|
BLUEPRINT FOR FAIR SHARE HEALTH CARE
MAY 24, 1999
Consumers Union's Washington, DC Office
Introduction
Today consumers are at greater risk of being uninsured or underinsured than they were in 1994, when efforts to enact health care reform died. While the easy part of achieving health care reform is developing policy models that lead to universal coverage, the more difficult ingredients are Presidential and Congressional leadership, campaign finance reform, and a powerful consumer-based grassroots movement.
What the Public Wants
One of the reasons health reform has not been enacted is that there is no public opinion consensus on how to reform the health care system. The needed public consensus for reform never emerged because of the public's diversity of viewpoint, and the basic satisfaction level of the vast majority of Americans who are insured. Some of the areas where there is a near consensus of public opinion: people tend to want choice of doctor and health plan; quality health care; prompt health care; a voluntary system. In general, the public tends to oppose an expanded government interference in what should be private health care decision-making; rapid change in the health care system; policies that increase taxes or health insurance premiums; or rationing of health care.
Health Care Market Failure
Many types of market failure present challenges for finding solutions to the health care problems. Some of the dimensions of market failure (and the limitations of market-based solutions) include: (1) third-party insurance payment makes consumers less sensitive to health care costs; (2) Americans are too compassionate to let gravely ill people be denied needed treatment because they can't afford it; (3) for many medical decisions, doctors, not consumers, are the decision makers; (4) information is imperfect; (5) employers, not employees, often choose health plans; (6) the cost of providing "the product" varies from one consumer to another; (7) powerful special interests (who profit from the current health care system) are a dominant force in shaping policy through their advocacy before Congress and state legislators/regulators.
Failed Incrementalism
The health reform measures enacted since 1994 have not moved the nation closer to universal coverage. Instead, with each small step forward, the country has moved two steps backward. The result: there are now about 43 million Americans with no health insurance; 31 million Americans are underinsured, facing financial catastrophe if they get sick even though they have health insurance; health care costs as a percent of gross domestic product are projected to continue to increase, from 14 percent today, to 17 percent in 2007. The Health Insurance Portability and Accountability Act has not met the high expectations, demonstrating that the real issue defying easy solution is affordability of coverage. The Children's Health Insurance Program, while a step in the right direction, will leave millions of children uninsured. The burden of paying for health care continues to fall disproportionately on the poor and the sick.
While in one sense these failures were totally predictable in a system that requires a major overhaul, not just incremental reform, that isn't the whole story. Piecemeal reform need not move us backwards, even if it doesn't necessarily yield the ideal solution. And regardless of what is ideal, we know the political process does not seem to allow for a comprehensive approach at this time. So should we do nothing and wait for the system to collapse? At Consumers Union, we don't think so. We believe that the most responsible path for those who care about universal health care is to develop a long term blueprint which pieces together the key elements of what must be done - and what must be prevented - to facilitate achievement of our ultimate goal.
Models for Reform
Consumers Union's goal for health care reform is: Every person must have access to quality health care at an affordable price, with the right to choose providers and the right to have complaints resolved fairly.
There are many possible paths that could lead to this goal. We could use the public sector as a single payer of all health insurance for all people. Or we could mandate employer-provided coverage (with various levels of employer funding). We could provide incentives for states to individually take the lead on the path toward affordable coverage for all. Another approach would be to allow individuals to buy into the Federal Employee Health Benefits Program. Another path would be an individual mandate (combined with an overhaul of the individual health insurance market and targeted subsidies to make premiums affordable) (1).
Principles to Guide the Path to Affordable Health Care
The following principles should guide efforts to piece together enough health care reform to meet our ultimate goal of quality, affordable health care:
1. Broad pooling of risks (keeping the sick and the healthy in one broad risk pool.)
2. Progressive financing (with contributions based on ability to pay).
3. Targeted subsidies based on income (making coverage affordable to all, including all children, the working poor, early retirees).
4. Meaningful and understandable consumer choice (replacing frivolous variation in benefits with standard benefit packages).
5. Comprehensive benefits (including prescription drugs, caps on out-of-pocket costs, and no limits on lifetime benefits).
6. Healthy competition in the marketplace (prohibiting companies from profiting by excluding the sick from
coverage).
7. Fair marketplace rules (leveling the playing field so that companies that meet consumers' needs are rewarded) (2).
8. High quality care (with protections for patients that assure full accountability for treatment decisions and create incentives for good outcomes).
9. Targeted programs for vulnerable populations (meeting the needs of the poor, the elderly, the disabled, and the very young).
10. Strengthened safety net (with consumer-friendly reforms of Medicare and expanded access and continuity of coverage for Medicaid).
Implications for Public Policy
Changes that would move us forward include programs for early retirees and children, targeted subsidies for the unemployed and working families, a tax credit for families spending the most (as a percent of income) on health care, and expanded Medicare benefits. Changes that would be a step backward (continuing the path of failed incrementalism) include expanded Medical Savings Accounts, changing Medicare benefits from "defined benefit" to "defined contribution (3)," eliminating state benefit mandates (without creating a comprehensive standard benefit in their place), and exempting more insurers from state consumer protections.
Conclusion - A Call for FAIR SHARE HEALTH CARE
We need to move from our patchwork system characterized by gaps, toward a tapestry concept that weaves together into a coherent whole the various functional parts of the system, acknowledging that we are all in this together, and interdependent. Consumers Union needs to educate the public about the unfair burden the current health care system places on the poor and the sick. We need to help the nation define health care finance fairness - and work toward limits on families' exposure to out-of-pocket health care expenditures and premiums. We need to adopt as our motto, "Fair Share Health Care," with each American paying a fair share - and every American enjoying quality coverage.
____________
(1) This would represent a dramatic change from our current employment-based system. There are various ways of structuring such a system. One way would be to use the income tax system as the enforcer. In any individual-based system, careful design to achieve the equivalent of community rating (in our employment based system) is key. In addition, we would need income-based subsidies to assure affordability.
(2) In other words, companies that meet the needs of high-risk populations would not be penalized. One mechanism is risk adjustment that provides higher payments (i.e., transfers between health plans) to companies serving higher risks.
(3) A "defined benefits" means a fixed benefit package, while a "defined contribution" refers to fixed payments, e.g., through a voucher. The latter holds the potential to provide better budget control, while placing beneficiaries at risk of erosion of their benefits.
