Today's Health Care Reading - Private Care and Insurance vs Government Care and Insurance

For an overview of the public versus private debate, below are three links outlining the scope of the discussion as of this morning.

To understand this discussion the reader is reminded not to confuse providers with insurers. They are not the same.
Providers furnish the professional services and facilities that are health care.
The mission of insurance is to administer and coordinate the costs of health care.
Medicare can be thought of as government insurance. So that no one believes medical care is free, Medicare charges a premium for Part B. And to let providers understand that Medicare is not giving them a blank check to charge as much as they want, there is also a rate over which Medicare will not pay.

The "gap" between what Medicare will pay and what providers charge can be paid out of pocket by the Medicare beneficiary, or he or she can purchase private insurance, sometimes called a "medigap policy," to cover those costs in return for an additional monthly premium.

For the last four years another insurance product called Medicare Advantage has been made available through an agreement between Medicare and the insurance industry. A Medicare beneficiary can leave the Medicare system altogether to have health care needs managed by one of several alternative private plans. These plans are subsidized directly by Medicare which continues to collect the Part B premium from the beneficiary. In other words, the government still collects the money, but the beneficiary's health care is outsourced to a private insurance company and whatever providers they approve. Depending on individual plans and where the beneficiary lives, an additional premium may be charged ranging from zero to an additional amount over and above the premium already being collected by Medicare Part B.

The health care reform debate now in progress is an attempt to find a remedy for America's spiraling health care costs. Not to put too fine a point on it, in the words of a politician whose name I can't recall, America has the best health care system in the world and the worst way of paying for it. Many factors go into the reasons for this situation, but the same Yankee Ingenuity that produces history's most impressive advances in medicine also produces an equally impressive number of ways to extract the greatest possible profits from those advances, not the least of which is insurance whose mission is to manage risk pools in a manner that minimizes costs while at the same time maximizing the delivery of products and services .

"Risk pool" is defined not only by those included but by those who are excluded as well. This is where the rub comes in, because so many people are excluded from insurance risk pools that whatever health care costs they incur are ultimately covered by charity, taxes and/or higher insurance premiums.

The insured population consists of Medicare and SCHIP beneficiaries, veterans (whose health care is furnished by the Veterans Administration), members of the armed forces (whose needs are met by Tricare, formerly CHAMPUS), government employees (covered by FEHBP), Native Americans (Indian Health Service) and a large population of employed people under a host of group insurance plans that may or may not include coverage for beneficiaries.

A large uninsured population is part of the nation's medical bill. Just because they are uninsured it does not mean that their care is not a cost. In addition to receiving emergency services in accordance with the law, those who neglect non-emergency care often incur greater emergency expenses as the result of preventable complications. Add to that group several millions of others including unemployed people or those whose earnings are too low to pay for insurance, individuals with adequate incomes who are in good health but opt not to have health insurance, individuals with chronic or pre-existing conditions who are unacceptable in risk pools, and a large and growing number of Medicaid beneficiaries. The cost of medical care for uninsured Americans must be recovered either by taxes or higher charges to those who are insured.

(Even after all these years, most people still have no idea what the difference is between Medicare and Medicaid. Medicare is a form of government insurance for seniors. Medicaid is a program of financial aid - as the name indicates - for destitute people who cannot afford various social services, including medical care, provided by government. The layman's word for Medicaid is welfare. That's also where the food stamps and WIC vouchers come from. Look down your nose at your peril. There but for the grace of God you may go. Both my parents were Medicaid beneficiaries.)

Here are three readings I recommend.

►►►An All Out Solution to Healthcare Crisis by Dr. R.K. “Ravi” Pandey.

Published last December, this piece advances the argument for a three-tiered approach to universal health care.

Tier 1 would focus on the general health need as well as the wellness. The government through taxes will provide these services. The taxes will be solely collected for healthcare purposes and will be a percentage of every individual’s income. This fixed or progressive percentage of income, as tax would bring ownership to all. Also, the burden would be proportionately distributed among the rich and the poor. It will free up small businesses from the burden of worrying about healthcare and enable them to focus on the growth of their business and their most important societal contribution – creating millions of jobs. A move towards this tiered structure would free up every American from worrying about health to focus on more important things like improving their job productivity and taking care of their family. American industries will have a chance to compete in the global market on an equal footing. The economy will be invigorated and grow.

Adaptation of Tier 1 as a national program would require creation and development of the infrastructure, which will create jobs to boost the economy in construction sector.

Second and third tier would be left to the free market to design with legislative guidance. Second tier could be designed for buying insurance for serious illnesses and tier 3 could be, in Senator McCain’s terms, the Cadillac of healthcare. This would be for those who want to buy insurance for hair replacement, fertility treatment, etc. Those who want to keep themselves or their family members alive in a vegetative state for years would have to buy their coverage through tier 2 and tier 3 as appropriate. The healthcare dollars need to be utilized for overall national health. They should be prioritized for the net present value of life for the individuals competing for the resources.

This three-paragraph snip does not do justice to this piece. It addresses a host of other considerations, including the problems of not enough physicians, empowering nurses to write prescriptions as well as dental and eye care.
The comments thread is also a must-read.

►►►The Siren Song of Public Programs by Roger Collier at the Health Care Blog

This piece from January looks at the very appealing "Medicare for all" approach to universal health care and finds it filled with flaws.

It seems a seductive idea. Medicaid and its little cousin, SCHIP, provide coverage to more than forty million low-income people, most of whom would otherwise have no insurance, while Medicare is an essential part of the lives of 45 million seniors. It’s hard to imagine American health care without these programs, and understandable that there should be demands for their expansion to cover many of our forty-seven million uninsured.

Seductive it may be, but could the proposal also be the siren song that might lead to the wreck of reform?

In a few short paragraphs he hits the main reasons it is more of a dream than a reality. The comments thread is a serious discussion including input by Dr. Pandy from the first reading.
Maggie Mahar adds her excellent input, including a quick and easy to grasp reason why this would never result in savings...

A wholesale cut of doctors' fees would mean many fewer doctors would take Medicare patients-- that would be the beginning of the end for Medicare. No Democrat wants that to happen on his watch.

Anyone who cannot understand that???


►►►The Public Program Impasse: A Proposal, also by Roger Collier, advances a hot-off-the-press idea (this morning's post) which would involve compromises on the part of several interests, not the least of which is Barack Obama himself.

With current front-runner reform models all including some form of “insurance exchange,” a public program option could be written into reform legislation but implemented only when insurer premium increases for the standard coverage exceed a predetermined target, for example CPI change plus one percent. To minimize the effects of local and year-to-year aberrations and insurer premium variations, the trigger test could perhaps be applied on a biennial basis for each regional exchange, with the premium number in the comparison being a weighted average across insurers, and with the CPI percentage that for the region. This approach doesn’t cover the first year, since it’s dependent on year-to-year changes, but the Massachusetts Connector and Netherlands health care reform experiences suggest that insurers will offer aggressively low rates initially in order to build market share.

At the moment he's getting beat up a little in the comments thread, but I find the idea appealing. The language above looks like a variant on Medicare Advantage, but I can't be sure that's what it really means.

I can't get a hint how this proposal might stand on the mater of mandates. The biggest difference between Hillary Clinton's plan and Obama's plan was the matter of mandates. Hers had a mandate for all to participate. His plan was (and is, so far) optional. Young, healthy, selfish citizens who can afford insurance have an option not to participate, waiting until the day comes when medical expenses exceed their out-of-pocket comfort level. The currently in place and going broke Massachusetts plan is modeled on the mandate idea. If you live in MA you will be insured, required to pay for insurance (like that for your car), and the state will figure out some way for you to afford it.

I rather like the idea myself, if only to capture that young, healthy, income-producing population now opting to, as the insurance industry says, "go naked." I see no reason that for a buck or two in taxes per person (sin tax, lottery, payroll, whatever) individual states should not be able to get enough money to fill out public health clinics with more staff, run a little chronic-conditions and well care on the side, and subsidize low-income citizens with whatever competing private insurer is in the business.