Most working Americans have employer-provided health coverage, where costs are out of control. Here’s a plan to save money, put money in their pockets, and give Democrats a winning issue.
All of these suggestions could be solved by a medicare for all, or equiv natl health insurance. WE already have a model for medicare that can be expanded to the whole population. THe elimination of insurance company profits as well as the administartive burden placed upon medical care providers are positives. A single payer system could implement the changes suggested such as single pricing or competitive drug pricing. The other advantage to a medicare for all system is that corporations would no longer have health insurance responsibility thus making their cost of labor more competitive. There's no reason why this approach shouldnt save taxpayer money while improving health outcomes and our economy.
I believe transformational yet incremental reforms will push us closer to single payer. That’s what my plan is all about. First single pricing with budgets with growth caps. Then a public option through Medicare instead of Obamacare. This will lead more and more employers to drop coverage, especially as we evolve to a less work/more free time Society enabled by AI and renewable energy.
I can't help but think of Eisenhower's parting remarks when he warned of the military-industrial complex attaining too much power. The simple truth is, if the military contractors didn't rip us off so blatantly, with the cooperation and approval of the Generals and Admirals, we could afford universal health care! Add the pharmaceutical industry to that equation and we start to pay off the national debt! Close the loopholes that allow billionaires/millionaires to pay less tax than the local cop on the beat, and we could feed millions of hungry people and cure/prevent their diseases!
Much the same could be said about the high cost of education, so what’s the commonality? It’s the slowing of wage increases over the last 40 years and the importation of huge amounts of foreign-made consumer goods. The imports keep prices low so that we hardly notice that the purchasing power of our wages, for things produced domestically, continues to erode. Our frog has been boiled. Education and healthcare are 2 things provided by highly educated professionals leveraging huge amounts of capital equipment. Rising healthcare premiums are measured as a percentage of wages and normal inflation over time accelerates past any wage gains. What to do? Some of these ideas are good and need to be implemented now that wages are out of synch with real healthcare inflation. But curbing the ridiculous profits of health insurers is also something to be looked at. There is no profit possible in healthcare, only margin. What goes to profit and fat executive salaries is not going to people and this needs to be curbed. Single payer healthcare is essential to fixing the problem. Other statistics show that if employers simply gave their preminus to a single payer plan like Medicare, we could improve the quality of care for everyone and leave none out in the cold.
Single payer will not become politically achievable unless there is a total collapse of the system, which everyone should be against on humane grounds, if for no other reason. I'm a practical person trying to develop politically achievable reforms that move the U.S. in the direction of universal, affordable coverage.
Agree that single payer as such is politically unachievable--even if the numbers work out (I worked out a favorable funding structure for California in 2004, confirmed by the Lewin Group), substituting a tax-based system and disrupting current coverage is a non-starter: "the biggest tax increase in history". But a gradual process with a public option may be doable, e.g. allow employers and the exchanges to buy Medicare policies, which will be more reasonably priced than most insurers if only for the administrative savings. Medicare becomes a public insurance company which sets the prices and policies against which insurers must compete. Employer and employee payroll costs become payments to Medicare, should they choose the policy, and Medicaid is potentially rolled in. Medicare gets younger, healthier people so can spread costs. You may still have multiple payers, but in an environment in which insurers must compete. Perhaps a Dutch system (insurance regulated as a public utility) is what we ultimately get, and perhaps public option ignores the many complexities of the system, like paying enough to keep providers viable. But like the Democrats proposed grab-bag of fixes, I don't see your three-pronged policy becoming easily understandable and broadly acceptable politically either. Definitely worth a discussion, very helpful to open up a broader reform discussion as we face untenable cost increases. And political viability has to be the true test, which is how we got Obamacare.
A follow-up: A Medicare option would accomplish all three of your goals: limits on out-of-pocket, single prices and provider budgets, as it somewhat does now. By being market competition-oriented, a public option is probably more politically viable than forcing single prices and budgets on the industry.
Medicare coverage would be offered as a plan to compete with other plans. Arguably for employers and employees who sign on, it could be calculated as an addition to the payroll tax, simpler for benefits managers. It would then be the basis, maybe the floor, for competing plans which presumably would have innovations and benefits for members. Your three principles would be part of a Medicare plan against which insurers would compete. I'm sure others have explored this in depth, but it does seem to be a politically viable approach (ruled out by Joe Lieberman in the Obamacare fight). Thanks for engaging!
Great work, as usual, Merrill. Do you know of other experts who would support such a proposal? Perhaps Robert Reich, whom you mentioned above. I ask because the U.S. needs to act quickly to address the issue of rising costs, which, as you pointed out, have risen faster than wages and inflation for many years.
Just guessing, but it's likely you've covered health care longer than I have and so you know how long employers and other payers have said the rising costs of health care are "unsustainable" (for the very reason that health care costs almost always rise faster than wages and inflation). Every year, those costs rise at what we call "unsustainable" rates, but, as you noted, those who are served by the status quo are likely to push back hard against any attempt to change how we pay for health care.
I would just add one more point. You mention medical debt, which no one takes on voluntarily. Instead those who accumulate med debt do so because they cannot afford the high cost of care and yet will do anything to pay for that care for themselves or for a loved one. Forcing anyone to take on medical debt should not be allowed in the richest country in the world.
This doesn't get rid of the inefficiencies of multiple payers. The simple truth is that most of what makes American Healthcare the most expensive in the World is the For-Profit, Fee for Service paradigm. The huge money pipe in our system from healthcare expenditures to corporate bottom lines is the problem. Not only is it obscenely expensive, but it leaves an unacceptable number of people uncovered. And compared to other industrialized countries with universal healthcare, our result for all the money we spend is a shorter lifespan. Insurance execs are defacto medical practitioners by overriding Docs and other medical practitioners to deny care - all to increase their bottom line. Everywhere I look, I see a special interest looking to boost their profit by increasing the overall cost of the system. We basically have Laissez Faire Capitalism running amok in the US Healthcare System - and Society in general. It may take a major shock along the lines of the Great Depression to be able to rein in these forces.
While noteworthy for its details that address many of the issues and would bring about a more equitable healthcare landscape, gooz's 3 pt plan is too complicated and could be manipulated by insurance, providers and patients or their "advocates". A single payer system such as 'medicare for all" that requires some contributions from patients unlike the Bernie Sanders proposed "free" medicare for all is the only realistic way to address this problem. HEalth insurance for 50% of the population is currently provided by a variety of govt programs - medicare, medicaid, tricare, chips, obamacare, et al. So bring the healthier employees onto medicare and pay for with increased corporate taxes that will be offset by elimination of corporate health insurance costs. Eliminate MEdicare Advantage and gain about $80B/yr from those bloated costs due soley to insurance companies expenses plus profits. And eliminate the need for health insurance across the board making for a huge cost savings. The single payer system will have monopoly leeway in dictating pricing by provdiers including points 2 and 3 from Gooz's proposals above. HHS will have a dual mandate - affordable healthcare and quality healthcare so the economic success of providers is necessary to maintain. I'm sure we can learn lessons from other countries who have implemented single payer. Also single payer will make our companies more competitive as they won't have to pay for healthcare - a major expense. Who loses in such an approach - insurance companies, pharmacy benefit managers and inefficent system providers. who wins - patients, corporations, taxpayers and to some extent providers in that their administrative burdens will be reduced. another govt program which should help is a "gi bill" for medical students. In excahnge for govt provided medical education, newly minted drs would be required to spend some time in practices in hard served areas like rural and safety net hosps. It's socialism but we're already 50% there so it's not an idealogical issue. Oh sure the insurance compnaies and republicans will cry 'socailisnm, death panels and long wait times for some procedures. These arguments must be publicly argued so that average voter doesn't get snookered into the old 'socialism" boogeyman, With healthcare insurance costs soaring now is the moment to move to single payer.
I believe that this plan has the best chance of gaining political traction of any that I have heard about, although I am a fan of M4A. The 3 part plan involves a cap on income-based health care expenses which becomes socialized and must be funded by the federal government, which should be pushed by the Democrats. Financing should be possible after reimposing reasonable taxes on the ultra wealthy.
One-size-fits-all pricing of health care has appeal, as well. The financing of this right-sizing becomes the issue. There needs to be an option to retain value-based pricing, however, as an engine for innovation towards better models of care.
The global budgets for hospitals is tricky. We have a burden of deferred care with the populations that have been under-insured. Also, with an aging population, we must take into account the morbidities in the future wave, accompanied by a diminishing young population. Therefore, I expect that risk-adjusted models will be required, which also implies some kind of attribution model to build the budgets.
Another important factor needs to be worked out: long term care for the aging and disabled populations. Given the lack of coverage for long term care in this country except for voluntary individual policies and Medicaid as the last resort, we need to finance a coverage model for the overall aging population. Long Term Support Services as well as Home and Community Based Care programs have been pioneered by the state Medicaid programs around the country, which will need to be expanded to encompass the non-Medicaid populations.
Finally, I believe it is time for national insurance company requirements around minimum medical loss ratios. At the moment, regulation of insurance companies is delegated to the states. But we should impose minimum loss ratio requirements nationwide according to lines of business. At the moment, CMS mandates a minimum loss ratio of 85% for Medicare Advantage plans, which has the effect of limiting the profit margins allowed. I recommend similar limitations appropriate to the line of business. While working at non-profit health plans, we priced for a 2% to 3% profit margin. At for-profit plans, the target was usually 5%. There needs to be a national standard as to what items are permitted to be counted towards the medical loss ratio (could we abolish the term "medical loss ratio" and substitute "medical cost ratio", please?).
The ideas under discussion here, other than the global hospital budget (which, by the way, has been used in Canada for some time), do not address the fee for service system, which creates incentives for both over-treatment (unnecessary procedures) and under-treatment (lack of compensation for preventive care and the management of chronic conditions). We need to implement universally the Kaiser staff-model HMO system. Ultimately, we need to integrate healthcare and public health, so that in any given community a specific individual or group of individuals is responsible for the health of the population.
All of these suggestions could be solved by a medicare for all, or equiv natl health insurance. WE already have a model for medicare that can be expanded to the whole population. THe elimination of insurance company profits as well as the administartive burden placed upon medical care providers are positives. A single payer system could implement the changes suggested such as single pricing or competitive drug pricing. The other advantage to a medicare for all system is that corporations would no longer have health insurance responsibility thus making their cost of labor more competitive. There's no reason why this approach shouldnt save taxpayer money while improving health outcomes and our economy.
Single payer is the logical endgame and will eventaully happen. it's a question of when and how to get there.
I believe transformational yet incremental reforms will push us closer to single payer. That’s what my plan is all about. First single pricing with budgets with growth caps. Then a public option through Medicare instead of Obamacare. This will lead more and more employers to drop coverage, especially as we evolve to a less work/more free time Society enabled by AI and renewable energy.
I can't help but think of Eisenhower's parting remarks when he warned of the military-industrial complex attaining too much power. The simple truth is, if the military contractors didn't rip us off so blatantly, with the cooperation and approval of the Generals and Admirals, we could afford universal health care! Add the pharmaceutical industry to that equation and we start to pay off the national debt! Close the loopholes that allow billionaires/millionaires to pay less tax than the local cop on the beat, and we could feed millions of hungry people and cure/prevent their diseases!
Much the same could be said about the high cost of education, so what’s the commonality? It’s the slowing of wage increases over the last 40 years and the importation of huge amounts of foreign-made consumer goods. The imports keep prices low so that we hardly notice that the purchasing power of our wages, for things produced domestically, continues to erode. Our frog has been boiled. Education and healthcare are 2 things provided by highly educated professionals leveraging huge amounts of capital equipment. Rising healthcare premiums are measured as a percentage of wages and normal inflation over time accelerates past any wage gains. What to do? Some of these ideas are good and need to be implemented now that wages are out of synch with real healthcare inflation. But curbing the ridiculous profits of health insurers is also something to be looked at. There is no profit possible in healthcare, only margin. What goes to profit and fat executive salaries is not going to people and this needs to be curbed. Single payer healthcare is essential to fixing the problem. Other statistics show that if employers simply gave their preminus to a single payer plan like Medicare, we could improve the quality of care for everyone and leave none out in the cold.
Single payer will not become politically achievable unless there is a total collapse of the system, which everyone should be against on humane grounds, if for no other reason. I'm a practical person trying to develop politically achievable reforms that move the U.S. in the direction of universal, affordable coverage.
Agree that single payer as such is politically unachievable--even if the numbers work out (I worked out a favorable funding structure for California in 2004, confirmed by the Lewin Group), substituting a tax-based system and disrupting current coverage is a non-starter: "the biggest tax increase in history". But a gradual process with a public option may be doable, e.g. allow employers and the exchanges to buy Medicare policies, which will be more reasonably priced than most insurers if only for the administrative savings. Medicare becomes a public insurance company which sets the prices and policies against which insurers must compete. Employer and employee payroll costs become payments to Medicare, should they choose the policy, and Medicaid is potentially rolled in. Medicare gets younger, healthier people so can spread costs. You may still have multiple payers, but in an environment in which insurers must compete. Perhaps a Dutch system (insurance regulated as a public utility) is what we ultimately get, and perhaps public option ignores the many complexities of the system, like paying enough to keep providers viable. But like the Democrats proposed grab-bag of fixes, I don't see your three-pronged policy becoming easily understandable and broadly acceptable politically either. Definitely worth a discussion, very helpful to open up a broader reform discussion as we face untenable cost increases. And political viability has to be the true test, which is how we got Obamacare.
A follow-up: A Medicare option would accomplish all three of your goals: limits on out-of-pocket, single prices and provider budgets, as it somewhat does now. By being market competition-oriented, a public option is probably more politically viable than forcing single prices and budgets on the industry.
How does a public option help people with employer based health insurance?
Medicare coverage would be offered as a plan to compete with other plans. Arguably for employers and employees who sign on, it could be calculated as an addition to the payroll tax, simpler for benefits managers. It would then be the basis, maybe the floor, for competing plans which presumably would have innovations and benefits for members. Your three principles would be part of a Medicare plan against which insurers would compete. I'm sure others have explored this in depth, but it does seem to be a politically viable approach (ruled out by Joe Lieberman in the Obamacare fight). Thanks for engaging!
Says who? I admit that a large cross section of the political class would first need to grow a spine.
Love your ideas but reject the notion of total collapse. On what grounds? If you can’t think it, you can’t do it.
...and save money for patients, taxpayers and corporations.
Why do we not consider dental care to be part of health insurance? The perenrage of dental care covered by dental "insurance" is a joke.
Great work, as usual, Merrill. Do you know of other experts who would support such a proposal? Perhaps Robert Reich, whom you mentioned above. I ask because the U.S. needs to act quickly to address the issue of rising costs, which, as you pointed out, have risen faster than wages and inflation for many years.
Just guessing, but it's likely you've covered health care longer than I have and so you know how long employers and other payers have said the rising costs of health care are "unsustainable" (for the very reason that health care costs almost always rise faster than wages and inflation). Every year, those costs rise at what we call "unsustainable" rates, but, as you noted, those who are served by the status quo are likely to push back hard against any attempt to change how we pay for health care.
I would just add one more point. You mention medical debt, which no one takes on voluntarily. Instead those who accumulate med debt do so because they cannot afford the high cost of care and yet will do anything to pay for that care for themselves or for a loved one. Forcing anyone to take on medical debt should not be allowed in the richest country in the world.
This doesn't get rid of the inefficiencies of multiple payers. The simple truth is that most of what makes American Healthcare the most expensive in the World is the For-Profit, Fee for Service paradigm. The huge money pipe in our system from healthcare expenditures to corporate bottom lines is the problem. Not only is it obscenely expensive, but it leaves an unacceptable number of people uncovered. And compared to other industrialized countries with universal healthcare, our result for all the money we spend is a shorter lifespan. Insurance execs are defacto medical practitioners by overriding Docs and other medical practitioners to deny care - all to increase their bottom line. Everywhere I look, I see a special interest looking to boost their profit by increasing the overall cost of the system. We basically have Laissez Faire Capitalism running amok in the US Healthcare System - and Society in general. It may take a major shock along the lines of the Great Depression to be able to rein in these forces.
While noteworthy for its details that address many of the issues and would bring about a more equitable healthcare landscape, gooz's 3 pt plan is too complicated and could be manipulated by insurance, providers and patients or their "advocates". A single payer system such as 'medicare for all" that requires some contributions from patients unlike the Bernie Sanders proposed "free" medicare for all is the only realistic way to address this problem. HEalth insurance for 50% of the population is currently provided by a variety of govt programs - medicare, medicaid, tricare, chips, obamacare, et al. So bring the healthier employees onto medicare and pay for with increased corporate taxes that will be offset by elimination of corporate health insurance costs. Eliminate MEdicare Advantage and gain about $80B/yr from those bloated costs due soley to insurance companies expenses plus profits. And eliminate the need for health insurance across the board making for a huge cost savings. The single payer system will have monopoly leeway in dictating pricing by provdiers including points 2 and 3 from Gooz's proposals above. HHS will have a dual mandate - affordable healthcare and quality healthcare so the economic success of providers is necessary to maintain. I'm sure we can learn lessons from other countries who have implemented single payer. Also single payer will make our companies more competitive as they won't have to pay for healthcare - a major expense. Who loses in such an approach - insurance companies, pharmacy benefit managers and inefficent system providers. who wins - patients, corporations, taxpayers and to some extent providers in that their administrative burdens will be reduced. another govt program which should help is a "gi bill" for medical students. In excahnge for govt provided medical education, newly minted drs would be required to spend some time in practices in hard served areas like rural and safety net hosps. It's socialism but we're already 50% there so it's not an idealogical issue. Oh sure the insurance compnaies and republicans will cry 'socailisnm, death panels and long wait times for some procedures. These arguments must be publicly argued so that average voter doesn't get snookered into the old 'socialism" boogeyman, With healthcare insurance costs soaring now is the moment to move to single payer.
I believe that this plan has the best chance of gaining political traction of any that I have heard about, although I am a fan of M4A. The 3 part plan involves a cap on income-based health care expenses which becomes socialized and must be funded by the federal government, which should be pushed by the Democrats. Financing should be possible after reimposing reasonable taxes on the ultra wealthy.
One-size-fits-all pricing of health care has appeal, as well. The financing of this right-sizing becomes the issue. There needs to be an option to retain value-based pricing, however, as an engine for innovation towards better models of care.
The global budgets for hospitals is tricky. We have a burden of deferred care with the populations that have been under-insured. Also, with an aging population, we must take into account the morbidities in the future wave, accompanied by a diminishing young population. Therefore, I expect that risk-adjusted models will be required, which also implies some kind of attribution model to build the budgets.
Another important factor needs to be worked out: long term care for the aging and disabled populations. Given the lack of coverage for long term care in this country except for voluntary individual policies and Medicaid as the last resort, we need to finance a coverage model for the overall aging population. Long Term Support Services as well as Home and Community Based Care programs have been pioneered by the state Medicaid programs around the country, which will need to be expanded to encompass the non-Medicaid populations.
Finally, I believe it is time for national insurance company requirements around minimum medical loss ratios. At the moment, regulation of insurance companies is delegated to the states. But we should impose minimum loss ratio requirements nationwide according to lines of business. At the moment, CMS mandates a minimum loss ratio of 85% for Medicare Advantage plans, which has the effect of limiting the profit margins allowed. I recommend similar limitations appropriate to the line of business. While working at non-profit health plans, we priced for a 2% to 3% profit margin. At for-profit plans, the target was usually 5%. There needs to be a national standard as to what items are permitted to be counted towards the medical loss ratio (could we abolish the term "medical loss ratio" and substitute "medical cost ratio", please?).
The ideas under discussion here, other than the global hospital budget (which, by the way, has been used in Canada for some time), do not address the fee for service system, which creates incentives for both over-treatment (unnecessary procedures) and under-treatment (lack of compensation for preventive care and the management of chronic conditions). We need to implement universally the Kaiser staff-model HMO system. Ultimately, we need to integrate healthcare and public health, so that in any given community a specific individual or group of individuals is responsible for the health of the population.