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Henryk A. Kowalczyk

Henryk A. Kowalczyk

Posted: August 11, 2009 01:14 PM

The Health Care Reform Bill; the Promise of Pears on a Willow Tree


One week after posting my open letter asking for a concept in the health care reform bill, I received an email from President Barack Obama.

Several hours before my letter showed up on Huffington Post, I forwarded it to the White House, using the "contact us" form on their website. I thought that it would be nice to let them know about the letter before making it public. In the process, I revealed to them my personal email address. At this email address, I received a generic mailing from President Barack Obama a week later, with the subject line "What health insurance reform means for you". Adding my email address to the White House spam list appears to be the only practical outcome of my open letter to President Obama.

At almost exactly the same time, I received an email from my acquaintance commenting on my text. Actually, he forwarded to me the same spam email from the White House with a comment, "Seems ok to me, what's all the fuss about? It's about time we check and take away control from the free market thugs who could care less unless you give them money."

This email prompted me to look again at the message from Mr. President. Let us cite it here:

• No discrimination for pre-existing conditions
• No exorbitant out-of-pocket expenses, deductibles or co-pays
• No cost-sharing for preventive care
• No dropping of coverage if you become seriously ill
• No gender discrimination
• No annual or lifetime caps on coverage
• Extended coverage for young adults
• Guaranteed insurance renewal so long as premiums are paid

On the surface, it looks good. Actually, it sounds like a promise of Christmas every day of the year: too good to be true.

A pledge of no discrimination for pre-existing conditions prompted me to look into encyclopedias for definitions of insurance. It is a way of managing risk of unexpected losses. Therefore, by definition we cannot buy insurance to cover the repair of a roof after that roof began leaking. Trying to do this would be a fraud. One might expect that a Harvard Law School graduate knows it. Nevertheless, this is what Mr. President is promising us in his email.

Should it mean that a sick person, with a pre-existing condition, should not be able to get medical care? Obviously, no. However, health insurance as we have it now is not a way to handle this. This could be handled in two ways. One is by government assistance for people in need. This is how it is done -- imperfectly -- now. The second way is by creating a new insurance product, lifelong health risk insurance, paid for throughout life and meant not for coverage of petty everyday medical expenses, but for coverage in instances when health care costs, for whatever reason, go above a predefined level of affordability.

Health Care as an Entitlement

In the first approach, health care for people with high treatment costs is secured by the government, and paid for by taxes. We have it partially now, as Medicaid pays for medical treatment for poor people. For others, it is a so-called "community benefit", which mostly means hospital care for people who do not pay. We all pay for this later, in increased rates for people covered by Medicare or private insurance. If we select to continue this path, we could formalize what we now pay anyway, and agree that everyone should receive medical care in instances where the cost of treatment goes above some predefined levels that we would accept as being above affordability for most Americans.

When agreeing on this, we could notice as well that many serious health conditions could be dealt with better in their early stages. Hence, we would conclude that good everyday basic health care could save us a lot of money otherwise spent on emergencies and advanced stage illnesses. The final conclusion in this path of reasoning would be that health care should be a basic right of every American the same way as education is. This way we would end up with a health care system similar to the one in France now, where everyone receives health care when needed without worrying about any payments, as the government there pays doctors and hospitals as our government supports teachers and public schools.

Health Care as a Product

In the second approach, we would assume that health care is a service, similar to our home or auto repairs. This is how our current private health insurance works now. Unfortunately, it works imperfectly.

If we look closely into our current health insurance plans, at their core they are not insurance at all. Mostly, they are health maintenance plans: something that we could compare to an extended car warranty. They cover unexpected high-cost medical treatments, but only for the duration of the contract, usually one year. Therefore, if a bus would strike someone insured, all medical expenses, within agreed limits, would be covered. If someone would get a stroke, it would be covered as well. However, if such an event would result with a need for ongoing health care, this would be excluded form the renewed policy as a pre-existing condition, or would be covered by the policy collecting in advance an estimated cost of such medical care. People working for the government or large corporation would be more fortunate, as by a virtue of being a part of a large group, they would not feel the increased cost due to their preexisting conditions, as it would be dissolved in the large pool. Nevertheless, their rates gradually would go up as well, and eventually their employers would ask for larger co-payments. Small businesses would have premiums raised at the next policy renewal.

Sticking to the concept of health care as a commercial service, we can overcome the problem of preexisting conditions only by implementing a new product: a lifelong insurance against instances of catastrophic health deterioration. With the risk, that an insurance company might go bankrupt, people would buy this long term insurance only if it would be guaranteed by the government, in a similar manner as our currently government-guaranteed bank deposits.

Insurance companies issuing health risk insurance would notice that they would spend less for the treatment of the seriously ill if people would have better preventive and basic medical care. Consequently, they would be financially interested in promoting health maintenance plans, similar to those called now "health insurance." Furthermore, recognizing the importance of health care, the government would continue its policy of tax deductions for buying health insurance, and could structure its policy in such a way that not buying health risk insurance would mean higher taxes. This way, without a mandate, we could have the prevailing majority covered.

What Is Better?

I have no intention to hide that, based on my understanding of how things work, I am convinced that we could have better health care at lower cost when treating it as a product, not as an entitlement. However, I have to acknowledge that systems built on the opposite concept can provide satisfactory results. For example, the World Health Organization named the French health care system as the best in the world.

My point is that these two approaches are not compatible. It is as with driving on the left or on the right side of the road. I have heard opinions why one is better than the other However, we cannot have both at the same time. President Obama claims that those Americans that are satisfied with their current health insurance would be able to keep it when others would go with the public plan. This promise boils down to the pledge that with his health reform proposal, some vehicles would be allowed to follow the right side road rule and some the left side rule.

We may debate endlessly which option is better. However, trying to combine them is the worst of the worst. It creates the monstrous apparatus with the wealth of the private industry and the political strength of the government. This hand in hand work of the government with the health care industry is the main reason for our current health care crisis at the first place. However, naming the problem is not an objective for President Obama.

It is striking that in the email from President Obama quoted above, we do not see a former university professor who could outline to us the essence of the problem, present the viable options, and tell us which one is better. Instead, we have a voice of an every day politician promising as usual what people want to hear, or -- as a Polish saying goes -- pears on a willow tree.