The current health care debate is dispiriting: Republicans ignore that we already have a poorly functioning universal health care system, and Democrats want only the political victory of "covering the uninsured," irrespective of whether the legislation actually brings about fundamental reform the system so badly requires. The centerpiece of this debate is the "pubic option" which Democrats tout as the only mechanism to force change in the insurance industry and Republicans view as the first step to a single payer, federally run plan. There is another way to reform the health care insurance market that should work for both parties.
As a starting point, the debate about the feasibility and cost of universal health insurance misses the point that universal health care coverage already exists as mandatory emergency room care. No politician, Republican or Democrat, has argued that we should reverse current law requiring emergency rooms to treat patients who walk in, regardless of ability to pay. Once we acknowledge that we have universal coverage, we can avoid the silly ideological battles about whether it is a desirable goal and focus on the critical issue of how to transform our highly inefficient system of providing this coverage to a more comprehensive and economically sustainable one.
A grand bipartisan bargain is available for the taking. Republicans need to accept the notion of universal care and a functional health care safety net for all of our citizens in the form of subsidies for the purchase of insurance; Democrats need to accept that we need the market to determine how best to deliver health care, by implication empowering individual choice and allowing insurance companies to price policies based on risk and consumer preferences.
Setting aside the compelling moral reasons for having an effective national health care system, we cannot, as a matter of rational economic and health care policy, withhold routine medical care from our citizens nor bankrupt individuals who incur large annual health care bills. To the latter point, it is indisputably true that individuals suffer at random from many serious, even fatal medical conditions, from traffic crash injuries to breast cancer, environmental exposures to genetic disorders, etc.; it is right that our society should provide those people with a meaningful safety net both with respect to appropriate treatment and its economic consequences.
One pragmatic, nonpartisan step to achieving such a goal is to create a National Health care Reinsurance Pool (NHRP). All insurers who write health care policies would be required to participate in this pool and, in turn, would be able to purchase reinsurance for payouts that exceed an annual amount. The cost of the reinsurance would be established such that the NHRP would operate at a breakeven level. By creating one large national pool to absorb catastrophic risk, the NHRP is an efficient mechanism to fairly distribute the ruinous costs that millions of Americans bear each year.
Of course, for the NHRP to work, all Americans would have to have health care insurance and insurance companies would be required to offer policies irrespective of preexisting conditions with the NHRP as a backstop for the catastrophic risk portion of health care coverage. However, insurance companies would have the flexibility to offer consumers an array of specific choices such as deductibles, out-of-network costs, reimbursements for routine visits and prescription drug coverage, to name a few examples. As importantly, insurers need to have the flexibility to price policies in a way that provides clear economic incentives for healthy behavior. If you smoke, are preventably overweight, drink too much, don't exercise or otherwise don't take reasonable steps to maintain your health, you should suffer an economic consequence in the form of higher premiums.
While we can't expect individuals to be educated consumers of health care individually, it is patronizing to assume that individuals can't figure out which insurance policies best meet their needs. The insurance companies need to act as the bargaining agents with doctors and providers and the consumers should judge which insurance company offers the services they want and are their best advocates.
In a world in which insurance companies cannot deny coverage and they participate in a national reinsurance pool that largely mitigates the risk of adverse selection, their success will depend on attracting consumers as a function of both the flexibility of the policies they write and the quality and effectiveness of the coverage they provide. Moreover, the market may develop in such a way that major providers of health care such as hospitals and doctors will form consortia that will be able to create captive insurance companies and essentially serve the consumers directly without using traditional insurance companies as third party intermediaries. The best analog would be to think of something like the Mayo clinic which provides coverage directly to patients and participates in the NHRP to mitigate the risk of catastrophic occurrences in their patient population.
Our health care system does a very good job for the majority of Americans but a poor job for an important and growing minority of the population. This failing is driving everyone's costs up. Even for those who now enjoy the benefits of our health care system, premiums are rising at unsustainable levels. We can improve this situation. There is no simple or easy solution, but we can do better with the combination of a national health care reinsurance pool and a truly competitive insurance market. That combination is the best "public option."
