A Better Way to Reform Health Care
I recently posted an article on the Huffington Post along with my friend, Regina Herzlinger of Harvard, describing how the Obama health care plan will decimate our economy. Many readers asked if I had a plan or if I wished to only criticize the president's proposal. In fact, I have introduced comprehensive health care legislation, the "Patients' Choice Act" along with Senator Richard Burr (R-NC) and Representatives Paul Ryan (R-WI) and Devin Nunes (R-CA).
We believe our plan will meet the president's goals far better than the president's own plan, or the plans being floated by the president's Democratic allies on Capitol Hill. Before I explain how our plan achieves those goals and outline some of the key differences between competing proposals, the American people should realize that there's remarkable agreement about the goals of health care reform.
Republicans and Democrats and conservatives and liberals all want a health care system that is more accessible, affordable and fair. I know this to be true because I've seen it first-hand. I've worked in the health care sector my entire adult life first as the owner of an optical company then, and now, as a practicing physician. The least partisan places in America are health care delivery areas - doctor's offices, emergency rooms, neonatal and intensive care units, and so on. The American people want a system that works, and so do the vast majority of members on both sides of the aisle.
Setting the right tone in the debate is more important because the stakes couldn't be higher for individual families and the future of our country. Getting health care reform wrong won't merely prolong the suffering of families, particularly low-income families, but will jeopardize our long-term economic health. What the American people need, and what policymakers have an intellectual and moral obligation to provide, is a rational debate based on competing ideas and solutions, not the recycled demagoguery of past campaigns. If we believe the other side is wrong we should put forward our best ideas and arguments in specific legislative language.
I'm willing to give the president the benefit of the doubt and believe the best about his motives, even if the political apparatus supporting his plan isn't willing to do the same. I'm also not afraid to say that I want the president to succeed because success will mean a better health care system. I am convinced, however, that if the president isn't persuaded to change course his plan will fail catastrophically, especially if he "wins" the vote in Congress. In fact, health care could be his domestic Iraq, but worse. It's one thing to declare "Mission Accomplished" but something else to truly accomplish the mission.
Let me explain how our bill accomplishes the mission:
Today there are three major barriers to access and coverage. There is broad agreement about two causes: cost and cherry-picking - when insurance companies deny coverage to people with pre-existing conditions. The other major barrier to access and coverage are failing government programs like Medicaid that provide access to a government benefit but not access to health care. Forty percent of doctors and hospitals refuse to accept Medicaid patients because the government's efforts to impose "affordability" have been an abject failure.
On the cost front, our bill gives every American a generous tax credit ($2,290 per individual, $5,710 per family) to purchase health insurance. We do this by ending the current discrimination in the tax code that gives people a tax break if they receive health coverage from their employee but no benefit if they are self-employed or unemployed. The rules governing our current, employer based, health care system were made in the 1940's when Americans stayed in the same job far longer than they do today. Ending the employee exclusion will end job-lock and put the individual and their doctor back in charge of health care.
This is a bold proposal that would dramatically reform our health care system. We address a number of questions related to this provision in our materials but let me address a couple of common questions.
Many people ask: How will a $5,710 tax credit help someone buy coverage when the average plan costs about $13,000? That's a fair and reasonable question.
Our plan works because the employees only pay about one-third of their plan's premium. For example, the average family's annual employer-provided health insurance plan cost about $13,000 last year, with an employer paying about $8,600, while the employee only paid about $4,200 in annual premiums. Under the Patients' Choice Act, that family would have more than enough to cover their share ($4,200) and have a significant sum left over for any additional medical expenses. It's true that the funds the employer provides would now be taxable income just like salary but the point critics ignore is that the typical individual and family will still come out way ahead under our plan.
The tax issue is controversial because the Obama campaign spent millions of dollars distorting John McCain's tax proposal which also called for ending the employee tax exclusion and replacing it with a rebate. Ironically, the Chairman of the Senate Finance Committee, Senator Max Baucus (D-MT) has proposed eliminating or capping the employee exclusion as a way to raise revenue. The fact that Senator Baucus was greeted not with a barrage of attack ads, but with assurances from the White House that his option would be "on the table," shows that the attacks against McCain were illegitimate and purely partisan.
The question the American people should be asking Congress about the way our current tax code treats health care is not whether we should change it but why on earth should we keep it like it is. The current rules are terribly regressive. Today's system discriminates against low‐income Americans: wealthy Americans receive $2,680 in tax breaks for health care while the poorest Americans only receive $102.26.
We address the second major barrier to access - cherry-picking - by making it profitable for insurance companies to not deny coverage. Our bill does this in several ways. First, we set up voluntary state-driven exchanges to facilitate real competition between private plans and give Americans - for the first time - a choice of health care plans. The exchanges would require all participating insurers to offer coverage to any individual - regardless of patient age or health history. Exchanges could also set up auto-enrollment so that a 24-year-old who shows up in an emergency room after a motorcycle accident would already be covered by a basic plan. Today, we all pay for those ER visits.
Our exchanges are NOT based on the Massachusetts model, which is not working. Rather, we acknowledge the economic reality that single-payer advocates ignore: health care economics are regional, and that a one-size-fits-all mandate from Washington will fail.
We overcome the third barrier to access - failing government programs - by giving low-income Americans the means to buy insurance outside of the failing Medicaid program.
The Patients' Choice Act gives low-income families at 100 percent of poverty level an additional $5,000 to purchase coverage on top of their tax credit. In other words, a family of four at 100 percent of the poverty level would now have $10,710 to buy coverage under our plan.
Many on the left don't like to address the reality of failing government programs because it is undermines their case for the "public option." How can a system that turns away the poor 40 percent of the time by called a success and worthy of expansion? The American people should not have faith in the public option until members of Congress voluntarily enroll in Medicaid.
Instead of acknowledging the failure of government interventions many on the left like to demagogue greedy insurance companies. One problem with this argument is that the government already drives about 60 percent of the health care economy. We already have a system of price fixing and cost containment in place called Medicare that sets the prices that insurance companies and providers follow.
Of course, insurance companies are hardly perfect actors. As a doctor, I've berated many insurance company bureaucrats who thought they knew how to care my patients better than I did. Yet, it is misleading to claim half of the problem is the whole problem. Our bill deals with reality and the whole problem - the perverse incentives in government and the private market that are hurting families. Putting the individual in charge of health care is the only way to address these underlying factors that drive up costs and reduce quality and access. The third-party model lacks transparency and accountability and allows both government and insurance company bureaucrats to get between a patient and their doctor.
Our bill includes a number of other provisions that make our plan truly comprehensive. We emphasize prevention and disease management and change reimbursement rates so doctors can be paid for doing prevention. We eliminate widespread fraud and waste in Medicare and Medicaid, which is estimated to be $80 billion per year, and so on.
The point is that health care needs a new operating system, not a service patch to a broken system. Building a new "public option" on top of a failing system with an elaborate system of fines continues the 1960's idea that a little more government spending and intervention will fix health care. It's time for true innovation and change, not a Windows 1975 approach to reform.
Finally, a critical factor that sets our bill apart from the president's plan is sustainability. Our bill accomplishes these goals without spending any new federal money, or raising taxes. The problem in health care is not that we don't spend enough, but that Americans aren't getting enough value for their dollars. On a per capita basis, America spends nearly twice what other industrialized nations spend. Our responsibility is to make better use of existing resources.
The president's argument that we have to make an enormous new investment in a "public option" in order to save money down the road is speculative at best, and a recipe for fiscal disaster at worse. Every major health care program created by the government since 1960 has cost far more than originally envisioned.
In 1965, Medicare was supposed to cost $3.1 billion a year. Today, Medicare costs $455 billion a year and is headed for bankruptcy. SCHIP was established a decade ago as a safety net for poor children. Today, a family living at 300 percent of the poverty level is eligible for SCHIP.
Some estimates say the "public option" will cost $1.2 trillion but no one knows for sure. It's impossible to predict the havoc that would ensue if, for instance, the Lewin Group's study is correct and 120 million Americans lose their private insurance because private companies are driving out of business by the government plan. When faced with out-of-control costs, European countries with single-payer plans responded the only way they could - they rationed and denied life-saving care.
The president is using conservative economic arguments to sell his plan - it's about choice and competition, etc. - but he is putting forward a proposal that would have the opposite effect. Also, the American people should be concerned about the need for a government plan to keep the private plans "honest." In a free society, individuals keep the government honest, not the other way around.
The president has given Congress a firm deadline to pass a health care bill. In the next seven weeks all sides should put their ideas on the table and have it out. What is not acceptable, though, is delay and posturing. Organizing for America, the organization set up by the President's former campaign manager, David Plouffe, has asked Americans for donations to combat those who are allegedly spreading "fear and confusion" about the changes the administration seeks. I would contend that if the American people are fearful and confused the administration should look in the mirror. We are on the cusp of a major debate and neither the administration nor its allies on the Hill have put their ideas in clear legislative language.
Many on the left are obviously worried about a repeat of 1993 when their detailed plan was released early, roundly criticized then defeated. While hiding the ball might be a good short-term political strategy, a plan that can't survive public scrutiny does not deserve to become law.
I believe the Patients' Choice Act can prevail in a public debate. Even if our plan doesn't have the votes to pass in Congress, it does show the American people that it is possible transform health care without putting the government in charge.
I know that many on the other side have a different vision and philosophy. Yet, their stalling raises a difficult question. If they are confident in their plan why haven't we seen it? We're still waiting. More importantly, so are the American people.
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"This article brought to you by Sen. Tom Coburn, bought and paid for by the health insurance industry. Thank you for your attention.
Fantastic.
Now you're going to tell us that Hitler was a Liberal. Oh, I guess your side has already started that lie.
Next you'll be telling us that War profiteering is perfectly acceptable. Oh wait. Your side already does that.
Now you're telling us that Health Profiteering is acceptable despite the gross conflict of interests between the docs/insurance companies and a sick patient.
"Our plan works because the employees only pay about one-third of their plan's premium." That, of course, is among the dwindling portion of employers that pay for health coverage at all.
"How can a system that turns away the poor 40 percent of the time by called a success and worthy of expansion?". Because it serves the poor 60% of the time?
I do agree with one thing in this article: health care isn't the same everywhere. I think health reform needs to be focused on locality. For example, I think Doctor and hospital rates should be set so that 2/3 of the doctors/beds in a county are in the system. That will definitely mean different payments in different counties, and it means 1/3 non-participation. But that's fine. Classic competition. I also think insurance rates should be set by county. That is, the "group" in an insurance pool, whether it's govt or private, are all the people living in one county. Everything focuses on controlling costs and health within a relatively small geography. That makes insurers, providers, and payers all invested in keeping people healthy and costs down in a given locality. Things like that disparity in Texas become visible quickly.
Pls note, a single payer system solves the medicaid problem... it goes away. Everyone will have access to 100 percent of the providers.
yOUR PLAN DOES NOT!
Regards
We have had a free market healthcare system for a century.
Repug logic is that the free market is ALWAYS is best.
OK, then we should have the best and cheapest healthcare system in the world. We do not. Not even close.
Its not a lack of choice. There are thousands of plans! Too many choices. Too much overhead to process all the different plans.
So why has free market not delivered the best system? Because just maybe healthcare is not a free market system product anymore than an interstate highway system, stadiums for billionaires, the military or police and fire department
If I hear one more Repug solution that is solely built on tax code changes, I'm going to puke!
Regards
Republicans are the party of No Choice. How dare they claim that a public health care option will leave Americans with No Choice?
Corporate for profit health care does that now as 18,000 people die each year simply due to lack of health care coverage! The only way health care would be rationed is if we continued to elect Republicans!
What do Republicans offer people who can not afford health insurance? No Choice.
What do Republicans offer people who are paying too much because 60% of bankruptcies are due to people who can't pay medical bills? No Choice.
There is a $1,000 surcharge Now in health care premiums to cover people who receive treatment in emergency rooms. Do you have a Choice with that? No.
What do Republicans offer people who are denied health care because of pre-existing conditions? No Choice.
What do Republicans offer people who have health insurance but their coverage is inadequate? No Choice.
What do Republicans offer people who don't like the Corporate Run for-profit health insurance industry? No Choice.
What do Republicans offer scientists who need funding to continue valuable health care research? No Choice.
Do Republicans seek to protect our economy from corporate monopolies which deny choice? No.
Clearly it is the Republican plans that would leave the American people with No Choice, No Economy, No Health Care, No Clean Environment, No Equality and No Peace if their Corporate Run Bigoted version of America is pursued.
I would point out as bad as medicaid is... by your words 60% accept medicaid.
Now list me a non government plan where 60% of the healthcare providers are enrolled oin the plan....
Medicaid is nota ogood situation.
Why should they be discrimated againts anymore than anyone lese is when it comes to treatment.
I assure you that w/o medicare, the elderly today would be w/o healthcare. For my 65 year old workers, Humana has quoted 36K per year! If we hire them full time they lose their Medicare (we must be the primary) and we must provide...
Regards
If there is not a single payer option.. its not healthcare reform....
60% of physicians want single payer.
56% of Fortune 500 want single payer option.
70% of American people want single payer.
Tax credits.. absurd... Insurance companies will love it....
As an owner of Cancer Treatment centers.. your plan is a joke. Solves nothing. More of the same.
As a small business owner. i dont want to be an employee benfits administra
Obama's plan will decimate our country?.. Where have you been... the current system has already done that! We spend 3 times more than countries with single payer...
The money is already in healthcare
When Wal-mart gets rid of the middleman thats called efficient capitalism.
Pls resign! This is nolonger an issue in doubt as to what is the best solution!
Regards
Regards
HuffPost's Pick
Due to cutback in my hours, my gross pay is now $1500 per month. I pay over $1000 per month for a single coverage high deductible insurance policy. I do little more than break even. Does anyone really think a "tax credit" will help? I just want the opportunity to purchase affordable insurance. Opportunity and choice - that's what a public option is. It's not a handout and it doesn't put the insurance companies out of business. I keep hearing about all the people who will lose their private health care plans. I have to wonder how many of those people would keep them if they were affordable.
This is just more money for business and less for the people. Business as usual.
I'm a 77 year old retiree. My pension is $720, and they take away $103 for Health care, leaving me with $607 per month. I have choice of doctors, specialists, the best hospitals. Since Mr. Bush squeezed us -forced us- into taking an HMO, my co-payment have raised (somebody has to pay for the Ceos fat salaries, no?). But as my house is paid, and so is my old car, I survive. You know what? I wish every American citizen could get the same coverage. In today's America, I consider myself privileged. Single payer? You bet!
Even though I have serious doubts any time a rethuglican presents a health care proposal, I read this one with an open mind. After reading it, I closed my mind again. I don't want a tax credit to pay for my insurance. I want the same kind of health coverage and benefit plan that Cobern gets. I want universal coverage single payer plan, not some some plan disguised to keep things moving just as they currently are.
Good point.
Don't forget to let your congressional delegation, state governor,and white house know you feel this way.
Universal, Single Payer - we will keep saying it as slowly and clearly as many times as you need to hear it, but we will not settle for less! Ignore us at your own (job's) peril.
Well said. Don't just say it here. Let your congressional delegation, state governor, and the White House know how you feel about it.
Not one word about cutting costs, not one word...
Now they are trying to seduce the middle class with something of a potential tax cut...Reme
Are you better off than 30 years ago? If you can say yes, then of course you would support these people, but for the bottom 80%, there has been NO progress in 40 years....O
Good luck and good night...
Yep. These tax credits are just magic government money. There is not mechanism at all for cost cuts. Just a giant subsidy for the current system.
Since when should a health insurance premium be more than a mortgage on a house? It doesn't make since. They take 30-40% off the top just to pay their executives.
We do not like the for profit system. Please, people in Congress, understand this.
What a Rube Goldberg contraption of a plan. All the bells and whistles only serve to distract from the basic fact - the health insurance industry stays in the driver's seat, and we continue to subsidize them at an enormous cost in dollars and human suffering. I can't even imagine the added administrative costs for all these "co-op" plans, especially at the beginning for start up. The vultures are already circling to pick over that new fresh carcass of wasted spending.
Congress, listen carefully: Any plan that includes the health care industry being able to function just like they are functioning now will fail at everything except lining their pockets. We don't want a "generous" tax credit to pay for health care we're paying for already (highest per capita cost in the industrialized world - 37th in level of care!?) - you'll just borrow the difference from China down the road and we'll have to pay it back with interest anyway. We want to take a big fat bite out of the margins the health care industry has been making off of us for decades.
God forbid we do anything to limit the Capitalist system from invading every aspect of our lives. Things like human life and social progress are always the last things on the list. Money is our primary religion now !
10 trillion dolllars of wasted money in the last 15 years to make the fat cats richer....
But don't you know that EVERYTHING can be fixed by playing with the tax code?
One of the real benefits of this debate is that it's rubbing the shine off capitalism, poisoning the notion of "free" markets. Oh, the con, you can smell it, it's like a chemical fire, the acrid smoke ripping your sinuses. Ideological purity isn't pure, it stinks like an open sewer, it's foot-shuffling blind faith, and even the cognitively deficient are catching on.
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