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.

Comments

[kevsters]

It is just another example of these right wingers being completely removed from the reality of the situation.

I found this clip of Right Winger Ron Christie saying "what's the rush" when it comes to reforming health care.

Easy to say coming from someone who probably has insurance.

http://progressnotcongress.org/?p=1701

[mnpat]

The correct title for this article should be "A Better Way to Reform Health Insurance". Under a universal health care plan the health care providers are paid on your behalf from a government pool. Under private health insurance, health care providers are paid from a pool of money held by a "for profit" company who will pay losses (health care fees and services) they are contractually obligated to pay. If their premiums haven't been high enough to pay claims, stockholders, company expenses (including salaries and bonuses), your costs, and/or deductibles will increase the next year. Health care is NOT synonymous with health insurance.

[chacounne]

There's a photograph next to the word gall in the dictionary, and it's Senator Coburn's.

[tsuh]

Some of the problems with Obama's zillion dollar health care plan: It will raise the deficit, raise taxes (which will do more harm to the economy), and reduce the quality of health care. Moreover, what if this kazillion dollar government mandated boondoggle passes, and physicians vote 'no'---with their careers? That's what has happened in other Nations that have government run health care like Obama is proposing.

For example, I know of a medical specialist who has been in practice for 16 years, after ten years of training. The 22 physicians in his practice employ 80 people. Only strict attention to costs keeps them afloat. They see 5000---yes, that's 'thousand'---patient per year with cancer and blood disorders. Another 10% drop in reimbursements, and most of the MDs over 58 (they have 8) will quit; the rest will likely seek alternate careers or practices, or simply go half time. Guess what happen than? You guessed it you get your universal health care but no one is there to provide health are for anyone.

So: go ahead. Put Medicare clerks and Canadian health care fans in charge. Maybe they'll have some good ideas on how to treat your advanced, but curable colon cancer or lymphoma. But probably not. The American public will get the the shaft and they are not going to like it at all. Don't say you weren't warned. Any politician who votes for this monstrosity will pay the price at the ballot box.

[baxtron]

The specialist doctor's are making a ton of money. Some justified, some not. With new freedom to choose a gov't option, the specialists will reduce in number, and the general practicioner will increase exponentially. With regular, affordable visits to the general practitioner, we can prevent diseases from getting to the specialists who charge a high fee for their services. It will save the health care industry close to a kajillion dollars. Which isn't quite as much as kazillion, but definately alot. The specialist to general practitioner ratio in the US is about 7/1. In other countries with some sort of national health care system, it is about 1/7.

So go ahead. Reject your United Health Care clerks rejecting you because you have a preexisting condition, or what I like to call, SICK. Maybe they'll have some good ideas on how to refuse the coverage you need to cure your cancer. Probably not.

[lysistrata]

Do you believe our law makers would have the courage to tell the industry they must insure everyone no questions ask about health, no matter what age, choice of doctors and hospitals, choice of insurance not the employers choice, they must cover prescription drugs? Would you trust the lawmakers to regulate an industry they hope will hire them as lobbyists?

They are interested in their profits not the nations welfare. money for them is the name of the game.

[remedy]

We rank lower in every catergory of illness than any country with universal coverage.. Please at least come up with a new create excuse cause that one just dont fly. Doctors will vote no with their career? Where can we find the information to back up that claim you made? Sell health insurance do you?

[JRsNana]

So based on your last paragraph, if we get a universal health care plan, suddenly everyone is going to forget how to treat advanced, but curable colon cancer and lymphoma? I really doubt that a Medicare clerk is going to be treating me and I KNOW no Canadian health care fans are going to be treating me! What is wrong with you people?

[tiznow]

While our current system clearly needs modification, your points are on the money. The closest things we have to single payer are Medicare and Medicaid. In many communities, physicians either don't take these insurances or are in the process of dropping them as they continue to cut reimbursements. Under a government run single payer plan there will be a rationing of care caused by decreased access to it, if it is run the way Medicare and Medicaid currently are.

[heydavemaine]

Senator

There are some serious holes in your arguments. You base your system on employers contributing to workers health care plans. Will you make it mandatory for employers to do so?
Who decides what services will be covered, how hight the deductibles and co-pays?

You mention cherry-picking but not community rating. I'm the victim of "passive" cherry-picking--attracting well patients away from a discontinued plan until only those who needed the greatest coverage stayed on. By the time I gave up, my single-person premium had risen to over $24K a year!

You include no reforms to protect the public from frivolous denials of care from insurers---Shouldn't doctors be the final word on all decisions about care? We need patient advocates to assist us in
navigating the system of appeals.

And the biggest omission of all: why is the U.S. the ONLY developed nation in the world unsuited for a single payer option?

[tsuh]

Why is Canada currently moving away from its current universal health-care system and moving quickly to a two-tier system?

Why is private care within Canada doubling every year?

Why do all Canadians have a 35% tax rate?

[raker]

Why does BCBS coverage cost $2,000 a month for family coverage?

Why, even with a comprehensive health plan, do people still have to pay thousands in copays?

Why do hospitals repeatedly discharge patients too early, only to readmit them a day later?

Why to people without insurance have to fly to Thailand for heart surgery?

Why do so many Americans go without health care because their insurance dropped them, or they lost their job?

Why are so many Americans forced into bankruptcy by health care crises?

[JuliaRain]

Stop lying.

"Why is Canada currently moving away from its current universal health-care system and moving quickly to a two-tier system?"

This lie especially must stop.

[DavidClaiborne]

Coburn says: "The least partisan places in America are health care delivery areas"

Not if your idea of healthcare includes family-planning services (contraception, sexual health, abortion)....

[mdlw]

Under social security disability program, I received Medicare 2+ years after onset of disability; then Medicare paid all medical bills retro to onset of disability. I had no insurance for my children, I could barely put a roof over their heads and food on the table. Then I signed up for Medicaid, which provided me prescription and "whatever Medicare didn't pay for" coverage; more importantly, health coverage for my kids.

Thirteen years later, I returned to the work force and found co-workers were paying for limited health policies. Yet, they were paying for federal programs that had blessed me and my kids with full coverage; coverage they each deserved. And horror stories, i.e., an employee had out patient surgery at a contracted clinic, but much later taken to a same name hospital unconscious near death requiring immediate surgery and ICU, the insurance company denied claim because hospital was not on list of approved providers. Bankruptcy was the result of 3+ days in ICU.

Later on, my insurance company fired two health providers shortly after my visits. I finally had surgery again, and permanently out of the work force.. It took 18mo for SSDI approval again. I paid nearly $400mo Cobra until monies depleted. I had no income (wasted money paying LTD premiums). Medicaid would not cover me (no pregnancy or breast cancer). I had to wait 29mo to receive Medicare, no retro. Medicare premiums are deducted from my benefits check.

Single payer system.

[Connolly1916]

This is not going to solve the biggest driver of insurance costs: the need for privately-funded plans to turn a profit. Get the profit out, get the costs down. Period. I don't care if we do it with an entirely publicly-funded solution or a mix of public and privately-funded (and heavily regulated) plans.

[IndependentJones]

Just asking. Has anyone floated the idea of flat-rate coverage across the board? If EVERYONE is buying in at the same rate, the sheer volume of consumers would make up for the loss of variable rates per consumer, wouldn't it? I'm not an enconomist, but it seems plausible. Perhaps it would need to be a tiered flat-rate that went up a bit per decade of life, but was still a gradual, reasonable increase. Or, since income tends to decrease with age when healthcare needs increase, perhaps the alternative would be better. A flat-rate buy-in upon reaching adulthood, with a decrease as you age. That way the larger population (younger Americans) may pay more at the beginning when they are a huge part of the population, then get more on the back-end ala Social Security (but without any sort of Trust Fund to raid.) Of course, this couldn't be a government run program or it would be raided, but if it had the SS set-up with no way for congress to keep reaching into the cookie jar...

[GuyP]

What will help drive down the costs of providing health care though? Doctors and nurses still have to get paid. New technology and R&D costs are still needed. Obviously these people are going to all be going for the same piece of the pie, so who is making the decision on what to spend money on?

[chaskagirl]

I'm still waiting to hear how many months of COBRA coverage you could afford at $1500 per month if you lost your job today. I think your silence speaks volumes.

[JCPOK]

Wow… just wow. This piece is just crazy. Coburn make the ominous proclamation that “health care could be Obama’s domestic Iraq, but even worse” and then just a few sentences later ironically accuses the Obama administration of fomenting fear and confusion in the health care debate.

How is a guy like this a US Senator? How does this guy not just get torn to shreds for such horrible writing, contradictory analysis and complete lack of self-awareness? It’s truly amazing. I think Coburn’s ability to get away with garbage like this is largely a reflection of the fact that he exists in a media bubble (i.e., Oklahoma) where 100% of the media is staunchly conservatively and there is absolutely no investigative journalism to call him out on stuff like this.

[CentristScientist]

I think the Senator makes some interesting points. I don't agree, but where has this kind of rationality and substantive thought been in this debate? Our political system would be so much more healthy if most conservative arguments were presented in such a way. Thank you for your thoughts, Senator.

[raker]

I read only typical Republican scare tactics used to defend the status quo. Can you name one of those interesting points? One example of rationality or substantive thought?

[BonnieJW]

Sen. Coburn, you don't get it. Poor people, unemployed people can't use a tax credit. What about all the co-pays and deductibles the rest of us have? What about the tiny amount the insurance company pays and the huge balance WE have to pay?

[Primadonna]

Senator ... your assumptions that you are basing your plan on are not based in reality. I encourage you to speak to those Senator Baucus had jailed - doctors and nurses from PNHC (Physicians for National Health Care) and the California Nurses Association. These aren't "particularly low-income" people that are on the forefront of this fight for a humanitarian right. These are the majority of middle class that you will need votes from next election ... these are some in the dwindling masses that have been devastated by crimes of the banks leading to the bank bailouts. It took the government only weeks to appropriate trillions in bail outs ... leading to welfare for the corporations. How much is in your campaign treasury donated by insurance companies, banks and big pharma? And you already do have a form of medicare as your own healthcare is provided for by the government, yet delivered by private doctors.

If this government can so swiftly appropriate trillions to the banking industry then how come within a matter of weeks can you not appropriate what is needed in providing healthcare for all of us in this country? BTW, my insurance company, Aetna, just raised my rates AGAIN in California ... due to rising costs in healthcare ... same excuse they used last time they raised my premiums less than twelve months ago ... across the board so they say ... and these are the very people whom you and every politician have allowed to fleece

[grooveygrover]

isn't competition supposedly healthy for a free market society? Doesn't conservative ideology support a free market society? so why does a little competition from the government scare insurance companies/conservatives so much?

it's a rhetorical question.....none of their ideologies work in the real world

[CentristScientist]

Because it is impossible to compete with a body that receives massive government funding (deficit spending at that...). It would be like if you had an ice cream shop and then I had an ice cream shop down the street where I was paid money by someone else every time I sold ice cream. Of course I could sell for a lower price. But ultimately this money must come from somewhere... us... the taxpayers. And we have nowhere near the fiscal soundness to pull it off. It's money coming from nowhere.

I probably ultimately side with Barack O. in this debate, but the other side does have valid points that should be heard so that we get this thing right.

[atlantajoe]

where is the competition when the gov does not have to compete, they just spen more money. Would you really rather be on medicaid than a private plan ?

[skippypicasso]

Yes, if it were medicaid for all.

[Pimpinnati]

Why doesn't the Government have to compete? In a free market their plan would be weighed against the private plan. Thus competition exists.

Its just the insurance companies are all colluding with each other. So the rates are sky high. If they have to compete with a Government plan that is affordable then all of a sudden every private insurers rates drop like a stone. Its either adapt or die.

The insurance companies don't want the golden goose slain by an intelligent alternative. Those CEOs can't have those insane salaries if they have to actually reduce prices to meet what would be a changing free market.

[jake1az]

Just give us the plan the Senator has.

[GuyP]

Are you incapable of understanding that the government can run deficit on a healthcare program indefinitely, but a business cannot survive if its costs exceed its revenues? For example, lets say you made widgets, and sold them for 10 cents a piece, that's the price people are willing to pay, and other widget manufacturers also sell their widgets for that price. Widgets are a commodity, so your costs to produce widgets are $.09, giving you $0.01 for every widget sold. Then the government says, widgets are too expensive! and gets in the widget business, selling their widgets for $0.05 a piece. You can no longer sell widgets, because you'd have to selling them at a loss. The government can't make widgets for less than $.09 either, because if it were possible to do that, you would have done that yourself to make more money.

So now you have the government selling widgets at a loss of at least $.04 each, but that doesn't matter to them, because they are the government. Everyone else is driven out of the widget making business, making the government the only provider. Costs to make widgets can also skyrocket as time goes on, because the government has no incentive to keep costs low.

Of course, health care is more essential than widgets, but you obviously don't know what you are talking about if you don't understand why government run healthcare would be the antithesis of a free market solution.

[IndependentJones]

Your example is bogus. You make the assumption that your fictional widget company is currently marking up their product for the absolute smallest profit possible per unit. You're already presenting your widget company as a not-for-profit organization. A more likely corollary to reality might be that a widget costs $.09 to manufacture and is sold for $1. If the government comes in and starts selling their widgets for $0.50, then your widget company will be forced to lower prices to compete. You assume that a government plan would be purposefully trying to run all competition out of business. That's an overly cynical world-view you've got there. Though, if there's some sort of ammendment to the plan exempting the government program from anti-trust laws, then you'd be on the right track. I'll look out for that.

[RonGallion]

Because government does not have to show a profit. The government makes the rules private business are forced to follow. The government change the rules on a daily basis example the IRS we all have to comply. I agree the insurance companies are much to blame in this problem but if you consider the insurance companies a problem wait until congress gets a hold of health care. You will be wishing you had an insurance company again. No where in the world has socialized health care been a success, people from all over the world come here for health care, why is that, it's not cheaper, it;s not free, it is available and the best care in the world. Are prices high? For sure, can the government solve the problem? Not a chance, care will go down, taxes will skyrocket, and we will be no better than anywhere else. By the way there are NO difference between Republican and Democrats, it;s all just government. The Dems have control of the whole ball of wax and still you are playing the blame game. The Republicans have no power, their party is in shambles, because they are NO different None than the Dems. I am a part of neither. Both parties make me sick.