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

[JHancock]

So what is it about private insurance that the GOP will say anything, do anything to prop them up and continue to support this rotten to the core U.S. health system? Up until WWII there was practically no private health insurance. Health care was provided by government or charity run hospitals and clinics. The blue cross organizations were non-profits who provided community rated insurance to everyone. People paid their doctors in cash or chickens. It is not like the Constitution guarantees that health insurance company executives have to be paid millions of dollars to screw those of us who pay ridiculous annual premiums for insurance that never seems to actually pay for anything.

It is time to get rid of these leeches. We need a single payer system. No one complains about Medicare. Everyone complains how they are screwed by their private health insurance companies. Why do you deny reality?

[JoeBoomer]

Insurance companies have a fiduciary obligation to charge as much as they can and deny as many VALID claims as thay can. I presume, from your post, that you would also prefer that our tax returns be audited by private contractors who work on commission. You obviously don't get it.

[GetOnMyMap]

I think the prevailing feeling now is that we'd all prefer if health care providers had less "fiduciary obligations" and more health care providing obligations. Public health is private health - when all of California is wracked with plague, see how quickly it spreads from at-risk communities to the most exclusive ivory towers of this entire country. If the issue is that cheapening and easing the burden of preventative care will incite overuse and abuse, let's truly look to our "Socialist" friends overseas.

Is our whole country such a bunch of stupid, unhealthy neurotics that more access to basic healthcare will bankrupt us?

[DanteLabon]

They would never want that to happen. Fox spends all of it's time demonizing the word "socialism". The message that they don't want to get out is that it works overseas, but everybody gets the SAME healthcare...and that is just not good enough for the rich and famous. You know, the people you see in the emergency room who get to go back to see the doctor before you, even though you have been there 2 hours...and are bleeding more. I've heard them slip up on occasion and tell the truth.. "I don't want everybody else getting a piece of my pie"

[Davwbaird]

profiting off of our misery

[herbprof]

It is a dog chasing its tail. Modern medicine has lost the fight with disease is the root cause of the problem that everyone overlooks. Lets just look at a few of the problems, there are 140 autoimmune diseases and they are at epidemic numbers (of every 4 people in the USA 1 will have an autoimmune disease), arthritis has 100 different forms alone. Obesity is also epidemic (34% of the population and growing) and every one of them will have multiple diseases and medications for the rest of their lives. If it wasn't such a tragedy for so many people it would be a colossal joke! They ask for donations and government money (it must add up to 100’s of Billions of dollars) to find a cure but they have not found a cure for a single disease in 60 years, something is very wrong here. Think about this, if every time you took your car to the mechanic and he told you "I can't cure the problem but it's treatable at a cost of $80 to $150 dollars a month for the life of your car." How long would it be before you would be bankrupt? Paul

[pfrogger]

gross over simplification.
there are more diseases because we know a lot more.
infections have a cure called antibiotics.
autoimmune diseases, ie. the body's immune system is overreacting to the body, may not have a cure, but they have treatments. in the past when we didn't know about these diseases, people would just suffer and die. is that better?
and the human body is very complicated. the immune system as well. "curing" a disease is not that easy and is often used by lay people who have no idea about science or medicine.

most people see the simple side of things. the human body is incredibly complex and after millions of years of evolution, it should be.
obesity is a problem in America. other countries have it under control. maybe if America actually had a healthcare system that promoted preventative education like other countries with "socialized" healthcare, we would have the same preventative measures.

[Heartlight3]

How does Canada do it? I read a post from Greg in Vancouver on MSNBC.com this morning which said that he pays $108 per month for a family of four, and he can see any doctor he wants whenever he wants. He thinks we are nuts for arguing about this. The Republicans don't want a public option because they think it will put the insurance companies out of business. The insurance companies have put themselves out of business by pricing themselves out of the market. What did they think was going to happen if they kept increasing their prices while wages kept going down? That is unsustainable. If they are so stupid as to not realize that eventually people would not be able to afford to buy insurance, they don't deserve to be in business.

[uberliberal]

Rationing that's how.

[DanteLabon]

You watch too much Fox news. So, you don't mind being ripped off by the insurance companies??? As long as it's private enterprise it can't be wrong...right??We'll all just wrap ourselves up in the flag and everything will be alright..huh? I hope YOU never get turned down for treatment you need, by an insurance company that YOU PAY INTO with good will, because you had a cold 10 years ago..and they call it a pre-existing condition...and they DO that everyday.

[pfrogger]

when the private insurers refuse coverage, what do you call that?

you Repubs love your insurance so much, keep it. the rest of us will actually progress to a point where people don't make money from people's pain and suffering.

[Acleacius]

Lol, private health accounts will make costs come down, that's rich, really. :)

Try again? Insurance companies are a for profit industry, they have caused more suffering, hardships, bankruptcies and premeditated premature deaths. to increase their profits.

You, coburn and gop are protecting since they funnel money if not directly, indirectly through campaign donations. Yes we know dems get money too, it doesn't hide the fact, that's who your working for, NOT the people of this nation.

The same criminal position on Social Securty, BOUGHT and PAID, the phony study by butler and germanis. The phony think tanks kato and herritage, called "achieving a leninist strategy"? "state street" sponsored this, they stood to make billions from private social security accounts?

Not I single one of you sobs, who back this can provide any proof, since the actual proof, yet they are willing to risk economics collapse to try it. They wanted to invest the money in stocks, any idea what the US would look like if theseb astards had won?

Think ONE of these sobs was actually raised in conditions which they are trying to TRICK and FORCE on the American people? One of you sobs, tell us the story of your childhood, where a piece of meat was thrown into a room to fight over or money for health care?

Father, mother and child fighting each other for the food and health care!

Well do you punks?

[MidwestBlue]

Public health care could bring back jobs, keep the few jobs we have right here in the U.S., and create new jobs. If we are going to salvage our economy, public health care is our only hope.
Let the insurance companies go the way of other failed businesses. We can't afford to pay these middleman any longer.

[grdavis1019]

Where were you guys the last years when you had the power to do something? Never a peep from any of you about health care reform. I dare say if McCain won, this article wouldn't exist and neither would any other talk of health care reform. It's our turn. Your party's arrogance and greed left this country in the worst shape it's been in since the Great Depression. Get in the back seat and go for the ride till your state turns Blue like the rest of them.

[pfrogger]

did you misread MidwestBlue or are you replying to someone else?

[Cleanerman]

Sorry, I just don't agree with Coburn at all. Single payer, please.

[GrahamInCanada]

Senator Coburn's argument is very hard to read, because it is hard to read when one is constantly rolling ones eyes in reaction to it all. His plan leaves for profit insurance companies in charge of a market for health and out of control doctors. Another market experiment, another one, oh, there go the eyes again.

But then I came across the gem, his allusion to "Windows 1975" as the current operating system of the health market. In general, writers should not make up metaphors made up of allusions to things the writer does not know or understand, because then one lays an egg like "Windows 1975".

It was a gem, because there was a movie called "Windows" released in 1975. Appalled by the number of "accidental" deaths in South African prisons caused by political prisoners falling out of windows, it is a movie about falling out of windows, and the fantastic and improbable stories provided to explain it.

That is how I now imagine Mr. Coburn, watching Americans in need of a civilized health care system fall past his window, giving fantastic and improbable stories about them, and suggesting solutions that basically say, here, my solution is to give you wings, and let you fly for yourself.

[Badkitty4u]

I'm glad to see that the Republicans finally have a plan of their own instead of just saying no. This is exactly what we need. All of the best ideas and then have a debate about what is best.

I'd like to add one item though. ALL HEALTH CARE RELATED BUSINESSES MUST BE TAKEN OFF THE STOCK MARKET!!!!!!!!! The health care industry should NOT be a for-profit industry! I understand that doctors should still make 6 figure salaries and executives that oversee these companies should also get paid well. We still need the incentive for students to want to go into health care so I still feel that people in the health industry should get paid a lot.

What I DON'T agree with is that share holders should get dividends, nor should a health care business motivating factor be stock price!! This is just ridiculous. I have multiple sclerosis. I did NOT CHOOSE this disease, I just got dealt a bad hand in life. It is completely absurb that stock holders should have any ability in profiting off my illness. Doctors, nurses... yes... stockholders... NO! If I want to go get a car I can choose which car I want. What I can't choose is to have multiple sclerosis or not.

Please add a provision that all health care related businesses: Hospitals, Insurance Companies, Drug companies etc be taken OFF the stock market!!!! This is simply not fair. All of these companies should be driven towards CURES NOT PROFITS!!!!!

[ScreenName05]

Senator Coburn,

While respect to your opinion I must respectfully disagree with your position. The problem with a health care credit to buy health insurance from private carriers is that:

1) it is too small for anyone over the age of 40. People in their late 50s are paying $12,000 up for plans with a $6,000 deductible. Your credit program won't even cover the deductible.
2) What is to stop the insurance companies from raising the price by the amount of the credit. Even if they don't my health insurance went up 19% last year - at that rate your tax credit will be eaten up in 2 years by rate increases. I and my wife have never been seriously ill, that is why our rate only went up 19%.
3) All the evidence I have seen indicates that if anyone in our family gets seriously ill we will be cut off and our insurance canceled. This is the greatest fear of people over 50 as it means guaranteed bankruptcy just as we approach retirement.

The problem is the insurance companies. At every point in the system the insurance companies make the problems worse (interference with doctors and pharmacists, denial of services, cancellations) and yet they shave off 40% of the insurance payments as profits.

You are on the wrong side of this argument. Please get on the right side.

[freshnotbitter]

Yes, it sounds like you live in the real world like I do and realize that Insurance companies have billion dollar budgets to influence congress, write laws, have lawyers pore over contract language and media experts devising devlishly tricky web sites and all of it in the pursuit of beating their competitor's performance so that the CEO gets his performance based pay bonuses every quarter from grateful board members/shareholders.

Neither we, nor congress, nor anybody else, can keep up with the insurance companies in devising new ways of turning a profit which may, or may not, be connected to better service, lower rates, better health care. We will be "reforming" forever.

A public option would exercise a kind of passive control over the private sector, if it is well devised, while at the same time providing universal health care passively and by definition becase it would automatically cover everybody not covered by private health care. In other words, it would not be a competitor strictly speaking, but rather a perfect complement to private sector.

[BushBites]

Health Insurance companies make money one way.

They deny coverage.

[NWGuy]

"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."

One heck of a lot of assumptions with this statement, especially being the foundation for the plan! If you aren't working, working for yourself, or working for one of the many companies that can't or won't purchase health coverage for their employees, the whole basis of this plan crumbles.

"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."

Is he kidding?? Voluntary? A greed based system like the insurance companies have become to "voluntarily" participate in a program that will cost them money??

[BushBites]

Your plan will also have the effect of causing employers to dump their employee insurance benefits.

You know what kind of chaos that will cause?

Or, I guess, you don't care that a bunch of pigeons will be sent out into the market to be plucked by the insurance companies.

Or maybe that's your goal?

[BushBites]

This whole plan is basically shoveling more money to the insurance companies in the hopes that they'll play nice.

(They won't.)

[darcyf]

Americans are SICK AND TIRED of paying taxes for a government that does nothing but take our money and feed grotesquely greedy corporations and their officers. Maybe the govt isn't the model of efficiency, but at least it does it's best to be fair. Maybe you live in another planet, but I'll bet every one of your constituents has had run-in's with these fabulous health plans you seem to love. They suck. They will try every trick in the book to either outright deny a claim or just wear you out in fighting it. They say you're covered, but not so much in reality. I want single payor for one reason - At least I will know what is covered and what is not...at least then I can plan. Now it's a system of Russian Roulette - they say I'm covered, but when I need it will they pay? Aaaahhh...you'll never know until and if you need it...and you may be calling your insurance company while having Chemo because they are refusing to pay. Decades of the same old broken promises...I am ready for something different.

BTW..I used to be Republican - You guys just don't get it!