Monday, November 30, 2009

Why wait four years?

I was struck during President Obama's health care speech before Congress several months ago that the reforms he advocates would not go into effect for four years, until 2014. This timetable, too, is written into both the House and Senate versions.

Why the delay?

It is hard for me to imagine, even given the federal rulemaking process, that it should take four years to establish an insurance exchange from which people can buy coverage. This is the exchange that would eliminate the nasty practices of insurance companies: Denying coverage because of pre-existing conditions; limiting annual or lifetime payments; and rescission of policies. It is hard for me to imagine, too, why it should take four years to fully deliver targeted subsidies to lower income people so they can afford insurance.

As noted by Princeton Professor Paul Starr in yesterday's New York Times: "By comparison, when Medicare was enacted in 1965, it went into effect the next year."

This leaves me with a bad feeling. It looks like the Obama team does not want implementation of the health care bill to take place during their first term. Why? Perhaps they know that the cost of the plan is higher than they are saying. Or maybe they know that the options available to consumers will be less attractive than currently portrayed.

Maybe they are worried that if all this happens on their watch, re-election in 2012 will be in jeopardy.

I have yet to find a knowledgeable observer who does not agree that the cost of universal coverage will be high and that consumer choice will become more limited to the degree that federal policy tries to control costs.

I personally think the cost of universal access is worth it and an important public policy imperative; but the administration puts itself into a box when it downplays the consequences of the legislation. It is forced to postpone the effective date until after the 2012 election, so it will not suffer political backlash from a public that has been misled.

Let's hope that Congress sees this otherwise and implements these important measures more quickly. (Wouldn't it be ironic if the Republicans offered a floor amendment accelerating the effective date? How could the majority party oppose that?)


Anonymous said...

one reason for the slow implementation is to keep the 10-year cost of reform lower....makes for a CBO score that is in the range Reid and others want...

Anonymous said...

The Washington Post appears to agree with both you and anon 5:23.

The recission reform takes effect in 2010. Zowie.

I am torn because although this is a terrible bill, this issue will be radioactive and untouched for the next 15 years if SOMETHING is not passed. Even if it forces further bills in the future.


Anonymous said...

Paul, many of our political leaders have decided telling us little fibs to get in place what they know we need is okay. I believe they start out with the right intentions, but the lines of what is right and wrong get blurred in pursuit of their goals.
They all know the costs will be significantly higher and there will not be $400 billion in Medicare cuts.
The Republicans should put forth an amendment that expedites all of the cost reduction measures to occur immediately and the increased coverage measures take effect in 2012 assuming the cost reduction targets are achieved.

Anonymous said...

First, thank you for having an honest, open, and amazing blog. I would love to see more CEOs engage in this type of blog writing.

Second, I'm not a fan of the bill. While I'm all for the elimination of pre-existing conditions, rescissions, lifetime payments, etc. it still doesn't take care of coverage issues.

I would like to know why the mental health system is still a trainwreck. Thirty visits a year? Seriously? Most therapists/psychiatrists won't take insurance because of the hassle and cutting of costs, thus the burden is on the patient to either get reimbursed at an out of network benefit or suck it up and fork over $200-400 for an assessment visit. How is that containing costs?

I would like to know why only FOUR states have manditory infertility coverage but only if you have a policy from a workplace that has over 50 employees? I am grateful beyond words that I was one of the lucky ones to partake in this care and have a beautiful son as a result. But knowing many women who struggle with infertility and the pain of the cost of trying to get pregant or even adopt (which can be at the same price yet more of the hassle), why is it a matter of "well ART is a choice". ART is a medical treatment due to a medical condition. We didn't choose to have endometriosis, PCOS, or even unexplained infertlity. Yet any man can get Cialis or other drugs for any reason at any age, even without a medical condition?

It also doesn't cover the issue of off label usage of drugs when they've been proven successful. How many doctors prescribed a cancer treatment and it has proven to work yet due to off label usage it's been denied by the insurance companies?

Finally, the latest reports from the government task force that states that mammograms at 50 should be the norm and pap smears at 21. Really? Saving say $300 tops for a mammogram is worth risking having stage IV metastatic breast cancer at 50 instead of catching it early at 35 or 40? My mother had 2 years of symptoms and didn't go to a doctor. Six years of antiestrogen, oral and IV chemo and now a three month prognosis thanks to liver cancer is proof that the cost of a delayed diagnosis is more costly than covering $300 for an early xray.

None of these issues are being addressed and I would like to know why these major issues (minus mental health and off label drug usage) are targeted towards women?

Maybe I expect too much out of the system.

Unknown said...

Great Post Paul,

I'm puzzled about why the administration and many others consider insurance practices such as denial due to pre-existing conditions or gender discrimination as unfair? Insurance by definition is protection against an uncertain event.

A woman age 24 has much higher medical liability than a male age 24. A person with diabetes has a much higher liability than someone who does not. If the insurance industry is forced to treat everyone as equal, the cost of private coverage for those who currently cost less to insure will go up. That fact is pretty simple.

When you purchase car insurance policy, gender and traffic history (pre-existing conditions) are absolutely considered. This is a no-brainer. Why should it be any different for medical insurance?

I do think reform is badly needed, but I firmly believe any bill that demonizes these types of algorithm-based insurance practices is going to cost much more than the public is led to believe.

How can they simply say costs will decrease for everyone? The logic just doesn't add up to me. What am I missing?

76 Degrees in San Diego said...

OK, let's try this rudimentary limerick:
The richer the insurance benefits, the higher the cost;
The higher the cost, the greater the premiums,
The greater the premiums, the less people insured;
The less people insured.......the less needed healthcare and the more unfunded looks like the first line needs amending...

Anonymous said...

bfielder's comments are the reason I keep beating my drum that insurance is the wrong model for covering medical costs, as health is not an "uncertain event".....


Engineer on Medicare said...

A process in systems engineering is to create a concept of a solution to a problem for which requirements have been established, and compare that solution to an alternative solution. The concepts are analyzed and modified to achieve the best solution based on the requirements.

So let's take the Medicare model, applied to all, as the concept for providing a certain level of health care. The performance requirements (number served, health care standards, rationing, cost, . . . ) against which competing models would be evaluated are the same for all concepts.

The medicare model is well known and generally accepted by its customers. If certain aspects (perhaps the payment principles) must be changed to make it universal, that could be addressed in the requirements.

The provider system would not be changed by the system but would evolve as the provider businesses compete on cost and quality for the business of the users (the patients) and to satisfy the requirements and standards established by the payer. Preservation of entities that don't fit the model (maybe insurance companies) would not be required.

Because the requirements (such as degree of rationing) are the same for all, the determination of the winner does not depend in great degree on the particular values of the requirements.

Now, let the advocates of the current and proposed systems present their models for evaluation against the "Medicare Model" and see what system provides the lowest cost when evaluated at the same level of care. While cost should not be the single objective of a health care system, it is a valid measure of comparison of "equal performance" systems. The lowest cost system leaves the most money available for increasing levels of care, or for applying to other needs of society.

It would be interesting to see the points of view of health care leaders on the best way to provide a given level of health care. What would be your requirements? What would be your ideas on who should be included by right in a health care program? What would be better than a "Medicare for All" model, why would it be better? What would be the relative cost and who would pay for it? What would be the important features of such a plan?

Anonymous said...

In response to bfeidlers comments I can think of two reasons off the top of my head why health insurance is different than car insurance. The first is that most private insurance is through your employer which means you may lose your coverage through actions such as layoffs, change in plans by the employer (the new carrier lasers some employees that have pre-existing conditions)that are unrelated to your decision to keep coverage or forego coverage. Should you be deprived coverage because those things occurred? The second is that poor health, unlike poor driving, may be beyond the control of the individual and may be genetic etc... Should a person really be deprived because of that? I do agree that pre-existing conditions that are lifestyle related should have consequences attached to them (such as higher premiums).

bafielder said...

Some people simply cost more to ensure. Whether it's because of a genetic condition or effect of poor choices doesn't matter.

There are probably people who can't get car insurance by no fault of their own, such as visual disabilities or severe epilepsy. They are not "deprived" of car insurance. It's just a bad bet for the insurer because of the liability risk. Why is private health insurance a right or entitlement?

Employer-based health coverage is a benefit, not an entitlement.

Plus it makes no difference if it's paid by the employer or individuals, the cost of those who have more health problems is passed on to the whole group as long as premiums are group-based.

As an individual paying part or all of my premium, I want my group to be as healthy as possible to keep costs down for everyone in the group. As a small business owner, it's easy to see how a few costly claims by one or two individuals can impact the entire group premiums.

So what happens when private ensurers are forced to take on those individuals with the highest risk? Prices go up, naturally.

Engineer on Medicare said...

IF the policy makers (congress) decide that health care for everyone is an entitlement, and they are going to compel all persons to be "insured", and require that all insurers accept all comers regardless or risk, then they should go all the way and make the government the single payer. Then collect taxes to pay the bill.

There would be some import/export advantages if health care were paid for with a Value Added Tax. The tax would be collected on imports and is usually rebated on exports.

Let the providers compete on the basis of price, quality, and customer service. The current insurance companies can compete for management services contracts.