Dr. Dean's Second Opinion
For the first time since Harry Truman, real health-care reform is finally within reach. While health-care reform may well pass with only Democratic votes just like Medicare in 1965, this should no longer be seen as a fight between liberal and conservatives, Democrats and Republicans. This is now a fight between the insurance companies and the American people. The reason we are finally going to get real health-care reform is that the plan President Obama put forward recognizes the importance of giving the American people a choice: If you like what you have, you can keep it. If you don’t, there will be a public-health-insurance option. The president’s steadfast support has been critical to reform because without a public option, there is no reform, just a shuffling of deck chairs and wasting $1 trillion in taxpayers' money.
Republicans in Congress now have the opportunity to be on the right side of history in the health-care reform debate.
A large number of the American people—more than 72 percent, including more than 50 percent of Republicans—strongly support the public option.
Recently, both the U.S. House of Representatives, led by Speaker Nancy Pelosi, and the Senate Health, Education, Labor and Pensions Committee—ably led by Sen. Chris Dodd and guided by the wisdom of Ted Kennedy—demonstrated that they are listening to the American people. Both have passed plans that represent real reform. While the bills are not perfect, they include a public-health-insurance option like the American people have asked for. It’s not yet clear what the Senate Finance Committee will do, but it’s clear that they too should take a stand for real reform and support the bill passed by the HELP committee.
A great majority of Americans face a constant struggle to stay one step ahead of mounting medical debt. Medical crises contribute to approximately half of all home-foreclosure filings. According to a study conducted by researchers at Harvard University, 50 percent of all bankruptcy filings in 2004 were partly the result of medical expenses; 68 percent of those who filed for bankruptcy actually had health insurance, but found that insurance inadequate to cover their bills.
Even as skyrocketing health-care prices are bankrupting millions of Americans, however, the earnings of private health-insurance firms are rising. In most areas of the country, the insurance market is dominated by one or two large providers. Rather than bargaining for lower rates, large insurer conglomerates are transferring the higher prices charged by hospitals to patients and padding their profits. Between 1999 and 2008, as premiums increased 117 percent for families, the profits of the top 10 insurance companies grew by approximately 1,000 percent. During the same period, insurers merged more than 400 times, but employee premiums increased nearly eight times faster than average U.S. incomes.
Large insurers have little incentive to bargain for lower prices, and smaller insurers do not compete on premiums to gain market share. Instead, they “follow the pricing of the dominant insurer” and compete on risk. As the Urban Institute has pointed out, “competition in insurance markets is often about getting the lowest risk enrollees as opposed to competing on price and the efficient delivery of care.”
For real health-care reform, we must restore competition into health markets and reorient the business model toward quality of care. A health-care reform initiative that includes a public-health-insurance option (like Medicare) would permit individuals who do not receive coverage through an employer to choose from a menu of private and public coverage options. Enrollees would pay a subsidized premium (should they qualify for a government subsidy) and receive the coverage of their choice. The new public health plan would negotiate with hospitals and doctors for the best health-care prices. Costs would be set through a process of competitive bidding in which all of the different health-care plans (public and private) would participate to provide standard benefits.
The new plan would also use its inherent advantages to do what private insurers have only promised: Control costs over the long term. Unlike private companies—which typically spend between 20 and 50 percent of health-care dollars on expenses such as administration, executive salaries, advertising, and shareholder return on equity—Medicare has low administrative overhead and the ability to bargain for volume discounts, just as the new public plan would have.
A public-health-insurance option could use its ability to negotiate for lower prices and volume-purchasing capacity to muscle private insurers into lowering their administrative spending and using more health-care dollars to provide actual health care. This kind of reform could reduce projected health-care costs by about $2 trillion over 11 years. It could lower premiums by 20 percent on average, simplify the medical billing process (thus pleasing doctors and patients alike), and allow small businesses to finally enroll their employees into a health-insurance program that provides comprehensive health benefits.
The American people have made it clear that they want change. Republicans in Congress now have the opportunity to be on the right side of history in the health-care reform debate. It’s time to abandon the false rhetoric of the right wing and the scare tactics of the insurance companies desperate to hold on to their profits and do what’s right for America.