The Pros and Cons of Healthcare Reform for Limited Medical Insurance
Aug 3, 2009
For the past two months and for many more to come, the federal government’s desire to overhaul America’s healthcare system will be the hottest topic of discussion at every level of society – from the hallowed halls of Congress to neighborhood barbershops. Most people believe change is necessary (or “The vast majority of our nation is in favor of reform”) due to the overwhelming number of uninsured or underinsured individuals in our country, but there is much debate as to what the appropriate changes should be.
This article attempts to study the basic proposal, sanctioned by President Obama and recently proposed by Sen. Max Baucus (D-Montana & chairman of the U.S. Senate Finance Committee), and determine the effects it may have on the limited medical industry and the people it serves.
The Baucus Call to Action
Essentially, the Baucus plan calls for universal healthcare coverage centered around a single-payer system similar to Canada’s. It would create government-funded insurance (in addition to Medicare and Medicaid) that would compete against private insurers in a program called the Health Insurance Exchange, a nationwide insurance pool that would allow individuals to compare and purchase the plans of their choice. According to Baucus, private insurers offering coverage through the Exchange would be precluded from discrimination based on pre-existing conditions and Premium subsidies would be available to qualifying families and small businesses. Baucus contends that by making health care more affordable and universally available to all Americans, his plan would take a major step toward eliminating racial and ethnic health disparities.
While the Exchange is being created, the Baucus plan would make health care coverage immediately available to Americans aged 55 to 64 through a Medicare buy-in, and it would begin to phase-out the current two-year waiting period for Medicare coverage for individuals with disabilities. The plan would provide every American living below the poverty level with access to Medicaid and ensure that all states use the State Children’s Health Insurance Program (CHIP) to cover children at or below 250 percent of the federal poverty level. The Baucus plan also calls for additional funding for Indian Health Service funding, a federal program that provides healthcare for Native Americans and Alaska Natives.
Once affordable, high-quality, and meaningful health insurance options are available to all
Americans through their employers or through the Exchange, individuals would have a personal responsibility to obtain health coverage. This step is necessary for insurance market reforms to function properly and to end the current cost shifting occurring within the system (caring for uninsured and underinsured raises premiums for the insured). Baucus expects that a vast majority of American employers would continue to provide coverage as a competitive benefit to attract employees. Otherwise, employers would be responsible for contributing to a fund that would help cover those who remained uninsured.
Another major focus of the Baucus plan is prevention and wellness. Under the Baucus plan, anyone who is without private coverage and not eligible or enrolled in a public health
coverage program would be given a “RightChoices” card that guarantees them access to recommended preventive care, including services like a health risk assessment, physical exams, immunizations, and age and gender appropriate cancer screenings recommended by the U.S. Preventive Services Task Force. Individuals whose RightChoices screening detected and diagnosed one or more of the most common, costly chronic conditions, would qualify to receive treatment on a temporary basis until viable coverage options were made available to them through the Health Insurance Exchange. Also, current Medicare, Medicaid and CHIP beneficiaries would receive recommended preventive services with little or no co-payment and Preventive services would be covered by all insurance options offered through the Health Insurance Exchange.
The Baucus plan also attempts to improve health care quality and value by providing payment incentives to healthcare providers delivering better care rather than more care. One way he plans to do this is by investing in health information technology (IT) and new comparative effectiveness research that gives providers ready access to better evidence and other clinical decision-support tools.
Beyond measures to refocus the system on primary care, reward quality care, and invest in research and technology, the Baucus plan endorses direct steps in five additional areas to curb excess health care spending:
- Eliminate overpayments to private insurers in the Medicare Advantage program.
- Increase transparency of cost and quality information, and require disclosure of payments and incentives to providers by drug or device makers that may lead to biased decision-making.
- Reform medical malpractice laws that could lower administrative costs and health spending throughout the system, while ensuring that injured patients are compensated fairly for their losses.
- Consider policies to shift the focus from institutional care to services provided in the home and community in order to improve the quality of care delivered and reduce costs.
- Explore targeted reforms of the tax code to make incentives more efficient, distribute benefits more fairly, and promote smarter spending of health care dollars by consumers themselves.
The affects of Universal Healthcare on the Limited Medical Industry
While the Baucus plan is simply a proposal and not a final submission of legislation, one can surmise that should it be put into action, limited medical plans across the board could become more robust in order to meet certain government-mandated criteria. This would certainly put limited medical insurance products on a more level playing field with traditional products, but it might also diminish the lines of distinction that make limited medical insurance a uniquely attractive option for certain individuals and employers.
By his own admission, Sen. Baucus says his plan is expensive and will take at least a decade of increased taxes to pay for its initial costs. Of course, this means that individual and corporate taxpayers will inadvertently become the underwriters. Considering the roughly $1.5 trillion bailout package we’re already holding the bag for, it is hard to believe that average Americans can afford to take on any more financial obligation. Employers will be especially burdened by the responsibility of paying back the cost of this universal healthcare plan and its ongoing price increases –as evidenced by the implementation of similar systems in other developed countries around the world. The rising cost of health insurance is far and away the single biggest concern for every country, regardless of their social framework.
Baucus says we need to eliminate waste, but a Cato Institute study shows that substantial levels of government regulation is the key contributor to already excessive administrative costs (25% of the total annual healthcare expenditure in America). According to the study, this regulation currently provides benefits in the amount of $170 billion but costs the public up to $340 billion.
Quality of Care
While polling data indicates that U.S. citizens are concerned about health care costs and there is substantial support for some type of reform, most are generally satisfied with the quality of their own health care. According to a Joint Canada/United States Survey of Health in 2003, 86.9% of Americans reported being "satisfied" or "very satisfied" with their health care services, compared to 83.2% of Canadians. In the same study, 93.6% of Americans reported being "satisfied" or "very satisfied" with their physician services, compared to 91.5% of Canadians.
But in deference to what citizens say about their own quality of care, an international comparison of health systems in six countries by the Commonwealth Fund ranked the UK's publicly funded system first overall and first in quality of care. Systems in the United States and Canada tied for the lowest overall ranking and toward the bottom for quality of care. However, survey data shows that Canadian and British respondents are three to four times more likely to wait more than six months for elective surgery than those in the U.S. and, although America ranks low in the percentage of patients able to get a same- or next-day appointment for a medical problem (47%), Canada fares even worse.
Innovation and development of new treatments
Free market advocates say that the largely free market system of health care in the United States has led to the faster development of more advanced medical treatment and new drugs. For instance, cancer patients in the United States for many forms of cancer -- including those of the breast, thyroid and lung -- have higher survival rates than their counterparts in publicly-funded health systems in Europe. Many contend that public care systems, in which there is more bureaucratic government involvement and less financial incentive in the health care industry, lead to less motivation for medical innovation and invention.
Most of the world’s scientific community believes that the United States, with its partly free-market health care system, is the world leader in medical innovation. According to economist Tyler Cohen quoted in The New York Times, the American system leads in converting new ideas into workable commercial technologies, and the research environment in the United States, compared with Europe, is richer, more competitive, more meritocratic and less tolerant of waste. Cohen argues that the American government could use its size to bargain down health care prices, but this would ultimately result in the loss of lives due to reduced innovation. Cohen also argues that one reason America's leadership in this area does not translate into relatively higher life expectancy is that other wealthy countries also benefit from U.S. medical advancements. Economist Arnold Kling says that America's role in medical progression is crucial not just for Americans, but for the entire world. In June 2008, the Financial Times reported that leading pharmaceutical companies, including Pfizer, Roche and Merck-Serono, were reducing the amount of clinical research they performed in the United Kingdom. The companies say that the policies of the National Institute for Health and Clinical Excellence (NICE) result in too few UK patients receiving "gold standard" care to provide the comparison group needed for clinical trials.
Big Change Requires Careful, Prudent Consideration
America’s healthcare system is undeniably in need of change. Costs are already out of hand and continuing to rise at a rapid pace, primarily because there are far too many uninsured. Sen. Baucus and his colleagues on the Senate Finance Committee are to be commended for the planning and hard work they have invested thus far into healthcare reform effort, but the plan they propose is simply too expensive and has too many variables for it to be considered viable at this time in light of our country’s extremely stressful economic climate. Lawmakers from both sides of the political spectrum need to meet more often with the American public and work together to determine the best way to approach reform for our healthcare system. Resolution can be achieved but only through thoughtful and thorough consideration and careful examination of the pros and cons of other country’s universal systems to avoid making the same mistakes.
Carl Stecker is President and Chief Executive Officer of Benefits In A Card, one of the country’s leading administrators of limited medical insurance. His company, which has been honored by AllState Insurance as the country’s #1 administrator of its limited medical products, is a major sponsor of Worksite Magazine’s Mini-Medical and Limited Medical Sales & Marketing Conference in October. Mr. Stecker serves on a number of professional and civic boards and is an active member of the American Staffing Association and Staffing Industry Analysts.