Reform without the Public Plan Option- It could look like this

What will reform look like?

I have consistently predicted that health care reform passage will not include a public plan, government run program. I don't see how it will get the votes needed. In a previous post I gave the pros and cons and more recently posted how agents might still be able to sell the public plan option which makes the cost more even with private plans.

Moving on let's look at what's possible without the public plan option.
I'll discuss two possibilities to use as the mechanism to get competition without a true public plan.

1- the Co-op model run by private, non-profit state based consumer friendly entities with strict implementation regulations by the feds with the carrot of seed money.

2- Medicare Advantage-like health plans regulated and contracts enforced by the feds BUT, not run by the feds.

Critics say you can't put cost controls in either of these above like you can if it were "government-run". And why not? States regulate the sale of health insurance. The NAIC (Nat'l Assoc of Insurance Comm.'s) sets forth model acts and rules on nearly every aspect of health insurance as guidelines for the state regulators to implement. This ain't rocket science, don't let them tell you it can't be done. It can.

Both of these models I identify can be set up with new payment structures like accountable care to reimburse providers for episodes of care, not strictly fee reimbursement. And the reimbursement does not need to mirror the reduced fee structures under Medicare or Medicaid. Don't let them tell you otherwise.

Example-
Let's look to the enactment of HIPAA in the late 90's as an example. The feds passed the law which the states were then required to pass as well with at least the same consumer protections, but the state's could also go beyond the federal minimums. The same can be done here. The "Health Care Reform Act of 2009" could mandate "episodes of care" reimbursement and penalize doctors for hospital readmissions. That will step up quality and reduce cost. Going a step further it could provide incentive payments to health plans and insurers and require providers to implement LEAN processes ( see http://www.healthcarevalueleaders.org/ for details). This can be instituted in the same way as the HIPAA privacy measures that were placed upon health care providers. It can be done on a strict timeline- say by 2015.

There's your cost savings in two distinct options and without a public plan run and operated by the feds. Both include oversight by the feds like Medicare, Medicaid and TRICARE (military). This is nothing new, we've done it for decades, its not socialism. Again, don't let them tell you otherwise.

By the way the Co-ops and the Medicare Advantage-like federal contracted plans could both be structured to set up the elimination of the individual health insurance market by letting individuals join the larger risk pool and lower costs to individuals like the self-employed. Of course it would also eliminate individual underwriting and therefore that dreaded term, "pre-existing condition." Cost savings would also include the elimination of individual state high risk pools which together insure several hundred thousand Americans.

This is the framework that's needed for true health care reform. Please comment and add to the reform discussion.

Current Focus is on the Wrong Issues

Today’s topic: The real issues in the health care reform debate


Although the cost issues and the potential inclusion of a public plan option are important, there are real issues being largely ignored.

The primary issue in health care reform should be about increasing access and the best means to do it. Way back in April the health insurance industry offered some key concessions. AHIP, the largest national insurance trade association said that if the approved health care legislation were adopted without a public plan option, health insurers would drop two huge current health insurance practices.


*** Full disclosure: I consult extensively with AHIP so I’m fully acknowledging my perspective and biases. I also work with Medicaid policy to increase health insurance access for people with disabilities, so I see and understand both sides. ***


But the concessions AHIP offered are indeed huge.

1) No more individual plan underwriting. This means insurers propose to no longer cherry pick the healthiest potential customers seeking individual health insurance. They pledge to take all comers. Now of course they propose that because it’s beneficial to their business…. insuring more people, means more health insurance premium, and equals more revenue. Health insurance is a business and like every business, revenue is a good thing.

2) No more gender-based underwriting. This is a very good thing. This means that women of child-bearing age will not be charged a higher premium simply because they COULD become pregnant. Fellas, this of course means we might pay a little more, but I think we all agree it’s only fair. Ultimately, coupled with the first concession, this means that young, single women will no longer have the difficulty of obtaining health insurance on their own if their employer doesn’t offer it. And without the incredibly high premiums.

If there is mandated coverage on individuals and/or businesses it means that the insurers will benefit from an increased market and increased revenue so the elim- ination of underwriting and instituting equitable premium based on gender mean a fairer health insurance system.

Ok, So What Does This Mean?

Hopefully as the debate rages on Congress will realize it needs to resolve the public option issue speedily so that we get the more important issues of how best to increase access in the foreground. Those more important issues are- will coverage be mandated, how will it be financed, how will physicians be incentivized to achieve better health outcomes and reduce spiraling costs.

If health care reform does not eliminate the individual market and put us all into larger purchasing pools, therefore reducing insurer risk and decreasing premium, then we will have failed miserably. This needs much more attention than it currently is getting.


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You might ask how this would affect state Medicaid programs, Medicare and state high-risk pools available to the currently uninsurable? I’m glad you asked as that will be the subject of a blog entry next week. Stay tuned and please join in the discussion.