What is Health Reform, and Why?

As Congress enters the August district work period, (the official name for the August recess), the debate about health reform has shifted from Congressional hearings and mark-ups to local Town Hall meetings, the media, (print, talk radio, talking heads on TV, and the blogo-YouTube-osphere), and the astroturf campaign styled world of organized phone banks, shout downs, and meetup/get-together rallies/service days.

Proponents and opponents on all sides are participating in and supporting all these types of activities.  But the questions I keep getting are, “what is the proposal?” “What is in the President’s bill?”  “What is health reform?”

Simply answered, 1) There is no single proposal – three House Committees have passed bills, (which need to be melded into one bill for consideration by the full House of Representatives in the fall), and one Senate Committee has passed a bill and another is still trying to cobble together a bipartisan bill; 2) The President has 3-4 principles, but doesn’t have his own “bill”; and 3) That is still being determined – but if you listen to the escalating frenzy, (which is why I frequently wear earbuds that may or may not be connected to an MP3 player), health reform is all about a public insurance plan option.

Health Reform Centering on a Public Plan Option
So why is the debate focusing on a public plan option?  Probably because it serves as a fulcrum for many of the hot button sound-bites on both sides:

  • A  public plan option is necessary to create competition in the insurance marketplace
  • A public plan option is necessary to provide competition to private health insurance
  • A public plan will keep the private insurance companies “honest” by creating a  competing organization that won’t be concerned about profits
  • A public plan is the first step to achieving a single-payer health system
  • A public plan is a government take-over of the healthcare system
  • A public plan is socialism
  • A public plan is the first step to a college football Bowl Championship playoff system – OK nobody has said that…. yet

What is a Public Plan, and Why?
As I’ve written in the past, there has been many descriptions of what a public plan could be – ranging from  the Federal Employees’ Health Benefits Program (FEHBP) to traditional Medicare – and yes, Medicare is a government program despite some media reports of individuals telling Members of Congress to “keep the government out of Medicare.”

Obviously the structure of a public insurance plan would determine its affects on the US healthcare system. While analyses of all possible public plan options haven’t been conducted, a few have looked at how much could be saved and how many people might enroll in a public plan that looks something like Medicare – but paid higher rates to doctors and hospitals, and was run more flexibly than traditional Medicare.

John Sheils at the Lewin Group released a report analyzing this type of public plan option, and a more recent report from the Urban Institute expands on that work and makes the case that this type of public plan option is needed to increase competition in the health insurance marketplace because there has been significant consolidation in recent years. The Urban Institute’s paper makes some compelling arguments, but its analysis also combines creating a public plan option with national insurance reforms, (i.e. replacing state based insurance regulation), and national or regional health insurance exchanges.  Since each of these three initiatives, (public plan, national regulation, and an exchange), would change the competitive landscape of the health insurance market, it would be helpful to have analyses examining each of these ideas alone and in different combinations. [Note – the Urban Institute released a report in April about Health Insurance Exchanges, which discussed how exchanges can increase competition and consumer options by reorganizing the market for health insurance.]

An informative real-world initiative about what the combination of insurance regulation and a health insurance exchange can accomplish has occurred in Massachusetts.  With insurance regulation historically being the responsibility of the states, Massachusetts has had rather stringent regulations, (for example, see this chart from the Georgetown University Health Policy Institute), which is why none of the media stories about individuals being denied coverage by their insurer for apparently necessary care have come out of Massachusetts.  On top of this strong regulatory environment, in 2006, the state created the Commonwealth Connector exchange to make 3 levels of insurance packages from several insurance companies available to individuals and small companies across the state.

Has this increased competition, transparency, and the ability of individuals to compare plan options?  Yes, yes, and yes. Has it controlled the growth in health insurance costs?  Maybe a bit – but not enough because insurance costs reflect the underlying cost of care people are getting, and insurance regulation and an exchange alone aren’t going to “bend the curve” in healthcare costs. So it could be argued that the purpose of a public plan option is cost containment, and the Urban Institute’s analysis concludes that there would be system-wide savings from the public plan option.  However, these savings are based on the public plan paying lower rates to doctors and hospitals, and thus competitively driving down all prices and costs – rather than any br0ader healthcare delivery reforms resulting in improved quality and efficiency.

Answering the Question
So while health reform options have been debated and analyzed, there still seems to be many questions about what health reform will be when Congress finally comes to some semi-consensus around one bill in October, November or December. What is clear, is that whatever this is, it will be called “health reform.”

But beyond what is in that bill there is a lot more that should be considered “health reform.” Specifically, earlier this year, Congress allocated $1.1 billion for comparative effectiveness research, $10 billion more for NIH research, about $30 billion for implementing health information technology, expanded SCHIP (an existing public insurance program run by the states) to cover an additional 3 million children, empowered the FDA to regulate tobacco, and are examining ways to improve food safety and other initiatives outside of the “health reform” bill to improve the health and well-being of Americans – both through targeted legislation and changes to regulations and government operations.

So what is health reform?  It’s going on all the time in many places and ways.  Some of it is happening at the state and local levels, some of it is happening at the Federal level, some of it is happening in the private market, (with large employers working together to improve the healthcare they are buying), and some of it is happening within health delivery systems that are working with organizations like the Institute for Healthcare Improvement to improve quality and reduce costs.

While the focus has been on doing “health reform” this year, the reality is that we will have to keep “doing” health reform for many years to really make significant improvements.  This process of health reform is like making a good red wine:  It takes several years after the vines are planted before they bear fruit – and they must be regularly fertilized and tended to. It then takes several more years before the harvest is good.  And making the wine requires that the grape squeezings ferment to produce the beginning of the wine which then must age to make a really quality product.

Easy? No.
Time consuming? Yes.
Worth the time and effort? Yes.
What’s the alternative? Whining about why “health reform” hasn’t happened.

One thought on “What is Health Reform, and Why?

  1. I was diagnosed with multiple sclerosis THIS YEAR. My injections cost over $2000 MONTHLY. Now that I have a PRE-EXISTING CONDITION, – will you, the PROTESTERS, PAY for the medicine I will NEED for the REST OF MY LIFE if I want to further my career at a different company?!!
    Private insurance penalizes those with chronic health conditions!!! I pay taxes. Why should I not be able to get health insurance?!? If YOU will not help me pay for my lifelong medical condition, then you should keep your insurance as Obama has said SEVERAL TIMES, and I should be able to get help through the reform Obama is pushing.
    YOU PROTESTERS are basically saying that anyone with a chronic condition has to stay at the job they currently are with. I shouldn’t be punished into staying at my current job just because IF I LEAVE IT I WONT BE ABLE TO GET HEALTH INSURANCE BECAUSE NOW I HAVE A PRE-EXISTING CONDTION.

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