A Simple First Step Towards Universal Health Care

The New York Times reports this morning that a major split is developing between Sen. Ted Kennedy – back on the Hill as he fights brain cancer – and Sen. Max Baucus over the shape and form of universal health care. Kennedy, long a proponent of a single payer system, is teeing up against Baucus who is negotiating with Republicans over keeping all of health care in the hands of private insurers.

Kennedy and Baucus chair competing committees, and each are racing over creating a plan.

Meanwhile, 47-million Americans remain without any health care while an estimate 20-million more working adults are under-covered. As we reported yesterday, in California alone 1-million people go to Mexico for treatment annually because they can’t afford seeing a doctor at home.

The Kennedy plan is relatively simple, the emerging Baucus plan sounds as if it is being written by Jackie Mason.

First, you take health plans that are tax free now and you make some of them taxable, but not all of it, and not for everybody. But who? We don’t know who! Then, a new tax deduction puts money in the pocket of the people who we don’t know who they are so they can take it out again and buy what they had for free in the first place. Next, the money the states use to pay for medical care for people who don’t have health insurance could be used to pay for people who don’t have health insurance which means they can’t get good health care. But we don’t know who they are, either. Well, maybe we know, but we’re not sure, so we won’t say. Then, three million people who don’t have any health insurance will have money from the tax deduction they didn’t want, to buy health insurance on their own if they have enough income to take advantage of a $15,000 deduction and can actually can buy a policy that provides coverage. There might be six people in America who can do this. So we’re taking money from here, and moving it over there, and then back to here, which where it was in the first place and now let’s have some tuna because I’m exhausted.

The fact is, there is already in place a hugely successful, low cost health care program that could be implemented quickly and efficiently.

Kids First

Put bluntly, as desirable as the goal might be, the reality is that universal health care isn’t going to happen overnight, and it’s not going to cover everybody who needs coverage on Day 1.

But there is a simple step forward towards universal health care and the basis for it already exists: The insurance plan that covers employees of the federal government, from President Obama to the lowliest entry-level file clerk at the Dept. of Agriculture.

The plan could start tomorrow, with few studies and almost no increase in cost or federal bureaucracy.

The first step would insure everyone under age 18 through the fed’s program.

Every uninsured child would receive immediate coverage. Children covered by a parent’s plan would be lifted out of the policy at the anniversary date of their employer’s policy and put in the federal insurance pool. Actuaries will love this because healthy, middle class, suburban kids don’t get sick as often or as seriously as children of the working poor and underclass from inner cities. So, the insurance risk gets spread across an enormous number of youngsters, lowering the cost for everyone.

Insurance industry sources tell me that it would take about 12-to-18 months to enrol every person under 18 in the country. Moreover, the federal plan offers some coverage choices which parents would need time to consider and select.

The cost would be paid by employers, as they do now. Instead of paying a premium to an insurance company on behalf of an employee, the company would pay the same amount to the federal insurance pool. Payroll costs would remain constant and might actually decline a bit: The federal “risk pool,” or number of people insured, would swell, spreading the actuarial risk of the coverage over millions more people. Premiums for the under-18 crowd would decline as a result, most likely eliminating the need for a worker’s contribution to the plan.

At the same time, state Medicaid and SCHIP money spent for covering uninsured kids could be diverted to other medical needs: Providing better treatment for uninsured adults, improving facilities at hospitals and clinics, increasing staff salaries; the list is as endless as the array of needs.

Uninsured Adults

Once children are covered through the fed plan, coverage could be expanded to all currently uninsured adults.

Covering children federally would account for an estimated 15-to-20-million of the uninsured 47-million. Let’s be conservative and assume that there would still be 32-million uninsured adults not covered.

The cost of insuring the currently uninsured would be carried by spreading the risk among all adults. No doubt some number of the uninsured cannot get insurance because of poor health. But many of the uninsured will be healthy, small business owners and employees – the very people politicians love to applaud – so the risk between healthy and unhealthy will be balanced. Small business owners would either divert their current insurance premiums to the federal pool or contribute through a payroll tax reduction made possible through tax credits.

Finally, the fed plan would replace private, employer-sponsored plans. As with dependent children, employers would pay premiums to the federal plan rather than to an insurance company.

Bonus! There are a number of major benefits beyond providing health care for everybody:

• It destroys the myth of “no choice” since people will continue to see their own doctors.
• It finesses potential objection from doctors, whose fees will not be negotiated or set by Washington – as they are with Medicare – but by the generous fee schedules of the current fed plan for doctors treating millions of government employees and dependants.
• Since the federal government plan involves insurance companies, its lobby would have the rug pulled out from under it by still be able to write policies.
• Coverage costs would decline because, in addition to the risk pool expanding to 330-million people, insurance companies won’t have “policy acquisition costs” – a fancy phrase for selling and renewal commissions plus production bonuses paid to agents, underwriting fees and other overhead charges.
• As the VA and Defence Department do already, Washington would be in a position to negotiate formulary prices for prescription medicine, the cost it will pay for medical devices including CT and MRI machines, hospital room reimbursement rates and other forces that contribute to ever-higher medical costs.
• As the VA and Defence Department do already, Washington would be in a position to negotiate formulary prices for prescription medicine, the cost it will pay for medical devices including CT and MRI machines, hospital room reimbursement rates and other forces that contribute to ever-higher medical costs.

The Downside

Admittedly, this idea comes with a downside.

Democrats, lobbyists, think tanks and the chattering classes who are stumbling all over each other to come up with health care ideas of their own, will be reduced to thinking about other important policy issues. Like ending the war in Iraq, dealing with Afghanistan and Pakistan, coming up with a workable, multi-party plan for handling North Korea, fixing the economy and re-regulating the financial industry.

Oh. And reducing the obscene growth in annual health care costs.

Likewise, the Republicans and their insurance industry allies will be caught between attacking the proposal or coming up with an alternative that looks and sounds like universal coverage but won’t be because it will be designed by insurance companies whose principal interest is in not insuring folks who might actually have a big, expensive claim.

Obviously, the devil is in the detail.

But using the existing federal employee insurance program as the basis for universal, single payer, health care offers an approach that will allow the US, so fond of “rapid deployment,” to begin dealing seriously with the one-seventh of its population who have no health care coverage whatsoever.