Cost-Effective Health Care Compromise

President Obama has mounted a new full-court press this week to finally pass a version of the Senate Health Care bill, using the "nuclear option" if necessary.

It seems he is assuming that the televised summit conference between Democratic and Republican politicos this Thursday (25 February) will fail to reach a bipartisan compromise. I hope a cost-effective compromise can be reached, but I am not sanguine.

If there is no compromise, the plan is for the Democratic-controlled House to pass a version of the bill already passed by the Senate (before Sen. Ted Kennedy passed away). Then the Senate, by a simple majority of 51, can confirm it and it will become law. I hope this "nuclear option" is not attempted. I do not believe it will work because anyone who votes for it and is up for re-election this year will understand that he or she faces a high probability of being defeated.

Here is my outline for a bipartisan compromise, based on my previous postings here and here, partially based on Democrat David Goldhill's reasonable proposals in his 2009 piece in The Atlantic. This is a very serious plan that I think has a chance of gathering bipartisan support.

1) Universal digititized patient data, securely accessible by any doctor chosen by the patient. This part should be easy to sell to President Obama and both political parties and all medical specialties. It has been technically feasible for a decade and it is past time we do it.

2) Mandatory Catastrophic Insurance coverage for all that would cover only medical costs incurred in any one year of over $50,000 or a chronic condition that incurs costs of over $5,000 per year for ten years. That coverage would include a voucher for a basic checkup once a year. The government would subsidize coverage for those who could not afford the relatively low premiums for catastrophic coverage. Goldhill estimates a yearly premium of $2,000 for this type of coverage. (By comparison, my wife and I are paying around $10,000 each if you include our out-of-pocket insurance and Medicare costs plus the contribution of my former employer and of government Medicare funding.) This is an approximation of the universal health insurance that President Obama and the majority party favors in a cost-conscious form that should be palatable to the minority party.

3) Nationwide competition by health insurance companies certified in any state to sell insurance in any other state. This will provide far more competition and bring down costs. This will be an easy sell to most members of the minority party but may be resisted by the majority party that is obligated to state health care regulators and to insurance companies that have near-monopoly positions in some high-cost states.

4) Mandatory Health Savings Accounts for all that would be tapped into for actual medical costs incurred, but would remain the property of the owner of the account (you, or your heirs) if not fully expended, as proposed by Goldhill. Employers and employees/retirees would pay into the Health Savings Accounts the difference between what they are currently paying for comprehensive insurance and out-of-pocket medical costs now and the lower cost of Catastrophic-only insurance. (For example, my wife and I would see about $8,000 per year for each of us pass into our Health Savings Accounts.) Young, healthy families with low medical expenditures would see their Health Savings Accounts grow by thousands of dollars per year, accruing as savings to prepare themselves for the likely increasing medical costs as they age. Those not so fortunate, who incur medical costs, would expend the funds in their Health Savings Accounts until the accounts were tapped out, and would then pay the remainder out of their pockets and savings, until they hit the catastrophic limits and then Catastrophic-only insurance would kick in. This is a further approximation of the universal health insurance that President Obama and the majority party favor in a cost-conscious form that should be palatable to the minority party.

The point would be to make the recipients of health care more conscious of the actual costs. Instead of calling an ambulance for every event, they would be more likely to drive the injured person to the hospital or use public transit if possible. Instead of accepting the first doctor's advice for expensive medicines or tests or procedures (that may be in the doctor's self-interest - he or she may have a boat payment due) they would be more likely to shop around for lower-cost options. That would drive down the costs of medical care for everybody and make the providers more responsive to their customers, who would be the actual recipients of health care rather than the government and insurance companies.

5) Tort reform to eliminate high malpractice premiums and defensive medicine with unnecessary tests that add up to 10% to costs. This will be a hard sell to the majority party that is in the pocket of trial lawyers, but it is an absolute necessity for support by the minority party.

6) Outcome-based reimbursement to eliminate costly surgery and medications that do not yield comparative effectiveness based on quality-adjusted life years. Though President Obama earlier seemed to favor an approach of this type, it will be a hard sell to the minority party. Some politicos in both parties who originally proposed it have backed away due to the onslaught of opposition based on "death panels" and "pulling the plug on granny".

7) No denial of insurance based on pre-existing conditions or boosting of premium costs due to illness. Given (2) and (4), anyone who has complied with the mandatory coverage requirement, which would be partly subsidized by the government for those who cannot afford it, would be protected from subsequent denial of coverage or premium increases based on illness.

Ira Glickstein