Public Infighting: A Major Barrier to Health Reform

When I think about health reform in the United States, I usually think of words like impossible. When I stop to contemplate why it seems impossible, I usually focus my attention on the structure of our government, which is designed to resist change, and the disproportionate influence of wealthy organized interests on the political process. These things certainly play a role, but the more I think about it, the more I am convinced that the major barrier to meaningful health reform is public infighting. Typically, we hear about infighting in political parties. For instance, when Democrats stop bickering with Republicans and start bickering amongst themselves, that’s infighting. It’s a pretty self-defeating strategy, but the American people seem content to engage in it themselves.

As a nation, we can agree on a preferred outcome. It doesn’t take much effort to conclude that our country would benefit from everyone being healthier. Yet we can’t seem to agree on the path to that outcome. Here it comes down to the “haves” and the “have nots.” (My wife has me watching Big Brother if you can’t tell.) Quite simply, the “haves” are pleased with the world as they get to experience it. Just witness the latest Kaiser poll. These are the same people who say things like “We need to reform the health care system in this country, but I am extremely satisfied with my health insurance and my personal physician.” They also say things like “Congress is doing a terrible job. We need to vote them all out and start over. Except for my member of Congress. He/She is doing a pretty decent job.” Welcome to Lake Wobegon. When I snap my fingers you will wake up and realize that you can’t all be above average. Some of the haves have done this–and they’re the ones trying so diligently to reform the system for the better of the nation.

The “have nots” meanwhile, should be hacked off. Things clearly aren’t going their way. They should be totally supportive of health reform. Unfortunately, a recent poll shows that they don’t understand what “Obamacare” will do for them. They are disorganized and confused, but they are also proud and strive to be–however unsuccessfully–self-reliant. So they don’t want a handout, and they don’t want the government to get involved. Of course, this is a gross overgeneralization. There are plenty of uninsured who would welcome the help, and just don’t understand what sort of help they stand to get.

Still, at the end of the day, there are two groups of “haves” and two groups of “have nots” and these four groups are aligned two on each side: two for, and two against, health reform. That, I am convinced, is why we don’t see more meaningful health reform, why the states are not all making progress to implement the new law, and why our nation–and potentially our next GOP leader–faces a Sisyphean task.

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The Necessity of the Individual Mandate

People are quite accepting of the idea that choices have consequences and that choices are often unavoidable and irreversible. That’s why so many people like to bandy about the saying “You can’t have your cake and eat it, too!” Yet, with health insurance, that’s exactly what people seem to be longing for. They don’t want the government telling them what to do (e.g., requiring everyone to buy health insurance), but they also want health insurance when they need it, lest they be unable to afford a trip to the doctor or hospital. Americans are being confronted with an inescapable “either/or” proposition, all the while clamoring for a “both/and” solution that simply doesn’t exist. Let me put it into the starkest of terms. Forget politics and the courts for a minute and just join me in a simple thought experiment.

Congress passes, and the President signs, a law that forbids health insurers from denying people coverage on the basis of pre-existing conditions. As a result, people with pre-existing conditions are happy, because they can now purchase health insurance, which they couldn’t previously do in many cases without taking out a home equity loan. At the same time, people without pre-existing conditions are happy, because they no longer have to purchase health insurance while they are healthy. Why waste the money? Instead, they can simply wait until they get sick and buy insurance then, when they need it. After all, the insurance company is powerless to prevent such behavior, thanks to the new law.

Pretend for a moment, that you are the CEO of a major health insurance company. Suddenly you find yourself insuring only sick people. All the healthy ones don’t need your product, and there is no incentive for them to purchase it until they fall ill. Ordinarily, you combated this problem by denying coverage to sick people–or by charging them much higher premiums. Congress won’t let you deny coverage any more. What do you do? Your options are simple: Keep premiums low and pay out enormous claims, or raise premiums dramatically in hopes of generating a net profit after paying out enormous claims. It’s not rocket science. Under this scenario, health insurance costs would skyrocket, quickly becoming unaffordable for all but the wealthiest Americans.

If only there was some way to ensure that people didn’t wait until they got sick to purchase insurance. Enter the individual mandate. By requiring everyone to purchase insurance coverage, the insurance companies no longer face a scenario where all their beneficiaries are sick and costly. In fact, the number of healthy insured persons will go up, and that should actually steer things in the opposite direction, helping to spread risk and bring premium costs down on average.

In the end, we are left with three options:

1. Return to the status quo. Under this approach, most of the sick who truly need it will be unable to afford health insurance. Our system will remain fragmented and costs will continue to rise. 
2. Ban pre-existing condition exclusions without an individual mandate. Under this approach, people won’t buy health insurance until they get sick. As a result, health insurance costs will rise even faster than they have in the past, the number of uninsured persons would grow dramatically, and the health insurance system as we know it would face significant contraction if not collapse.
3. Ban pre-existing condition exclusions with an individual mandate. Under this approach, everyone would be covered and health insurance costs would not increase at such alarming rates. In fact, they might even decrease.

Maybe it’s just me, but door number 3 seems like a pretty clear winner. It’s only when politics and the legal system get involved that such economic commonsense gets confused. As most of the courts thus far have ruled that the individual mandate is severable (meaning the mandate can be ruled unconstitutional while the rest of the law remains intact), door number 1 seems firmly closed. Fundamentally at issue is whether the decision not to buy health insurance is an economic decision affecting interstate commerce. Based on the different outcomes that can be expected depending on the presence or absence of a mandate, I don’t see how a judge worth their salt could determine that the decision not to purchase health insurance isn’t an economic decision. This much is certain: there will be a decision and it will have far-reaching consequences. To wish otherwise is to hope in vain. We must eat our cake, or save it for later. We simply cannot do both.

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How Can Insurance Help Your Health and Your Pocket?

Note: The following is a guest article, authored by a third-party. Its content is not endorsed by Wright on Health.

Everyone should have at least enough health insurance to cover a major accident or illness, but a lot of people don’t have even this much protection. The primary reason for this is cost. Many consumers can’t afford to pay for health insurance. If you think you are one of these people, you shouldn’t give up. There are many ways to get cheaper insurance.

Shopping for insurance can be frustrating, but the first thing you need to do is determine what your needs are. Your insurance premiums are determined by the level of coverage, the range of services which are covered, your deductible and factors about you such as your age, sex and lifestyle. You can’t do much about the last few, but you can choose the rest.

The level of coverage determines how much protection you have. A plan with a high level of coverage will let you go to the doctor whenever you want, but a plan with a low level of coverage will only cover accidents and serious illnesses. There are many types of plans in between these two extremes, of course, and the premiums vary accordingly.

Different policies also cover different types of services. A catastrophic injury policy, for example, may cover hospital bills, surgery and physical therapy but not follow up visits to the doctor. Other policies may cover everything, including prescription drugs and mental health issues. Of particular interest to young women is the issue of maternity benefits. Not all policies cover pregnancy, and if you are a woman of childbearing age and there is a chance you could become pregnant, you might want to consider buying a policy that will cover it.

The final factor that determines your health insurance premium is the deductible. This is the amount you pay out of pocket before the insurance kicks in. It can be anywhere from $250 to $10,000, depending on the policy. The cheaper insurance policies tend to have much higher deductibles than more expensive policies. One thing that should be noted about deductibles is that they often don’t apply to office visits; if your policy covers these, you will have to pay your copayment but not the deductible.

If you want to find a cheaper insurance policy, you will need to decide what level of services you want to have and determine what the highest deductible you can handle is. A high-deductible catastrophic illness or injury policy can often be purchased for as little as forty dollars a month, depending on the buyer. More comprehensive policies start at a hundred dollars a month and go up from there. Be sure to shop around. Insurers charge widely varying rates and you want to get the best deal possible.

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Enough of the Entitlements

This post probably isn’t going to be what you’re expecting. The thing is, someone needs to say it. While the debt ceiling deal has been reached, pulling the U.S. back from the brink of an unprecedented default, the budget issues in this country won’t be getting any better as a result of the legislation that was passed. The big losses posted on Wall Street yesterday (and the preceding week), suggest that the folks playing the market are getting a clearer picture of just what a mess we’re in. The deficit needs to be brought under control, but how?

That’s where politics comes into the mix. The right–especially the extreme right–seems to think that when we spend more than we take in, we simply fix the problem by cutting spending and while we’re at it, cutting taxes, too. The extreme left seems to think just the opposite: keep on spending and just raise revenues (i.e., taxes) until we can pay for it. The moderate position looks to a balanced approach of spending cuts combined with revenue increases. This is the approach that the President suggested in his recent television address to the nation. It’s not what we got.

The debate gets carefully framed through language that resonates with some emotions, while conveniently glossing over other emotions that might evoke a different response from the public. For example, there’s a bit of rhetoric out there that claims that the country needs to cut taxes on the wealthy “job creators.” It sounds good. You can envision a scenario where it makes sense. On top of that, when it’s repeated often enough, without being questioned, people begin to assume that it must be true. Unfortunately, both history and conservative economists agree that it isn’t. When the wealthy get tax breaks, they make like the Steve Miller Band, and “Take the Money and Run.” What they don’t do is create jobs. Here’s a good primer to get you started, and there’s much more online.

Again, I’m not saying we don’t need to look for ways to cut spending, we do. I agree with conservatives on this point. I’m just suggesting that the argument conservatives put forward for cutting taxes isn’t valid. Until we can balance our checkbook, we need to increase certain taxes on the wealthy. Keep in mind that it’s very unlikely that you meet the definition of wealthy for this purpose. Conservatives sell the tax cuts as a way to create jobs (which it doesn’t) and they gain popular support for budget cuts by talking about “entitlements.” This is the issue that really gets under my skin, and this is where I’m taking you on a bit of a detour. Hang with me.

When you hear a politician talk about “out of control spending” and the “need to cut wasteful entitlements,” what image comes to mind? Do you think about welfare? Food stamps? Single mothers with a houseful of children and no job? Lazy people? Illegal immigrants? Be honest with yourself. Do you hear the word “entitlements” and think “No one should be ‘entitled’ to anything in this country. The American way is success through hard work. We need to stop giving handouts to people who don’t pull their own weight. Entitlements discourage people from working. After all, why should they when they can just live off the government? I’m so sick and tired of paying taxes on my hard-earned money so somebody else can get something for nothing.” When you think these sorts of things, what do the “bad” people who mooch off the government look like? Well, unless they look like the sweet lady in this picture, chances are you’re missing the mark.

This is my Granny who passed away last week at the age of 87. She lived a long, full life, and for nearly one-fourth of that life she was a recipient of entitlement spending. In fact, few people in this country receive more benefits than she did. She received Social Security payments every month. She had Medicare coverage. And, because her income was low enough to qualify for it, she had Medicaid coverage, too. Those are the big three entitlement programs. Together, they represent more than 40% of the Federal budget, and millions of Americans rely on them like my Granny did. But my Granny wasn’t lazy. She worked hard all her life, sewing, gardening, and taking care of the home, until her body literally wore out. There are many just like her in that regard. Our picture of entitlement spending is all wrong. We don’t typically think about it, but even millionaires receive Social Security and Medicare when they reach retirement age. I’m guessing that they enjoy those benefits, and wouldn’t support having them cut, even if they don’t depend on them the way my Granny did.

And that’s the point of this post. In memory of my Granny, I’m hoping that whenever you hear a politician from either party speak of “entitlements” that you’ll replace that word with the phrase “Medicare, Medicaid, and Social Security,” because that’s what they’re really talking about. I’m also hoping that you’ll reflect on your own prejudices and misconceptions about the beneficiaries of these programs. Feel free to picture my sweet Granny, or your own parents or grandparents, in your mind’s eye, for these are the faces of the victims of excessive cuts in entitlement spending. Don’t be fooled into thinking that we can make things better by cutting spending and revenues. That’s just one step forward and one step back. Likewise, don’t be fooled into thinking that cutting spending or raising revenues alone is sufficient. That’s only half of the battle. Realize instead that we need to cut spending wisely, in ways that minimize harm to people who depend on these important government programs, while also raising revenue wisely, in ways that ask the wealthy to forgo preferential tax treatment and corporate loopholes, while not overburdening lower and middle-class Americans. It really is that simple, and the sooner the American public understands that and holds their elected officials accountable for it, the sooner our nation’s budget deficit will be eliminated.

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The Importance of Consistent Coverage

Patricia Herman, Jill Rissi, and Michele Walsh are the authors of an interesting study in the August 2011 issue of the American Journal of Public Health, which examines the relationship between insurance status, medical debt, and access to care in Arizona. In a simple model, they find that insurance status seems to stave off some degree of medical debt. Specifically, an additional 9 percent of the uninsured population has medical debt relative to the insured. However, once they start controlling for things–estimating a model that much more closely approximates the way the world works–they find that insurance status isn’t a significant factor.

On the other hand, they find that having inconsistent coverage puts people at much greater risk for accumulating medical debt, struggling to pay their bills, and delaying or forgoing needed health care. In fact, compared to the consistently insured, those with inconsistent coverage have 2.5 times the odds of having problems paying their medical bills, nearly 6 times the odds of forgoing needed care, and more than 4.5 times the odds of forgoing needed medications. These are big effects. The authors mention them, but they don’t really focus on them enough, in my opinion, given their magnitude.

Their take seems to be that insurance status doesn’t matter much. My take, using their results, is that insurance status matters very much, because any lapse in coverage subjects the individual to the risks of high out-of-pocket costs, which also seems, understandably, to influence care-seeking behavior. I’d like to hear more from the authors and am going to invite them to respond here on the blog. Hopefully, others will engage them as well.

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