Solving Healthcare Through Verbosity - The American Spectator | USA News and Politics
Solving Healthcare Through Verbosity
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I’ve finally figured out what it is about liberals. They speak a different language. It’s a language not even meant to be understood by ordinary human beings but only by those in the know.

Let me tell you how I arrived at this. I read David Brooks’ column in the New York Times last week — he hasn’t completely succumbed to the Grey Lady yet — and Brooks suggested that anyone who wanted to “get fundamental” about healthcare should read a report called “Bending the Curve: Effective Steps to Address Long-Term Health Care Spending Growth,” just put out by the Brookings Institution.

The authors have combed through the bills that are already out there. They’ve taken good ideas that are now in embryonic or neutered form. They show how the ideas would work if fully implemented.

So that’s what I did. The report is only 11 pages and accessible on the Internet.

Now let me say to begin that I know a little bit about healthcare. Fifteen years ago, in the middle of Hillary Clinton’s reform effort, I read John Goodman and Robert Musgrave’s Patient Power: Solving America’s Healthcare Crisis. The authors spelled out in clean and simple terms what was wrong with the health insurance system:

1) What we are calling “health insurance” is really pre-paid medical care. Existing company plans offer too much, giving first-dollar coverage for routine medical care. As a result, few players have any financial stake to conserve. Both doctors and patients are spending other people’s funds — insurance companies’, corporate health plans’, or ultimately taxpayers’ money.

2) Unions and large businesses have long collaborated in setting up a system where they are able to provide health insurance as a tax-free job benefit, giving large-company employees a huge advantage over people who have to buy insurance on the open market.

3) Since regulation of the insurance industry was given to the states in the McCarran-Ferguson Act of 1945, the states have limited competition and balkanized the system so that no national market for health insurance really exists.

4) At the state level, health provider groups — especially fringe therapies and techniques — have lobbied hard to get their practices mandated coverage. Chiropractors are always the bellwether. In the 1990s, New York State chiropractors gave Governor George Pataki a huge testimonial dinner after he got chiropractic mandated into insurance policies. This drives up costs because people have to buy coverage they don’t want.

5) The solution lies in deregulating insurance and getting everybody on the same level playing field. Give private purchasers the same tax advantages through tax-free “health savings accounts” that would allow them to buy real health insurance (with sizable deductibles and co-payments) and meet their routine medical expenses with tax-free money.

All this made absolute clear, logical perfect sense. I looked into the system and found it worked exactly the way Goodman and Musgrave described. (Fifteen years later, nothing much has changed.) I found the key was something that Goodman and Musgrave didn’t talk about at great length — the ERISA system (that stands for the Employee Retirement Income Security Act of 1973).

ERISA was one of those clubby little arrangements that big business and unions had set up for themselves with the help of Washington. After a few big pension funds went bankrupt in the 1970s, Congress decided to back all union pensions with federal money. Health benefits were thrown in because, as one bureaucrat told me, “the pension and benefit funds were essentially indistinguishable.” In order to make sure the federal government didn’t go bankrupt, Congress also threw something in saying “no state law shall become between a pensioner and his or her benefits.” That turned out to be important.

At the healthcare level, what this came to mean was that union health benefits were no longer subject to state regulation. Major companies could set up insurance plans without being burdened by mandates to include chiropractors, social workers, Rolfing therapists, and so forth. This made much insurance cheaper. The only problem was you couldn’t buy the insurance from an insurance company. Instead, companies had to self-insure, setting up their own risk pools, in order to avoid state regulations. Only the big companies and their unions could do this. So by the 1990s, 95 percent of corporations with more than 500 employees had ERISA plans.

Then the most amazing thing started to happen. As the states began to set up high-risk pools for the sick and the uninsured and pay for them by taxing private health insurance, ERISA plans argued they were exempt! Making contributions to a state high-risk pool would “come between the pensioner and his pension.” So all the costs of covering unhealthy people with pre-existing conditions fell onto people outside ERISA’s magic circle and buying in the private market. As a result, private insurance became even more insanely expensive.

What you had, then, was the two-tiered system you still have today — people in ERISA plans who get a whole variety of breaks and exemptions and people buying insurance on the private market and forced to carry all the extra burdens imposed by the states. It wasn’t even close. Someone in an ERISA company would pay $1000-2500 a year for coverage that would cost close to $10,000 on the open market. Yet nobody paid the slightest attention. At one point the New York Times editorial page was writing mealy-mouthed editorials of how health savings accounts should not be allowed because “they would enable healthy individuals to avoid the costs of paying for unhealthy people through high-risk pools and community ratings.” The editorial, of course, was written by editors who had all of the above exemptions through ERISA.

As the years rolled on, two possibilities presented themselves:

1) Either abolish ERISA altogether and try to levelize a national insurance market; or

2) Keep expanding ERISA so that more and more people could be admitted to the magic circle.

The first, of course, was virtually impossible. ERISA companies were too powerful. (“We’re basically the Fortune 500,” one official at the ERISA Industry Committee, the Washington lobbying group, told me.) So ERISA exemptions were expanded. Gradually smaller and smaller companies found legal ways to form self-insurance pools so they could opt out of the state regulations. The Freelancers Union did a very nice job in my profession. Even small law offices and medical practices were eventually able to self-insure. And that’s where we are today.

Of course, there are always small start-ups and low-margin businesses that are too small to self-insure or can’t afford ERISA plans. (Remember Hillary Clinton’s famous remark, “I don’t have time to worry about every underfunded entrepreneur in America”?) And ERISA insurance is not portable. If you lose your job or change jobs, you’re out of luck. But the ERISA system now enfolds a majority of the population — which is why so many people are out at town hall meetings telling their Congressional representative to leave things alone.

How could the last remaining citizens be brought aboard? Well, there are a couple of obvious solutions. Repeal the McCarran-Ferguson Act, for one thing, and eliminate state mandates. Then make sure that Congress doesn’t impose the same mandates as well. (It already has in many instances. Remember Tipper Gore’s campaign to mandate mental health coverage?) Then allow insurance to be sold across state lines. Give everybody the same tax exemption as ERISA employees and create a level playing field across the country. With insurance companies once again able to form nationwide pools, the price of insurance would quickly come down. All these options are being studiously ignored by the Obama Administration.

But let’s get back to my original point, which is that liberals speak a different language when they talk about healthcare. Here’s what the Brookings Institution recommends for resolving the problem:

• Link “meaningful use” health IT [Information Technology] bonuses to achieving better results as part of systems of quality measurement, quality improvement, and care coordination.

• Create interoperability and provider communications standards, with a focus on filing priority gaps in standards for practical exchange.

• Fund technical support programs to ensure providers adopting health IT have access to comprehensive support for overcoming implementation challenges.

• Create an entity [that means a federal government panel] to allocate CER [Comparative Effectiveness Research] based on the expected value of the evidence to be developed, including the national burden of disease and the likelihood that the research will lead to real improvements in care.

• Emphasize areas of medical uncertainty, public health interventions, and broad provider practice patterns and the policies that influenced them.

I don’t know about you but most of these sentences sound like the kind you compose with refrigerator magnets. What in god’s name are they talking about?

Now I know what the answer will be. “You don’t have the expertise to know what they’re talking about.” I’m sure that’s true. There must be a level of non-profit, policymaker executive authority at which this all jargon makes sense.

But that’s the whole point. None of this is supposed to be comprehensible to ordinary individuals. It’s not written for people who take part in the system. It’s written for people who see the major players as chess pieces to be moved around the board.

Conservatives see doctors, patients, insurance policy agents and so forth as individuals who have their own knowledge base and motivation and whose self-interest must be unleashed and played against each other in order to create a competitive market system. Liberal “policymakers,” on the other hand, see the same people as chess pieces to be moved around the board in order to achieve the desired outcome.

It’s not at all surprising, then, to find that the one interaction that troubles the Brookings authors is “fee-for-service,” the old-fashioned method where your doctor provides a service and you pay for it. Fee-for-service works for plumbers, for carpenters, cockroach exterminators, hair salon operators — almost any service you can name — but not for doctors and patients because… well, because the government wants to get involved and doesn’t like the outcome. And so the Brookings authors offer instead “Pilot Accountable Care Organizations (ACOs)” and “Pilot Enhanced Episode-based Payment’ Systems” in which:

Payment rates for certain types of episodes of care would be set through competitive bidding with risk-adjustment, with public reporting of provider outcomes and quality bonuses. On the beneficiary side, tiered co-payments should be implemented, to encourage use of providers that deliver more efficient bundles of services. Other promising reforms that might be piloted include new pay-for-performance models or care-coordination bonuses…

In other words, the players aren’t adult enough to work things out for themselves. They have to have it worked out for them. Who will “implement” these “tiered co-payments” or determine the level of “care-coordination bonuses”? Why, your friendly neighborhood bureaucrat, of course.

I see very little room for compromise in all this. One side wants to free people up from government regulation and let patients, doctors, and the insurance industry work things out for themselves — with some simple subsidization for people who cannot afford to pay for their own medical care. The other side wants to set up a complex, arcane system that only the people who run it will ever understand — but where this elite will be free to determine the outcomes.

Which one would you choose?

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