Here’s why health insurance is not like broccoli
The fate of universal healthcare coverage that the United States has been trying to achieve for over 100 years may boil down to broccoli.
The broccoli argument is simple and was frequently referred to in the recent Supreme Court arguments: If the government can require people to buy health insurance, why couldn’t it require people to buy broccoli, which also enhances people’s health? This question, at the heart of the conservative objection to the individual mandate to buy health insurance, illustrates the so-called limiting principle the Supreme Court must rule on: Under the Commerce Clause, does Congress have the constitutional power to compel people to act, in ways they might object to, when their inaction can harm others?
The High Court never got clear on why health insurance is not like broccoli and can thus be constitutionally regulated. There are two important differences that inform the principle for limiting congressional power to compel people to purchase goods and services.
First, as George H.W. Bush made quite clear, you need never eat broccoli. But unless you are a hermit in Alaska, you will use healthcare at some point in your life. Today, it is estimated that the uninsured use more than $116 billion in healthcare services each year. When they will need healthcare is unpredictable. If they are lucky – only at the end of their life. If they are unlucky, an accident, unplanned pregnancy or cancer diagnosis may compel an earlier need for a physician, hospital services, or both. What happens if they don’t have health insurance? Thankfully, doctors and hospitals don’t turn them away when they most need care. They give them the tests and treatments they need – at least to get over the emergency or acute episode. Thus, while it is feasible that you may never be engaged in the broccoli market, at some point, everyone – including the uninsured – will be engaged in the healthcare market.
Why couldn’t we let people voluntarily decide whether they want health insurance or not, instead of compelling them to buy the insurance with the mandate?
Unlike broccoli, when some people don’t participate in the health insurance market – 50 million people in 2009 – there are direct consequences for the insured who are participating. The costs of caring for the uninsured are shoved onto the rest of us through higher insurance premiums or taxes that hospitals, insurers and doctors must charge to recoup the costs of uncompensated care.
Voluntary health insurance exchanges piloted in several states without mandates all failed because healthy people opted out. Those who are relatively healthy figure the cost of insurance is too high, that they are subsidizing insurance premiums for sicker people and they probably (it is a risk) won’t need the insurance because they are healthy. When some healthy people stop buying coverage, the premium goes up for the remaining slightly sicker people. Then, as premiums go up, more and more healthy people drop out, creating an inevitable downward spiral. This is cost-shifting from the uninsured to the insured, and it is true not just in theory, but in practice. We have tried many such exchanges, and they have all failed. Only the Massachusetts exchange has worked because of its mandate requiring healthy, as well as sicker, people to buy insurance.
Wal-Mart will see you now
By Dave Chase The views expressed are his own.
“We don’t have a debt problem. We have a healthcare problem.” Those are the words of Laura Tyson, one of the most respected economists in the world. In Bill Gates’ recent TED talk, he described healthcare as the factor that is devastating state budgets leading to education cuts. Clearly something must to be done now to address this crisis.
With the possible exception of the federal government, no organization is in a better position to reverse healthcare’s hyperinflation than Wal-Mart.
If that sounds crazy, let me explain. As Ezra Klein recently pointed out in a Washington Post graphic, it’s not the age or obesity of the population that is driving healthcare costs. Nor does it have much to do with alcohol or even malpractice costs. Rather, as the many cost comparisons in the presentation below show, we simply pay more for the same items when compared to other countries.
No organization in the world has more prowess than Wal-Mart at negotiating costs with suppliers of products and services. With 1.4 million employees and hundreds of millions of customer visits every month, Wal-Mart’s impact is without parallel. It’s one reason that the Sierra Club partnered with Wal-Mart on its Sustainability Program. In healthcare, Wal-Mart’s $4 prescriptions program has saved their customers billions since the program’s introduction.
Sam’s Stimulus
I don’t see going to Walmart for my primary care but I’m glad they are planning to do it. It should provide a jolt to get the broken healthcare system to fundamentally rethink what they are doing. What exactly was wrong with paying my family doctor directly without insurance middlemen mucking things up? When Walmart brings efficiencies, consumers usually win. If you don’t like them, shop elsewhere. Sounds simple to me.
The next chapter in reforming healthcare
The following is a guest post by Stephen Davidson, a professor at Boston University’s School of Management and author of “Still Broken: Understanding the U.S. Health Care System.” The opinions expressed are his own.
President Obama brought back the healthcare debate yesterday by telling a White House audience, “I refuse to go back. And so do countless Americans.” Obama drew attention to the consumer protection regulations developed to implement the new law. Given the continuing controversy surrounding the new law and the relentless criticism from its opponents, the president’s remarks highlighted some of the law’s most dramatic early benefits.
Obama’s healthcare address was an early entry in what will undoubtedly be a series of efforts that emphasize how Americans will benefit from the healthcare bill. The political reality is that as the fall elections approach, the administration must continually inform the public of the beneficial effects of the reform so Democrats get electoral credit come midterm elections.
In the meantime, let’s take a take a step back and look at what the bill that was signed into law three months ago promises to achieve.
The new law makes substantial progress toward the kinds of systems found in other developed countries, which is a good thing. Those systems cost much less to run, cover all their citizens, and provide greater patient satisfaction and better health results. Beginning in 2014, America, too, will provide healthcare to almost all its citizens by mandating most Americans to buy affordable coverage. Federal subsidies will help those who cannot afford an available policy to pay both the premiums and cost-sharing amounts required. The result will be that more than 30 million additional Americans will gain access to affordable and comprehensive health care coverage.
Additionally, private insurers will be forced to improve their coverage by allowing parents to cover unmarried children through the age of 25 and by no longer being able to do the following: –refuse to sell to people with pre-existing conditions or other risk factors –charge more to subscribers with pre-existing conditions or other risk factors, with the lamentable exception of age –cancel or refuse to renew policies for people who use services –impose annual or lifetime limits on benefits
Interesting story, since health care systems in most developed countries are flawed, cannot afford the cost going forward, the US has decided to take a system and match the rets of the world. Too bad, it had a great opportunity to move forward.
Now it can join the ranks of the rest of the world as all try to find a solution to health care.
Costs will increase, some current programs will be reduced in coverage and all will pay more out of pocket/taxes, premiums etc.
Better, maybe perception is the reality, but simply paying more does not improve the system or gain efficiencies.
Women small business owners really need healthcare reform
– Nancy Duff Campbell is a founder and co-president of the National Women’s Law Center, one of the nation’s pre-eminent women’s rights organizations. A recognized expert on women’s law and public policy issues, for over thirty-five years Ms. Campbell has participated in the development and implementation of key legislative initiatives and litigation protecting women’s rights, with a particular emphasis on issues affecting low income women and their families. The views expressed are her own. —
Insurance companies and others who profit from our broken health care system are mobilizing to defeat comprehensive reform by using misinformation and scare tactics. A prime example is the allegation that healthcare legislation – specifically the plan being considered by the House of Representatives – will hurt small businesses.
The fact is that small business owners, especially women, are already hurting under our current healthcare system. Leah Daniels, 29, is the owner of Hill’s Kitchen – a gourmet kitchenware store that opened last May not far from the U.S. Capitol. Daniels can’t afford to offer health insurance to her three employees. She purchased her own bare-bones plan on the individual market for protection “in case I get hit by a car,” but not much else. It costs her just under $200 a month and doesn’t cover such services as routine doctor’s visits or maternity care. Daniels, who often works 7 days a week, says that she is constantly worried about getting sick.
Daniels’ problems are, unfortunately, all too typical. A new report by the Council of Economic Advisers (CEA) found that small businesses pay up to 18 percent more than large firms for the same health insurance policy. These higher costs mean that small businesses are considerably less likely than larger businesses to provide health insurance to their employees, and those that do tend to have less comprehensive plans. And Census data show that women-owned businesses are generally smaller than male-owned businesses.
Small business owners and employees who don’t get coverage at work or through a spouse’s plan may shop for insurance individually. But if they are women – and small businesses that don’t offer health coverage tend to have large proportions of female workers – they are likely to face discrimination in the individual health insurance market. A study by the National Women’s Law Center found that insurance companies routinely charge women higher rates than men for individual policies and offer policies that exclude health needs specific to women, such as maternity care.
Women who own a small business know that the current health care system is failing them. At a meeting of women small business owners in May, Daniels says, “We went around the room and everyone either had health insurance through their spouse or didn’t have coverage at all. Women talked about being afraid to go to the doctor because they didn’t want to find out that they might be sick. It was really striking.”
The healthcare reform plans that have begun moving through Congress would help make it possible for small business owners to offer comprehensive, affordable health insurance. The House plan would make insurance more affordable by prohibiting insurance companies from discriminating on the basis of health status or gender and by allowing small businesses to purchase coverage through a new Health Insurance Exchange. The Exchange would reduce administrative costs and offer a choice of plans meeting minimum benefit standards. New tax credits would be available to help some small businesses pay for employee health coverage; the credit would be worth 50 percent of the cost of qualified health coverage expenses for businesses with 10 or fewer employees and average wages of $20,000 or less. It would gradually be reduced until firms reached 25 or more employees or average wages of $40,000 or more.
Obviously the law has been enacted by now. We’ll see if it changes in the courts or through Congress. We’ve found http://www.ceowomensclub.com/articles/Fe male-Entrepreneurs-Reality that this is an important issue for women business owners. The cost and potential fear of getting sick can impact the most successful woman business owner
Peddling damaged goods
– Dr. Steffie Woolhandler and Dr. David Himmelstein are both associate professors of medicine at Harvard Medical School and primary care doctors at Cambridge Hospital. They co-founded Physicians for a National Health Program. –
Once they’re finished mandating that we all buy private health insurance, Congress can move on to requiring Americans to purchase other defective products. A Ford Pinto in every garage? Lead-painted toys for every child? Melamine-laced chow for every puppy?
Private health insurance doesn’t work. Even middle class families with supposedly good coverage are just one serious illness away from financial ruin. In a study carried out with colleagues from Harvard Law School and Ohio University we found that medical bills and illness contributed to 62 percent of all personal bankruptcies in 2007 – a 50 percent increase since 2001. Strikingly, three quarters of the medically bankrupt had insurance – at least when they first got sick.
In case after case, the insurance families bought in good faith failed them when they needed it most. Some were bankrupted by co-payments, deductibles, and loopholes that allowed their insurer to deny coverage. Others got too sick to work, leaving them unemployed and uninsured.
Now Congress seems poised to fulfill insurance executives’ prayers; make failure to buy their faulty product a federal offense. We’ve seen this brave new world in Massachusetts. Here, beating your wife, communicating a terrorist threat and being uninsured all carry $1000 fines. Our law has halved the state’s already low uninsurance rate – mostly by expanding Medicaid and similar programs at great public expense.
But reform hasn’t made care affordable for middle class families, or for the public treasury. A middle income uninsured 56 year old is now forced to lay out at least $4,800 for a policy with a $2,000 deductible before it pays for any care, and 20 percent co-payments after that. Skimpy, overpriced coverage like this left one in six Massachusetts residents unable to pay their medical bills last year.
Even among the insured, 18 percent skipped care because they couldn’t afford it. Meanwhile, as costs rise for subsidized coverage our state Senate plans to drop 28,000 people from the insurance rolls, and public hospitals and clinics have suffered draconian cuts as funds were diverted to shore up the reform.
First let me be clear that I am insured. I am 56 & own a small struggling retail store. My health insurance policy costs me $6000 a year. In order to have such a “low” premium, I have a deductible of $2500. I have almost no extra money after paying my basic bills. I can’t afford to go to the doctor although I have some real health issues. I fell last year and tore muscles in my leg. I need physical therapy but I can’t afford it. It is difficult for me to walk and it keeps getting worse. My quality of life has greatly deteriorated. I can see myself in a wheelchair in a few years. Blood was found in my urine 3 years ago. I took the tests I could afford but the cause wasn’t found. I can’t afford further tests. Maybe I will end up on kidney dialysis because I have an untreated condition. All I can do is to hope that I don’t. People in my situation who are under-insured are really in a bind. We are not poor enough for Medicaid or rich enough to have good insurance with a low deductible
Healthcare reforms warnings from France and Canada
– Brian Lee Crowley is the founding president of Atlantic Institute for Market Studies (AIMS), a public policy think tank in Canada (pictured left) and Valentin Petkantchin is director of research at the Paris-and Brussels-based Institut économique Molinari. The views expressed are their own. –
President Barack Obama’s package of heathcare reforms – mandatory health insurance, public health option and increased federal government financing – is being sold as preserving independent high quality care and choice for patients while keeping down costs. Taxpayers and patients in both Canada and France know better.
Unfortunately, our experience is that once the government gets its nose in the healthcare tent, not only is spending not contained, but health care professionals lose their freedom to practice. Left with few choices, patients face shortages and waiting lists.
Washington’s proposed new public health insurance option, while not imposing Canadian-style single-payer monopolistic public health insurance immediately, will almost certainly lead to that result in the end.
One of two things will happen. If doctors prove reluctant to accept patients covered by the public option and it is thus unable to compete successfully with private insurers, the politicians will not stand idly by.
Physicians’ freedom to practice outside the public option will become increasingly hedged with restrictions, perhaps ultimately ending up, as in Canada, with doctors in the public system being prohibited from taking private patients.
Or, more plausibly, in the short term at least, private insurers will gradually withdraw from the business, incapable of winning against a government-subsidized “competitor.”
Sounds to me like the systems in Canada and France do not work. Do the authors have a system that does work. If you know the systems please tell us what will work. We have plenty of people trying to take our money for giving us information on things that don’t work.
Fixing health care
– Peter Morici is a professor at the Smith School of Business, University of Maryland School, and the former Chief Economist at the U.S. International Trade Commission. The views expressed are his own. –
American health care is broken.
At 16 percent, the United States spends a much larger share of GDP on health care than Western European economies. Yet the United States has about 45 million uninsured, while its peers do not.
Many Americans between 50 and 65 cling to jobs they don’t want simply to keep health benefits. Their European cohorts are not so constrained.
Simply, European systems ration and control prices more effectively than do U.S. private insurers.
Americans can see a specialist quicker than patients elsewhere; however, U.S. private insurers impose endless paperwork and multiple trips to tawdry, inconvenient locations for blood work, x-rays and other tests that should be conducted simultaneously and under one roof with the specialist.
After your internist finds blood in your urine, it takes many absences from work and visits to moribund waiting rooms to locate the kidney stones, and finally schedule surgery.
I agree, single-payer system is likely the only way to properly/fairly fund health care. Its painfully obvious that business interests have trumped public interest. Of note in particular is way in which R&D is funded, and executed; leading to high expectations of returns/profits in this traders market environment. The next highly advertised drug is a killer app all too often, has led to distrust and noncompliance issues.
A strong, viable public health system that provides BASIC care would lessen the strains on hospitals, ERs, etc. Provision of basic care would decrease costs. Those who enter health care as a vocation rewards were reduced that couldn’t be measured in digits while stresses increased.
Currently, people distrust the medical system and rightfully so. You’ve seen as I have “health fads” come and go based on fuzzy research with large ad campaigns. The relationship between physician/nurse and patient disrupted by those self-interested creating the incentives of individuals to self-diagnose and treat.
Unrealistic goals and profit motivations in directives of the health benefits of particular foods, OTC remedies, etc that change, not limited to FDA and NIH incentives, have all contributed to this distrust. Under the current “guidance” of what constitute an overweight individuals and “unhealthy” even the Governor of California would be ‘classified’ as overweight and not healthy. We have more than one health crisis, one might ask why asthma has reached epidemic proportions among otherwise healthy children/adults not exposed to smoking!!
A hybrid system which allows public health to deliver basic/chronic care and highly reformed insurance industry with oversight to supply more extensive/private care beyond that. Clinics are no fun but do work if given the oxygen/funding. That public health system has a record of eradicating Polio and managing TB outbreaks some 50-60 years ago. Public health systems are a first line of defense in communicable disease and provision of data/vaccinations, common chronic disease monitoring, etc. Stripping out incentives and funding of research for profit-motivated expectations is mandatory, as it direct marketing of Rx mediations. Its time public interest, patient interest becomes the focus of health care reform.
No system will be perfect, every system will have those who abuse it. However, the abuses in this current system is highly lopsided and enabled to the negative in sane/responsible patient care. Finally, it isn’t efficient to further burden health care providers to include a degree in economics to exist and provide care or spend valuable time negotiating standard care for their patient vs what an insurance company will agree to pay.
HR676 written in 2007 with broad bipartisan support provides the best chance of success including est.annual $300B savings just merely by standardization of billing alone. It is disappointing the current Administration has ignored it.
The challenge of health insurance reform
–Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –
Today President Obama submits his budget outline to Congress, and, with it, a $634 billion fund for health care drawn from higher individual and small business taxes and lower reimbursements to medical providers.
Reform of our health care system is long overdue. If you’re unemployed, or work for a small business that offers no health plan, or someone in your family has an existing illness known as a “pre-existing condition,” your main concern might be how to get health insurance.
As Obama said on Tuesday night in his address to the nation, “We can no longer afford to put health care reform on hold.” But setting up a $643 billion fund and raising taxes in the middle of a recession isn’t necessarily affordable either.
In testimony yesterday before the Senate Committee on Finance, Congressional Budget Office Director Douglas Elmendorf presented options for controlling health care costs. He warned that “reducing or slowing spending over the long term would probably require decreasing the pace of adopting new treatments and procedures and limiting the breadth of their application.” That’s rationing by another name, not a comfortable concept to Americans. (To read the testimony in pdf format, click here.)
Mr. Elmendorf pointed to the current employer-based health insurance system, where health insurance premiums are untaxed income to workers, as one of the main causes of price increases. He suggested replacing the tax exclusion or restructuring it, so that patients have more incentives to control costs. In that way the purchase of health insurance would be similar to the purchase of home insurance or auto insurance, services that consumers appear able to purchase without major problems.
President Obama has said he will consider all proposals. During his campaign, the centerpiece of his health reform effort was to set up a new health insurance plan, similar to the Federal Employees Health Benefits Program. It would be open to all, with “affordable” premiums and co-payments.
I am a small business owner. Let’s see right I am involuntarily paying for 4 health plans 1.family health insurance 2.Medicare(Ponzi’s) 3.Low income health insurance 4. employee’s. On top of that, I pay copay, deductibles, with a 1 million dollar lifetime cap. (which means if(knock on wood)something happens I need multiple surgeries and treatments it will easily be exhausted) Now you want to increase tax when my business is struggling. And how many more small business are closing as I’m writing this comment?
Hmmm, how about this for a change– force the big insurance companies to lower their profits, and make it illegal for them to be a public traded companies. How many billions of dollar BCBS, UnitedHealthcare, Cigna were making and I don’t have the mention the pharmaceuticals. (only in America) Don’t come up with a fake universal health plan that not truly helping everyone, esp when the sole winners are the insurance companies. (even the Canadians systems make more sense) Corruption still lingers, tackle the fat cat that’s causing all these problems in the first place– HMOs and the pharmaceuticals.
Yes, broccoli is a provocative reduction, a way to belittle the importance of the individual mandate to buy health insurance. In fact, I would say that we are required by law to buy food, although we have our choice whether or not to choose that vegetable over another. If you do not buy food and your children suffer, that would be grounds for the state to charge you would neglect or even abuse. If you as an adult individual refused to buy any food for yourself, then you would likely get in trouble. You could go to a food pantry or a soup kitchen and get by on some days, but you could end up in jail (for stealing food) or you for disorderly conduct if you went to a restaurant and insisted on your right to eat without paying.
The individual mandate is the good old American value of taking individual responsibility for your life, contributing your fair share towards your own health care and realizing that you are part of a health care system. It is very much closer to the requirement to buy car insurance — and there has been some cost shifting there as well because we have an uninsured motorist cost on the car insurance bill.
The individual mandate was a conservative Republican idea to begin with in order to counter the Democrats’ idea of an employer mandate, so it is so obvious that Republicans and Tea Party folks are against it now only because Obama adopted this provision in the law that was passed under his watch as President! The individual mandate is part of RomneyCare in Massachusetts. One of the sickest things about this political season is to see Mitt Romney running against a national health care reform law that is modeled after one of his best achievements as Governor or Massachusetts!