Map of life expectancy at birth from Global Education Project.

Thursday, April 06, 2006

Ju Jitsu?

Universal "coverage" -- however defined -- is not the only issue in health care policy. It's essential to meaningful reform, but there are ways to do it that just make matters worse. The conservative movement, led by the White House, wants to force everybody to buy really crappy health insurance that doesn't pay for basic and preventive care, but only kicks in if you have catastrophic expenses. We would have to pay for ordinary services out of pocket, which is supposed to make us "owners" of our own health care. There are tax breaks which make it even easier for rich people to afford, and don't do much for the rest of us. This system leaves the private insurance industry in control of our money, skimming off their 25% or so, and does nothing to control costs or bring rationality to the allocation of resources. On the contrary, it encourages people to skip preventive care and subsidizes expensive interventions after people have become seriously ill.

The day after celebrating their great victory in getting what is touted as nearly universal coverage passed in Massachusetts, progressive forces are waking up with a nasty hangover and a sneaking fear that they've been taken advantage of. Here's what crusading docs Steffie and Dave have to say. Excerpt:

The legislation promises that the uninsured will be offered comprehensive, affordable private health plans. But that’s like promising chocolate chip cookies with no fat, sugar or calories. The only way to get cheaper plans is to strip down the coverage – boost copayments, deductibles, uncovered services etc. Hence, the requirement that most of the uninsured purchase coverage will either require them to pay money they don’t have, or buy nearly worthless stripped down policies that represent coverage in name only.

Third, the legislation will do nothing to contain the skyrocketing costs of care in Massachusetts – already the highest in the world. Indeed, it gives new infusions of cash to hospitals and private insurers. Predictably, rising costs will force more and more employers to drop coverage, while state coffers will be drained by the continuing cost increases in Medicaid. Moreover, when the next recession hits, tax revenues will fall just as a flood of newly unemployed people join the Medicaid program or apply for the insurance subsidies promised in the reform legislation. The program is simply not sustainable over the long – or even medium – term.

It appears they may have a point. Liz Kowalczyk of the Boston Codfish Wrapper finds out that the premium that families above 300% of poverty (that's about $50,000 a year for a family of three) will have to pay will be around $700 a month, and that won't cover prescription drugs and will have over a $1,000 a year deductible. Meanwhile, there just isn't enough money in the legislation to begin to provide an adequate subsidy for poorer people, and how much they will have to pay to buy into the state-subsidized plan that's supposed to be available for them is still unknown.

Worst of all, there is no reason to think this will encourage more employers to cover their employees. Au contraire, as far as I can tell, if they're paying workers less than $50,000 a year -- which is where the vast majority of uninsured people are already -- they'll have less incentive than ever to offer coverage. The state is promising to subsidize coverage for those folks, so why not dump them? $295 a year is all they'll have to pay, much cheaper than health insurance. It wouldn't be bad in principle for more of the population to be in the state-sponsored plan, but it's bad if you haven't taken care of the financing, which they haven't. The only way to pay for it now is to make people pay most of the cost out of pocket, in other words it's regressive.

In fact, people near the 300% of poverty limit would presumably have to pay nearly full price for the state-sponsored plan, and they won't be able to afford it. In order to avoid a huge fine, they'll have to buy the crappy "affordable" plan that won't pay for their routine care or prescription drugs. Depending on how much money the state can come up with, there's no telling how far down the income scale this will go. If more and more employers drop coverage, and costs keep rising, maybe right down toward the bottom. Sure, we could solve the problem in a trice by raising the income tax, but is that going to happen?

In case anyone has any doubts, the conservative Republican governor Mitt Romney is planning to run on this accomplishment in the Republican presidential primaries. The Heritage Foundation helped write the bill.

I sure hope I'm wrong but we may just have sent our bank account information to a deposed Nigerian prince.

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