WOOSTER, OHIO — Twenty-three years ago, when discussing the rising cost of treating the terminally ill, Governor Richard Lamm of Colorado famously quipped that elderly people who are terminally ill have a “duty to die and get out of the way.” He had a salient point somewhere in there, but he got a lot of flack for the indelicacy of his rhetoric.
The truth is, however, that health care is a finite resource. There is ultimately only so much of it to go around, and, whether or not it is immediately apparent to us, every nation on earth has a system of rationing health care.
In a single-payor system, such as the one that exists today in Canada and the United Kingdom, health care is rationed through delays and inconveniences. (Michael Moore tries to show otherwise in his provocative and illuminating film Sicko by interviewing people in Canadian and British hospital waiting rooms; the test, however, is not whether you have to sit in a waiting room for very long, but rather, whether first-choice therapy is delivered without delay.) In the U.S., health care is rationed by leaving 40 million people uncovered. By leaving 40 million people uncovered, those who receive good coverage in most cases get all the attention they desire, while the uninsured do everything in their power to avoid going to see a doctor at all, for fear of the cost of being ill.
To underscore the point, and to give Governor Lamm the benefit of the doubt that he wasn’t just being a hard-hearted son-of-a-bitch when he made his radical statement about health care back in 1984, three years ago Governor Lamm said the following in an interview: “Right now we don’t have a moral health care system. We have a technologically brilliant, but morally inadequate health care system because we let 40 million people go uncovered.”
It is the ethical aspect of leaving people uncovered that makes the upper middle class in this country squirm, because they also intuitively understand that health care is both a basic need and a rationed resource. Michael Moore appeared on Hardball with Chris Matthews last Monday and asked him: “Would you mind sharing your [private hospital] room if it meant that 47 million Americans would be covered tonight?”
MATTHEWS: Interesting question.
MOORE: Would you?
MATTHEWS: I think I should, let me put it that way.
There is a middle ground between giving everyone full coverage, and giving those of relative affluence every health care amenity while others get nothing. There is potentially a middle ground that will give us, as a nation, the ability to improve the rate of infant mortality (which today is the 32nd worst out of 33 of the world’s developed nations), while at the same time giving recognition to the role of insurance companies as major drivers in our capital markets. There is, potentially, a way of rationing health care in a way that does not permit the least financially secure among us to succumb to outrageous costs or, literally, to poor medical care, while at the same time preserving choice and freedom – all within the framework of a Ward Republic solution of drawing upon federal resources and the federal power to tax, but leaving important decision-making to be made at the community level.
My health care reform proposal, the Public-Private Healthcare Trust Program, would create a single-payor system for basic needs while maintaining a robust market for private insurance for ancillary needs and premium services. Here’s how it would work:
Specific coverage issues would be subject to local decision-making, except that, at minimum, a trust must provide the following:
- 100% coverage for
- Pre-natal health care
- Children’s health care
- Catastrophic and long-term chronic disease health care
- Emergency trauma health care and post-emergency rehabilitation
- All senior healthcare (68 years and older)
- Trusts must provide at least 50% coverage for adult health care not otherwise falling within these categories (the remaining 50% being referred to as the “gap”), excluding procedures traditionally considered to be elective “non-health care” procedures such as elective plastic surgery .
- Local trusts may, subject to fiscal limitations, provide more than the minimum coverage, thus providing an incentive for a community dialogue on preventive health; the less basic coverage that a particular trust must pay for, the more ancillary coverage it will be able to provide.
- Local trusts may, subject to fiscal limitations and on a discretionary basis, provide health care grants in hardship situations to deal with unexpectedly high gap expenses.
- Citizens may opt out and opt into the system at will, but may not opt out of paying for the system. No “preexisting condition” limitations shall attach.
- Patients will have the unqualified ability to choose their health care providers — unlike the current system, in which private health care insurance typically limits the extent of its coverage to services performed by preferred providers.
Federal funding will be distributed to each local trust, consisting of groups of 5,000-7,000 people within a locality, on a pro rata basis (with adjustments for age and existing disabilities within a particular group). Trusts will be governed by a local elected board of citizens. The activities of the trust may be administered as a local business, or by a private insurance company, subject to a capped administrative fee of 6% of federal funding per year. Real administrative costs should be lower under the Program due to the fact that administrative decision-making will be limited to a determination of whether the health care provided is 100% covered or 50% covered. Trusts will be subject to an annual federal audit.
High on the list of the things that frustrate people most about the current private health insurance regime is the facelessness and distance of the decision-makers, and the difficulty of enacting change or even getting coverage questions answered in a satisfactory manner. The idea here, however, is to keep the administration of public health care benefits as local, immediate and face-to-face as possible, to provide the most uncomfortable level of accountability possible, as well as to aid in the gathering of pertinent intelligence about a specific community’s needs.
Health care falling within the specified areas of minimum public coverage will be subject to fee and expense caps, gauged at 2008 cost levels with a bi-annual cost increase mechanism, similar to the way in which public utilities are regulated in this country; provided, however, that the caps shall apply to services performed under limited program coverage, or for self-insured or privately insured patients, at a rate of 120%. Health care providers will be permitted to charge premium rates above the caps for people who wish to pay for premium services, such as priority scheduling of procedures and visits, private hospital rooms, etc.; but such premium services shall be paid for by individuals or through premium supplemental health care insurance, and not by the trusts. Competition among health care providers will be generated along two fronts: who provides the most successful care, and who provides the best premium care.
Liability for malpractice will be strictly limited, since the element of medical costs for any malpractice event in determining actual damages will be drastically reduced or eliminated.
In order to attain a level of health care spending in the U.S. under the limited coverage of the Public-Private Healthcare Trust program at $3250 per person in year one (which is more than Canada spends on a per capita basis for all health care, but only a little over half of what the U.S. currently spends), the plan would cost approximately $975 billion in year one. The principal sources of federal funding ($987 billion) would be the redeployment of the federal portion of the existing Medicare program, currently budgeted at $340 billion; the same payroll tax increase of 3.3%, shared between employees and employers, as proposed in H.R. 676, currently projected to raise $441.6 billion; the repeal of the Bush tax cut of 2001 and reinvestment of the Bush “economic stimulus plan” of 2003 into the Healthcare Trust, projected at $206 billion. Savings from citizen opt-outs will be reinvested in the program.
The payroll tax is a tax increase, but it comes with a potential cost savings to many working Americans and employers: most employers who provide health care coverage currently pay 6 to 17% of payroll to fund private health insurance, and most insured employees pay deductibles for even the most basic medical procedures that would be 100% covered under the system.
States and localities may supplement the Program through their own revenue sources. In 2006, this State of Ohio spent $12.25 billion on Medicaid. Many of the responsibilities that fell into the state’s lap would become the burden of the federal government under the Public-Private Health Care Trust plan; thus, even if the State of Ohio were to decide to spend only 10% of that amount under the Trust plan, it would still be contributing significantly to the provision of health care to its citizens, and potentially extending the level of coverage available under the Trusts to the citizens of Ohio.
In addition, individual and corporate charitable contributions to Trusts will be 110% tax deductible.
The Private Marketplace
- This Program is designed to encourage the development of three kinds of private insurance markets: one aimed at people who wish to opt out of Trust coverage, and who still desire either full coverage, or a cafeteria plan for limited coverage; one aimed at filling the “gap” for those who are part of the Trust Program, which presumably will cost significantly less than full coverage currently costs; and one aimed at providing premium services – thus enabling the corporate executive who is able to negotiate for the best coverage to move to the head of the line, subject to available resources, in most situations. That’s capitalism, folks – and incidentally, it helps to preserve, at some level, the role of “wealth-and-business engine” that insurance companies have fulfilled for the past 30 years in the U.S. by being important public and private equity and debt capital investors in American business.
- Private insurance, as a supplement to or instead of Basic Coverage, may be offered and sold to individuals or through employers or other collective organizations.
- All subsidies of private insurance companies by the federal government, such as the Medicare Part D program, shall be abolished.
No health care plan is perfect, because the demand for health care in a world of limited resources (and money) will, at current population rates, always outpace the supply of health care. Our aim, however, is to create a moral system of health care in this country – one that is community-focused, and that will, in the best situations, galvanize communities around the issue of taking care of one’s neighbors.
I thank you for listening, and I’ll be seeing you along the trail.