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Universal Insurance: A Worthy Goal, But A Miserable Climb. Vanderbilt February 12, 2009 Tom Scully. Universal Coverage— miserable??. If it was easy—it would have happened long ago! It will take until at least 2011. 5% chance in 2009—due solely to Sen. Kennedy

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Universal insurance a worthy goal but a miserable climb

Universal Insurance: A Worthy Goal, But A Miserable Climb

Vanderbilt

February 12, 2009

Tom Scully


Universal coverage miserable
Universal Coverage—miserable??

  • If it was easy—it would have happened long ago!

  • It will take until at least 2011. 5% chance in 2009—due solely to Sen. Kennedy

  • Lots of debate for next 6 months. But this makes Medicare Rx look like child’s play!


Insane system
Insane System

  • Nobody’s fault—amalgam of post-war policies created today’s mess-hard to unwind

  • Really 3 finance systems—all different:

    • Medicaid & SCHIP. (Tenncare) 90 million people

    • Medicare 47 Million of highest users

      -- both highly equitable behavioral disasters

    • Commercial insurance –under 65 (75% ERISA)

      -- highly responsive/flexible inequity. 47 M uninsured


Better off with clinton 94
Better off with Clinton ’94?

  • Yes—that was all about commercial market reform

  • Looks like most moderate Dems today

  • Just went a bit too far

    -organizing the under 65 market ain’t easy?

    What President has looked good here?

    -Clinton? Bush 1 or 2? Carter? Nixon? Truman?


Politics and knowledge
Politics, and Knowledge?

  • Far worse than 1993-94

  • Fewer in both parties understand the issues

  • Polarization much worse—zero communication (see stimulus)

  • No Bentsen, Kerry, Moynihan

  • No Danforth, Chafee or Dole


What are the options
What are the Options?

  • Medicare for all; Medicaid expansions (Stark).

    -never happen. Will never be the votes

  • Vouchers/ Tax Credits for Individual Coverage (Bush/McCain)

    -dumb structure; GOP is toast

  • Middle?? Many variations—all around FEHB concept. HUGE differences

    - Wyden individual coverage?

    - Obama/Daschle/Baucus?


Huge philosophical differences
HUGE Philosophical Differences

GOP- Hates price fixing. Thinks Medicare and Medicaid “single payer” model is the problem.

  • They want to push Medicaid and Medicare to “at risk” private health plans (deregulate and commercialize). FEHBP is model.

  • HMO and private plans are “good”--deliver value to taxpayers because their $ at risk.

  • Under 65 Reform: Access thru individual mandate and insurance pools. PRIVATE plans. Individual mandate ok to some.

  • Tax Credits or “transfer payments” to provide access to poor through private plans


Huge philosophical differences1
HUGE Philosophical Differences

Democrats- hate “privatization” of Medicare and Medicaid and look to government payer/contractor model for under 65 system.

  • Expanding Medicare to 55-65 year olds is still a popular approach.

  • Employer mandates still popular.

  • Expanding Medicaid and S-CHIP generally preferred to private plans for low income.

  • Strong opposition to “profits” given to managed care plans to run the system.


Other models for compromise
Other Models for Compromise?

  • New Massachusetts Health Care Reform Plan

    • Mandates everyone purchase health insurance with financial penalties if forego

    • Requires employers with >10 employees provide coverage or pay a “Fair Share” contribution of up to $295 annually per employee

    • Government subsidizes low-income individuals

    • (all financed via Medicaid scam)

  • Schwarzenegger Proposal

    • Similar to MA – everyone must purchase insurance, mid-large employers provider coverage or pay 4% payroll into pool, low-income subsidized by state

    • Physicians (2% revenue), hospitals (4% revenue), health plans required to contribute

      NEITHER is funded—or deals with ERISA


What is out there now
What is out there now?

  • Middle/Left:

    Obama/ Baucus (similar to Daschle)

  • Federal Health Reserve regional pools

  • Medical review at FHR

  • 55-65 Medicare buy-in

  • “Medicare-like” federal option in pools for all under 65

  • Limited Tax Cap on benefits

    Most on left think this is way too far toward market (Waxman, Stark)

    Conservative Dems and GOP think this is way too much big Government


What is out there now1
What is out there now?

2) Middle/Right

Sen. Wyden (D-ORE) (and both TN Senators)

  • Abolish employer-based system, eliminating tax preference for employers

  • Individual mandate

  • All Americans buy via regional pools

  • Subsidies for low income to buy private plans through pools

    Correct concept. But employers, unions and insurers go nuts. Turns world upside-down. Too much too fast—not doable


So what are the big hurdles
SO WHAT ARE THE BIG HURDLES

-MANDATES: employers or individuals Do you randomly assign the uninsured to a plan and chase them?

-COSTS: Got $100 Billion a year—FOREVER—for me?

-ERISA- 75% of under 65 lives. Everyone ignores??

Nissan and HCA have to deal with 50 regulators? Lose control of their costs/plans?

-TAX CAP- Unions and Conservatives go nuts

Devil is in detail—and detail is NO FUN!


So wise guy what would you do
SO, Wise Guy—what would you do?

  • If it was easy—it would have happened long ago!

    But there is a doable substantive middle ground

    Rolling Hills: Clayton McWh; THA; Nissan, etc tasked to “find doable middle ground”


Rolling hills universal coverage with no new
Rolling Hills: Universal coverage with NO new $

STRUCTURE:

  • Individual Mandate

  • State/Regional Insurance pools mandated . Universal coverage for a basic benefit. Poor get subsidized; those buying more get taxed on extra benefits

  • ERISA reform. If large employers want to “opt out” of state pools, they must submit employee data for “risk adjustment” (works in Medicare). If employees healthier, they would pay “cherry picking” fee to state pools, per employee.

  • Mandated standard “actuarially equivalent” plan (i.e. BC PPO with $750/person deductible) that would be available free or low cost to low income.

    COST: Just < $100 Billion/ year


Universal coverage for 0 more
UNIVERSAL COVERAGE FOR $0 MORE

PAYING FOR THE COST:

  • CAP THE TAX PREFERENCE at the value of the basic plan. Everyone gets a Chevy. If you want BMW coverage—it is taxable as income.

    Limit on employer deduction and employee exclusion Saves about $50-$60 Billion a year.

    2) RECAPTURE $30 Billion of the $45 Billion a year of hospital subsidies. Medicare DSH; Medicare IME/GME; Medicaid DSH. If there are no uninsured, should all those subsidies continue as is?

    SEE! SOMETHING FOR EVERYONE TO HATE!!!!


Universal coverage
UNIVERSAL COVERAGE

NO PAIN NO GAIN

LOTS OF PAIN TO GO AROUND

  • Must be LONG, Torturous and bipartisan project---or it won’t happen.

  • Sadly don’t hold your breath


Wrap up miserable
WRAP UP– Miserable?

  • What could blow this up? ANYTHING!

    -Employers (ERISA)

    -Unions

    -States

    -Conservatives over TAX CAP; Liberals over TAX CAP

    -Liberals over “not enough” in basic plan

    -Politicians because it is good politics

    5% is optimistic. Love Sen. Wyden (and Alexander and Corker) for trying!!



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