The Health Insurance Elephant in the Room

Does employer-based health insurance have a future? If not, what will replace it?

This is a fairly interesting way of presenting America’s health insurance crisis, which has left 45 million Americans uninsured and health care costs skyrocketing out of control. Paying doctors, hospitals, drug companies, device manufacturers, West African aides in our nursing homes and the like now gobbles 16 percent of the Gross Domestic Product, a full six percentage points greater than any other industrialized nation. Rising health care costs are contributing to the demise of some of our great industrial giants, yet we have health outcomes that rival Cuba and Ireland. Even the average Englishman – with his collapsing national health service, long waits for basic care, and bad teeth (it must be true, I read it in the New York Times) – outlives his American counterpart by a full year. Poor bugger.

In the face of this crisis, our Washington political leadership either a) ignores the issue (the Republican Party) or b) suggests incremental reforms like Sen. Hillary Clinton’s proposal to insure all kids. When a few states like Massachusetts and Oregon launch interesting experiments, the media cannot be bothered to spend more than a day on the story.

So I went out of my way this morning to attend a forum at the Brookings Institution, co-sponsored by the New America Foundation, that asked the two questions that led off this brief note. We often forget that the American system of providing working people with health insurance through their place of employment is rather unique, a product of employer efforts to attract and keep workers during World War II when the government imposed wage and price controls on the economy. But given what’s going on today – people changing jobs every couple of years; more and more contingent workers (I’m not laid off, I’m a consultant!); fewer and fewer small employers offering insurance; behemoths like Wal-Mart thumbing their nose at this basic social obligation – it would appear that this particular manifestation of American exceptionalism is headed for the scrapheap of history.

The New America Foundation would like to put itself at the head of a parade sending employer-based health care into oblivion. Len Nichols, director of its health policy program, positively kvelled at the support expressed this morning for NAF’s pet reform: requiring people to buy health insurance the same way states require people to get car insurance. The implication, of course, is that the tax break for employer-paid health care will be repealed, employers will stick the money they now spend on health care into worker paychecks, and empowered consumers will march off into the insurance marketplace to buy policies that fit their needs.

Strong support for this approach came from Todd McCracken, president of the National Small Business Association, few of whose members provide comprehensive health insurance in the first place and even when they do, usually require onerous co-pays and deductibles to help meet the pricetag of an insurance marketplace that routinely offers inordinately high prices to individuals and small groups. No one should really blame small businesses for screaming, “Let me out of here.”

Leave it to Brookings’ Henry Aaron, the aging don of health care economists (today was his 70th birthday, he informed the crowd, which means we were born on the same day), to add a dose of reality to the proceedings. Employer-based health care “works for most us,” he reminded the audience. It does so because “it pools risk – good risks and bad risks – as part of a single group.” Who will want to insure the 55-year-old with emphysema from a lifetime of smoking? Setting individuals loose in the marketplace, even with subsidies, will never work because the only way to provide health insurance at a reasonable cost is to “pool large numbers of people and charge people average costs. You have to pool somehow,” he said.

Andrew Stern of the Service Employees International Union gave the opening address and made the moral plea for a universal plan. But after listening to his poignant anecdotes about working moms who lost children because they couldn’t afford to pay a $900 hospital bill, Ron Brownstein, the veteran political reporter of the Los Angeles Times, poked his inquisitive finger in the obvious hole in Stern’s presentation. So what would you replace it with?

Stern said he didn’t care with one notable exception. You could expand the system that currently offers federal employees a choice of insurance plans; you could go with an individual mandate with subsidies; you could set a national standard, turn over all the money in Medicare and Medicaid to the states and let them figure it out, he said.

But Stern, whose union led the breakaway from the AFl-CIO last year and is considered a darling among sections of what the folks at the Nation call “the left,” folks at The American Prospect call “progressives,” and folks who belong to Hillary’s vast right-wing conspiracy call Liberals, definitively ruled one option off the table. On this signature issue, he came down squarely in the camp of the centrists. “Medicare for all” ain’t happening, he said. “We’re for choice of doctors and plans. There’s going to be multiple payers, not a single payer in America.”

For the record: All but two of the nearly 30 countries now considered part of the advanced industrial world have some form of national health insurance. All of them spend substantially less than the U.S. on health care. More than half have better health outcomes based on traditional measures like longevity.

Americans are craving, to use the words of Andy Stern, health care that is affordable, universally available, and of high quality. Amen brother. But there’s an elephant in the room when no one in the political firmament – left, right or center – is willing to even talk about how the rest of the world goes about achieving it.

Posted by gooznews at June 16, 2006 09:47 PM