Debacle. Conundrum. Crisis. Broken. Not working.
What do all these have in common? They've been used to describe the health care system in the United States (and they're the ones fit to print). And the rhetoric is heating up. Calls for change ring out from every affected constituency, which is to say everyone. The doomsday prophecies have been issued.
According to more than one veteran politician, the cost to employers is threatening American companies' ability to compete globally. The shape of things to come is bound to be different than the shape of the current system.
The circumstances are well documented
The United States spends more money overall and per capita on health care than any other country, even those with health care for all -- pick your term, universal, nationalized, socialized. The Organization for Economic Cooperation and Development says the United States, as a proportion of GDP, spends 49 percent more on health care than the Swiss (the next highest spender) and 150 percent more than Great Britain.
U.S. health outcomes are no better than those in other industrialized countries. America ranks 22nd among industrialized nations in average life expectancy and 25th in infant mortality.
More than 45 million people spend all or part of each year without coverage. And even those with jobs are not immune to the health care cost emergencies, as 81 percent of the uninsured are employees or family members of employees, and 69 percent of Americans who have faced problems paying for care actually have health insurance.
Starbucks now spends more on health care than coffee. Auto manufacturers spend nearly as much on health care as they do on steel.
The list continues. What can the country do about it? Policymakers have been debating that question for the last 20 years. One thing remains certain: the flurry of proposals has increased in recent weeks and months, with a changing of the guard in Washington and emerging contenders for the 2008 presidential nominations. Both major parties offer several competing proposals.
"Everyone has their own opinion," says Jim Cosares, president of Brooklyn, N.Y.-based JimCo Associates Inc. "It's a very tough situation. Unfortunately, you can't walk away with a solution without hurting someone."
Impetus for change
Mounting evidence pointing to a need for change is piled everywhere. State governors cry poverty as state budgets tilt further out of balance because of health care spending. Advocacy groups demand better coverage for more people. Employers insist on changes to the system as they see their premiums jump by double digits year after year. And health care experts and opinion leaders rate positive changes to the system as a top priority for the new Congress.
According to a Commonwealth Fund survey of health care opinion leaders, 88 percent of respondents place covering the uninsured at the top of Congress' to-do list, listing it as absolutely essential or very important.
A Kaiser Family Foundation survey, "Health Care in America 2006," found that most Americans consider providing health insurance for all a priority. When asked this question -- "Which of these do you think is more important: providing health care coverage for all Americans, even if it means raising taxes, or holding down taxes, even if it means some Americans do not have health insurance coverage?" -- 69 percent said providing health care for all Americans was more important.
Numbers like that are difficult, if not impossible, to ignore. Especially for men and women whose livelihoods depend on the votes of the people affected the most. There are uninsured and underinsured Democrats, Republicans, Independents, and -- most valuable to politicians -- swing voters.
The Kaiser survey also found that Americans are dissatisfied with the cost and quality of health care. Fifty-eight percent are very dissatisfied with the cost and another 22 percent are somewhat dissatisfied. That's compared to only 18 percent who say they are somewhat or very satisfied. Fifty-four percent say they are somewhat or very dissatisfied with the quality of care. While quality could be a perception, the cost of care hits people where it counts most -- in the checkbook.
When asked about the number of people without health insurance, only 4 percent responded that it isn't much of a problem, while 52 percent call it a critical problem, 36 percent say it is serious and 7 percent say it's a problem.
Elected officials can look at the Kaiser poll to discover what Americans think of the problem. They can look at the Commonwealth survey, which polled opinion leaders instead of the general populace, to see some possible solutions. When presented with a list of 15 possible options for reforming the system as it stands, opinion leaders chose which strategies they consider extremely or very effective.
The top five methods for expanding coverage for the uninsured are:
- Mandating that all individuals buy coverage, combined with subsidies and a pooling mechanism, 57 percent.
- Providing states with federal matching funds to expand Medicaid and/or State Children's Health Insurance Program coverage for poor children and adults, 57 percent.
- Creating a single-payer insurance system, 54 percent.
- Covering everyone under Medicare, 53 percent.
- Letting near-elderly adults buy into Medicare, 46 percent.
Plans, plans, plans
Brokers need to pay attention as the debate gains momentum in Washington, and they must fight to influence the final decision, especially if they want to keep their jobs. A reformation that cuts out brokers altogether could have consequences those outside the broker community might not foresee.
"Anything that would reduce the role of the broker in the process would be a disservice to the business community," says Jack Gary Alspaugh, principal of Gary Insurance Group in Scottsdale, Ariz.
Brokers who concur -- and have solutions to avoid that -- have the chance to find out what elected officials are proposing and exert some influence. Here is a look at some of the most prominent proposals, starting at the top.
President Bush's plan
In his State of the Union address in late January, President George W. Bush announced his plan to expand coverage. The president's plan keeps the system private and uses tax benefits for individuals along with federal help for states.
On the individual front -- which will affect brokers most -- Bush's plan offers individuals who have health insurance a tax benefit by exempting the first $7,500 of income from payroll and income taxes. Families covered by health insurance get to exempt the first $15,000 of income.
The biggest change would be for those who boast employer-funded coverage. They still get to exempt either $7,500 or $15,000, depending on their situation, but the employer-covered portion of their health insurance will be taxed as income.
Even with a tax on employer-sponsored portions of health care, the administration says this proposal will result in lower taxes for 80 percent of employer-provided policies, making health insurance more affordable for nearly 100 million people who get insurance on the job. That leaves 20 percent with a higher tax bill, but the plan offers them the option to adjust their compensation, raising wages and lowering premiums, to offset any tax change.
While other Bush proposals -- increasing cost and quality transparency, improving health information technology, promoting wellness and disease prevention -- are in tune with what average Americans and health opinion leaders say is important, the thrust of his plan isn't highly regarded, at least as a means to get more people covered. Only 25 percent of those polled by Commonwealth found providing tax credits and other subsidies to low-wage workers an effective strategy.
"Medicare for All"
U.S. Sen. Ted Kennedy, D- Mass., serves as the new chairman of the Health, Education, Labor and Pensions Committee. Last November, shortly after the 2006 elections, Kennedy made clear that health care would be a top issue.
"The time is long overdue to address the crisis in health care," Kennedy said back then.
He calls his plan to address the issue, "Medicare for All."
Kennedy doesn't shy away from the term universal health care. He wants all Americans covered. His proposal calls for a phased-in plan that eventually offers every citizen access to Medicare and the same coverage enjoyed by members of Congress, the president and federal employees.
In addition, enrollees will have access to the doctor, hospital or other provider of their choice. There will be no out-of-network charges because every provider will be in-network.
The public would be largely responsible for funding such a program, but the system itself would remain private. Doctors, hospitals and other providers would remain private entities, while private carriers and their intermediaries would continue administration. Plus, maintenance costs would fall by billions of dollars, as the administrative expense to run Medicare accounts for only 3 percent of Medicare spending, while private insurance company costs for marketing, administration and profit is 14 percent.
Financing for the program would come from employers and employees. Employers would bear a 7 percent payroll tax while workers would be taxed 1.7 percent, according to preliminary estimates. For businesses, that is far less than the nearly 13 percent of payroll they spend now, according to Kennedy's proposal.
Kennedy's plan features some of the same components as the president's: transparency, better information technology and improved quality of care. It differs in that it calls for larger government involvement in a private system. What it doesn't call for, at least in its early form, are some things health care experts say will reduce costs. If Kennedy wants a plan that truly reduces health care costs, it should establish evidence-based guidelines for care, increase the use of disease and care management strategies for chronically ill Americans, and reduce inappropriate care. All of those are important, according to the Commonwealth Fund survey.
The U.S National Health Insurance Act
Introduced in the U.S. House of Representatives as H.R. 676, the U.S. National Health Insurance Act sounds much like Sen. Kennedy's plan, but calls for more sweeping changes in the health care system. The publicly financed, privately delivered system would use the existing Medicare program to cover all U.S. citizens.
Sponsored by U.S. Reps. John Conyers, D-Mich., Dennis Kucinich, D-Ohio, Jim McDermott, D-Wash., H.R. 676 would:
- Convert the U.S. health care system to a nonprofit program.
- Cover every person living in or visiting the United States and U.S. territories with a national health insurance card and ID number.
- Cover all medically necessary services, including long term care, eye care, chiropractic, substance abuse treatment and much more.
- Provide patients their choice of providers.
- Carry no co-pays or deductibles.
- Prohibit private health insurers from selling coverage that duplicates the national program.
- Hire and retrain workers displaced by the transition to a nonprofit program.
- Set reimbursement rates annually for physicians and allow for global budgets for health care providers.
- Take 15 years to implement fully.
The plan itself is likely to meet resistance from many corners of the political establishment. Its method of financing also will draw fire, as public support for universal health care diminishes when new taxes are part of the plan.
State level
Many state residents won't have to wait for the federal government to take action on the health care front. Governors across the country are stepping up to the microphones and offering proposals of their own. Last year, Massachusetts took action, with Gov. Mitt Romney signing legislation that provides nearly universal health care coverage to residents.
The Massachusetts plan mandates that every state resident purchase insurance and emphasizes shared responsibility, as does Gov. Arnold Schwarzenegger's plan in California. Schwarzenegger's plan goes a step further by requiring insurers to provide coverage -- access to affordable plans cannot be denied residents. Employers that do not provide coverage options for employees would be charged assessments that would go into a state fund.
Illinois Gov. Rod Blagojevich has a plan to provide universal coverage in his state, as well. Again, it mandates that individuals purchase coverage, either through an employer or on their own, or face a penalty; and employers have to provide coverage or pay an assessment. In Connecticut, lawmakers are pushing private insurers to offer basic, low-cost health insurance plans to uninsured adults. Several other states are nudging toward health care reform with proposed coverage for all children.
While many of the broad proposals boast the same elements, the intricacies of how each plan would work differs by state. Some would tax employers, employees, doctors and hospitals. Others would use federal funds differently. Some would subsidize insurance providers for discounted plans.
Employers already have questions and concerns. Brokers who keep abreast of possible changes will be in the best position to provide employers with the information they need to make the best choices.
Cosares says he's heard from some of his clients that they would embrace a switch to universal coverage, but he insists they can't see the bigger picture.
"Some of my clients say they can't wait for national health care," he says. "What they don't realize is that instead of writing a check to the Cignas and Aetnas of the world, they'll just write checks to the IRS. The money has to come from somewhere."
Change is coming. Finding a solution that balances the needs of businesses, employees, the unemployed, the uninsured, carriers, state and local governments, and brokers will be difficult. Get to know the possibilities and take the available steps to bring about a system that benefits both brokers and the people they serve.
