IN THIS ISSUE:
? Ways and Means Hearing on the Uninsured
? Some Thoughts on Moving Off Dead Center
? KB Forbes’ Crusade Against Price Gouging
On Tuesday I testified on the uninsured before the Health Subcommittee of the Ways & Means Committee in the House. The committee, chaired by Rep. Nancy Johnson (R-CT), had the very good sense to look at underlying causes of the issue rather than reaching for instant solutions. In the course of the hearing, however, a very different approach to the entire subject suggested itself. More on that below, but first:
? The hearing began with testimony from Douglas Holtz-Eakin, director of the Congressional Budget Office (CBO). His testimony focused on the numbers, including the varying counts of the uninsured, who they are, why they are not accessing available coverage, and the implication that a variety of policies are required for a heterogeneous population.
? Diane Rowland, executive vice-president of the Kaiser Family Foundation, was next with another look at the statistics. She concluded, “Looking ahead, it is hard to see how we will be able to continue to make progress in expanding coverage to the uninsured or even maintaining the coverage Medicaid now provides.”
? Perhaps the most interesting presentation was by Len Nichols, vice president of the Center for Studying Health System Change. Dr. Nichols summarized a book he co-authored, “Health Policy and the Uninsured,” and walked the Committee through 10 myths about the uninsured. He used an economics perspective to challenge many of the assumptions currently in wide circulation. He pointed out, for instance, that just “being insured” is no guarantee of access to care.
? Glenn Melnick of the University of Southern California discussed how hospital pricing, especially “the lack of a rational and transparent pricing system for self-pay patients,” disadvantages the uninsured and potentially stifles the market for Health Savings Accounts.
? I tried to make the case that previous state and federal policies, especially tax policy and ERISA, have distorted the market and made coverage more expensive and less accessible for anyone not in the subsidized systems of Medicare, Medicaid, and employer-sponsored health insurance.
SOURCE: All the testimony is available on the Committee’s web site at:
Some Thoughts on Moving Off Dead Center
The discussion afterwards was pretty grim. The members of the Committee who were present (along with Mrs. Johnson, Congressmen Pete Stark (D-CA), Jim McDermott (D-WA), Phil Crane (R-IL) and Dave Camp (R-MI) stayed for the bulk of it) have all been through hundreds of such hearings, debated scores of bills, and enacted some of them (including HIPAA and SCHIP) trying to address the problems. But nothing seems to have worked. Their frustration was palpable. Mr. Stark said half of all bankruptcies involve medical expenses, and in 80% of those cases the person did have health insurance coverage. Mrs. Johnson asked about the role of community health clinics and said they can offer a source of care more efficiently than insurance coverage. Mr. McDermott asked how giving a low-income person a $5,000 deductible plan will help them get the care they need. And Mr. Camp noted how volatile the uninsured population is.
Time ran out at the hearing, but I wanted to suggest to the Committee that sometimes when a problem seems intractable it is because we are not framing it correctly. We are not asking the right questions. Perhaps there is another way to look at this issue.
Instead of asking why so many people are uninsured, perhaps we should look more closely at who is insured and for what. None of us is insured for everything, nor should we be. Health insurance is only one way to pay for health care services, and often not the best way.
The Members’ observations at the hearing hit all around this notion, but didn’t specifically identify it. Mrs. Johnson is right that paying directly for routine services is often more efficient than passing those dollars through an insurance mechanism. Mr. McDermott is right that what HSAs are really doing is inviting people to be partially uninsured. Mr. Stark is right that having insurance as we know it today still leaves people financially unprotected. Mr. Camp is right that addressing “the uninsured” is trying to hit a moving target. People come and go as their needs and resources change.
The real question is what is the appropriate role for health insurance versus other forms of financing? There is an entire universe of stuff out there that can be considered “health care.” Insurance can never cover it all. We are all “uninsured” for something.
If we start with this reality, the next question is “What is appropriate for an insurance plan to cover? And who decides?” Is it really a good use of the clumsy insurance mechanism to pay for a $60 physician’s office visit? Is insurance, with its administrative costs, the best way to pay for Viagra and birth control pills? Aren’t these things better paid in cash and save the insurance to prevent the bankruptcies Mr. Stark cited?
There is always a concern about low-income people – “How can they be expected to pay cash?” But insurance isn’t a particularly good way to subsidize their health care needs, either. First, they or someone else has to pay premiums if insurance is used to pay for their care, and the premiums would be lower if routine expenses were paid directly. The money that would otherwise go into premiums could be made available for them to pay cash. Second, to the extent there is administrative waste involved in passing claims through insurance, it is not a very good use of their scarce resources. Getting more bang-for-the-buck is even more attractive to the low-income than it is for other people. Third, is it really a good thing that even low-income people are required to pay premiums for services like in vitro fertilization or psychiatric social workers? Perhaps they should be allowed to use their limited resources to cover only those services that are high priorities for them.
Congress might be able to gain some traction here if it began to wonder about these issues.
I was glad to meet Professor Melnick at the hearing. Hospital pricing is heating up as one of the key issues in the care of “self pay” patients, including both the uninsured and those with HSAs. Perhaps the person who has done the most to bring attention to this issue is K.B. Forbes, one time spokesman for both Steve Forbes and Pat Buchanan during the 2000 presidential primaries. He has organized a group called Consejo de Latinos Unidos that is focusing on uninsured Hispanics who are often charged three and four times as much as insurance companies for hospital care. He calls it price gouging and has wrested some concessions from the Tenet hospitals in California. Unfortunately, the hospitals tend to give price breaks only to patients they deem needy, not to others who simply prefer to pay in cash. Now his attention has focused on Florida and the HCA hospitals, which he calls “the worst abuser of price gouging” in the country. But he isn’t confining his focus to for-profit hospitals. He is also tackling the Seventh Day Adventist Florida Hospital and Orlando Regional. The Florida Hospital Association is fighting back, defending its discounts with insurance companies and charging the uninsured with being irresponsible. It is also darkly hinting that Mr. Forbes is part of an insurance-industry conspiracy, which is odd since he is critical of insurance discounts. There is a wealth of fascinating information available on all this, starting with a dispassionate overview in the “Orlando Weekly,” and then a wide variety of sources both pro and con.
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