Five Easy Things to Do on Health Care
1) Have employers report the amount of health benefits paid by employee and by employer on the W-2.
Health benefits paid for by your employer are currently tax deductible. The deduction is worth billions. One estimate put the cost at $188.5 billion in 2004. Republicans would like nothing better than to remove the tax deduction and there are several arguments for doing so that make sense. But this would begin to destroy the current employer based health insurance system and absent a better system, I am not sure anyone (other than Bush and some right wing free marketeers) wants to risk that right now. But having employers report this as tax deductible income on the W-2 would do much to show people exactly how much their health benefits cost and how much is being spent. This would add a lot of clarity to public discussions about health care reform and it’s not that expensive either. My employer pays about $300 and I pay about $500 a month for family coverage. How much does yours cost?
2) Get real about consumer information
It’s often observed that health care is a market plagued with information asymmetries. These create lots of market inefficiencies and potential failures. Alleviating that requires that government get serious about providing consumers with information about procedures, doctors, hospitals, and insurance companies. The Institutes of Medicine have been working on outcome measures and performance data for a while, but bringing the databases to the public hasn’t happened yet. For one thing, most health professionals don’t trust the public since the data can be often unreliable and can also provide incentives for doctors to skew treatments and the acceptance of patients. One way to keep a hospital’s success in bypass operations up is to turn away the riskiest cases. But there is no reason to think that we can’t start bringing this to the public and getting some grant money targeted towards getting better information and metrics developed. If we want the market to work better, the first thing we need to do is improve the quality, transparency and availability of information.
3) Fix the ERISA regulations and preemption of state regulations of HMOs
One of the main provisions of the Patient’s Bill of Rights that Republicans have stalled for the last 8 years allows patients to sue their HMOs if they wrongfully deny them medical treatments. A provision in the law that regulates pension benefits (ERISA) has been interpreted to preempt all state regulation of employer provided benefits and this includes HMOs. So if your HMO says sorry, no transplant for you, then you cannot sue them to force coverage of your claim. You are, essentially, without coverage. What you can do is to sue in Federal Court to get coverage (without any damages) but all the insurance company has to do is drag out the process through appeals and delays until you and your problem pass away. If you die, your heirs have no standing in court. A few years ago the Supreme Court ruled that you could sue your HMO for malpractice but the ERISA preemption was upheld in another decision. So this is still an open problem. One way to fix this is to pass a law that simply says that Federal law does not pre-empt state laws that are more stringent in their regulation of any aspect of employee benefits. A better fix would be passing the Patient’s Bill of Right’s but that ain’t happening before 2008 for sure. It might seem hard to imagine that any bill allowing people rights to sue would not get passed in this environment, but this fix still needs to be implemented.
4) Create state insurance pools for small businesses
This idea has been around a while and high-risk pools by states have proven problematic. Bush often touts these kinds of plans. So let’s go head and set up mechanisms to allow small businesses to pool employers and risk so that they can get reduced cost health insurance. The Federal Health Benefits plan is a large risk pool of Federal employees that offers several kinds of plans. Kerry had a plan to allow people to join that pool and simply pay the same rate that the Federal government paid to cover its employees. But the Chamber of Commerce could set something up as well. Federal law needs to be set up to facilitate and support this kind of activity. Of course most employers still won’t provide health insurance, but these pools could form the basis for the kinds of Health Insurance Purchasing Cooperatives (or HIPCs) that were the centerpiece of the Clinton health care plan.
5) Create a standard basic health benefits package
Call it Plan A. But the Federal government could do much to get a discussion about what health care benefits could be in a national health insurance program by passing legislation stipulating what basic benefits need to be in a health insurance package at minimum. This wouldn’t stipulate any circumstances on the financial side. Plans could still be structured like they would under Republican preferences with high deductibles and low premiums or high premiums and lower deductibles, as they tend to be under Democratic preferences. It wouldn’t have to cover abortion or cosmetic surgery or other controversial treatments and issues. But it could have some minimum standards of what is covered. A certain number of preventive care visits. Rules about outpatient and inpatient stays. A list of covered procedures and treatments. One of the benefits of the Oregon health plan was that it initiated a discussion about what would comprise a basic set of benefits. Heck the government doesn’t even need to make this law. A large foundation could commission this and them publicize the results so that shoppers could compare their plan to Plan A. A standard set of benefits starts a conversation about basic benefits and it educates people about what to expect from an insurance company. It also can do much to protect against those phony insurance companies that are selling low cost coverage to folks and then skipping out on paying anything when a claims comes in.
Oh, and don’t forget to allow the importation of prescription drugs from Canada. And let’s let Federal health plans and state Medicaid plans negotiate for lower prices from drug companies too. Both of these were (intentionally) left out of the prescription drug bill.
UPDATE: Matthew Yglesias links to commentary about the latest health care proposal from the Center for the American Progress, which, at first glance looks like Kerry-lite.