Health Care Reform Series: The Patients' Choice Act

July 5, 2:28 PMLiberal ExaminerJenny Kakasuleff

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President Barack Obama hugs Debby Smith, 53, from Appalachia, Va., after she asks him about her health care during a town hall meeting at the Northern Virginia Community College in Annandale, Va., Wednesday, July 1, 2009.(AP Photo/Alex Brandon)

The last article in this series discussed the varying distortions that have been used to drive the public debate on health care reform. This part will analyze the Republican Party’s approach to solving the problem, paying particular attention to the Patients’ Choice Act.

Read: A history of health care in the U.S.

Read: Distortions in the public debate on health care

In response to rising sentiment for a public option, republicans have responded with a plan of their own, which claims to provide all the benefits of a universal health care system through the free market. Sens. Tom Coburn (R-OK) and Richard Burr (R-NC), along with Reps. Paul Ryan (R-WI) and Devin Nunes (R-CA) have introduced the Patients’ Choice Act (PCA).

The PCA abandons some of the key principles long supported by the GOP, and indeed, embraces many tenants long endorsed by democrats. However, like a wolf in sheep’s clothing, it is high in rhetoric, low in detail, abundant in vagaries, and leaves open the question of exactly how the market-based plan may achieve its lofty goals.

The GOP plan would dismantle the current employer-based system by taxing the money workers spend on health care, with the intention of shuffling them into the individual insurance market where they would then be responsible for finding and negotiating their own plans, and paying their own premiums--or as the plan simply calls it, "choice." It assumes that individuals want to go through the hassle of picking among a smorgasbord of insurance alternatives, and that by further complicating the process, somehow efficiencies will naturally emerge.

The plan would create state health insurance exchanges, which would require participating providers to offer coverage regardless of age or health status; that they meet a minimum set of health coverage standards, and would submit to having their activities reviewed by an independently established board that could punish them for "cherry-picking" customers.

Since the plan specifically references age and health—rather than "guarantee issue" (as discussed in the first section)—it is unclear whether insurers could find their way around this requirement by simply denying coverage for other reasons; for example, hazardous employment. Furthermore, there are no caps on the premiums that may be charged, which could lead to outrageously high premiums that drive patients away without needing to issue a denial.

The plan summary makes repeated claims that the insurance exchanges would transform our market, which is currently geared in favor of private insurers; to a market that increases patient choice by encouraging insurers to compete for customers. The highly-charged rhetoric ignores the fact that this free-market approach has largely failed for nearly a century, so it is further unclear how the PCA would begin to achieve this goal.

As mentioned previously in this series, for-profit insurers could not stay afloat if they had to provide coverage for those with serious health problems—it does not fit the business model. So, how generous need the government subsidies be for these private entities to make such a venture profitable?

As the PCA asserts, incentives are key. So, what insurance company is going to willfully sign-up for a program that puts them under the scrutiny of government regulators, requires them to cover everyone—thereby cutting into their profits—and does not even allow them to choose what coverage to include? The individual market outside of these exchanges will continue to exist without the regulations, so the incentives would need to be huge to pull private industry away from it. It is thus, unclear how much choice patients would really have.

The plan provides a tax credit of $2300 for individuals or $5700 for a family of four, and removes the tax-credit currently received by employers. It allows individuals to open non-taxable Health Savings Account’s for future medical expenses, or to enroll in high-deductible health plans, in which the costs are less, but the care is limited to catastrophic illness and has high out of pocket expenses. As Tim Foley points out, it’s patient choice— unless the patient wants to choose a relatively high-performing government program.

The PCA says “universal care…should be guaranteed,” but does not mandate it, and does not clearly illustrate how it would expand enrollment. The crux of the plan is individual choice in the marketplace; “Patients should be able to choose from a variety of private insurance plans…All Americans have a right to personalized and individual health care that will meet their unique needs.”

The plan advocates further expanding what is already causing the greatest inefficiencies in the system—more complexity. As discussed in previous sections of this series, the idea behind creating more competition, with the assumption that this will inevitably lead to lower premiums and better care is theoretical in nature, and nonexistent in practice.

As patients are offered an ever-widening array of private options, not only does the capacity to wade through all of them defy rational thought and efficiency, but it creates an administrative disaster for physicians and hospital staff. To create even more complexity through plans that are negotiated directly by individuals with insurers created for their “unique needs,” and simultaneously rolling back employer-based plans, the PCA will introduce more confusion, more bureaucracy, and even greater costs.

As Dr. Aaron Roland, M.D., a physician who owns a small private practice in California explains:

The private health care insurance system which we deal with every day is an insidious bureaucratic monster. The morass of more than 1300 insurance carriers in this country introduces an administrative mess beyond belief. In our small office of essentially two full time equivalent providers, seven full time support staff are needed to cope with the complexities introduced by this system. I am quite certain that the wasted effort this system creates is so great that if we had a unified system of health care I could see 10-20% more patients – with two fewer staff. Looked at from another direction, at least 10-20% of my current income is wasted on insurance bureaucracy which benefits no one.

The PCA proclaims, “Programs run by the government are plagued with waste, fraud, and abuse. More than $60 billion is lost each year to Medicare fraud.” The immediate assumption is that the government is the reason for this waste, but alas, it is private industry that has been the largest offender in defrauding the government.

Case in point: Columbia/HCA, the largest for-profit hospital company in America, was forced to pay $1.7 billion to the government in a settlement when, according to Forbes, they had "increased Medicare billings by exaggerating the seriousness of the illnesses they were treating. It also granted doctors partnerships in company hospitals as a kickback for the doctors referring patients to HCA. In addition, it gave doctors 'loans' that were never expected to be paid back, free rent, free office furniture, and free drugs from hospital pharmacies." HCA’s CEO, Rick Scott, was forced to resign amidst the fraud. Is it surprising that conservatives have chosen this same individual to lead the charge against universal health care reform?

Supporters of PCA make some statements that deserve credit. Among them, “The health care system in America is broken…About 70 percent of Nobel Prizes in medicine come from the United States, and five of the six most important medical discoveries over the past 25 years are American. Now, America needs the best health care system in the world.” Notice the last sentence is speaking in future tense, and can otherwise be interpreted as, “America does not currently have the best health care system in the world.” Recognizing that the status quo is “failing” Americans, we can now lay that argument to rest.

The republican sponsors of the PCA realize their plan does not have a chance of passage, but hope that in a spirit of bipartisanship, democrats may adopt some of its premises—that is—the premises that the plan did not already hijack from democrats.

While I can no longer call them the party of no ideas, I can categorically place them as the party of bad ideas. Always conscious of the business, profit-seeking, corporate interests involved, the republican plan is a lesson on exactly what not to do to improve the system, and puts into practice every idea that has thus far failed, as indicated by the history of health care. The only thing that has not been tried in this country is a public option, available to everyone.

After all, if the government is so poor at delivering services, offers only sub-par care rife with waiting lines, and is clouded by bureaucracy; people would avoid the public plan, right? Well, sure; unless consumers find that the vast reduction in premiums more than off-sets the inconvenience of waiting for an elective service.

Government-sponsored programs will always be able to provide health care more efficiently and contain costs better than the for-profit sector, which is constantly responding to shareholder demand. The answer is not to turn the few efficient programs in the system, like Medicare and the VA, over to the private sector; but determining how we can enroll more individuals in similar plans.

Most importantly, the PCA still does not consider health care an essential right for everyone; it simply encourages it by proclaiming to make it more affordable; though the basics of the plans explanation is of the theoretical type, like “trickle-down economics,” meaning it sounds way better than it has actually worked out in real life.

The following video provides some insight and support to the claims that have been made thus regarding the PCA:

Notice that Devin Nunes repeatedly uses Medicaid as an example of “failed government” that would be remedied by the PCA. He never once uses Medicare--and for good reason. If the single-payer method set up through Medicare is the most efficient program we have—Medicaid is the antithesis of it. There are some key differences between administration of the two programs that are likely to blame for this disparity, chief among them is the fact that Medicaid is operated largely by the states—hence, it is less uniform than Medicare and privatized in many cases. There is a notable correlation between introducing more complexity and rising inefficiency. The PCA plan would be run by the states—just like Medicaid—which Nunes relentlessly criticizes.

The next part of the series will address solutions offered by supporters of universal health care that have not been touched upon thus far, and includes President Obama’s vision of reform. It will address similarities between plans offered by both parties, as well as the strengths and weaknesses embodied in a public/private partnership.

Read the next article of this series: The Affordable Health Choices Act

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*If you would like to submit a health care story, with the possibility of seeing it published here, please send me an email message at jennyk1981@gmail.com.
 

Copyright ©2009 Jenny Kakasuleff