The fundamental barrier to enactment of single-payor health insurance, or for that matter, any kind of comprehensive universal coverage, public or private, isn't whether the idea is viable, whether it's a good policy choice or not, or whether it's better than the current health care non-system. Face it. We know single-payor works. We know this because it's worked elsewhere. The real problem is the size of the existing health care establishment in the United States. A reform like single-payor health insurance won't happen so long as the health care oligopoly controls several million jobs to administer the system. Health care is a political machine of unprecedented scope in American history. We won't shout it down or reason it into submission. The only way to kill this monster is to starve it to death.
Below the fold, I attempt to define a sixteen step plan for defunding the health care crony network and steps toward single-payor health care. It takes a page out of the playbook that has worked so well for conservative strategists: instead of going for the one hail mary pass that will enact comprehensive health care, the "sixteen step plan" plays a slow, tough ground game (hey, it's Superbowl weekend).
The issue isn't whether single-payor health insurance is better than what we've got now in the United States. It is. Other industrialized countries with government-run universal health care cover all of their citizens at a much lower cost per capita. Our system is the worst in the world at doing what a health care system is supposed to be doing. It's not a matter of free markets versus government intervention, or what we can and can't afford. It's a choice between the corporatist American model, and the social insurance model of most other countries. We have single-payor health insurance right next door in Canada: does anybody who doesn't make their living from health care really believe for a minute that ours is better? If so, they've definitely checked out of the reality-based world.
The real barrier to enactment of single-payor healthcare in the United States is the sheer size and reach of the existing mega-bureaucracy. The health care establishment is not an industry. It is a political machine, the twenty-first century reincarnation of Boss Tweed and Tammany Hall. It's only purpose is to consume resources and increase its size and power. Millions of people owe their jobs to this political machine. Those people aren't just the faceless bureaucrats of insurance companies, whose mastery of Kafka has been so well chronicled by other diarists here. It's a whole subculture of human resources personnel in private employers, and office managers in doctor's offices and hospitals. It's the armies of information technology, accounting, and real estate personnel who support the system, and all those lawyers, lobbyists, and other specialists in the manipulation the outcomes of Federal and state regulatory processes. It's the purveyors of the many financial "products" such as HSAs and Section 125 plans that are themselves a large off-the-books component of the nation's supersized health care bill. Add to that our old friends in big pharma, and, last but not least, health care providers themselves. The one thing that speaks louder than money in politics is control over jobs, and the health care political machine controls millions of jobs. So it's no surprise that they are able to defeat us time and time again. They're buying votes on our health care dime.
Nothing will change so long as the existing health care oligopoly is able to control such vast resources. The only way to kill this monster is to starve it to death. It's not enough to just fight to pass a law that mandates single-payor health insurance, for the simple reason that such a law will never see the light of day as long as the healthcare ward bosses control 14% of American GDP. There are enough people who stand to lose under this system to provide the people at the top of the health industry pyramid with all the street warriors they need to kill this.
Americans overwhelmingly want universal health insurance. They don't care whether it's private sector, public sector, or no sector at all -- they don't want to face bankruptcy if they get sick, or, worse, not being able to afford a doctor or a hospital when they're ill. Alas, time and time again over the last fifty years, those healthcare ward bosses have won the fight. Each time their machine has expanded its size and power. We can propose single-payor health care bills until we're blue in the face (a condition not covered by health insurance). The health care ward bosses will find a way to stop these, as they've done successfully with every attempt since the end of World War II.
If we're ever going to get out of this mess, we need to take a page from the playbook of the right wing zealots who get us into that mess in the first place. Don't propose comprehensive universal health coverage in one step. Do it in many steps. Sixteen steps, by my reckoning. (Sarcastic aside: I wanted it to be twelve steps, since we're trying to cure the health care system of a severe case of addiction to cronyism. It didn't fit in twelve steps. The health care system is pretty sick.) My sixteen steps may seem precise and prescriptive, but they don't have to be. The steps can be re-ordered, re-structured, and re-prioritized based on what Congress (or in some cases state legislatures) are willing to do at any point in time, and where the other side is putting up the strongest fight.
Each step provides some measure of improvement. At the same time, no one proposal of the sixteen I make below solves all of the problems. Each step is beneficial by itself: the relief starts at step one, not at step fifteen. And each step slowly re-frames the debate.
Those of you who are actively lobbying for single payor health insurance shouldn't give up, of course, just because some DailyKos diarist posts a sixteen step plan -- even if I am blazingly intelligent (which I'm not). If you're about to go lobby your congressman to enact the Conyers Medicare-for-all bill, for example, do it, the louder the better. Some hail Mary passes do complete, after all. In the mean time, the effort you invest in advocating true reform draws down the machine's resources and makes it easier to achieve one step, then the next, then the next. The steps below have one thing in common: they try to reduce the non-medical cost of health care delivery: the various revenue sources that feed the health care political machine.
So how do I know if I'm on to something? If we find that we're arguing about the exact steps, or what the right order is, or whether it's 15 or 17 steps, well, that means that the concept might just have some validity.
Without further commentary, here is my sixteen step plan. Start dancing!
Step 1. Standardize the services covered by health plans. Each and every health plan offered in the United States varies, in ways large and small, in what is and isn't covered. This morass, a tribute to false "choice" in health care, adds greatly to the cost of rating and processing claims. It is very, very difficult to compare the value of rival health insurance plans. A standard plan form and coverage level makes it easier to compare different plans since the only differentiators are price, network coverage, and deductibles and copayments.
What if we wind up with a "compromise" that increases plan uniformity but doesn't completely standardize the system? Go for it, then come back next year with a plan for complete standardization.
Standardization forces more price competition between providers. Fewer resources go into claims processing, and this takes resources away from insurance companies. Step one is a seemingly modest proposal that in fact has vast ramifications for health insurance.
Step 2. Balance billing reform with a vengeance. If you have a PPO or HMO, you actually benefit from a weak form of this already. Our version of PPOs eliminates the financial liability of a policyholder to any carrier's in-network providers, above and beyond deductibles and copayments (we'll go after those in Step 11). Payment for services would, legally, be between the provider and the health plan. This provision, which is strenghened by the next few steps on my list, eliminates arbitary end runs by providers in search of more money from patients.
Step 3. Mandatory claims determination in advance. A health insurance carrier would be required to produce, in advance, calculation of benefits for any medical procedure. That calculation would be legally binding on the carrier and on the provider. This eliminates an immense amount of back end processing, not to mention back and forth between all three parties. A strong version of this proposal requires the carrier to do this online and in real time.
This will be more difficult for health plans to deny claims or otherwise manipulate their rules to cut payouts. (Aside about terminology: I've tried to avoid the phrase "cut costs" because health plans, by design, don't try to cut costs. Honest businesses cut costs to be more competitive. Health plans aren't honest businesses. They're political machines.) Since instant determination is automated determination, it eliminates cost and cronylism (aka insurance fraud) now present in the 30-day plus cycles for claims processing.
Step 4. Insurance carrier balance billing. Under most insurance policies, payment for deductibles, copayments, and uncovered services is between you and your provider. Under this proposal, the carrier would be required to pay their network providers in full and balance bill you. Copayments are between you and the provider. This accomplishes several things. First, it eliminates most collections overhead by providers and guarantees that a health plan actually produces benefits. Second, it forces insurance carriers to collect their ridiculous copayments, and weakens the whole copayment system in general. With this step, we're setting up to kill copayments and deductibles altogether when we get to Step 11.
Step 5. Claim processing latency. In this step, health plans must pay any valid claim within seven days. A claim already approved under the provisions of step 3 may not be denied or modified under any circumstances -- the carrier had their chance during the pre-determination. A denied claim can be appealed by written notice, telephone, or online; each method is equally valid and binding on the plan. An appeal must be heard and resolved within 30 days.
Denials of claims could only occur for very well defined reasons: duplicate claims or a well defined set of criteria for wrong or bogus claims (these standards would become part of the standardized rules we impose as part of Step 1). Claims denial rates would be tracked. Furthermore, a plan would be allocated a set percentage of incorrect denials (say, 1% of all claims) after which each incorrect denial would result in a substantial fine.
Step 6. No-time-limit COBRA coverage. Currently, COBRA benefits (your right to buy health insurance benefits from your employer for 102% of the employer's cost) only last for 18 months. This step would eliminate the time limit. If that can't get enacted, keep making proposals to increase the time period for COBRA eligibility as much as possible.
Step 7. Underwriting, Part 1: exclusions and guaranteed issue. This step would eliminate all pre-existing conditions exclusions in health insurance plans, of any kind. It would eliminate all underwriting practices based on claims history, both for individual and group plans. Under Step 7, insurance pricing could only be based on plan content, not on someone's previous or anticipated future claims history. All plans would be guaranteed issue plans. This would eliminate much overhead used to fund underwriting. (It would also cut the revenue of the claims clearinghouses, eliminating further sources of funding to the health care political machines.)
Step 8. Underwriting, Part 2: reinsurance federalization. This is a big step. It is a major part of moving from a private to a public system: all of the steps so far have dealt with how private insurance works, and not really dealt with accessibility of insurance.
Some background. Most health insurance carriers, and all employer-sponsored plans, are funded not just by your carrier or your employer, but by re-insurance purchased by the plan. Reinsurance is a contract that your primary carrier buys from another insurance company to cover themselves for unusually large claims. Employer plans are usually lower cost than individual plans, since the employer pays as it goes and doesn't have to maintain loss reserves, or run at a profit, or marketing expenses, and employer funded plans depend on the re-insurance system. The objective of Step 8 is to merge all the little risk pools into one common pool -- that's what insurance is for.
A federalized reinsurance system is essentially a wholesale national health insurance system. A payroll tax or other revenue mechanism would fund a mandatory federal reinsurance system. (If that's too big a step, start by charging retail health plans for it: they're already paying for reinsurance.) This step funds part of the cost of all health insurance. It is also the first step toward creating a single risk pool. This step depends on some measure of plan standardization: if there's one reinsurance plan, there has to be one definition of what's reinsured. (If Step 1 above hasn't been fully implemented, an intermediate reinsurance scheme applies to some common denominator of benefits.)
This is Step 8, and not Step 1, because it will face fierce opposition. The machine has to be softened up first through some of the previous steps.
Step 9. Underwriting, Part 3: Community rating. All insurance plans, both individual and group, are required to use community rating. There is one risk pool. Ideally, you'd mandate employer funded plan participation. This is a bit harder to do, although once the community rating system is big enough, employers will voluntarily scrap their funding in favor of the community pool. Step 10 finds more ways to make the insurer pool bigger.
Step 10. Underwriting, Part 4: Federal, state, and local employees. This is simple. Once Step 9 establishes a common risk pool, it's possible to start "encouraging" employer-funded plans away from employer funding. You do this by making insurance cheaper than employer funding. One way to do this is to mandate Federal, state, and local governments into the common risk pool. This step has one big advantage: it can be done by executive order.
A simple mini-step, one that's not even all that controversial, is to allow individuals and small businesses to participate in Federal and state employee plans at COBRA cost. This might be Step 1, not Step 10: it can be done in most states by executive order.
Step 11. No deductibles and copayments. This could have been step one but it's something that the machine will resist with a vengance, so, most probably, we would need to enact the other steps first. Combined with plan standardization, we've now reduced the massive spectrum of health insurance plans into a single commodity product, differentiated only by the scope of provider network.
Since the steps so far do nothing to prevent this, it's a safe bet that insurance carriers would be frantically trying to segment their markets by provider network structure. Step 12 attacks this directly.
Step 12. Provider network structuring rules. Absent some mechanism for rate setting, which is likely to involve a massive and politically difficult end game, we need a way to control the provider reimbursement schedules -- remember that providers and insurers are still negotiating rates. Rate setting is gamed by both providers and carriers. Furthermore, while market forces don't have a stellar history in health care, we don't really have a reliable system for setting reimbursement levels for providers. So it's necessary to make do with a market based mechanism until and unless we kill private insurance altogether.
It turns out that the health insurance machine has unintentionally helped us out. In an attempt to create false "choice" they invented PPO networks. Those networks can be made to work for us.
We can structure provider networks by imposing the following rules on health plans. First, all provider networks must, for all areas where they do business, enroll a certain percentage of all providers, and all provider specialities, in their networks. They must either construct a national network or establish reciprocity deals with other networks. Furthermore, a single carrier may only maintain a single network. Equally important, any provider must be a member of networks covering a substantial portion of the population: perhaps 50 to 70%. These structuring rules turn provider-carrier negotiations into an auction market.
Over time, the rate structure that's negotiated under these structured arrangements provides the starting point for the reimbursement levels that would be used in a single payor system.
Step 13. Big Pharma. The elephant in the room that hasn't been addressed so far is drug prices. Simple price regulation would be gamed and manipulated by the pharmaceutical industry.
This is a hard problem that has bedeviled the global economy. You can't just set prices willy-nilly: you do need to offer a substantial ROI for new drug development, although it's clear that big pharma has learned to pocket an R&D price premium while not doing much R&D. The pharmaceutical industry is extremely skilled at evading market forces, and health insurance carriers have no financial incentive to drive drug prices down (especially since everyone scratches everyone else's back). The only way to handle big pharma is to attack it head on: a single cooperative owned by all insurance carriers that handles all pharmaceutical purchase negotiations. The antitrust exemption that would allow this would explicitly mandate that this consortium is limited in its ability to decline to purchase particular drugs, and that pharma companies are in turn limited in their ability to decline to sell to the consortium. This approach applies some measure of quasi-market price setting, similar to what was done with providers in Step 12.
Step 14. Medicare and Medicaid convergence. A Medicare or Medicaid benificiary would be able to elect to choose a zero-deductible plan, which would be paid for out of the composite of the Federal reinsurance system described earlier and the existing Medicare or Medicaid funding system, and which would be free of cost to the beneficiary. The same convergence would be applied to various state insurance subsidy systems. We're getting closer to the end...
Step 15. Sliding scale premiums. This doesn't have to be Step 15, but if the rest of the steps are in place, it puts us within first and ten of the single payor health insurance touchdown. (The Super Bowl is tomorrow...) Simply put, health insurance premiums would be priced as a percentage of the policyholder's income, and would be automatically deductible from Federal, state, and local income and payroll taxes and from Social Security withholdings. (This essentially defunds the HSA and benefits processing establishment. We don't need to repeal HSAs and Section 125 plans. They'll die of their own accord.) If the system isn't rid of deductibles and compayments yet (Step 11) those would also be assessed as a percentage of income.
Step 16. Pulling it all together. With most or all of these steps in place, the health insurance industry won't be able to sustain itself at its current levels of overhead. At this point, competition among networks would have driven down provider pricing and determined an equilibrium set of price levels. In the end game, the machine is very much weakened, but still dangerous -- it will be screaming for bailouts and warning of the dire consequences of its own bankruptcy. At this point, one of two things will happen: it will go under, forcing enactment of a single-payor system, or it will wither into a privatized retail shell around what is in effect a wholesale system of single-payor insurance.
Are these necessarily the right steps? Probably not: I'm not an industry expert, just an unhappy consumer of the current crappy system. And if the industry continues to fiddle while the health care system burns, the resulting meltdown may kill the monster for us, and Congress will trip over itself to enact single payor health insurance in one step, not sixteen.