Make Medicine Better

Many visitors to makemedicinebetter.org are asking the same questions: "What is health care reform really all about?" and "What does health care reform mean for me?" There are no short or easy answers to these questions, but below is my attempt to provide some information that might help make it a little easier to understand.

First, health care reform will mean something different to everybody, depending on whether you are old or young, rich or poor, employed or not, insured or not, completely healthy or with an existing medical condition. You see, all of these factors determine whether or not you are eligible for health insurance in the United States and at what cost to you. Cost is generally defined as the premiums you pay to purchase health insurance plus any out-of-pocket money you must pay for health care in addition to what your insurance will pay.

There are approximately 310 million people living in the United States. In general:

Those of us over age 65 are eligible for Medicare, a "public option" where the cost is paid by the federal government with money contributed by taxpayers via a Medicare payroll tax. Medicare does not pay for all medical costs, but most seniors are satisfied with their health insurance coverage under Medicare. (40 million people)

Those of us who have low household incomes (and how low will depend on which state you live in) are eligible for Medicaid, another "public option" where the cost is shared by both state and federal governments with money contributed by taxpayers via income taxes. Medicaid eligibility and benefits vary from state to state, with determinations of what is covered made by state legislatures. (50 million people)

There are an estimated 47 million of us without health insurance.

The rest of us (170 million people) receive health insurance in what is commonly referred to as the private market or "private options" – meaning we either purchase individual policies on our own from private insurance companies or we are eligible to receive health insurance as a fringe benefit from our employers. With employer-sponsored coverage, most employees share in the cost of the insurance premiums with their employers.

The first priority of health care reform is all about making sure that everybody who lives in the United States has guaranteed access to affordable health insurance coverage.

If you are covered by either Medicare or Medicaid, you already have access to a "public option" for health insurance. Importantly, seniors and those with low household incomes need those public options. There is no private market for those over age 65 or those who have low income unless either our government or an employer guarantees payment of the premium. Because many seniors are living on fixed incomes and understandably consume many more health care services than when they were younger, private individual health insurance at the conclusion of one’s working years becomes prohibitively expensive. And unfortunately, those with low incomes who often live in poverty and experience poorer health as a consequence, have no affordable private options either.

The public options are certain to grow in terms of number of people covered. Medicare will grow from 40 million people to 70 million people as the baby boomers reach age 65 and become eligible. And all of the reform proposals currently being considered by Congress would increase the number of people who are eligible to receive health insurance under Medicaid by raising the household income threshold to a level higher than is currently legislated in most, if not all states.

It is for those who currently find that private health insurance is too expensive and for those who are currently uninsured or who could one day become uninsured (as a consequence of losing employer-sponsored coverage or developing an uninsurable medical condition) that health care reform holds the greatest promise.

Private insurance can be purchased in one of two fundamental ways: by an individual on their own, or by an individual as part of either a large or a small group (as an example, all BJC employees are eligible to purchase health insurance coverage as part of a large group). The larger the group, the more an insurer or employer is able to spread the cost of people getting sick across lots of people who pay premiums into what our industry calls a "risk pool." If the cost can be shared by many who contribute to the "pool", the insurance premium is lower. If the cost is shared by only a few, the premium will be higher.

Today, many small employers find the cost of health insurance to be too much to offer as a fringe benefit to their employees, and if those employees decide to purchase coverage on their own, the premiums are very expensive and consume an increasing percentage of their individual incomes.

There are two proposed solutions to this problem. The first, being considered by the Senate, would create a "private insurance exchange", a place where small employers and individual purchasers of health insurance can come together and gain access to insurance coverage at large group rates (lower and more affordable premiums). A key feature of this proposal is that individuals and small employers would be required by law to purchase health insurance coverage, often referred to as a "mandate". The reason for the mandate is that unless all individuals and small employers participate, the exchange will not become a large enough group to allow the private insurance companies to spread the cost of people getting sick across lots of people who pay premiums.

However, even with the private insurance exchange, many people would still not be able to afford coverage. The Senate proposal would offer financial assistance (subsidies) to help individuals buy coverage based on level of household income. It is these subsidies that account for most of the price tag for health care reform, estimated at $850 billion over ten years for the Senate solution.

The proposal under consideration in the House of Representatives is what you likely have heard referred to as the new "public option." In simple terms, this approach creates a new public program that would provide the affordable coverage at large group rates that is presently unavailable to individuals and small employers. The House proposal is estimated to cost more than the Senate alternative at $1 trillion over 10 years.

In both the Senate and the House versions of health care reform legislation, approximately half of the new cost will be covered by raising marginal tax rates on those of us with household incomes over $250,000 (back to the same tax level as during the Clinton Administration), and the other half will be covered by reductions in Medicare payments to hospitals, home care companies, insurance companies and pharmaceutical companies. The discussions of how to pay for the cost of either a new private exchange or a new public option are ongoing and very much subject to change.

So, long story made short, the primary goal of health care reform is to guarantee access to affordable health insurance for all people living in the United States.

The second goal of health care reform is to slow down the rising cost of health insurance to a rate of growth approximately the same as inflation in the overall economy. Health care inflation has been much higher than general inflation for a long time, meaning that health care costs are consuming more and more of our paychecks. We sometimes hear our political leaders refer to this rate of health care spending as consuming a greater and greater percentage of our gross domestic product.

All health care reform proposals have different, but overlapping approaches to holding down costs. Most would create demonstration projects to test new and better ways to deliver health care services that would also be less expensive.

Political leaders, of both parties, agree that we cannot afford to continue on our current spending path. Without "bending the cost curve" downward, our government will not be able to cover the cost of Medicare and Medicaid without either raising our taxes or reducing the benefits that we receive. And, all of us, if we live long enough, will one day receive our health insurance under the public option called Medicare.

Finally, we are often asked: "What does BJC think about health care reform?"

We who work at BJC see firsthand and all too often the anguish and the fear that besets our fellow citizens who are faced with life threatening illnesses or pain-causing injuries, and who either do not have health insurance or more often, coverage that is inadequate to cover their share of medical costs. In many instances, these patients will still receive needed medical care or attention. Often, that care comes much later and under emergency circumstances. The data is clear. We know that those of us with adequate health insurance are much less likely to be hospitalized for avoidable medical conditions, and much more likely to receive check-ups that give us the opportunity for early detection and prevention of disease.

BJC is in favor of health care reform. We believe it is important and necessary. And, reform cannot wait until next year when our budget deficits might be lower, or two years from now when we might have different representatives in Congress. We can be pretty sure that in whatever version of health care reform gets enacted, our legislative leaders will make some mistakes. We will learn from those mistakes and make needed adjustments along the way.

In the meantime, we at BJC are already hard at work developing new and better ways to make medicine better. We are grateful that you have visited our new web site, and hope that you will join with us to take the world’s best medicine and make it better.

Steve Lipstein

 

Tags: health care reform, healthcare reform