Saturday, September 08, 2007

Follow-up to Holland's plan ...

On Thursday, I posted commentary on a Wall Street Journal article in my post entitled
"Is the Recipe for U.S. Sick-care System found in Holland?". Before that, I suggested that a patchwork of different plans would emerge until the Federal government got around to addressing the issue. Thats not necessarily bad, what is bad is a patchwork without universal mandates. Yesterday, however, a commentary was posted clearly directed at the same subject that was worth considering. I would like to share that commentary with you and solicit your opinions on the subject.

In essence, the commentary suggests that a big part of the "problem" with the U.S. (and many other countries, for that matter) health (or sick) care system is that the costs are largely invisible to patients. For those of us who have insurance, there is often little regard for the true cost of drugs, tests, doctors fees, hospital fees or anything else because we're only concerned about the co-pay. The author argues that the U.S. tax system has induced workers to believe that someone else was paying the bills for their care, so they have pushed for better health benefits regardless of cost. Again, this suggests that the system in the Netherlands may direct more attention towards the issue by making patients more involved in the cost evaluation. The reality is that the cost has not been "free", we have traded higher wages and other benefits (like vacation time) in exchange for healthcare benefits whether we realize it or not.

Another element worth considering is the author's suggestion that evidence also suggests that many benefits of health insurance, although paid for equally by everyone, flow disproportionately to the affluent. He argues that legal mandates requiring insurers to cover such services as mental-health care and fertility treatment make available, at collective expense, benefits that the affluent are much more likely to use. Personally, I do not believe that insurance should be obliged to pay for fertility treatments, as having children is indeed a choice that many people, including younger and older workers, singles, gay and lesbian workers and undoubtedly other groups are forced to subsidize so that a small group of people can enjoy these benefits. The argument is that a wider variety of plans with different coverage would be available if the system encouraged individual buyers rather than collective purchase of healthcare plans. That I would agree with, but today, plans are really one-size fits all, with little regard to the various services that people actually want or need. Hmmmm, the author may be on to something.

I do not agree that President Bush's plan is worth reconsidering mainly because I believe his plan addresses only half of the problem: it eliminates the incentive for any company to offer healthcare coverage while doing nothing to encourage insurers to provide individual coverage, so its not sufficient. However, I do think its worth looking at individual coverage (something that the Massachusetts and Tennessee plans do), again looking at the plan in the Netherlands might be worth considering. Perhaps its good that the individual states are going their own way, at least initially, then the Feds can mandate that all states need to have a plan in place, as long as there aren't too many mandates. Interestingly, the Dutch plan addresses diabetes, but leaves many other diseases out. I am a bit troubled by that, but its a starting point, anyway. I'm curious about what everyone else things. Please, chime in!

Commentary: Who Pays for Health Insurance?
By Clark Havighurst and Barak Richman, The Wall Street Journal
September 6, 2007; Page A17

New census data showing that the number of Americans without health insurance increased by 2.2 million in the past year (to 47 million) undoubtedly deserves the attention it is getting. But the increasing size of the uninsured population is only a symptom of deeper problems in American health care, not the problem itself. Indeed, concern for the uninsured obscures the plight of middle- and lower-income workers who do have health coverage but pay dearly for it.

In many cases, those who drop their health coverage do so for rational reasons. They apparently prefer to run some financial and health risks rather than pay for insurance that now costs the average family $12,000 annually. The American health-care system resembles all too closely an extortion scheme that forces individuals to either pay a very high price or put their families' health in danger. It is not surprising that many working Americans are deciding not to take it anymore.

Ironically, many more Americans would probably drop their health coverage if they knew how much it really costs them. But they don't know, because of the way the tax system treats health benefits. Under the current system, employers are the principal purchasers of health insurance, and workers seldom know how much their employers pay. They also don't realize what economists have repeatedly concluded: Employer outlays for health insurance translate directly into less take-home pay for employees.

Because the tax system has induced workers to believe that someone else was paying the bills for their care, they have pushed for better health benefits regardless of cost. Benefits have thus become more comprehensive and expensive than makes economic sense for most working families. Likewise, because voters haven't fully understood who pays for health care, they have supported laws and regulations that strongly reflect the values and interests of the health-care industry and its most affluent customers. Consequently, unlike ordinary consumer products, health coverage does not come in a range of models suited to different pocketbooks.

Weak consumer cost-consciousness has left the U.S. with private insurance that functions as a reverse Robin Hood scheme, taking from middle-income Americans to support a health system that benefits many elite interests. A significant fraction of the cost individuals incur for health coverage goes not to pay for care they and their families receive, but to support a variety of industry activities and projects, including medical education and research and the building of costly facilities. Even assuming the industry pursues only socially worthwhile goals, its otherwise uncompensated efforts should be financed by a fair system of taxation. At present, many such costs fall on premium payers like a regressive "head tax" rather than in proportion to their income or ability to pay.

Evidence also suggests that many benefits of health insurance, though paid for equally by everyone, flow disproportionately to the affluent. For example, cost-sharing requirements deter lower-income individuals from using their coverage more than they deter wealthy ones. The latter also know how to manipulate the system to obtain more and better services at plan expense. Legal mandates requiring insurers to cover such services as mental-health care and fertility treatment make available, at collective expense, benefits that the affluent are much more likely to use.

Particularly in view of the widening income gap between middle- and high-income earners, serious attention should be given to how the health-care system takes lots of money from the working class without giving them commensurate value for much of it. One does not have to be a populist to see the unfairness (as well as the tendency to increase the uninsured population) of forcing workers to pay unjustifiably high prices as a condition of being insured at all.

A good way to prepare the public for needed health reforms would be to expose consumers to the true cost of health insurance. President George W. Bush's pending proposal to tax the value of employees' health benefits as income, while also providing a compensating standard deduction or tax credit, would serve the useful purpose of stimulating market and political demand for low-cost alternatives, including coverage that stops short of paying for everything seemingly mandated by professional (that is, non-economic) standards.

Congress is making a mistake in ignoring the president's proposal. If voters realized that it is not only the uninsured whom the current system victimizes, would-be reformers of all stripes might finally find a broad constituency willing to support fundamental change.

Messrs. Havighurst and Richman are professors at Duke Law School.

URL for this article:


Anonymous said...

Well, that's nothing different than what I've been saying for YEARS now. But I guess I don't get listened to because I'm just a lowly impoverished medical biller, not a policy wonk or talking head. :-)

Anonymous said...

Hi Scott,

I am curious what you mean by the Dutch plan addresses diabetes, but leaves many other diseases out. I am from the Netherlands and I have some background in .

By the way your weblog is 277 on my


Scott S said...

Jan, if you go to the original article from the WSJ in my previous posting, the following was an excerpt:

"Insurers get risk-equalization payments for patients with about 30 major diseases. They can use these to offer discounted premiums and programs tailored to those with heart disease, diabetes and other ailments.

One shortcoming is that many diseases aren't subject to risk equalization. The excluded diseases -- such as migraine headaches -- are harder to diagnose and their treatment costs are harder to predict. "Seen from the side of migraine patients, this is highly unfair," says Peter Vriezen, president of the Dutch Headache Patients Association."

If I interpret this correctly, this means that if the disease is not among the 30 specifically targeted for risk-equalization, then coverage may be harder to come by. This is not saying it does not exist, only that the deductibles and limits may be more than they are with diabetes.

For details, see .


Anonymous said...

I think I get your point, but I am not sure whether it is a big problem. Let me try to make that clear.

Every disease is still covered in our system and no insurance company can refuse a patient for basic care, since basic insurance is compulsary. Basic care is very broad. You can also get non compulsary additional insurance. Let me give an example: in the basic package emergency care in foreign countries is insured on the basis of dutch prices. The additional insurance covers all the costs. Insurance companies can refuse patients for this additional insurance. At the start of this system companies were obliged to accept all patient who opted for additional insurance. My basic coverage now costs (with discount) 90 euros and the additional coverage costs 10 euros.

It is true that only special groups can get a maximum discount of 10%. However, during the introduction of the new system the competition among the insurance companies was that fierce, that it was almost impossible not to belong to a 'special' group. For instance, if you were a member of a sportsclub you would get the maximum discount. But off course I don't know what will happen in the future.

So the amount of discount will never exceed the 10%. For now that is about 10 euros a month. People with a good income can easily pay that amount of money. People who have less income get compensated through their taxes. So they should also be able to pay their insurance. So everyone is perfectly able to pay their insurance and get good healthcare.

Almost certainly, the no-claim of 255 euros will be replaced. Next year, you will have to pay the first 155 euros yourself.

More information on the health care reform can be found on the website of the CPB.

Anonymous said...

Too bad that in America, it seems as if both the government and the insurance companies are in collusion to 'weed out' as many diabetics as possible, by making insurance unavailable for almost all Type 1's to purchase on their own, making less money available to cover children with chronic illnesses via state and federal aid programs and by making less and less funding available via Medicare and Medicaid for the supplies and prescriptions to keep us healthy and productive if over the age of 65. I guess by dying, we'd be doing the country a big favor as far as cost containment. I have to hand it to them - it is a great way to push the sick and the weak to the edge of the herd. Bravo, America. What a fantastic country.*sarcasm* And the truly sad thing is, we keep electing the schmoes that are purchased by the pharmaceutical and insurance industries with their brib... er, PAC contributions. We only have ourselves and the weasels we put in power to blame if we don't have healthcare for all citizens.

Anonymous said...


I agree wholeheartedly with the points you make. Unfortunately, when things are going well, no one (including diabetics) wants to use their discretionary time/money to advocate for change. When the S**T starts to hit the fan--when you are sick, when you need help, when you are "ready to fight" . . . you don't feel well enough to engage. What's the old saying, "When you're up to your ass in alligators, you really don't have time to consider the best way to drain the swamp."

I believe this is, in many cases, what besets diabetics. When your daily bGs, your A1c, your overall quality of life are "acceptable" you keep doing what you've been doing. When complications arise--kidneys start to fail, retinas begin to hemorrhage--you become so completely immersed in salvaging what you can of "normalcy" that you have no time to be a warrior for change. And, if worse comes to worse, and you "accept" a worse quality of life but decide to enter the fray and advocate for change, you find yourself marginalized by such epithets as: sour-grapes, troublemaker, conspiracy theorist, dinosaur, whiner, etc.

When one has the energy and resources to engage for a fight, there seems to be a lack of motivation ("it can't/won't happen to me); when the motivation kicks in, most find they have neither the resources or energy (health) to fight. A real Catch-22 that optimally serves the profit-mongers . . . not the individual.


Anonymous said...

Oh, we can advocate for change all we want - as a Type 1 I've supported every candidate who has ever talked about expanding health care, both universal and at the state and local level. The problem is that once we elect someone who wants to change things and who has campaigned as an informer, the lobbyists for the insurance and pharmaceutical companies and the limited government crowd start flinging cash at them. We aren't talking piddly little contributions of a thousand here and a thousand there - we're talking outright millions. And guess what? Strangely, those representatives start talking about compromise with all parties and that they need more time to study the problem and soon those noble ideas about universal health care and greater accessibility to doctors and medicine for those who need it the most go right out the window into the dumpster. The corruption in our system is staggering and disgusting. Again, we seem to be okay with it, since we keep electing people that keep the current system in place and the current system itself is kept in place by the bribe money that insurance and pharmaeutical companies pay to our representatives.

I agree with you that once a Type 1 diabetic becomes ill it becomes harder to fight for things, especially when you've lost your health insurance and medical supplies can take up half or more of your income. While nowhere in our Constitution does it dictate that Americans are guaranteed health care, the document itself is amendable. If we really wanted it, we could change it and ensure that every single American born received at least basic, preventative health care. By making it universal and having preventable conditions such as obesity, high blood pressure, etc be everyone's problem, we might get our increasingly self-centered and lazy populace to actually get off its collective duff and do something about the problem. Nothing motivates like a kick to the pocketbook. However, we keep electing representatives that refuse to vote for any significant changes regarding health care, insurance affordability or collective responsibility. They also tend to vote not to change the current method of funding political campaigns. So again, unless all of the chronically ill in America want to band together and start throwing substantial amounts of cash at our oh-so-bribable Congressmen and whatever yutz happens to be parked in the White House at the time, our voices will be drowned out by those who can contribute greater amounts of the green stuff. Quid pro quo and all that, eh?

I know it's hard for the chronically ill to scrounge together the resources to help fix the problem, but I'm also tired of us being walked on by the system and the people who we elected to help us. We only have one weapon at our disposal - our votes, and it's becoming an increasingly ineffective weapon. Something soon will have to give, because we can't go on this way and I honestly think it will the sickest among us who will bear the full brunt of health care 'reform".