Published: May 26, 2009 03:36 pm      

LION AND THE LAMB: Health care proposal raises questions

Reform of our increasingly dysfunctional health care system is becoming one of the top political issues. All sides are jumping into the fray, resulting (perhaps intentionally on the part of some players) in some confusing and misleading proposals.

The health insurance industry is running scared, afraid of losing its near-dominant role in health care financing. (See my article in April 15 Chronicle, “How good is your health insurance?") These private for-profit insurers have now offered — and possibly reneged on their offer — to reduce health care expenditures by $2 trillion over the next 10 years. That would be a $200 billion reduction each year, or a saving of about $2,500 per year for a family of four. This would be accomplished by reducing the growth rate of health care expenditures by 1.5 percent. 

This proposal raises a number of questions:

1. Why are they waiting until now, when under pressure and antagonism, to essentially admit that their profits have been unconscionable and unsustainable?

2. The reduction in insurance premiums would still not make health insurance affordable for millions of Americans. Average health care expenditure is now close to $8,000 per person per year. 

3. How large a government bureaucracy will be required to monitor that they actually fulfill their promise? They obviously want the government to stay out of their business.

But the health insurance industry, after years of fighting any regulation by government, have seen the light and are actually consenting to some government regulation! They claim to agree to offer health insurance equally to all comers at comparable premiums without regard to health status (“pre-existing conditions”), age, or sex.

Remember that the primary legal obligation of private health insurance companies is to ensure profits for investors. What will be the response of investors if their dividends are reduced?

It is apparent that this is a last-ditch effort of health insurance companies to save their hides for a few more years.

The most comprehensive proposal for health care reform is for adoption of the single-payer program, under which the government would serve as the insurance carrier for all Americans, while leaving ownership, administration and employment under private control. A few years ago, while in Congress, President Obama supported such a system, but apparently has more recently concluded that it is politically not possible at present.

Somewhere in the middle of the above two proposals is the prospect of a dual private/public health care system. Each individual could choose. If the private health insurance is working satisfactorily, it could be continued. Or any individual would be free to opt for a Medicare-like public insurance plan, financed through the graduated income tax as well as premiums. Some public funds would be available for both plans to make them affordable.

There is an assumption that over time there would be a preponderance of persons gravitating to the public system, which in all likelihood would be more comprehensive, more efficient, and less expensive. The risk is that relatively healthy individuals with minimal health care needs would opt for the private system, leaving the public system for the frequent and expensive users. The opposition of the private insurance industry to this proposal seems to indicate their belief that they would ultimately lose business.

Discussion of our failing health care system and possible remedies is likely to dominate news for the next few months. In such a situation there is always pressure to just do something, Let’s make sure that what we do is right for all of us.