Wednesday, January 6, 2010

Keep government out of health care? It's already there.

As I wrote in yesterday's blog, the federal government is now responsible for about 35% of total national health expenditures. But the public sector's contribution is actually much larger: today, almost one out of every two dollars spent on health care comes from federal, state and local governments. In 2008, combined spending by the public sector (federal, state and local governments) represented 47.3% of the total national expenditures (all sources, public and private, combined). Governments' share has grown over the years: in 2000, 44% of the total national health care bill was paid by public funds, up from 42% in 1980 and 37.6% in 1970.

Another way to look at this is how many people are covered by government or private sources. The Census Bureau reports that in 2008, 84.6% of U.S. residents had health insurance coverage. Of these, 66.7% had private insurance and 29% government insurance. In 1999, 72.5% were covered by private insurance and 24.5% by government programs.

(I wonder if those who argue that the U.S. has the best health care in the world realize that they are talking about a system where more than 87 million people already depend on the government for coverage, and where one out of every two dollars spent on health care already comes from government funds.)

How much would the House and Senate bills expand the government's role?

The Congressional Budget Office estimates that over the next 10 years, the Senate bill would add 15 million more people to the Medicaid and SCHIP programs compared to current law. Four million fewer people would be covered by employers, and five million fewer by the individual insurance market. Twenty-six million people would get coverage through insurance plans offered by a state health exchange, and most of these people would get subsidies from the federal government to help them afford the plans. The House bill too would add 15 million more to Medicaid/SCHIP, but it would actually increase by 6 million the number of persons covered by private insurance offered by an employer. Twenty-one million would get coverage through a national health exchange, which would include private health insurers as well as a public option. (The public option is not expected to be in the final House-Senate bill.) Under the House bill, the number of people who buy individual insurance would decline by 6 million people.

Under both the House and Senate bills, the vast majority of Americans - in excess of 160 million - would get their coverage from employer-sponsored private health plans.

I understand that there is a serious case to be made from the right against the further expansion of the government, just as there is a serious argument to be made from the left that the proposed reforms should do more to expand government's role.

But an honest debate would at least start by acknowledging the fact that the government already is involved in health care, big-time, and its role will continue to expand, with or without health reform, just as it has for more than forty years now. (No politician that I know of - other than maybe Ron Paul - is proposing to keep government out of health care, since this would mean eliminating or at least rolling back Medicare, Medicaid, the Children's Health Insurance Program, the VA, military medicine, and Tri-Care - not to mention eliminating NIH research, funding for graduate medical education, and a whole host of other popular programs.)

An honest debate would also begin by acknowledging that the House and Senate bills would further increase the government's role in health care by enrolling more people in government programs, subsidizing the purchase of private insurance, and regulating insurance companies, but most people would still get coverage from private insurance offered by their employer. You may believe that this is a good or bad thing, but let's not pretend that the current debate is really about keeping government out of health care (it is already there) or creating of a government-run health system (the bills don't).

Today's questions: What do you think the role of government will be in health care, without or without health care reform? What do you think its role should be?


Arvind said...

This is probably the first time I happen to agree with you, almost! For those on the left that want more govt in health care, this should be a lesson why it is disaster to let that happen. For those that say "keep govt out of health care" we should say "it is not only in to your health care, but in your bedroom, your office, your marriage, your life". So the slogan should really be "Optimize govt's role in health care"

Some of the most effective roles for govt to play would be -
1) to create and maintain a level playing field between employers, insurers, patients (employees) and providers, whereby all parties are equal players, have equal rights and responsibilities.
2) Simplify the conduct of the business of medicine by enforcing a uniform business process
3) Allow innovation to flourish using the concept of supporting success of community-based medicine
4) Eliminate the use of CPT codes for E&M services, thereby reverting to the profession service concept rather than commoditization of medical service (which CPT does)
5) Provide tax code incentives for individuals to purchase health coverage or health service directly
6) Provide quick remedy of complaints via establishment of specials tribunals similar to the BBB, where people can get fast remedies to their complains.

There are many ways government can be a catalyst to reform health care; but the current proposals do not qualify as reform by any standards.

Mark Mayer said...

Corraling insurance providers to narrow the rating bandwidth, so that individuals are not priced out of the market - replacing this with modified community rating - is one of the crucial steps forward, which the legislation should create, and the government should ensure.

Still, I personally believe that there won't be enough of a private insurance market to cover the near-poor, so I think that much of this segment will benefit from public insurance - IF adequate payment reform and workforce reform ensure enough well-trained, whole-patient doctors.

Steve Lucas said...

Arvind covers most of my points. From a business perspective we always see an increase in government health spending in economic downturns. People loose jobs and are forced to take positions at lower pay with fewer benefits that then qualify them for government programs.

So, for the short term we will see and increase in the number of those on the various government sponsored insurance programs.

Back to Arvind, I was also taught that the government’s role was to provide a level playing field. Additionally, government was to assist those who needed protection from market forces. The current debate regarding pre-existing conditions comes to mind.

While I believe government should have a light touch I understand that our current system has become so distorted by special interest that any government program will not reflect the general public’s needs or desires. The need to cover those suffering under our current financial downturn will be used to further enhance income opportunities for a select few.

Let no crisis go unused seems to be a concept embraced by the larger body in Washington.

Steve Lucas

Jerry M said...

I appreciate your emphasizing to what degree the federal government is already involved in health care. Unfortunately as a practicing physician billing for services I’m only too aware of it’s involvement. It also acts as the template for private third parties as BC/BS illustrated over 10 years ago in D.C. by dramatically reducing payment rates to coincide with medicare rates. As you know, many internists either do not take medicare or severely limit the number of medicare patients they care for. Is medicare a good deal for patients? I’m sure that if a patient put money into a private plan for 40 years before becoming eligible for benefits he would have a better plan that would not make him a second class citizen as does medicare now. We are experiencing a new problem with medicare that illustrates the misery of dealing with an 800lb gorilla. CMS has decided to not pay for consultations. In general I believe direct government involvement in medical care is not a pleasant experience.
I do believe ,however, that the federal government can be helpful in improving medical care and payment as has been cited previously. Medical insurance should be marketed to patients not employers by having full tax deductibility and group rates not connected to employment, insurers should compete across state lines and ,of course, there should be tort reform. Unfortunately, I believe the present reform will be passed in some form, will be a bureaucratic nightmare, will not reduce spending and will not improve quality.

Anonymous said...

Unless the problem of the number of primary care physicians is fixed now by increasing their reimbursement it won't matter who runs the show! When I looked at the backgrounds of the people who are on these panels to discuss healthcare reform, I see PHD's, MBA's. policy makers et al. Where are the community MD's, RN's, NP's, PA's, social workers et al who actually take care of patients in small offices all over the country? If the government wants to be involved then why not let loose the stimulus money for medical records tomorrow? Why do we need to wait until 2011? Health care reform should include streamlining processes to deliver care whether it's the govt or insurance companies. When someone is ill the last thing that they want to hear is "you need preauthorization for that Cat scan" or "the doctor is not in your plan".