Linda J. Blumberg, an economist and principal research associate at UI, is currently working on a variety of projects related to private health insurance and health care financing. In our latest 5 Questions interview, Blumberg talks about the state of our health care system, whether it can be fixed without a complete overhaul, and what the candidates need to know.
Five Questions Archives
September 6, 2007
1) Is our health care system as broken as some make it out to be?
Most Americans are reasonably healthy. To them, the current system may seem fine. But the true tests of our system are the individuals and families who have high medical needs and low income. We aren't doing a good job of protecting those people right now, and with medical costs rising and companies opting for less comprehensive health benefits, the situation is getting worse.
In the United States, we don't have a comprehensive public system or a cohesive system that includes everyone. Rather, we have a patchwork of programs for various sub-populations. Some workers get private insurance offered by employers. In most states, individually purchased insurance isn't available to everyone. Charity care for those with no insurance is limited, and the cost is prohibitive for most people when paying for care out of pocket.
There are many ways for people to fall through the cracks. All it takes is losing a job that provides health insurance or having a serious injury or illness. If you don't have coverage through an employer and need to buy insurance on your own, you may not be able to find it at any price. That's because most states allow private non-group insurers to refuse to issue policies to individuals based on their health status. Many states also allow non-group insurers to exclude particular conditions or body systems from coverage that is issued, based upon prior health problems. In general, the non-group is dominated by policies with much narrower benefits than employer-sponsored insurance, so the coverage that individuals do purchase tends to have high deductibles and other cost-sharing requirements, and more limited covered benefits.
And since public programs are only available to specifically defined groups of people, those who are uninsured and not eligible according to these rules might be out in the cold. Having insurance is not always sufficient protection: many of the people who file for bankruptcy amid a health crisis actually have health insurance, but under our current system, they just get overwhelmed by out-of-pocket costs.
While I don't agree with everything in Michael Moore's film, Sicko, its basic theme—that our system doesn't take care of a lot of us when we're most in need—is true.
2) What are the basic components of the new health care reform legislation in Massachusetts?
Passed in 2006 and being put into place now, this is a groundbreaking effort to expand coverage for low-income residents. The particular approach they took is no one's first choice. Instead, it's a carefully crafted compromise among all the stakeholders—consumer advocates, employers, and health care providers—that should significantly increase the number of people with insurance. Some still will find it difficult to afford insurance policies that are adequate to meet their needs, but this is a big step that should lead to real improvements for many.
The plan has five noteworthy components. First, it extends the state Medicaid program, MassHealth, to a wider group of people, including certain groups of disabled individuals, childless adults, people with HIV/AIDS, and children.
Second, all adults must purchase health insurance, but this requirement is subject to an affordability provision. If it is determined by the board overseeing the reforms that an affordable plan is not available, the mandate to purchase coverage is waived. Income-related premium subsidies will help make coverage affordable for those earning under 300 percent of the federal poverty guidelines.
Third, at a minimum employers have to establish a "Section 125" cafeteria plan for workers, allowing them to pay for health insurance with pre-tax dollars. Employers with over 10 workers must make a "fair and reasonable" contribution to their workers' insurance coverage. If they don't, they must pay an annual assessment of $295 per worker.
Fourth, the new Commonwealth Health Insurance Connector serves as a purchasing entity, which gives people without employer-sponsored insurance and small firms access to private, unsubsidized insurance. The Connector also runs CCHIP, the Commonwealth Care Health Insurance Plan, which provides subsidized comprehensive insurance coverage to adults who make less than three times the poverty line amount.
Last, Massachusetts has reformed the private insurance market. It merged the small and non-group insurance markets and makes new, lower cost insurance products aimed at 19–26 year olds available through the Connector.
3) Why is health care reform so difficult?
In a word, money. We know how to do reform but we as a society have not agreed to pay for it. Overhauling our current system so that everyone has adequate coverage would require an increase in government spending. In turn, that would mean that we would need to generate more government revenue, most likely through a tax increase—a huge political barrier.
Meanwhile, many powerful groups—doctors, hospitals, insurance companies, and pharmaceutical and medical technology companies—are heavily invested in the current system. They fear the unknown and worry that government involvement will reduce their profits. Not surprisingly, they lobby feverishly against change.
At the core, Americans still view health care as a privilege, not a basic right. We want affordable access to care when we need it, but haven't committed to redistributing income to ensure access to all. And few want limits on the use of services, even if they hold down costs.
4) Is it possible to dramatically reduce the number of uninsured Americans without overhauling our entire health care system?
If the goal is to offer adequate benefits that are accessible and affordable to all, then we can't just tinker around the edges of today's system. But a reformed system could still be one that's centered on private health insurance. We need new structures, regulations, and subsidies for vulnerable populations, and we need to spend more public dollars than we are spending now. These changes don't have to constitute a complete makeover, but they would entail substantial reform. The more we try to preserve certain components of the private insurance market while providing new protections for those currently being underserved, the more complex the reform design will have to be.
5) In a nutshell, what advice on health care reform can you offer to the presidential candidates?
I would advise candidates to keep in mind that successful reforms will require broad-based support from many stakeholders. It is difficult to achieve such broad support while expanding coverage and setting up systems to containing costs all at the same time. I believe it will be necessary to address the coverage problem first and then address the problems associated with the high rate of medical price inflation second.
Beyond that, broad-based support for reform will require a substantial education campaign. Americans deserve to know exactly how reforms would work and what each group's costs and benefits would be. Candidates need to acknowledge that more public money will be spent under a new system than under the current one and that we will need to explicitly address the needs of high risk/high cost individuals.
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