Monday, October 05, 2009

Wow... Those Are Some Ideas....

Bobby Jindal, a supposed expert on healthcare issues, presents what he contends could be the Republican answer to healthcare reform. His first proposal is straight out of "Hillarycare":
Voluntary purchasing pools: Give individuals and small businesses the opportunities that large businesses and the government have to seek lower insurance costs.
As CNN points out, to date they haven't worked.

Jindal offers up a plate of the usual reform ideas,
  • Lawsuit reform - Something it's always fun to talk about, but which now seems to concern the insurance industry so little that it's not a big deal to either party (even if it remains a big concern of doctors). And something that isn't likely to actually bring about cost savings.

  • Require coverage of preexisting conditions - Something that only works if there's an insurance mandate. Otherwise the free rider phenomenon makes insurance unaffordable, and you could have the perverse effect of getting healthy people to drop their coverage because they know they'll be able to pick up a plan if they become sick. If Jindal's an expert, he knows that... so why did he leave a mandate off of his list?

  • Electronic medical records - Something that may bring about a modest direct cost savings but, if done correctly, could reduce medical error and provide data that could be analyzed to improve healthcare.

  • Transparency and payment reform - providing consumers with information about healthcare providers and choices, and making payments "based on outcomes, not volume". The first part, when proposed by Democrats, gets spun by Republicans as "putting bureaucrats between you and your doctor"; I guess this is Jindal's apology? The second part is being tried to some extent with Medicare, although pilot programs haven't done much to reduce costs. The obvious danger of paying based on outcome is that it could lead to doctors turning away high risk patients to maximize their compensation (while also improving their scores on the aforementioned consumer reports on doctor performance).

Okay, Bobby, other than warmed over ideas from the Clinton Administration, ideas that are already being tried, or ideas you've pulled out of of the 2008 candidates' platforms and the Democratic Party's proposed legislation, what do you have?
Tax-free health savings accounts: HSAs have helped reduce costs for employers and consumers. Some businesses have seen their costs decrease by double-digit percentages. But current regulations discourage individuals and small businesses from utilizing HSAs.
As an "expert", Jindal should know that his claim of cost-savings is a half-truth. Sure, costs for businesses providing HSA's along with a catastrophic care-type policy see their costs go down, sometimes quite significantly. But consumers see their costs go up, in part due to how little their insurance actually covers and in part due to the loss of the insurance company as gatekeeper. Is Jindal proposing these plans because he believes in them, or because business lobbyists love them?
Portability: As people change jobs or move across state lines, they change insurance plans. By allowing consumers to "own" their policies, insurers would have incentive to make more investments in prevention and in managing chronic conditions.
There is an obvious problem with that proposal, in that many insurance plans focus on a state or region, and don't have networks of doctors available in other states. But let's assume for the moment that Jindal has a solution to the problem of in-network and out-of-network providers that could make plans work across state lines. There are two things he could be proposing here:
  1. Indefinite COBRA - once you're in an insurance plan you can continue to carry the plan with you forever as long as you keep paying the premiums. If you change jobs, your employer could subsidize the new plan. The insurance companies would have to continue plans for anybody who wanted them to continue, even if the original employer dropped the plan.

  2. Abolish group plans, and make everybody buy individual plans at vastly higher rates, although perhaps with these fanciful "purchasing pools" negotiating reduced rates for individual plans.

My bet is that Jindal is pushing his party's preference for the latter - abolition of group insurance plans in favor of individual plans that are affordable only by virtue of how little they cover.

Jindal offers a related idea:
Cover young adults: A large portion of the uninsured are people who cannot afford coverage after they have "aged out" of their parents' policies. Permitting young people to stay on their parents' plans longer would reduce the number of uninsured and keep healthy people in insurance risk pools -- helping to lower premiums for everyone.
(Isn't this in the Democratic bills as well?) I guess coverage under the group plans he and his party are so eager to abolish in favor of individual plans are cheaper and better than the plans he hopes will take their place? Because if not, young people would be better off with those new plans, wouldn't they? But seriously, if we're doing this, why not go a step further - let's say we let young people stay on their parents plans, without exception, until the age of 25. Why not 26? Why not 35? Why not... as long as their parent owns the plan? For that matter, why not then allow those young people to participate as full members of their parents' plans, following the "indefinite COBRA" principles previously outlined? Once again, if we're supposed to believe that the Republican alternative plans are going to be at all desirable, even if that right is granted they'll voluntarily drop out of those group plans in favor of the Republican plans, won't they?
Refundable tax credits (for the uninsured and those who would benefit from greater flexibility of coverage)
An idea gleaned from the McCain campaign (and also incorporated in a different way into the current Democratic bills), but watered down into something less than a replacement for employer-sponsored plans? I guess the idea is that the working poor will use tax credits to purchase low-coverage plans accompanied by HSA's they can't afford to fund. Jindal argues that "will help make non-emergency care outside the emergency room affordable for millions and will provide choices of coverage through the private market", but doesn't explain how. Either the tax credits he plans are going to be surprisingly generous, or Jindal expects the poor to somehow get cheap, full coverage policies even as he endorses stripping that type of policy away from working people. Because otherwise, the working poor will still have to get their routine care at the emergency room because, although insured for catastrophe, they won't be insured for that care.
Reward healthy lifestyle choices: Providing premium rebates and other incentives to people who make healthy choices or participate in management of their chronic diseases has been shown to reduce costs and improve health.
What does he mean by "healthy choices"? Not smoking? Not drinking? Not using recreational drugs? Not eating too much? Not eating too much fried food, candy, potato chips, etc., whatever your weight? Not being bulimic or anorexic? Not engaging in dangerous recreational activities? Not taking dangerous jobs?

How intrusive will this program be? And who will pay the subsidy? Does Jindal propose mandating that insurance companies offer these rebates, or does he propose that the government will be writing checks to people whom it deems to be making appropriately healthy choices? Will we take people at their word? What will be the consequence of getting caught fibbing? Really, how far does Jindal want the government to insinuate itself into our lives?

On the whole, Jindal's "reforms" largely accord with ideas incorporated into the various Democratic healthcare reform bills. Beyond that, they seem to be intended to let people think that they can keep their plans, and potentially even keep their children on their plans through the end of college or grad school, while producing a stack of incentives to allow and facilitate employers' dropping conventional plans (the ones people like) and replacing them with low-benefit plans and HSA's. McCain's plan meets Newt Gingrich. McCain's reputation for "straight talk" was tarnished in his campaign. (Please note also the prevarications at the beginning of Jindal's editorial.) I guess this is Jindal's roundabout way of saying, "For a Republican, that was straight talk - and then some."

Update: A bit more on why experiments with insurance exchanges have failed:
Texas wasn’t the only state to see its insurance exchange fail. Florida and North Carolina were also unsuccessful. And California, which had the first exchange (established in 1992) and the largest market, shut its doors in 2006. All these state exchanges failed for the same reason: cherry-picking by insurers outside the exchange.
The author's proposed solution, "Insurers have to accept everyone and have to charge everyone the same rates regardless of health status." The former is largely accomplished by eliminating preexisting conditions from the reasons insurance companies can deny coverage. But the latter? Wouldn't that necessarily involve setting one group rate (or schedule of rates) for every person an insurance company insures? If we do that, won't we both eliminate group rates (thus the need for groups) and the need to negotiate discounts (as everybody pays the same rate)? Won't that also encourage insurance companies to try to define their policies to principally benefit people who don't need insurance - their profits becoming primarily dependent upon how few services their insureds require?

The author believes "It would be smarter for Congress to revisit the idea of creating a public plan" than to go with exchanges - if she's correct about the regulatory mess that would be required to make exchanges (maybe) work, that's hard to argue.

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