The CED Health Reform Plan Gets It Right Until They Have to Make the Tough Decision
The Committee for Economic Development (CED) has released its report, "Quality, Affordable Care for All."
A few days ago I asked a number of questions about just how far the CED would go toward creating a better health care system.
While I think the group has made a number of very valuable suggestions, when it comes to cost containment they don't offer more than the long list of incremental and market-based elements already at work in the market with limited effect--and which they effectively decry in telling us the employer-based system has failed.
For example, why do they think that providers would embrace government-set health care quality protocols on a voluntary basis any more than they have when the market tried to get the docs to accept them?
At the core of the CED proposal is the notion that if we can just set the market up to work the way a market ought to, all will be well. I believe in the market. I also believe, after watching what is now a $2.2 trillion health care market at work for 35 years, that the market has its limitations. The notion that this policy proposal will somehow make all the "dummies" in the market a lot smarter and more effective once the CED outline is in place is a simplistic leap of grand proportions.
The CED proposal is a business proposal made by primarily business leaders. Give them credit for going way past the slim health care reform proposals the Republican presidential candidates have released. The CED makes good suggestions for crafting an individual health insurance system that can actually deliver a health insurance policy to everyone--no matter their age or health status. They also would give everyone the assistance they need to buy a health insurance plan (albeit a basic plan)--something the Republican candidates seem afraid to talk about. They also aren't afraid to tell us that would mean more taxes.
The CED goes well past what the Democratic candidates are willing to do by pointing out just how ineffective the employer-based systems, the Democrats have built their plans on, are in controlling costs.
The CED's analysis of what's wrong and why more limited strategies like consumer-driven care and health technology are by themselves inadequate, are right-on.
In short, the CED looks to me to get the understanding of the problems and challenges right and follows that up with a creative way to get everyone covered.
But then, the CED stops at the water's edge of cost containment.
They did steal the "health care fed" term. But then they don't give it the power it really needs to manage the nation's health care money supply. Until that happens, there will be no incentive for the market to do more than fiddle around at the edges.
I guess this group of mostly business people (many of them in the health care business) just can't get themselves across that last line--granting a "heath care fed" the kind of powers to rein in the health care system that the Federal Reserve has over the nation's money supply.
That's too bad particularly since I will bet that every one of those business leaders thinks the powers the real Fed has over controlling our nation's money supply are a good thing.
You can see the full report and summary here.
Here's a plan with a real "health care fed."
Earlier post: Committee for Economic Development (CED) to Release Its Health Plan This Week--The Questions to Ask Them
4 comments:
The CED report does make some good points, including the failure of the employment-based insurance system, the need to control costs in order to provide universal coverage, and the inadequacy of the current notion of consumer-driven care. Most important, the CED recognizes that "the root causes of these problems lie deep within the structure of our health care system." Where the CED goes wrong, however, is in assuming that by restructuring insurance, they can force change on providers. We do need to change how health care is financed, but real reform will occur only if we also change how providers are organized and paid.
Like many Democrats who support the idea of an FEHBP-like regulated insurance market, the CED people believe that by giving people a choice of health plans with different costs and benefits, they can spur competition among insurers that will translate into changes in how doctors and hospitals operate. But in fact, competition among insurers on this basis will only get them to push and prod providers in all of the ways that providers hate; the only difference is that the plans' customer becomes the consumer rather than the employer.
Competition that will lead to real reform cannot be between insurance companies; it must be between physician groups, which are the only entities capable of really changing physician behavior through peer pressure. This was the most important insight of Minneapolis' Patient Choice experiment, which produced lower costs without diminished quality. In my book Rx For Health Care Reform (www.rx-healthreform.com), I explain how a system along these lines could be constructed on a nationwide basis.
The CED approach has some other major flaws: for example, taxing everybody on the value of their employer-provided insurance is a political nonstarter. Also, while the CED favors an individual mandate via the tax code, it doesn't say anything about requiring employers to provide coverage.
As for the National Coalition on Health Care's "Fed" approach, I think that people should pay more attention to the coalition's report, because it shows the extent of corporate frustration with the status quo. But the idea of imposing price controls, either through the government or some quasi-governmental agency, will ignite the same backlash as the Clinton Plan did; and in any case, it's an awfully blunt instrument to apply to a system as inefficient and wasteful as ours.
We need Deep Reform, and we need it now.
I work for CED. I do not want to intrude on this discussion, but do want to clarify a few points.
The main clarification: The CED proposal includes a tax-financed, universal credit equal to the cost of the low-priced plan in each region. It is not, as the kenterry comment suggests, an income-tax-enforced individual mandate. (The confusion may have arisen because of a discussion in the CED report of what possibilities would remain if the body politic refused to finance the universal credit with taxes. That was a discussion of contingency alternatives, not the actual recommendation. Also, once the universal credits are introduced, the tax exclusion for employer-provided premiums would be a moot issue.)
Three shorter points: First, the system we envision would have standards for the quality and coverage of all plans set in a fashion similar to the current Federal Employees Health Benefits Plan. This would mitigate fears of two-tier medicine.
Second, we believe that the current system does not impose any meaningful competition among insurers OR health-care providers. We believe that real competition among insurers for individual customers would be a substantial change in the market, and would flow through to the providers. Please see the report for a detailed discussion.
Third, we believe that meaningful competition should be tried before the nation considers price controls or any equivalent, with all of their distortions. We discuss some of the problems with administered prices under Medicare in our report.
Thank you for the thoughtful discussion.
Joe:
I would appreciate your commenting further.
Please be specific in telling us what the CED proposal would do to create "meaningful competition" that 20 years of managed care hasn't been able to accomplish on its own?
As the CED report indicates, fewer than 10 percent of all workers have any choice among alternative health-insurance plans AND receive a fixed-dollar contribution from their employers, such that they pay the additional cost from choosing a more-expensive plan. This means that insurance plans of any type have no significant incentive to try to provide the care that people want at the most attractive possible price. So the issue, with respect, is not "20 years of managed care." If there were no such thing as managed care, there still would be no incentive on the part of suppliers to deliver quality and affordability. That incentive is at the heart of all progress in every other sector of the economy, and health care will not progress without it. With consumer choice, any models of health-care insurance and delivery that succeed surely will provide more of what people want and can afford to buy. Personally, I do not care whether those models include fee-for-service medicine, managed care, or some modes of organization that have not yet been imagined -- or any combination of the above.
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