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

Committee for Economic Development (CED) to Release Its Health Plan This Week--The Questions to Ask Them

David Broder gave us a preview of the Committee for Economic Development's (CED) upcoming health care reform plan. With the likes of Alain Enthoven and "a high powered business group" involved, we all need to pay attention.

Key points the report will make according to David's column:

• Business can no longer afford afford to pay for health care.
• Five years ago the group laid out a strategy for business to curb health care costs and it hasn't worked.
• "The U.S. employer-based health insurance system is failing."
• "Band Aid" approaches from Gingrich's emphasis on high-tech computers to medical practices, to the emphasis on consumer-driven care, to "Medicare for All," won't work. [Amen to all of that.]
  

The report will call for a reinvigoration of the market based on a structure of individual health insurance purchasing that would include:

• A regional purchasing exchange through which individuals would buy a policy from a number of competitors.
• Each year there would be an open season free of pre-existing condition provisions and medical underwriting--and presumably a late-enrollment penalty.
• The exchange would manage a risk adjustment system for the insurers so each would get a fair slice of the market--thereby eliminating the need for underwriting.
• Every family would receive a fixed-dollar credit sufficient to pay for a basic, low cost health plan. They could pay for more benefits with after-tax dollars.
• To pay for it, the current employer-based tax exemption would end (along with a requirement for employer-based insurance) and those savings, plus some form of other broad-based tax, would pay for the program.

These are all good ideas.

Republican presidential candidates have all pointed toward the reinvigoration of the individual health insurance market as a better alternative to the employer-based system. The problem with all of those proposals (see the candidate reviews in the topic column at right) is that they don't modernize the individual market so that age rating, pre-existing conditions, and medical underwriting are dealt with. It would appear this group has a way to get that done efficiently and the Republicans should pay attention to it.

When the proposal comes out, I suggest we pay attention to a number of things:

• 1. The details of the regional exchanges. To work, the exchanges need to result in something that really gives everyone access--no matter their age or health status.
• 2. Giving everyone the same low-cost policy concerns me a bit. Would the poor have the same health insurance policy as the rich and, while the rich could buy up, would a poor family be able to afford the same care?
• 3. The funding. As I have posted many times, an individual mandate is not necessary if the cost of a program is affordable for consumers. Do they really accomplish affordability at first--and ten years later is the program still affordable.
• 4. The big one I will be looking for is cost containment. To make the program affordable in future years, the group will need to "gore some political oxen." The only way I know of to stabilize costs is to pay the key players less than they would have gotten in future years. The Democratic and Republican presidential candidates all give lip service to this issue by just giving us a list of the same things that are mostly underway in the system now with insufficient effect.

The big question: How will this plan will be affordable ten years after it is launched?

I look forward to hearing more about this.