Understanding the Health Care Debate

It is hard to turn on the news, pick up a paper, or log onto social media without seeing someone’s opinion on how to “fix the healthcare problem.” It is certainly a very important topic, as the quality of our health care can change our lives without warning.  I’ve even heard it said that “nobody knew healthcare could be so complicated.” Regardless of your personal feelings on the debate, providing affordable health care to 300 million people is, in fact, extremely complicated, especially in the current political environment.  Nevertheless, we must work to solve the problem.  

I'm not a health policy expert, and I've only spent about 5% of my career working for the industry.  These facts don't make me any more (or less) qualified to provide my opinion.  I do a lot of reading, and try to understand the complexities and major issues.  What I'm giving you is my opinion on the subject, sprinkled with what I hope are a number of pretty solid facts.  Throughout my career in business and technology, I've been praised for my ability to take complex problems, and make them understandable.  That is all I hope to do here.  

Thanks for reading!

Asking the Right Questions

The debate can’t just be about how to “solve the healthcare problem.”   In fact, the better questions are, “what problems are we trying to solve?” and “what are the driving principles behind these efforts?”

Are we trying to solve the problem that people get sick in the first place, and require health care to survive?  Are we trying to tackle the reality that most people don’t have the means or the foresight to create a savings account dedicated to paying for unexpected medical expenses?  Are we trying to solve the issue of skyrocketing prices charged by doctors, hospitals and clinics for care?  Are we trying to harness the power of the free market to inject competition into the health insurance market?  Are we working to reduce prices for life-saving drugs and medical devices sold by private companies?  Are we hoping to balance costs for those who are healthy (but may get sick) against those who truly require care right now?  These are all problems that deserve an honest, healthy debate.

Even assuming we can agree on which problems to tackle, there is also a debate about our ideals and beliefs as people and as a nation.  Do we believe that having access to quality healthcare should be a right for everyone?  Or do we believe that it is a privilege reserved only for those who can afford to pay for it?  Do you believe that illness is preventable enough that we should penalize those who get sick, while rewarding those who manage to stay healthy? Should certain diseases and injuries be the responsibility of the individual, while others covered as a standard?  Should certain people (children and the disabled) get “free healthcare” while others struggle to pay for it, even if they make very little money?  At what point has someone paid enough into the system that they can rightfully expect to be taken care of for the remainder of their life?  Should programs such as Medicare and Medicaid be more tightly controlled to ensure that those receiving benefits cannot afford to pay them on their own?

Understanding the Basics

Yes, healthcare is definitely complicated; we all (most of us) know this to be true.  It is complicated because of what we believe both collectively and personally, and also because of the myriad of factors that make healthcare so expensive.  If we all believed the same thing, or if health insurance could be purchased for $12 a year, this wouldn’t be a difficult argument.  It is complex because raising the amount of money required to pay for all of us to receive care is a challenge.  It is complex because many people don’t believe, or aren’t willing to accept, that healthcare should be a right, not a privilege.  I seem to remember something about “life, liberty and the pursuit of happiness” that was written somewhere important.  Do we truly believe in those words? 

There are some things, on the other hand, that are surprisingly simple.  For example, reducing the cost of healthcare isn’t as complicated as you might think.  We know that the more people we can pack into a health plan, the cheaper the plan becomes.  We know that combining lots of healthy people with fewer sick people in a group leads to a lower overall cost to consumers.  We know that when people are forced to buy insurance on their own, they generally have fewer options, and therefore pay more.  If those people are higher risk or have a pre-existing condition, they may not be able to afford the insurance at all.  We know that buying products and services in large quantities saves money, because we have greater leverage as consumers.  We know that people who can’t afford insurance, or who choose not to buy it, still manage to get healthcare by showing up in emergency rooms, driving up costs for everyone else.  We know that those with bad insurance (high deductible, non-essential benefits) tend to delay preventable issues until they are really sick, often increasing the overall cost of care. We know that people who live a healthy lifestyle generally get sick less, but that many people end up with health issues through no fault of their own.  We know that things like comprehensive sex education, access to birth control, and availability of women’s health clinics dramatically reduce teen pregnancies, and therefore both abortions and the number of children born into poverty. 

The Case for Single Payer

These things aren’t particularly complicated, and the solutions all favor the same path.  If we really want to do something about healthcare, we need to move towards a single payer solution, or at least a multi-payer solution with a public option.  Many may not remember, since it was  17  …whoops…I mean 7 years ago... but the ACA (aka “Obamacare”) was supposed to have a “public” option for coverage included in the bill.  This was reluctantly given up as a concession to insurance lobbyists after a long, hard fight.  The public option would essentially be Medicare, but anyone could buy into it, even those who are young and healthy.  As we take a look at some of the ACA’s failures today, the failure of passing the public option is a major culprit.  Essentially, everyone in the individual market would have the option of choosing either the “public” option, or a private plan made available through state or national exchanges.  This would guarantee that a least one affordable option existed in all markets, increasing competition, and driving down costs.  The GOP talking point about selling insurance across state lines would be accomplished as well, as Medicare already has established provider networks in every state, and Medicare already complies with state laws, as required. Despite what you hear from some politicians, nothing prevents this practice today, as long as the private insurers are willing to meet these requirements. 

Having more people on Medicare actually decreases the per patient cost, and as healthier people join the plan, the prices to cover the current population would go down as a result. As more people start to carry their own insurance, we can finally move away from a system that ties health insurance to employment.  This could have additional positive outcomes.  For one, companies could shed the burden of managing and maintaining complex benefit plans for their employees.  With the elimination of tax deductible employer contributions to healthcare, corporate tax collections should increase significantly, which would help to offset the additional costs of coverage.  In the current system, large corporations have a huge advantage in attracting top talent, because they can more easily provide security to employees in the form of health benefits.  Many small companies either don’t provide insurance to their employees, or have higher premium costs due to smaller group plans, which puts them at a competitive disadvantage.  If people carried their own insurance independent of their employer, we would likely see increased mobility in the job market, leading to upward pressure on wages, further increasing the tax base. 

The Counter Argument

Sounds great, so what is downside of this option?  The obvious answer is that it would hurt the insurance industry.  Currently, large health insurers are some of the most profitable companies in this country, in large part because they provide insurance to mostly young, healthy individuals, while the government pays for the health care of our older, sicker, poorer and disabled populations.  The private insurers are more than happy to take on large businesses and wealthy individuals as customers, but are less interested in participating in the individual market, or helping out those of lesser means.  A public option, or a “Medicare-for-all” plan like the one proposed by Bernie Sanders, would create extreme pressure on these companies to cut costs and lower prices.  It may be difficult to pay multi-billion dollar bonuses to top executives, or to build expansive campuses of new office buildings when competing against Medicare. 

While such a major change would absolutely cause some pain in the industry, and those who work for it, that doesn’t mean it is the wrong thing to do.  I have a fundamental problem watching an industry create scores of millionaires and billionaires while most Americans are getting sicker and poorer because we can’t provide affordable care to all our citizens.  Some businesses simply need to be reeled in, as the value that they provide is far less than what they remove from our economy. We saw this in painful terms with the Wall Street mortgage derivative market crash a decade ago. 

Obamacare Success and Failure

The ACA attempted to solve many of these issues.  Expansion of Medicaid provided a lifeline to many poor Americans who could not afford care (other than in hospital Emergency Rooms).  Income based government funded subsidies allowed many to purchase insurance through the private market at affordable rates.  The individual mandate, while unpopular, created an incentive for young healthy people to buy insurance. This feature is critical to cost reduction as it helps to create more evenly distributed risk groups.  New regulations on the insurance industry ensured that all plans covered essential benefits, couldn’t refuse people with pre-existing conditions or establish caps on coverage, and allowed parents to cover their kids for longer.  There were also rules established that limited how much more could be charged based on things such as age and gender.  The law also raised additional revenue in order to pay for the subsidies through targeted taxation.  In the last 7 years, millions more have obtained high quality health insurance, even as costs continue to rise.  While experts disagree on the number of people added because of the law, it seems be be somewhere close to 22 million.

Without the preferred public option provision, however, the individual market has struggled, especially in certain areas of the country.  Most employers actually decided to keep providing coverage for their employees, instead of releasing them into the individual market as many predicted.  While nice for these employees, that actually hurt the individual market, because many younger, healthy individuals with jobs didn’t enter the market.  Without the competition of the public option, there was no market pressure on insurers to provide cheaper coverage or cut unnecessary expenses beyond what was mandated by the ACA. Individuals who didn’t qualify for subsidies saw their costs rise, in large part due to the elimination of “bare bones” or "catastrophic" health plans that carried few benefits at a more affordable price.   Drug and medical device companies continued to charge much more to American consumers than our friends in Canada and Europe.  Many (but not all) hospitals soared to record profits because of reductions in delinquencies and uncovered ER care.   In many cases, these hospitals paid no taxes on this income due to their tax-exempt status.

Few people believe that Obamacare was perfect, but here is what it got right.  It laid out a set of problems that needed solving, and it attempted to solve them. It was based on a set of beliefs that everyone should be able to afford coverage, regardless of their situation.  It aimed to increase coverage, and slow the historic rise in premiums and medical bankruptcies.  It targeted insurance company practices that put profits ahead of people’s health, and it created incentives for better results in care.  The ACA made progress against some of these goals, and stayed pretty close to its stated purpose.  Now it is time to take it further and finally deliver a system of care that America can be proud of. 

What’s Next?

We owe it to ourselves to hold any health plan (Democratic, Republican, or Bi-Partisan) to these same high standards.  I challenge you to evaluate any health care proposals by first asking these key questions:

1. What problems is this trying to solve?  How will it solve them?
2.  What are the key values and beliefs driving these plans?  Does the plan support those values?

We owe it to each other to elect representatives that share and fight for these beliefs.  Finally, we owe it to our children and future generations to, once and for all, move toward a system that allows all of us to pursue a healthy and happy life in America.