The author, who has come up with a sample set of principles to guide our healthcare system, also identifies the 15 biggest problems facing our dysfunctional system
January 19, 2011 -- Unless you were an insurance company, you desperately needed healthcare reform last year. Despite health plans lobbying to defeat reform using more than half a billion dollars of our health insurance premiums, money that should have treated our loved ones instead of fighting to treat no one, reform became law.
Despite the partisan obstructionism, health insurers will be required to actually provide the insurance that they promised when you signed a contract and paid a premium. Despite the court challenges, reform should prevail.
Why? Because mandating that Americans pay for something that they already receive is constitutional. Even if you never call your police or fire department, you still must pay the taxes which support your safety net. Did you read about the fire department that watched a home burn down because the owner didn't pay the optional fee for fire service?
Federal law requires that every patient coming to an emergency is given emergency healthcare, even if they refuse to pay for it. This emergency room safety net also has a price, currently paid by those who work there and those who buy insurance. Our government created this inequity and only our government could fix it. It is long past due for every American to pay for their fair share of our healthcare system.
Americans need more reform than became law, but we got several reforms that we needed.
Health plans must spend at least 80% of the premium dollars that we pay them for healthcare (at least 85% for group plans). This means that the plans currently spending only 65% of premiums on our care must spend at least 15% more on healthcare and less money on administration, costly executive management, shareholders and lobbying. A large insurer notified shareholders to expect lower earnings. What is not so good for insurance company shareholders tends to be much better for policy holders. Every absolute 1% in combined spending by all private health insurers equals one billion new dollars for care or, under the new law, a refund to policy purchasers.
Rescission is prohibited. Something was very wrong with our system when health plan employees received bonuses to find anything that a woman newly diagnosed with breast cancer might have forgotten to put on her insurance application. These women found their insurance rescinded for having had a nosebleed, or something equally minor and unrelated to their cancer. They then had no insurance and could not buy new insurance. Sometimes companies had collected premiums for years and when it was time to pay, abandoned these women to die. Rescission is no longer permitted.
There are no pre-existing condition exclusions. During the reform debate last year, one insurance company denied the hospitalization of a newborn baby who was overweight at birth. The insurer called it a pre-existing condition. In a newborn baby? Within a two week period, a different newborn had an insurance denial for being underweight as a pre-existing condition. Only perfect babies were insured? If the insurance companies weren't so brazen in the violations of their responsibilities, even in the middle of the reform debate, reform might not have passed. Now no one can be denied care for pre-existing conditions, not even newborn babies.
Reform included several other benefits, including carrying children on a parent policy until age 26, caps on out-of-pocket expenses, preventive care, and state insurance exchanges (if your state favors constituent health over politics and insurance company profits).
As a start on reform, this was an incomplete and potentially expensive way to go. Paying for this portion of reform will require additional reforms. We got an individual mandate to purchase insurance, but in name only. An effective mandate would require a penalty comparable to treble damages, perhaps three years of income-adjusted premiums. A penalty of one or two monthly premiums will not compel anyone to buy insurance. The argument that the mandate is unconstitutional is misguided. The mandate is not a mandate to buy insurance. The mandate is to pay for insurance that the "uninsured" already have, but is currently paid by others, those who treat the "uninsured" and those who do buy insurance.
We also did not get a fix to the SGR (Sustained Growth Rate), the biggest factor leading to the impending bankrupting of our healthcare system. This 1997 Congressional "fix" to rising Medicare costs that we could not afford, reduces payment rates to physicians and other care providers every year that costs exceed an arbitrary percentage. Congress has postponed the proposed cuts each year for several years. Less than one month after President Obama signed the reform legislation, Medicare payments were cut by about 20%, to a level below the cost of treating Medicare patients. (Congress reversed the SGR cuts three times in the months that followed, but without a permanent repair or repeal.)
We cannot get the reform of our healthcare system that we need by using the same processes that created our dysfunction in the first place (Einstein paraphrased). Using the existing political process and applying it to the negotiating table tilted heavily in favor of the health insurers will only give us similar incremental, but insufficient changes. We need real reform, beginning with the process that performs reform. We must first define how our healthcare system should work, how it should look. Once we know that, then we need to define the principles which support that system. Only then should we define the policies (through legislation and regulation) that constitute reform, avoiding policies that violate our principles.
To learn more about why our system is so broken, a sample set of healthcare principles, and the 15 biggest problems in our dysfunctional healthcare system (four of which were partly addressed by reform), please review the 8-page, non-partisan "Blueprint for an Effective and Sustainable Healthcare System."
Dr. Larry Ozeran is chair of the Yuba-Sutter Healthcare Council, a consortium of healthcare providers, insurers, educators, economic and workforce entities. He has been involved in healthcare policy for more than 15 years. He has been a practicing general surgeon for 18 years and a health informatics professional for 20 years, and is currently an associate clinical professor at the University of California, Davis with an emphasis on organizational and policy issues in health informatics.