Over the past three weeks, a procession of health care experts have wended their way to the halls of Congress to testify before the Senate Finance Committee. Collectively, the testimony (available on the Senate Finance website) looks at almost every aspect of health care reform. There’s plenty for any one person to disagree with, but—overall—it’s like having a free subscription to Health affairs.
If one had to pick just one paper to read, an excellent choice would be Len Nichols’ testimony on expanding health care coverage. It’s better written than most of the others, and far more objective than the self-serving comments from industry insiders. Here are my own comments on Nichols’ recommendations:
1. Elimination of the employer coverage tax exemption – Not only is it probably key to financing reform, it removes the unfair advantage that large employers have over small ones, and also potentially moves coverage choice and payment to those who will actually be covered. Allowing ERISA and other large employers to continue to offer direct coverage is a reasonable compromise, and one that would reduce the risk of destabilizing the insurance industry (and alienating big business). It’s also consistent with the successful Dutch system, which uses an insurance exchange model but allows large employers to contract directly with insurers.
2. Separate pricing of a minimum benefit package – I think this is essential, and I would much prefer to see price competition based on fixed benefits than benefit competition based on a fixed budget (as Fuchs and Emanuel have suggested). I don’t see how we can be confident about controlling costs if purchasers can’t see which choices are less expensive. Models like FEHBP that offer different benefits at different prices are the worst possible combination.
3. Risk adjustment – We clearly have to have some form of this, and again the Dutch system offers an example (as does Medicare Advantage – hah!). However, I wonder if a reinsurance approach might be simpler.
4. Play-or-pay – Eliminating the employer coverage tax exemption would remove the need for play-or-pay, which has inherent problems of unacceptability to smaller employers and also is liable to manipulation (Hawaii’s employer mandate is a good example of how this kind of approach can be finessed to a point at which it is meaningless).
5. Medicaid – Not only do we have a separate health care program for the poor, it’s one that too often limits access to care. It may not be politically feasible currently, but turning Medicaid into a wraparound subsidy program (as the Wyden-Bennett Healthy Americans Act proposes) would also achieve continuity of care.
6. Medicare – It’s essential that we wring some savings out of Medicare, but I’m not hopeful about the Finance Committee staff’s proposals for using payment changes to make delivery systems more efficient. So far, it hasn’t worked in the chronic care demonstrations and I’m always skeptical about CMS’ ability to make things happen. The one essential change is neutrality between Medicare Advantage and FFS, and this would be even more effective in terms of cost control if MA savings were shared with beneficiaries directly as offsets to Part B premiums.
7. Public program option – The self-funded state employee program option is a reasonable compromise. An alternative that I’ve proposed is a combination of a trigger (the public plan is only implemented in certain circumstances) and the availability of public plan payment rates to all private plans (in effect, a PPO-for-all).
It would be nice to think that common sense and experience will trump industry lobbying and political timidity, but meanwhile it’s a pleasure to read such a thoughtful and articulate paper as that of Nichols.