People are understandably confused by the complexity of the health care reform bills which have passed the House and Senate. At times like this our health care system seems like a runaway truck that has lost its brakes and is likely to careen off the road, plunging over a cliff.
If the Congress does nothing, within ten years American families with annual earnings of $50,000 are likely to spend 58 percent of their wages on health care. Health care reform must provide a safe stop for this runaway truck. Reform must achieve three simultaneous goals: (1) regulate the health insurance industry, (2) provide financial help for families to purchase health insurance that has needed benefits and reasonable out-of-pocket expenses, and (3) implement measures that will slow the rising cost of both private health plan premiums and government financed health care programs. These three goals are interrelated and can not be achieved separately.
The House and Senate reform bills would prevent plans from refusing to enroll applicants who are sick or terminating enrollees because they failed to note a preexisting condition on their application. Insurance plans would have to do away with lifetime limits and pay for care related to a preexisting condition.
However, the only way these reforms can be implemented without greatly increasing premium prices is to require everyone to have insurance. Otherwise, people who are healthy will wait until they become sick to purchase insurance. Insurance works by spreading risk over as large a number of people as possible.
Is it fair to require people, especially younger and healthier people, to have health insurance? I believe it is, because requiring everyone to have health insurance contributes to the public good in the same way as having fire and police departments benefit everyone.
None of us can predict when we might develop a serious illness or have a severe accident. When this happens to a younger person, they may never be able to obtain affordable health insurance. Since the young and healthy help lower the cost of premiums for sicker individuals, younger people will benefit as become ill or get older.
The House and Senate bills try to make premiums and out of pocket expenses affordable for both middle class and lower income families. It does not make sense to have a low cost premium while leaving a family exposed to unaffordable out-of-pocket payments when someone gets seriously ill. Health insurance should cover needed medical care with affordable deductibles and co-payments and plans should make preventive and wellness care available with minimum financial barriers.
In the House and Senate reform bills low income, single adults and families who cannot afford to pay anything for the cost of their health care become eligible for Medicaid, a joint federal and state program, with new federal support. It is less costly to cover these people in Medicaid than to pay the full costs of a private health plan.
Single adults and families who can afford to pay a portion of their health insurance costs, perhaps with an employer contribution, would be eligible to receive a governmental subsidy to help pay for the insurance premium. The amount of the subsidy will depend on their income. Similar to obtaining coverage through a large employer, these people will be able to select a good plan through an insurance exchange.
Ultimately people's ability to afford to purchase insurance, will depend on our ability to slow the growth in health care expenditures over time. Part of the excessive growth in costs is related to the introduction of new technologies and the impact of medical malpractice on clinical decisions.
Another reason is the many uninsured Americans, who do not receive needed primary care services and use hospital emergency departments excessively. They are frequently hospitalized for problems that could have been avoided.
Everyone pays for the excessive costs of these uninsured patients because hospitals must cover these costs by charging private health plans more. This drives up private insurance premiums. Our private health care system is poorly organized because primary care, specialty care, hospital care and home health care are not well integrated.
In addition, the way we pay for care, our fee-for-service system, encourages fragmentation, excessive usage and expenditures. Since there is no consensus about physician payment reform and integration models, the House and Senate bills contain funds for demonstration projects to clarify our options.
The House and Senate health care reform bills are not perfect. They reflect the give and take of the legislative process necessary to get the votes needed for passage. But time is running out to bring some order and rationality to our health care system. We are rapidly approaching a cliff and we can't wait very long to pass needed health care reform that will achieve the three interrelated goals: insurance reform, near universal coverage, and cost control.
Stephen Berman, MD, Fellow of the American Academy of Pediatrics, is professor of pediatrics at the University of Colorado School of Medicine, Children's Hospital chair in general pediatrics, and past president of the American Academy of Pediatrics.