Change We May (or May Not) Survive: Competing Approaches to Health Care Reform | WisCommunity

Change We May (or May Not) Survive: Competing Approaches to Health Care Reform

Now that McCain and Palin have draped themselves in Obama’s mantle of change, the crucial question has become: change to what? Obama, Biden, McCain and Palin all claim to feel the pain of hard working Americans who seem to be falling behind rather than getting ahead. All envision a bright tomorrow in which every American will be safe and prosperous. But there is a stark contrast between the Obama-Biden and the McCain-Palin vision for America. And nowhere is this contrast starker than in their competing plans for health care reform.

It’s easy for candidates to advocate a “free market” for health insurance, but my background as a cardiologist, the founder of a small but quite successful national consulting firm, a recognized expert on measuring clinical quality and cost-effectiveness, a developer of analytic tools to support coordinated, effective, efficient health care markets, and a Medicare beneficiary who once enjoyed rather good private health insurance permits me to look under the hoods and see how the engines will run, where they will take us, and what they tell us about two very different visions of America’s future.

John McCain talks enthusiastically about creating a competitive free market for health insurance. But real free markets do not operate in theoretical vacuums. Markets can be free only when buyers and sellers both have adequate information to make reasonable decisions and when power is fairly balanced so neither side can run roughshod over the other. The sub-prime housing crisis has been so toxic not because some overly aggressive investors made poor decisions but because intelligent investors could not obtain accurate information about what they were being sold. A homeowner who purchases electricity from the only supplier of electricity in the community is not participating in a free market transaction when the homeowner’s only alternative to paying the company’s asking price is to live without any electricity.

Information and competition are the lifeblood of any free market. Senator McCain, who has pleaded an ignorance of economics, appears oblivious to the paucity of usable information available to purchasers of health care services in a highly fragmented market and to the marked asymmetry of power between individuals seeking health insurance and the large companies that provide it. Perhaps he hasn’t noted that even large national corporations have difficulty both in obtaining the information they need to make intelligent decisions about health plans and in leveraging their buying power in negotiations with insurers.

Fortunately, I’ve never had to deal with the individual insurance market, but as the owner of a small business with very skilled employees who demanded high-end health coverage, I know first-hand how difficult it is to get affordable coverage and how many ways insurers have of limiting coverage that is not required by law. And remember, I’m a physician and health services researcher who specializes in this area.

In shifting responsibility for purchasing health insurance from employers to workers, McCain and Palin will create a huge hidden tax on middle class Americans. The tax credits proposed by McCain will cover less than half the cost of insurance and, because of asymmetries in knowledge and power between individuals and insurers, many overpriced individual policies will fail to meet the needs of their owners if their owners become seriously ill. This is not speculation. This is the reality of the current individual health insurance market. It is difficult for an individual to assess the quality of health insurance coverage until he or she develops a serious illness. And once someone has a serious illness, his or her negotiating power is virtually zero.

The past decades have been marked not by cost saving but by cost shifting. John McCain’s radical change in health insurance will complete the process of shifting the cost of health care back to individuals, where it was in the 19th century. Half a century ago, Russell Baker noted that it was not unreasonable to expect the poor to pay for the Vietnam War because it was their children that were dying in it. Similar, John McCain’s health plan will leave the sick to bear the added financial burden associated with their disease because it’s their disease, not yours or mine.

I would like to believe that John McCain is as ignorant of what his plan will do to the Americans for whom he has pledged to “stand up and fight” as I am of the advantages and disadvantages of alternative forms of energy. But I fear that after unbridled free markets brought us the savings and loan meltdown, the vanishing pension plan, and the subprime foreclosure crisis, any reasonable observer would agree that middle class people could benefit from a bit more protection from the government they elect. Extended beyond health care, McCain’s formula for change is a recipe for a return to the America of the robber barons before Theodore Roosevelt began and Franklin Roosevelt continued the reforms that gave rise to the great American middle class.

Obama’s conservative approach to change in health care stands in striking contrast to McCain’s radical proposals. Obama’s reform package creates a National Health Insurance Exchange that will provide health insurance for people who cannot or do not wish to be insured individually or through their employers. This Exchange should become an important source of reliable information about the quality and cost of health care and will replace private health insurers only if they are unable to compete with the bumbling bureaucrats who would run the Exchange.

Having just had the unpleasant experience of being patronized by a powerless functionary of a private insurance company whose only job seemed to be to make sure that my wife’s prescription was not filled, or at least was delayed as long as possible, I’m not so convinced that private insurers are more consumer friendly than are government bureaucrats. On the other hand, I believe some healthy competition might improve the service provided by both sectors.

In sum, McCain’s health economic program praises free markets but does nothing to create an environment in which free market transactions can take place. In contrast, Obama’s plan, which Republicans criticize as “creeping socialism,” emphasizes government action but, in fact, is crafted in a way that levels the playing field by empowering consumers, increasing competition, and encouraging a transition to 21st century coordinated, cost-effective care.


October 4, 2008 - 1:38am