Stupidity Is Very Unhealthy
Super-smart editorial in the WSJ by oncologist Ezekiel J. Emanuel and Senator Ron Wyden on what should change in health care. They start out by pointing out how antique our system is -- noting that not many people are buying cars built 60 years ago, watching TV on a set manufactured in the 40s, or seeing doctors who haven't cracked a book since before the polio vaccine was discovered. Why then, they ask, are millions of Americans getting their health care through an employer-based system from the 40s, when men stayed with their companies from their 20s until they retired with a gold watch?

Employers didn't start offering health benefits roughly 60 years ago because they were experts in medical decisions. It was a way of circumventing the World War II wage and price controls. Barred from offering higher salaries to attract workers, employers offered health insurance instead. Aided by an IRS ruling that said workers who received health benefits did not have to pay income taxes on them, and by the fact that employers could write off the cost of the health benefits as a business related expense, this accidental arrangement became the primary way most Americans access health care.

...Sixty years ago, most American companies competed only against neighboring companies for lucrative contracts. Today, most businesses are up against foreign companies that don't foot the bill for their employees' health-care costs.

...The money that employers are spending to buy health care for their employees could otherwise go to workers in the form of higher wages, empowering individuals to make their own health-care choices.

The currently available alternative to this employer-based system is even more horrifying. Individuals buying insurance don't have the same purchasing power as large businesses and end up paying much higher prices to cover administrative costs and risks. They also don't get the tax breaks that employers get for buying health insurance. In most states, insurance companies have the right to discriminate against individuals by denying coverage or charging astronomical prices to anyone with a pre-existing condition. It is no surprise that, when given the choice between the employer-based system and buying health insurance on their own, the vast majority of Americans reject the latter. (A Kaiser Health Tracking Poll this summer, for example, found that only 17% of Americans said they would prefer to buy insurance on their own.)

But this is a false choice. It assumes that the current system is the only option. Why can't Americans have the best of both worlds?

Americans need some of the benefits of the employer-based system: the security of being part of a large group, of not being denied coverage because of age and pre-existing conditions, and the convenience of having experts screen qualified plans and manage enrollment. But Americans also need portable insurance -- coverage that follows them when they change jobs, lose jobs, start a business or whatever else may come. Americans need more choices and the market power to buy the health coverage that works best for them and their families and, in turn, to make insurance companies compete for their business.

Such a system could be implemented today by creating state or regional insurance exchanges that pool individuals and small groups to pay the same lower prices charged to larger employers; that certify that all insurance benefit packages meet minimum consumer protection standards; that manage the enrollment process; that collect premiums; and that require insurance companies to issue and renew coverage for anyone who applies, protecting the insurers by paying them a risk-adjusted premium that pays them more when they enroll sicker, more costly, patients.

Fundamentally, this means that insurance companies would have to change their business model to compete on the basis of quality, price and benefits, rather than by "cherry picking" the healthiest people to cover.

Here's a quote from a commenter on the WSJ:

As someone with an actuarial background, I have long been a vocal advocate of detaching health care from employee benefit plans. The key to successful reform is to get the money employers pay for coverage net of their tax write off into the hands of the covered employees, and let the employees own their own policies. This provides zero dollar impact to the employer, big $ impact and control to the employee. This is the coming battle on health care reform. Do we give power to people or cede more power to government? This could be the most critical battle of our generation and determine whether we remain essentially a free people or shackled to a "benevolent" government.

--Michael Hopkovitz

Another one:

The article doesn't even address one of the major problems associated with employer based health care. Imagine for example that an employee covered under an employer's health care plan where the employer offers employees only one plan, a situation most employees covered by health insurance find themselves in. That plan is a PPO type plan and the employee is in the middle of cancer treatment. When the employer switches, he switches to a HMO type plan where the employee has to obtain his treatment from different doctors and hospitals than he presently has. This situation can create a life threatening situation where the employee gets caught in the red tape at the point where the plans switch, which often takes one to two months to get ID cards, new doctor selection, etc. An employee in the middle of chemotherapy can't wait to get their next treatment, it has to be done on a set schedule to be effective.

While undoubtedly some plans will effectively handle such cases, it can be expected that many will not. Having patient based health care rather than employer based health care would solve this problem.

--Thomas E. Nelson, CIC, CR

Yet another:

You're absolutely right on every point. I just wish you could force all of Congress to read your article.

I work in the venture-backed start-up world and have had to change jobs a few times. When I have, the single biggest head-ache has been securing new health care coverage for my family in the interim between jobs. (Note: I'm aware of the COBRA program, but when a company goes bankrupt or is dissolved, the health care coverage disappears and COBRA-continuation is NOT an option.)

Presumably I have been counted at times among the oft-lamented "40 million uninsured" in this country, but at least in my case it's bogus. I have always wanted coverage and I have always been willing and able to pay for it. But the delays in the underwriting process while the insurers try to weed out the moral hazard risks, and the fighting with the carriers about the numerous exclusions to the coverage that they insist on due to pre-existing conditions, means that typically several months go by before I am able to get new coverage in place. The great irony, in my opinion, is that we have had these problems even when we have tried to continue personal coverage, with the SAME carrier, and after several years of continuous coverage under a group plan.

--Jim McGovern

The realities of the work world have changed, and coverage needs to be modernized -- and not by having it provided by the governanny. For those who think it's "free" in countries in Europe like France, my friend M. last night opened up with the shocking info that he's paid about $70K in five years for his "free" French coverage. I think that's because he actually earns a good living here, as an enterprising "wop from the Bronx," as he likes to call himself -- a living that he'd otherwise have to be from one of the really high-born families or a gorgeous newscaster to earn.

UPDATE: This commenter, Parker Lyons, was particularly wise:

Why people think it is a good deal to finance routine office visits and generic medication is beyond me. What you want to finance or insure is the hospitalization or specialty medicine which gets really costly.

For non-smokers like me, who exercise, eat healthily (meaning eating meat and fat -- which you don't find so easily in meat in America) and maintain actual normal weight, a plan where I pay for office visits but have only coverage for more serious care would be ideal. I go to the doctor about once a year for a physical, and I saw an eye doctor once, and see a shrink every six months or so to get more Ritalin (I get the cheapo generic, of course).