Take the health care reform quiz

As a public service, Cascade Policy Institute offers the following short quiz to help Oregon Catalyst readers evaluate any of the various state or federal health care reform plans.

There aren’t necessarily any right or wrong answers. So, take the quiz and then comment if you’d like about how it either confirmed or changed your thinking on the complex issue of health care reform.

What to ask about any health care reform plan

“¢ Does it create a comprehensive alternative, competitively positioned to displace the old system?
“¢ Does it seek (and permit) all categories of willing citizens to be included?
“¢ Does it offer a credible and critically examined cost control strategy?
“¢ Does it foster future innovation and the spirit of individual responsibility?
“¢ Does it offer robust choice commensurate with the dynamic interests of the population?
“¢ Does the implementation strategy challenge the wisdom of forcing people to participate in an unsustainable or unproven solution?

If you answered “no” to most of these questions, then ask yourself if that reform is really on the right track.

You can view, print and forward a formatted color version of the quiz here.

In January 2007 Cascade Policy Institute began a series of one-page papers to address various health care reform issues. They’re published in BrainstormNW magazine and online in the Health Care Policy Insight section of Cascade’s Health Care research page. The quiz is the January 2008 Insight.


Steve Buckstein is Senior Policy Analyst and founder of Cascade Policy Institute, a Portland-based think tank.

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Posted by at 11:00 | Posted in Measure 37 | 28 Comments |Email This Post Email This Post |Print This Post Print This Post
  • davidg

    Add:

    Does it offer financial incentives to those who avoid using the system by maintaining their health and choosing a healthy lifestyle?

  • Steve Buckstein

    David, that’s an interesting suggestion. Of course, reform proposals that rely more on individual responsibility already encourage people to stay healthy because they can save money at the same time. Proposals that put the entire financial responsibility on “the other guy” have no such incentives.

  • dean

    Steve..I find the questions a bit obtuse, even as an over-educated part time college professor.

    I have no idea what question one means.

    Number 2 is also weird, since I don’t know of any proposed policies that are exclusionary except our existing system, which excludes based on affordability and/or pre-existing conditions.

    I get #3. Bottom line is the only proven cost control strategies are denial of care to some (existing US system,) rationing of care (Canada,) or direct budgeting (Britain.) Private provider competition, which we presently have in spades, has resulted in the highest health care costs on the planet, so more competition, your institute’s preferred approach, falls a bit flat empirically.

    #4 is interesting. Innovation in medical technology has been a US strong point internationally. But it has also led to our high costs, since providers innovate by offering the most profitable treatments, not cost control. Determining consumer costs based on lifestyle (individual responsibility) would be interesting. Poor people would be charged more than the rich, since they are apt to be less healthy. That would bring a smile to El Rushbo. Old people would be charged the most. 90 year olds would have to win the lottery to get care at all. My good friends who have a daughter with Cystic Fibrosis would be beggers at our freeway ramps.

    Choice is in the eye of the beholder. A single payer system (Canada, France,) allows you to go to any doctor or hospital you want, paid for by the government through taxes paid. The US system (supposedly free choice) is actually more restrictive. I am a Kaiser member and can only go to Kaiser for treatment. All other plans I know of restrict the providers you can go to.

    Last question..back to obtuse. But I will say the present system we have, with health care inflation running double the rate of inflation, the highest costs in the world, 47 million uninsured, no security for the middle class (one layoff away from losing health care) is about as unsustainable and already proven to have failed as you can find in the developed world.

    If you want proven success you would pick the French model. Highest performance (#1 according to the WHO) at about 60% the cost of our system, and complete freedom of choice. All this and 450 choices of cheese,. Ooh la la.

    • eagle eye

      Dean, if you have a catastrophic medical emergency in France, you may find the American system is preferable. I know someone who had an absolutely life-or-death emergency. He went to a place called the “American Hospital” in Paris, rather than one of the ordinary hospitals. He ascribes his survival to that.

      The above is true in spades in Canada.

      I would not say we have a true market system in the U.S. Nor would I necessarily say the Canadian or French systems are necessarily more “free” than the U.S. system. It would take a while to explain, maybe later.

    • John Fairplay

      “A single payer system (Canada, France,) allows you to go to any doctor or hospital you want, paid for by the government through taxes paid.”

      You obviously know nothing about the Canadian health system. Sure you can go…you just may not be able to be treated.

      • dean

        EE…I don’t have direct experience with the French system, but if you look at the statistics, they beat us in just about every concievable catagory of health delivery and for a lot less money. Facts trump anecdote in my assessment.Spend some time on the WHO web site with their comparative charts and see for yourself.

        As for Canada, their system ranks a few notches above ours (we are around 39th while they are 33rd) according to the WHO, which is considered to have the most objective, comprehensive country by country rating system. Their costs are slightly more than 1/2 ours. Problems in the Canadian system are primarily due to stinginess on the part of the Provincial governments, leading to long waits for procedures like hip replacement surgery and some cancer treatments, providing misleading anecdotes for free marketers.

        In the US, assuming you have insurance, and assuming your illness is not so debilitating that you lose your insurance because you can’t work, your insurance company is as likely as not to deny you certain procedures. Truly, we have the worst posible situation. The highest costs in the world and a mediocre standard of care with 30% of the cost going to middlemen. Why anyone not in the health insurance or pharmecutical business would defend our status quo is a mystery to me. Conservatives should be leading the charge for a more efficient, more comprehensive, more accountable system.

        The United States already spends more tax money on health care per capita than Canada does to take care of 29% of our population while they take care of 100% of theirs. Botom line, if you are wealthy the US system is better. For everyone else (except those needing hip replacements) Canada’s system us better.

        • eagle eye

          “The United States already spends more tax money on health care per capita than Canada does to take care of 29% of our population while they take care of 100%”

          Dean, this statement of yours is simply absurd. It makes me discount everything else you have said.

          As for Canada, I happen to know something about it from personal experience. A close relative who lived there needed open heart surgery very badly. Not a hip replacement, open heart surgery. After 6 months, she finally got it, but was half-dead by then, and never really recovered.

          I never said the U.S. system is perfect; I think it has a lot of flaws. Many of these have to do with absurd regulations, however, not on the fact that we have a “market” system.

          However, I don’t find any of the various socialized systems to be models of where we should go.

          What WHO figures am I supposed to take not of and what are they supposed to imply?

  • davidg

    Dean,

    The questions made more sense to me when I realized that they are designed to be applied to any industry, not just the medical care industry. You could use all of these same questions to analyze a proposal having to do with food, shelter, or housing, or anything else. The questions are generic. Apply them to anything. Look back at them and you will see what I mean.

    The question I suggested above was my attempt to create an “industry specific” question to the health care field. My concern is that all of the “health care” proposals floating around ignore what people really want: good health. Good health is much more desirable than good health insurance. Although many factors influence good health, choosing a healthy lifestyle does more to create good health than any other known factor. But you must do that for yourself; no government program can do it for you. I would like to see a health care plan that rewards people who achieve good health by their healthy lifestyle choices. Healthy people generally don’t need much in the way of health care. Giving them an opt out option or significant tax deductions/credits is the kind of incentive I think should be part of any government program. It would encourage people to get healthy by making healthy lifestyle choices. Steve suggested that good health is its own reward, and I certainly agree with that. But since the government gives tax incentives to so many other supposedly good activities, why not create some tax incentives for good health?

    • dean

      David, yes I agree remaining healthy is the best goal. No one would argue that point. The questions are still obtuse, regardless of how generic they are. Maybe I am just dense.

      Statistically, about 80% of Americans in any given year use next to nothing in the way of health care services. The other 20% use up nearly 100% of the cost. So in your aproach, maybe half of the 80% are very healthy and could opt out or get a significant cost break. Yet the cost of service delivery, all that treatment for the 20% that has cancer heart disease, traumatic injuries, chronic conditions, genetic issues like cystic fibrosis…this 20% plus some among the less healthy but not presently using services, but who are overweight, smoke, don’t exercise, and so forth would have to pay nearly 100% of all the costs. Think about that. The entire health care system would collapse overnight, because few among that 20%+ could afford to pay their true share.

      What makes universal access systems superior to the one we have is that they draw from a large pool, including many healthy who pay for the unhealthy. This seems unjust until you consider that the 80% healthy are likely as not going to take their turn as unhealthy someday, sooner or later, or one of their kids, or their spouse, or their parents. What happens then? They have been getting a price break, but now they need tens of thousands of dollars in care in short order. Who pays? Health savings accounts? I doubt it.

      Case in point. My mother gave birth to me in 1953. The next time she went to a hospital was 50 years later, and she had quadruple bypass surgery. Within a week she had “used up” all the insurance she had paid for 50 years. After that she was on expensive meds, and her health deteriorated further. Within 2 years she passed away at the age of 80, at a cost of hundreds of thousands of dollars in medical care paid by you and me through Medicare. All those years of good health meant bupkiss.

      Poverty, age, and genetics are as important as lifestyle. Are you going to charge 80 year olds $50,000 a year for insurance?

      I would stay with the health is its own reward, get everyone into the pool and lower the total cost. If we want to adjust premiums a bit based on how well people are looking after themselves, fine, but within reason.

      • davidg

        I had never seen that statistic you cite about annual health care usage. But it certainly sounds plausible to me. And that is what catastrophic medical insurance is for. People who opt out of the government program should still be able to buy the private insurance they think will meet their needs.

        At one time the US Surgeon General estimated that 60-70% of all health care dollars were being spent on conditions preventable by healthy lifestyle choices. When you apply those percentages to the annual cost of medical care in the US, the value of giving hefty incentives to healthy people makes a lot of sense.

        Sorry to hear about your mother. I have had my own frightening experience with heart disease. After years of what I thought were good health, at age 49 I was diagnosed with severe heart disease and told I needed prompt multiple bypass surgery and should go on drugs for the rest of my life. Though fully insured, I opted instead for comprehensive lifestyle changes. Now, nine years later, I’ve had no “events”, never had the surgery, and don’t take or need any drugs. I’d say that encouraging people to adopt healthy lifestyles is the most important and effective thing that any government program could do. Case in point: me.

        • dean

          David…the 20%/80% figure is from a report by the Kaiser fAmily Foundation. They also found that on average, our sickest 1% use $150,000 in medical services a year.

          I wonder if that surgeon general’s report was talking about ALL health conditions or those within an age group. Getting old leads to a lot of health problems regardless of previous lifestyle. And again, being poor is hardly a lifestyle choice. Poor kids tend to be fed junk food, get overweight early in life, and develop all sorts of chronic health problems.

          Yes, we could move to a catastrophic insurance only model. For me that would save about $100 on my monthly premium. Other studies suggest it would mean less frequent doctor visits for checkups and screens, meaning less catching of symptoms early that prevent bigger problems occuring, and thus could end up costing far more in heroic treatments later on.

          Good for you on your lifestyle change and the result. I agree with your conclusion that encouraging healthy lifestyles is worthwhile. I know this riles some readers on this site, but promoting healthy lifestyles is one strong argument in favor of higher density living, bicycle lanes, walkable neighborhoods, public open space conservation (with greenway trails,) and against urban sprawl.

          But, different lifestyles among nations do not appear to be a factor in our higher health care costs and lesser outcomes. The McKinsey Global Institute looked at the diferent disease mix among developed nations and found the difference to be about $100 per person per year, though the US spends $3000 more per person per year than these other countries.

          The US spends 16% of our GNP on health care (far more than any other country), an estimated 31% of that goes to “administration,” (Canada spends 17%,) and we rank 37th in health care outcomes (I mistakingly said 39th in my earlier post). In 1987 62% of Americans got health insurance through their employers, today that is down to 59%. Health care costs are rising double the rate of inflation.

          I don’t hear anyone refuting the above statistics. I’m still waiting (but not holding my breath) for a coherent argument against the US moving to a universal health care access system that reigns in cost, improves health outcomes, and increases access. The free market solutions offered by CPI are pipe dreams with little chance of success, either as policy or in terms of outcome.

          • davidg

            Dean,

            I don’t dispute any of your statistics, I just don’t think they lead to the conclusion you reach. One reason why I don’t support a government takeover of medicine is its track record in other economic areas where we let the government have a monopoly or near monopoly. Think: Amtrak, the Post Office, public schools, or the Veterans Administration hospital system. These entities all basically perform their assigned function, but ineffectively and inefficiently. The private providers of similar services uniformly have more respect than the government provided service, even if the private service is sometimes more expensive (UPS, Fed Ex). The government service, however, is likely to be more expensive than anything privately provided (Amtrak, public schools). If we let the government run health care, quality will suffer. We will all get equally bad service. I realize some people see that as an advantage, but others do not.

            I looked back at the article co-authored by C. Everett Koop in the July 29, 1993 issue of the New England Journal of Medicine entitled: Reducing Health Care Cost by Reducing the Need and Demand for Medical Services. The article says we can reduce medical costs by 70% just by adopting healthy lifestyle practices. The article didn’t put any restriction based on age or anything else for that reduction.

            I think your belief that medical costs necessarily increase with age is mistaken. The chronic old age diseases/conditions of Western Civilization (heart disease, stroke, diabetes, obesity, arthritis, osteoporosis, hypertension, and even cancer) do not afflict many cultures until they adopt Western lifestyles and practices. Conventional medicine refuses to admit that it has been woefully ineffective in treating these conditions with its dependence on drugs and surgery. Yet there are many medical practitioners who report remarkably good results in treating these conditions with just lifestyle changes (diet, exercise, and stress management) without the use of surgery or drugs. Conventional medicine says this cannot be. My own experience with heart disease dramatically taught me the value of lifestyle changes.

            Alternative approaches to health care are starting to gain widespread acceptance. I don’t have the cite now, but it has recently been reported that more than half of all medical care visits in the US are with alternative practitioners, not conventional health care practitioners.

            If the government takes over health care anytime soon, you can be sure that the conventional practitioners and drug companies will control it for their benefit. Drugs and surgery will continue to be the dominant mode of allowed treatment, and costs will continue to skyrocket. Yes, alternative practitioners will get a few crumbs from the government as they now do, but not in the ratio that the people would naturally choose and prefer. In his questions, Steve addresses this issue by asking: how much competition will be allowed in the program? You can be sure that when the surgeons and drug companies get control of health care through the government, there won’t be any threatening competiton to them from alternative health care practitioners.

            I also don’t agree with you that a healthy lifestyle is more expensive than junk food living, and that therefore the poor can’t afford it. My experience is the opposite: healthy is cheaper. You must educate yourself on how to do it, but I find healthy living to be surprising cheaper than what I was doing before.

          • dean

            David…you make a number of good points I agree with, particularly the potential value of alternative medicine. And I agree living healthily is not more expensive, and is within reach of poor people, who sometimes are their own worst enemy.

            I will take issue with 2 points. First, that government run systems are inherently less efficient than private sector systems. The post office has a very different job than Fed ex, what with needing to deliver regular mail. As for the VA, they have some of the finest practitioners in the world, but have been underfunded as they are asked to treat an aging population. I’m not sure what the private sector alternative to Amtrak is. One can argue that public schools are not monopolies because there are countless independent school districts people can and do move to or away from.

            But back to the question at hand…our medical insurance system. Is it really competetive? For most people, their employers decide what insurance options are available to them. Maybe one, maybe more than one. With 31% going to overhead compared to 2% for Medicare, which is more efficient?

            And then there is the question of “government run.” None of the democratic proposals create a government run system. All do expand the role of government to varying degrees.

          • davidg

            I’ll stick just to the main issues on this response: the PO, public schools, Amtrak, and the VA are all interesting topics, but we can discuss them another time.

            Do I think the present insurance system is competitive? Not at all! Government taxation has effectively dictated that everyone get their medical insurance through their employer – the employer gets the tax deduction. That can easily be changed. Don’t allow a business tax deduction for employee medical insurance! Instead give the employees a tax credit for their direct purchase of medical insurance. What would happen then? Individuals would purchase all policies, not businesses. Insurers would scramble to create and provide policies that individuals would find attractive. We would all get some choices. Now all we get from our employers is: take it or leave it. And in the last decade we have all seen that what we get are fewer and fewer choices with higher costs with each passing year.

            I think you are being a little coy by suggesting that proposals to “expand the role” of government are not the same thing as “government run.” Between Medicare and Medicaid governments are the dominant player in spending medical dollars today. Regardless of what you call it, “expansion” or whatever, more dollars and power will go to Washington DC under any plan I have seen proposed. We can expect a continued deterioration in quality, fewer choices over time, and a continued increase in costs if that happens. That’s how the government typically runs its ship.

          • Steve Buckstein

            Dean, your overhead statistics for public insurance programs leave out unreported expenditures. For example, “a pair of studies of Medicare administrative costs that included unreported expenditures on the program made by numerous government agencies concluded that Medicare administrative expenditures were at least three times the amount reported in the federal budget in 2003—$15.0 billion vs. $5.2 billion.2,3 Another administrative cost analysis—possibly the most comprehensive and methodologically rigorous to date—examined a wide array of costs borne by insurers, health care providers, and patients in the United States and Canada, paying particular attention to indirect costs of carrying out basic administrative functions. The study calculated costs, net of associated benefits, of explicit and implicit methods of collecting revenues, curbing use of services and paying providers. For example, longer waiting times in Canada implicitly keep utilization of health care services in check, generating indirect costs to patients from delayed treatment and missed work. The study found that indirect, hidden administrative costs dwarfed monetary expenditures, concluding that true administrative costs are many times higher in Canada than in the United States.”

            Source: “Administrative costs of health care coverage,” American Medical Association, 2007, http://www.ama-assn.org/ama1/pub/upload/mm/478/admincosts.pdf

            Also, “roughly speaking, the administrative (overhead) costs associated with private insurers are more than offset by hidden costs of public insurers. “

            Source: “Twenty Myths About Single-Payer Health Insurance,” NCPA, 2002, http://www.debate-central.org/topics/2002/book2.pdf

          • dean

            David…I’m not being coy at all. I’m just stating the fact that the proposals of the 3 leading democrats for president all maintain the present array of private insurance while adding 1 or 2 (depending on the proposal) new mandates (can’t reject buyer based on pre-existing conditions) and expanding on the options available by allowing individuals, such as myself (self employed) to buy into either an expanded medicare program OR select from the same menu that Congressmen can select from. So at least at this stage, the proposals INCREASE the available insurance choices.

            I agree with you that over time the federal role is more likely than not going to increase in the following years, but only because there is no other viable way to get cost inflation under control. We are at 16% of GDP and projected to get to 20% in a very few years. Its not sustainable.

            I already live under your proposal (as a self employed person I get to choose whatever health care plan I want and I get the tax credit directly) Many younger, healthier individuals would likley opt out altogether as I once did (it is a financially sound actuarial risk), leaving the cost burden on the poorer health, higher risk, older population. That is a recipe for bankrupting the country. If you included individual mandates, your approach could work, but lower income workiers can’t afford individual mandates without subsidies.

            Steve, I know there are competing studies. I would submit that AMA funded studies are inherently biased against single payer systems, because those systems (Canada) hold down the incomes of doctors. The AMA is a lobby group, not an independent research organization. I know because my cousin used to be one of their lobbyists.

            The National Center for Policy Analysis is a sef described free market think tank like yours. Sure…they would publish a study against single payer systems. But not a credible, objective one.

            My source is the McKinsey Global Institute, a professional economics research organization that does not appear to have any particular axe to grind. Another peer reviewed source (always look for the peer reviewed label) is Woolander, Campbell and Himmelstein, New England Journal of Medicine, 2003, pp 768-75.

            I appreciate the reluctance to have the feds more involved in health insurance. But based on the evidence from around the world, government mandated, single payer or even direct delivery systems (United Kingdom) are superior to our hodge podge part free market, part government provided system on cost, effectiveness, and efficiency. Multiple independent analyses confirms this.

          • Steve Buckstein

            Dean, rather than spend all day citing dueling studies, I think we can agree that there are competent experts who come to different conclusions about the pros and cons of different health care systems, and about the real overhead costs of those systems.

            Your cousin being an AMA lobbyist may give you one perspective on that organization. My relationship with my own doctor (and AMA member) may give me another. I’m not advocating un-restrained doctor income; I simply believe that more consumer choice, not less (as in Canada), would be a better way to achieve the results we both probably want.

            I don’t know any of the McKinsey economists personally, but agree that in many cases they do good work. I do know some of the NCPA economists personally, and believe they do good work also. Remember, economics involves human beings allocating scarce resources. As I think we’ve discussed before, human economic systems are dynamic – people change their behavior when confronted with different incentives, and our attempts to analyze and propose health care systems is always subject to some level of uncertainty. I think that our personal economic and political philosophies lead us to value some economic studies over others.

            While I don’t agree with you that government mandated systems are superior to our “hodge podge” system, I do agree that our system leaves much to be desired. I simply believe we need to move more toward market solutions and you believe the opposite.

            As a thought experiment, what if we could both get what we want; you could opt for an almost totally government run system and I could opt for an almost total market system. If everyone could voluntarily choose between these two poles (with a third hybrid for those not sure which is best for them) would you be willing to consider it?

            If so, you might be surprised that Cascade published just such a proposal in 2006. We are honestly trying to “bridge the ideological divide” in health care reform and believe the proposal below just might do it.

            “Bridging the Ideological Divide in Health Care Reform: An Actionable Plan for Oregon” http://www.cascadepolicy.org/pdf/health_ss/200610_bridging_the_ideological_divide.pdf

          • dean

            Steve…I’ll try to find some time to read your proposal. The short answer is that I would support ANY health care delivery system reform that competent independent analysts would agree had a good chance to acheive the following, in no particular order:

            1) Freedom of choice when seeking medical help (I don’t care if access is through a single payer or choice of insurance payers as long as we can seek medical help from any doctor or care provider without a private or public bureaucrat in the middle)
            2) Every American gets meaningful health care access (no one is denied care because they are too sick, old, poor, wealthy, lose their job, get injured, etc.)
            3) Cost inflation is brought down to a sustainable level
            4) Measurable health results improve (life spans, birth weights, diabetes, heart disease, etc…)

            For the record, I have no predisposition to want a “government run” versus a free market system for health care or any other service. But when I look around internationally, all the government run systems, even Canada’s which is chronically underfunded, and Britains, which is completely socialized, manage to beat our system on price, universal coverage, and measurable results, albeit at the expense of longer waiting periods for some procedures. This is what drives me left on this particular issue.

            Have you read any of the 3 democratic proposals on health care reform? It seems to me they are all “hybrids” that allow one to fly solo, pay into a government run system (expanded Medicare,) or choose from among a range of group providers. What is it you don’t like about their proposals, other than the initially higher taxes needed to subsidize care for the working poor?

            Yes, we are both probably inclined to gravitate to studies that support our pre-existing views. I hope we both also give greater weight to sources that have ideological independence and high peer credibility.

            Doctors are smart, well educated, hard working people who should be free to earn whatever the market will bear, just like the rest of us (with high marginal tax rates, but that is another subject). Their understandable objection to a single payer system is that a single payer would be in a position to set the price for any given procedure. Under a multiple provider system, they can play one off against the other or gravitate to the one that pays more. This is good for the higher priced specialist doctors, but apparently not good for the rest of us. One reason, probably the main reason the Dems are not advocating single payer is that believe they can lessen doctor opposition by maintaining multiple payers.

            Politics is the art of the possible as they say.

          • Steve Buckstein

            Dean, we may be making progress here. I think your goals for reform are basically good ones and I look forward to your comments on the “Bridging the Ideological Divide” approach. It assumes that experimental results need to confirm its benefits before imposing it on anyone.

            I have not read the Democratic presidential candidates’ proposals but I have read Sen. Wyden’s Healthy Americans Act and do see some good points in it; particularly his willingness to divorce health insurance from employment. Unfortunately, his “basic insurance policy” is really more of a “gold plated” policy because I think the Senator believes that’s the only politically possible approach.

            As you said, politics is the art of the possible, but unfortunately I think it’s also the art of the expensive and inefficient.

          • Steve Buckstein

            Dean, I should mention that while I haven’t read the three top Democratic presidential candidates’ health care reform proposals, I haven’t read any of the Republican presidential candidates’ plans either. I assume, perhaps incorrectly, that all are playing to their constituent bases during the primary season, so as an analyst I’ll wait a while before delving into all the details.

          • dean

            Steve…my response to Gregg’s health care reform proposal:

            1) I don’t think the divide he posits is so much ideological as it is practical. Many otherwise middle class people like me are one slip on the ice away from bankruptcy. That focuses one’s attention on solutions.

            2) The “absence of leadership” part is a straw man argument. Gregg could easily have found political and leaders who have put forth serious analysis and solutions. Its not lack of leadership, it is resistance from entrenched interests that blocks progress.

            3) On assumption #5, “proof of concept, ” I agree if we include the proven experience of other country’s systems, not just US models.

            4) On his reform elements, #2 & 3, those would put a surprising amount of trust in the government to manage and distribute the fund pool well.

            Overall, the approach Gregg lays out has potential. I have 3 main concerns: First, that the 3 tier system would effectively create a low quality, poorly funded public sector group. But even that is better than what we have today. Plus i don’t see any need to prevent wealthier people from seeking out higher quality care. They are going to do that no matter what.

            Second, eliminating employer provided insurance and pooling all the money is probably a political non-starter, which is why the Democratic candidates have not proposed this. I’m all for it if it can happen.

            Third, where do the high risk people end up? It would be awfully tempting for the middle tier to shunt all pre-existing conditions to the civic tier, which would end up bankrupting that tier rather quickly, or increasing the waiting ques to very long periods.

            So I’m curious….does this have any political legs in Oregon?

          • Steve Buckstein

            Dean, thanks for the thoughtful analysis and questions about Steve Gregg’s proposal. I think he’s the best one to answer them. He is unavailable right now, but should see your comments in the next day or so. Stay tuned…

          • Stephen Gregg

            Dean, I just returned from a trip, have skimmed the comments. I authored the questions precipitating most of this conversation and Buckstein forwarded your comments via email to me, and I responded asking that he forward on to you…so what follows may be some redundancy.

            Most people agree we have a highly unsatisfactory system and all participants can claim some responsibility for that dysfunctionality. To achieve the same results from another country’s health system would seem to suggest a requirement of duplicating a near exact transfer of the underlying economics and other factors present in that system. Our costs are twice as much as other countries because our pay-out to the take home pay of our participants is so much higher. To presume that we will abruptly adopt (pick your country), and proceed to pay doctors, hospitals, nurses and all of the “content” of our costs at the same rate, just does not seem likely. Its a bit like assuming if a drug passes clinical trials in mice, it is “proven” that it will succeed in humans. That is not to say we can’t learn from these other situations.

            You may not feel “ideologically divided” or driven from your perspective, but I have noticed this is a big deal with in much of the rhetoric. I don’t want to get lost in that particular word-smithing. The point is we are not showing a lot of willingness to accommodate to what the other guy wants, but rather insist that the government impose a winning view (whatever that is) on the minority. Even if we get that hypothetical done, my proposition is that there will be “hell to pay” from the losers to the outcome of another round of failure. Our focus should be on providing “alternative systems” that people have decided they want over the options. You may want comprehensive, first dollar insurance for yourself and others, and I may want catastrophic insurance and pay nominal bills directly to my provider. One person may be perfectly happy being a member of Kaiser from cradle to grave; another may want to seek their hip surgery in Thailand.

            Migrating to “defined contribution” from “defined benefits” is a widely debated concept. The honorable Ron Wyden as the centerpiece of his legislation advocates the “delinking” of the employer from the provision of health benefits, effectively suggesting a “defined contribution” system. My suggestion is that we should have well conceived reform experiments that permit “defined contribution” in lieu of “defined benefits”. Clearly many interests deeply fear the “tipping point” that could come from this horse getting out of the barn.

            How the “risk pool” be redesigned is a heavy weight subject. If we are to imagine a system that covers or guarantees access to all, wants choice as an important value, we need to reexamine how the risk pooling and matters of guaranteed issue should work. On its face, I am not certain private risk pools organized by private carriers does much other than reinforce selection practices that we consider offensive. That said, there are well established risk adjustment practices that could be imposed between carriers to neutralize selection. I think (not certain), I prefer moving to a “self funded model” common to large employers (because it is generally the least expensive), substituting community regions for individual employers. This seems to be commensurate with the “civic” commitment we all think needs to be re-energized. I also believe we need to consolidate the diverse payer segments we have created over time, which means Medicare, Medicaid, Employer, VA, etc. You don’t get to that “big tent” consolidation by “mandating” these interests. You get there by building a better option and “permitting” them to elect the “new system” and move us down the road of eliminating the “old system”.

            Should stop here.

          • dean

            Stephen…my reading of your proposal and response above is that it addresses the freedom of choice issue well enough, but I can’t yet understand yet what it does for universal access, cost control, and actual health measure improvement. My sense is that your proposed civic tier would draw in the poorest health, highest risk people, leading to chronic underfunding.

            Yes, other countries are at a far dfferent place than we are. We have become dependent on the lousy system we have because it employs so many people so inefficiently. This is why moving directly to a single payer system is a political non-starter.

            Also, do you have any thoughts on the proposals of the leading demcratic candidates for president? I would ask about the Rs as well, but they don’t seem to have any proposals on health care.

          • Stephen Gregg

            I feel rather strongly, that if we correctly criticize ourselves for costing twice as much as others, then the cost of funding the uninsured should be derived from the existing cash flows of the system…meaning some kind of tax or assessment on those flows. My model calls for all individuals to have an account into which all tax advantaged funding flows whether it be funding from Medicare, employer, or individual. Our model “assesses” those inflows 10% to be redirected to the bonafide needs of the uninsured. The “paper bag” economics is that this 10%, together with existing public funding should provide sufficient financing for this element of the problem. Our “system” is introduced in a community as an alternative to status quo. If you don’t buy this provision, you don’t elect this alternative and we wish you the best with your existing system.

            The three “segments” (not tiers) go about cost control in quite different ways as outlined in the second graphic. As an example the civic segment may reasonably be deployed around salaried physicians as an economic leverage point; the self directed segment may rely more heavily on high deductible insurance policies. Patients in the civic segment may have less obligation to manage the pricing of the services rendered, where those in the self directed segment are typically more robustly involved. The systems compete for the goal of providing the best value, reputation, etc.

            If any segment becomes dominated by the rich vs. poor, the model fails. I suggest to people, if rich and poor go to the Univ of Oregon, as a “civic institution”, why can’t we have “public service” options of comparable quality? These public systems failed in the past because the funding sources did not keep up with inflation rates of the private sector, causing those public systems to effectively degenerate and disappear. If we level the economic playing field, I am betting the “civic segment” has a real shot at giving the private sector a run for its money and correcting private sector abuses in the process. Conversely, the “left” in this debate should have some tolerance when a person of modest or “poor” standing elects the “self directed” model. Basically, the “rich vs. poor” arguments are often trite and insulting….all of us have an interest in better value.

            I do appreciate the “best ideas” can fail in implementation, which is why I uniquely and strongly call for experimentation and demonstration. It is generally not hard to apply risk adjustments to premiums as a result of who gets the sickest or the healthiest. Trick is not to allow the excuse of “adverse selection” mask inferior system performance.

            As far as the political proposals on the table, I am challenged to remember the details of any of them. In general the republicans are suggesting deferral to the states which is understandably cumbersome if it went on too long. As an experiment strategy, I am o.k. with this, although I would expect 20 failures for 1 success given the nature of the process. Clinton, Obama, Edwards, and Wyden have proposals. Each of these seem to concede to the politics of private insurance; Clinton and Edwards call for a “mandate”; Obama apparently does not and this is hotly debated. In my view, predictably none of the proposals, especially those emanating out of a political context, deal with cost containment in a very honest way. As an example it is commonly advocated that “prevention” would have a huge favorable impact on costs. It is a matter of fact in the minds of many. Yet there are academics who study the facts of this and are heard to suggest, “I know of no convincing data that proves that major investments in prevention, delivers cost savings”…or words to that effect. Certainly we must understand that “prevention” is burgeoning business in itself. My view is if a reform proposal choses to believe heavily in prevention, make the investment and deliver the results. If you are right, you win. If wrong you are punished. There are literally hundreds of tactical decisions like this to be made in delivering value. If we concentrate all this in the government or a singular private system, you will never know what value you are getting or what could have been. Of course value does not matter all that much to the 80% who are healthy at any given time which is another dynamic worth discussing.

          • dean

            Stephen…thanks for the thoughtful and detailed response. Last question: does your proposal have any political legs in Oregon or elsewhere?

          • Stephen Gregg

            Not really. I have found it to be a useful tool, to more quickly evaluate the strengths and weaknesses of other proposals. I also (without any arrogance) have kicked it around enough to feel it is about the only rational way to migrate out of the current system. What may be going on now is a lot of “trial and error” and “blind alley” pursuits by folks that must first explore the futility of their own beliefs before they are willing to provide some respect to what the other guy wants. I do fear that the subject is very poorly positioned in a number of ways, such that success is jeopardized. Here is one example of the “failed leadership” issue and a very important positioning nuance. Is it wise, to expect the legislature (state or federal) to escalate its responsibility for detailed architecture and execution of the system? I tend to believe that taking on this role is fraught with politics in design, execution, and any hope of impartial evaluation of what would be its own plan. In my mind, legislatures should receive the best competing proposals, compare and contrast, negotiate some modest changes, and then hold the architects and systems responsible for outcomes. This is totally different positioning than where we are headed currently. Don’t you find it interesting that after having processed billions of dollars through the Oregon Health Plan, there is absolutely no traction for independent evaluation of its performance? There are other “high order” positioning problems.

            Good talking with you.

    • Stephen Gregg

      David, I share your views. 15 years ago when I was very involved in managed care, we had a “revolutionary” subsidiary enabling employers to connect the “wellness behavior” of employees to their monthly premium sharing for their health insurance. Rather than “celebrated” and encouraged by laws and regulations, it was always very tenuous as to whether it was permissible. As I recall, about half the states explicitly prohibited employers from applying any bias towards smokers on the basis that much of the smoking took place outside of the workplace. I believe obesity is a “protected class” under ADA. Rather than indirect assumptions related to wellness, I would support a health plan that offered me some premium reduction after 5-10 years of nearly no claims. Conversely, if my wife had a baby last year at a cost of $10 or $15K, I would not have a problem participating in a health plan that “up-charged” my premium to reflect those costs, making overall premiums less expensive for others. These are all “outside of the box” options that could be introduced in an environment of choice and voluntary election of that choice.

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