Issue Summary: Health (Basics)
Revised 5/14/2004
Issue Summaries contain a quick reference to Centrists.Org policy ideas. They will be revised and updated periodically for clarity and usefulness, and as events and policy ideas change. Questions or comments? Please contact us at information@centrists.org .
Basics:
Health Policy and Role of Government
Cost, Competition, and Chronic Care
Medicare Reform and Prescription Drugs
Universal Coverage
Performance and Liability Reform
Detailed Issue Summary: Health Costs, Competition, and Chronic Care
Sub-Categories:
Government-Run vs. Private Health Insurance
Federal Employees Health Benefits (FEHB) Program
Association Health Plans (AHPs)
Prescription Drug Prices
Price Controls vs. Market Solutions
Reimportation of Drugs from Other Countries
Switching Health Care Toward Chronic Care
Detailed Issue Summary: Medicare Reform and Prescription Drugs (General)
Sub-Categories:
Medicare Reform
Prescription Drug Benefits in Medicare
Integrated Drug Benefit as part of Medicare Reform
Stand-Alone Drug Benefit, with Separate Premium
Zero-Premium Catastrophic-Only Drug Benefit
Detailed Issue Summary: Medicare Modernization Act of 2003 (Rx Drug)
Sub-Categories:
Introduction: The Big Uncertainties -- Workability and Cost
Main Components of the Medicare Modernization Act
The Drug Benefit, Private Health Plan System, and Low-Income Benefits
The Interim Discount Cards and Low-Income Assistance
The 2006 Drug Benefit
"PDP" Stand-Alone Drug Plans
Risk Assumption, Payments to PDP Plans, and Government “Fall-Back” Coverage
Medicare Advantage (MA) Health Plans
Coordination with Employer, Medigap, Medicaid, and State Pharm. Assistance Coverage
Low-Income Subsidies and Asset Tests
"Conceptual" Reform Provisions and Their Likelyhood of Transforming Medicare
Competitive "Premium Support" Demonstration Program in 2010
Income Related Premium and Low-Income Benefits
Chronic Care Initiatives and Demonstrations
Electronic Prescribing
Procedural Funding or Cost Control Measures
Health Savings Accounts
Political Evolution of the Drug Benefit
Detailed Issue Summary: Universal Health Coverage
Sub-Categories:
Basics: Coverage Issues and Ideology -- Tax Credits vs. Public Programs
Conservative Ideology
Centrist or Moderate Ideology
Liberal Ideology
Refundable, Advanceable Tax Credits
Large-Scale Coverage Proposals
Medicare for All, Single-Payer Proposals
Individual Mandates
Small Employer Mandates to Provide and Finance Coverage
Public-Private Purchasing Pools
Employers As Administrators, "Pass Through" Agents
Transitional Coverage for the Unemployed
Medicaid or SCHIP Expansions
Family Care (Parents of SCHIP Enrolled Children)
Proposals to Raise Poverty Thresholds
Medicaid "Fill In" Proposals For All Under Poverty
Medicare "Buy In" Proposals for People Under Age 65
Detailed Issue Summary: Health Care Performance and Liability Reform
Health Policy (Basics)
Health care is a difficult issue. There are no easy answers -- no "magic bullet" policies that will solve all the problems and make the issue go away.
We can’t make progress on health care issues without a compelling vision for how the health system should work, and a step-by-step program for moving toward that vision in each major part of the health system.
Role of Government. Centrists believe in limited government. However, health care by its nature requires more government involvement than many other sectors of the economy.
In general, the government should not directly provide health care or health insurance -- those functions are best left to the more flexible private sector: private hospitals, doctors, suppliers, and health plans. However, government can and should compel the private health sector to provide the information necessary to make health markets work. We also believe government has an important role preventing monopoly and collusion or other forms of market failure in the health sector. Finally, government incentives are often needed to bring "pools" of people together for the purpose of acquiring fair, reasonably priced health insurance.
Basics: Costs, Competition, and Chronic Care. Centrists favor competition among private health plans, both within employer-based coverage, individually based coverage, and government programs. Governments and employers have an important oversight and coordinating role, ensuring that people have good, fair choices. However, the primary decision-making authority on which health plan to take, or how to get the needed health care, should rest with the patient.
Consumer Empowerment and Choice. For decades, health providers, employers, and government programs have dominated decision-making about health and health insurance, with little or no input from patients. Consumers and patients need to be equal partners in decisions about their care; they must also take responsibility for their share of health costs.
Information. Patients need control of their health records, with nationwide standards to enable them to share their records with health providers. Consumers need to know which health insurance plan is best for them; which doctors or hospitals or nurses can best meet their needs, and which health plans or providers should be avoided.
Performance and Accountability. All parts of the health system -- public and private -- should be rated continually to determine their effectiveness improving health outcomes.
Acute Care vs. Chronic Care. The U.S. health system is designed for "acute" health care: we’re very good at patching people up when they suffer a sudden illness or injury, and making sure the bills get paid. However, the system is not very good at helping people with chronic illnesses manage their care and maintain their health.
Therefore, all health reforms should focus on transforming the health sector toward improvements in care coordination among health providers, complete, non-duplicative electronic medical records, and patient self-monitoring and treatment -- all the things which patients with chronic illnesses need.
Centrist Model for Health Reform: The Federal Employees Health Benefits (FEHB) Program. The FEHB system is a public-private partnership. The public roles are organization, pooling, premium and benefit negotiation, risk-management, and oversight. FEHB enrollees have choices of several private insurance plans, ranging from strict HMOs (in urban and suburban areas) to looser "PPO" or fee-for-service health plans that are available nationwide.
The FEHB model is flexible enough to allow improvements in information, accountability, and chronic care. FEHB is accountable to patients via choice and information, and to the public via direct oversight and negotiation.
Detailed Issue Summary: Health Costs, Competition, and Chronic Care
Sub-Categories:
Government-Run vs. Private Health Insurance
Federal Employees Health Benefits (FEHB) Program
Association Health Plans (AHPs)
Prescription Drug Prices
Price Controls vs. Market Solutions
Reimportation of Drugs from Other Countries
Switching Health Care Toward Chronic Care
Basics: Medicare Reform and Prescription Drugs. The Medicare prescription drug legislation enacted in late 2003 was a disappointment to most Medicare reform advocates. On one hand, the bill would help restore the Medicare's HMO options, which is a good first step toward eventually creating a competitive system where seniors can choose their coverage from a menu of public and private-sector options. On the other hand, the bill's emphasis on drugs, and the awkward and complicated system of drug coverage could do more to discredit than enhance public-private competition in Medicare.
Federal Employees-Style Competitive Model. Medicare enrollees (either over age 65 or workers with long-term disabilities) should have a choice of various health insurance options like federal employees have under the Federal Employees Health Benefits (FEHB) program. The 1998-1999 Bipartisan Medicare Commission laid out a model for transforming the Medicare program to an FEHB-style choice system, often called a "premium support" system.
A primary motivating factor for an FEHB-style or premium support system was to take Congress out of the business of micromanaging Medicare's payments and benefits. Instead, a public/private system would allow Medicare to be updated for changes in the health sector -- including benefit changes and recent advances like case and disease management services for seniors with chronic illnesses. After enacting deep budget cuts to hospitals, physicians, Medicare HMOs and other health providers in the Balanced Budget Act of 1997, Congress formed the Medicare Commission to devise a better process of keeping Medicare's costs under control.
The Medicare Commission's website contains cost estimates and other useful information about the Breaux-Thomas proposal. There is an extensive outside literature on the Commission's work and FEHB-style or premium support systems. A summary testimony that also captured some of the arguments for and against the Commission's proposal is available from the Progressive Policy Institute.
The Commission's recommendations gained little momentum in Congress, mostly because the budget switched from deficit to surplus in the late 1990s, and legislators felt that cost control or austerity measures might no longer be necessary.
Now, the surplus has switched back to record deficits, and the fiscal outlook for the 5-7 years preceding the start of the baby boom generation's retirement is bleak. However, Congress has not yet returned to the fiscal discipline, shared sacrifice and tough decisionmaking that characterized the early- and mid-1990s.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA). As a result, in 2003 legislators added a drug benefit that could turn out to be very expensive, without also adding much in the way of reforms. MPDIMA contains some important reform features. It will probably entice some new private comprehensive health plans (like HMOs and PPOs) back into Medicare, and will help the existing HMOs stay in the program. There are also several other items included in the new law that could prove transformative over time. But in general, the law probably does not represent significant reform, and it gives little hope that future generations will be spared large tax increases to pay for Medicare as the baby boomers retire and double the program's enrollment.
MPDIMA takes an important first step toward competitive reform of Medicare by re-establishing its private comprehensive health plans alternatives. Medicare's HMO program has shrunk since the budget cuts of 1997, and its enrollment now disproportionately consists of urban, low-income and minority seniors. It is uncertain how well the new PPO program envisioned as part of the 2003 legislation will work, but the general direction is positive. In general, more private comprehensive health plan options will help spark real competition (which could eventually lead to lower costs, especially if the government-run fee-for-service program begins to act more like a competitive health plan.
MPDIMA does little to foster an internal reconstitution of the government-run fee-for-service program. The government-run fee-for-service program has a centralized regulatory system that is not flexible enough to react to new developments in the health sector, or to the potential for localized improvements care of patients with chronic illnesses. Over time, Medicare's internal bureaucracy should be radically decentralized, with dozens or even hundreds of local Medicare offices that have budget authority and flexibility to work with local health providers to provide innovative care to beneficiaries. The Congressional role should switch from micro-management to oversight and data collection.
Finally, MPDIMA creates a demonstration program for an FEHB-style competition system, beginning in 2010. However, demonstration programs based on competition and cost savings rarely work, because localities subject to the demonstration don't want experiments in austerity in their "backyards." Chances are, these demonstrations will be canceled before they take effect.
Congress should return to the Medicare Commission's vision for a national FEHB-style system. Only by installing a sense of competition and stable choices is there a chance for the government-run fee-for-service program to free itself from Congressional micromanagement, for seniors to get the dynamic and innovative health plans they deserve, and for taxpayers to get a sense that competition and choice will restrain the growth of costs as the baby boom generation retires.
Link:
Explaining Premium Support: How Medicare Reform Could Work (revised 11.06.2003) This report outlines the structure of a national (federal employees-style) premium support system in Medicare. It includes the basic rationale for premium support and a step-by-step example of how premiums would be calculated under a national system.
Detailed Issue Summary: Medicare Reform and Prescription Drugs
Sub-Categories:
Medicare Reform
Prescription Drug Benefits in Medicare
Integrated Drug Benefit as part of Medicare Reform
Stand-Alone Drug Benefit, with Separate Premium
Zero-Premium Catastrophic-Only Drug Benefit
Basics: Universal Coverage. People should have the freedom to purchase varying levels of health insurance and health care services, but no one should be completely uninsured. For reasons of public health, and fair and efficient insurance markets, centrists strive to ensure that all Americans have health coverage. No Americans should feel left out of the health system, or be forced to depend on scattershot care from emergency rooms or indigent clinics. All should have a steady source of care, with certainty that they can get personalized assistance and support if they have health questions or problems.
General Principles. Centrist proposals for universal health coverage generally contain three basic features:
- Individual Responsibility. All Americans should be required to purchase coverage. Any persons remaining uninsured would forfeit the personal exemption on their income tax return.
- Public Financing for Private Coverage. Many Americans will need financial assistance to purchase health insurance. Centrists support means tested, refundable tax credits to help low- and moderate-income people purchase coverage through their workplace, a new purchasing pool, or on their own.
- A Menu of Choices. Like members of Congress and federal employees, all Americans should be able to choose their coverage from a list of high quality health plans. Centrists have proposed both state-level and federally based groups like the federal employees (FEHB) system that people could join.
Step-By Step Approach. Health reform will happen gradually, not suddenly. Employment-based coverage can be preserved, and transitional (between jobs) health coverage strengthened.
- Employers as Facilitators, Not Decision-makers. Employers can continue to play a key role helping workers obtain coverage. Employers should be asked to provide enrollment forms for health coverage through a group purchasing pool or other state-endorsed system (even if they don’t offer or subsidize health insurance as a benefit), and to provide payroll deduction of premiums and on-the-paycheck “pass through” of tax credits due to employees.
- Transitional Coverage. The recently enacted 65 percent tax credit for COBRA continuing coverage should be expanded to all unemployed workers and their families. Some low-income workers should be allowed to keep at least a portion of their credit even when they go back to work, especially if their new employer doesn’t offer health benefits.
Detailed Issue Summary: Universal Health Coverage
Sub-Categories:
Basics: Coverage Issues and Ideology -- Tax Credits vs. Public Programs
Conservative Ideology
Centrist or Moderate Ideology
Liberal Ideology
Refundable, Advanceable Tax Credits
Large-Scale Coverage Proposals
Medicare for All, Single-Payer Proposals
Individual Mandates
Small Employer Mandates to Provide and Finance Coverage
Public-Private Purchasing Pools
Employers As Administrators, "Pass Through" Agents
Transitional Coverage for the Unemployed
Medicaid or SCHIP Expansions
Family Care (Parents of SCHIP Enrolled Children)
Proposals to Raise Poverty Thresholds
Medicaid "Fill In" Proposals For All Under Poverty
Medicare "Buy In" Proposals for People Under Age 65
Basics: Health Care Performance and Liability Reform. At its best, the U.S. health system is unmatched. But it the system is not at its best too much of the time. Error rates are too high, quality is inconsistent, and excellent performance is not always reward. The government has three key roles to play, First, the federal government, in cooperation with the states, should create an information clearinghouse on best practices, and health outcomes and performance of local, regional, and national health systems and individual health plans and providers. This would allow consumers to assess which care is best, and which health plans, hospitals, doctors, and other health providers are consistent, high-quality performers.
Second, the federal government has a role in reforming the medical-legal system. Errors should be publicized, not hidden, that all health providers can learn from and avoid making the same mistake, and so that patients are better able to look after themselves. Health providers should be encouraged to report mistakes -- individual or systemic -- without fear that their disclosure will be used against them in a lawsuit. A reformed legal system would fairly compensate many more patients would are hurt by errors or substandard care. They wouldn't be dependent on "jackpot justice" through the lawsuits and the legal system.
Third, the federal government should reform Medicare and Medicaid with an eye toward improving those programs' performance. In Medicare, we suggest a radical decentralization of the program's administration, with national oversight and accountability systems. Local and regional Medicare administrators should be free to adjust the program's benefits and payments to meet specific local needs, but there performance improvements should be closely tracked and compared with their peers.
State-by-state comparisons of Medicaid and the State Children's Health Insurance Program (SCHIP) should be used to adjust federal matching payments. States achieving high levels of performance, or improving their performance rapidly, should be eligible for substantial bonus matching funds.
Detailed Issue Summary: Health Care Performance and Liability Reform
