humani nil a me alienum puto

random rants about news, the law, healthcare law, economics and anything I find amusing

Republicans And Universal Health Care (Only Nixon Could Go to China)

Regina Herzlinger (the McPherson Chair at Harvard Business School and author of Who Killed Health Care? (McGraw Hill, 2007); a health care adviser to John McCain’s presidential campaign) writes an interesting op-ed in the Atlantic.  She argues that the Republicans need to seize the moment, realize that the “time for universal health insurance coverage has come” and that they should go to China, figuratively speaking.  “Republicans should…seize the lesson of Nixon’s trip to China”, where in one swoop Nixon brought the middle Kingdom out of isolation and removed the issue from his political adversaries.  [As Spock says in Star Trek VI, there’s an old Vulcan proverb that ‘only Nixon could go to China’ — perhaps only the Republicans can get sustainable health care reform passed?].

Ms. Herzlinger argues that there is a “a massive constituency behind [a potential Republican] policy” and her fellow republicans can do a “better version of universal coverage.”  She highlights challenges with what appears to be the current Democratic plan to rely “on universal coverage through a government-controlled system like Medicare”: (i) distrust government’s ability to apply fiscal controls needed so that any plan would not bankrupt us as Medicare is appearing to do; (ii) concern that the government will control costs by rationing health care to the sick (citing the UK experience with cancer rate survival due to UK’s pathetic approval of new cancer drugs and therapies); (iii) government as a monopolistic buyer of health care could negatively affect the supply of doctors; and (vi) government-controlled system would likely impair the medically and economically important private investment — particularly in the emerging genomic sector.

The Republicans, she argues, should instead offer a “consumer-controlled universal coverage system, like that in Switzerland in which the people, not the government, control how much they spend on health.”  The Swiss choose from 85 private health insurers.  [I believe that the Swiss government causes a degree of plan standardization so that consumers can compare “apples to apples.”]  In Switzerland, the poor shop for health insurance like everyone else, using funds transferred to them by the government.  Rather than the “degraded” Medicaid program, the Swiss poor get the same insurance options that everyone else get.  The Swiss taxing authority, according to Ms. Herzlinger, enforce the mandatory system and achieve 99% enrollment.

This consumer-driven, universal coverage system provides excellent health care for the sick, tops the world in consumer satisfaction, and costs 40 percent less, as a percentage of GDP, than the system in the US. The Swiss could spend even less by choosing cheaper, high deductible health insurance policies, but they have opted against doing so. Swiss consumers reward insurers that offer the best value for the money. These competitive pressures cause Swiss insurers to spend only about 5 percent on general and administrative expenses, as compared to 12-15 percent in the US. And unlike Medicare, the private Swiss firms must function without incurring massive unfunded liabilities. Competition has also pushed Swiss providers to be more efficient than those in the US. Yet they remain well-compensated.

She cautions that the Swiss system is not perfect, we can learn from it.  It maintains some of the same problems we have with fragmented care and poor integration of payments between vertical provider groups for episodes of care.

She concludes by observing that movement to this model will have real economic impacts:

Republicans could enact Swiss-style universal coverage by enabling employees to cash out of their employer-sponsored health insurance. (Although many view employer-sponsored health insurance as a” free” benefit, it is money that would otherwise be paid as income.) The substantial sums involved would command attention and gratitude: a 2006 cash out would have yielded $12,000 — the average cost of employer-sponsored health insurance — thus raising the income of joint filers who earn less than $73,000 (90 percent of all filers) by at least 16 percent. Employees could remain in with an employer’s plan or use this new income to buy their own health insurance.

via Why Republicans Should Back Universal Health Care – The Atlantic Business Channel.

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