The "Demoplan" for Health Care Reform

Paul Krugman explains why supporting the "Demoplan" for health care reform is a good idea:

Why not single-payer?, by Paul Krugman, Blog: A number of people ... have been wondering why, exactly, the Democratic plans for health care involve such complicated schemes. The generic Demoplan, which basically follows the template laid down by John Edwards, involves four moving pieces: community rating, requiring that insurance companies offer insurance to everyone at the same rate regardless of medical history; a mandate, requiring that everyone have insurance; subsidies to help lower-income people pay for insurance; and public-private competition, in which people have the option of buying into a plan run by the government.

The alternative would be single-payer, aka Medicare for all: a payroll tax on everyone, and a government insurance program for everyone. Wouldn’t that be simpler, easier to administer, and more efficient?

Yes, it would. I myself described the Schwarzenegger plan in California, which contains all these elements except the public-private competition, as a “Rube Goldberg device — a complicated, indirect way of achieving what a single-payer system would accomplish simply and directly. “

But there are very good political reasons for going with the Demoplan: basically, it looks like something that could actually happen early in the next administration, while enacting a single-payer plan ... might take a very long time.

The public-private competition in the Demoplan is crucial, by the way, because it means that the Demoplan isn’t locked into the inefficiency of the private insurance system – it could evolve into single-payer over time.

Of course, the insurance industry will understand this, and fight the plan tooth and nail; the political logic of the Demoplan does not rest on the idea that AHIP will be fooled. Instead, there are two crucial advantages.

First, because most health insurance costs will continue to be paid out of premiums, the Demoplan doesn’t require a big tax increase – in fact, it can be financed simply by letting the high-end Bush tax cuts expire. I know, I know, the taxes that would support single-payer aren’t a true cost, because they would simply replace premiums and in most cases be lower than those premiums. But we’re talking about legislation, not reality.

Second, the Demoplans offer choice – so that people won’t feel that they’re being forced into a government plan. Over time, I suspect, many people will choose the government plan or plans – but they’ll have the option of staying with those wonderful people from the private insurance industry.

In an ideal world, I’d be a single-payer guy. But I see the chance of getting universal care, imperfect but fixable, just a couple of years from now. And I want to grab that chance.

Comments

[ken]

I think that the Democrats are proposing plans that they know will fail.

They will fail because 1) they are too complicated, 2) they mandate that people pay money to the very companies at the heart of the probmem, ie insurance companies, and 3) insurance company lobbiest will make sure that any part of the new plan that does get passed will be to their benefit and not the consumer.

Instead of all this complecated rigamarole they should just reduce the eligibility age for Medicare down as low as possible.

Medicare is well known and loved and has near universal support. Only the extreme idealoges oppose Medicare. Lowering Medicare eligibility without making any change to the program is politically feasable. All these other ideas are just for the sake of looking and sounding serious but are othewise just bamboozlement.

[anne]

Though I do ever so much wish true universal health care, and wish Medicare extended for all ages, there is simply not enough political support and even if there were we would need to handle resulting transition problems in the massive private administrative health care (health care insurance) sector.

Private insurers, I think, must have a significant role in health care reform for such reform to be politically possible and simply to avoid employment dislocations. But, we continually find, private insurers are performing poorly even when teamed in Medicare covered and this is concerning.

[save_the_rustbelt]

Hillary-Care was very disappointing as it appeared to have been written by a committee of political consultants - i.e., something to keep everyone happy.

I am not as pessimistic as Ken, but not terribly optimistic either. Politically, this will be similar to arm wrestling an octopus.

[anne]

"Hillary-Care," is of course an immediate insult. Would that be the never implmented health care plan of Hillary Clinton, and why has George-Care been better and what precisely is George-Care since we supposedly know what the Clinton health care plan was and is?

[anne]

Possibly only point by point changes in health care or health care insurance policy may be possible, but we should notice how hard it is even to limit insurance companies in rejecting applications and claims because of pre-existing conditions. Complexity and compromise will surely be part of legislative changes to come.

Where Paul Krugman properly complained about the costly and complex way in which the President and Congress designed the addition of drug coverage for Medicare, I was and have been in favor of the addition hoping and looking for favorable changes in the program over the years.

[anne]

STR has worked on health care insurance issues and needs to gradually think through and set down possible changes. PNHP or Physicians for a National Health Program is my starting point, but suggestions that will need compromise, for suggestions and among the plans of the Presidential candidates I find the plan of John Edwards most comprehensive and realistic.

http://select.nytimes.com/2007/02/09/opinion/09krugman.html

February 9, 2007

Edwards Gets It Right
By PAUL KRUGMAN

[Remember the New York Times files are all open.]

[save_the_rustbelt]

Anne, read my post again, I was not slamming Hillary but expressing disappointment. Both of her plans (whatever you care to call them) suffered from excess committee-itis and at the margin a lack of boldness.

The latest outrage from Bush-care is to gradually cut Medicare phsician reimbursments by an average of 15%. Duh.
Apparently this is to pay for Bush's other mistakes.

I have ambitions of setting down a detailed incrementalist plan, attacking critical coverage areas first and then moving into broader areas, but I have too many writing requests from health administration journals and several infant research projects. My word processor is overheating, I blog when I hit writers block.

I have been doing a healthcare series at Angry Bear, hitting narrow topics one at a time.

Back to work, darn deadlines.

[anne]

STR:

I understand, and sought only to point to language that has been used and will continue to be used to mask discussion. That you are writing on health care is important and satisfying. I suggest paying attention to the ideas of PNHP (Physicians for a National Health Program), even as politically unrealistic, in considering possibilites.

Please leave references to the STR health care series at Angry Bear, and I will read the series carefully.

[anne]

Professional writings as well may be summarized in time, even if not directly referenced.

[bakho]

Stop blaming "the Democrats". The Republicans to a man are against unversal health care. The Republicans have the power to obstruct and they don't apologize for obstructing nominations, legislation or even shutting down the government like they did in the 90s. The Republicans receive a LOT of campaign funding from the insurance industy. They are paid to obstruct legislation the insurance industry does not want. Does any Republican Candidate come close to having a plan for health care?

The Republicans may even succeed in blocking the expansion of SCHIP against the support of almost all the governors and support by a majority of Americans. Do you think Republicans won't be able to block health care reform as well? They blocked Hillary Care way back when. The Republicans did NOT try to work to make it better. They killed it entirely kicking the health care issue 2 decades down the road. It was a good program, but was attacked by the insurance industry and politicians who were more interested in "denying the Democrats a win" than doing the right thing for the American people. Those same people still have the power to block health care reform.

[save_the_rustbelt]

Anne:

In your honor (as a worthy debator and concerned citizen) I took a coffee break and put a related post on Angry Bear.

Now back to the grindstone.

[kharris]

My understanding (perhaps from an earlier Krugman piece) is that Edwards saw the public/private split as a way to demonstrate which gives better results per dollar. The insurance industry already knows the real answer (feature, not bug) and has been telling us the real answer is not true for years. Insurers don't want there to be a public component, because they will either have to compete on cost and service, or die.

[baileyman]

Anne says: "there is simply not enough political support", yet the people of the USA have supported something like single payer in polls for decades. "Political support", therefore, must mean something other than political support.

[mark]

Maybe the best answer is to go with high deductible insurance policies. In other words, get the insurance industry out of health care as much as possible. That would cut some of the cost. And all those people that would lose jobs in the insurance business could be employed in some more useful productive work, such as providing health care. It's not about the money, it's all about maximum productive use of resources (including labor) to provide the services required; especially with the upcoming reduction in the workforce as the baby boomers retire.

[anne]

STR, thank you, I will read the health care series.

When I write about political support, I am writing about a combination of general public and interest group support. Though I am completely sympathetic to what would actually be universal public health care insurance with optional competition from and additions by private insurers, as in France or Germany, I would guess this is not a realistic possibility from an interest group perspective.

[anne]

The coming election will be tough fought for the Presidency and Congress. Conservative programs in effect that have secured attachment to current foreign policy, health care, economic imbalances, minimal environmental safeguards, and on will be at issue. I do not imagine an easy election in calling for pronounced change in as many areas as sorely needed.

[Turbo]

Anyone waxing poetic about a single payer healthcare system has probably not lived in a country that has one. If you have an average employer plan in the US, you will receive much better care than in a single payer system such as Canada or the UK. However, US corporations are intent on off-loading their healthcare costs, and an aging population swelling the size of medicare make some sort of state-run system seem inevitable in the US, but I have my doubts that will lead to an increased standard of care for the average person. The private/public system in Australia has led to substantially different levels of care between the two systems, and Australians are far less tolerant of social disparities than Americans.

says...

Turbo says...

Anyone waxing poetic about a single payer healthcare system has probably not lived in a country that has one. If you have an average employer plan in the US, you will receive much better care than in a single payer system such as Canada or the UK. However, US corporations are intent on off-loading their healthcare costs, and an aging population swelling the size of medicare make some sort of state-run system seem inevitable in the US, but I have my doubts that will lead to an increased standard of care for the average person. The private/public system in Australia has led to substantially different levels of care between the two systems, and Australians are far less tolerant of social disparities than Americans.

90,000 people a year DIE in the U.S. because of lack of health insurance.

I had a cataract operation in one eye a 1 1/2 weeks ago. I have been legally blind in that eye for two years, but had to wait until I saved enough to get it fixed. A few years ago, when I was working at a job that pain $10,000 - $12,000 (no possibility of saving then), I made to much money to be eligible for Medicaid in the state of Georgia. Earlier this year, when I was between jobs, I applied for help from the state. What they were able to do for me was give me applications to a couple of charities. If I had gotten to the point where I was legally blind in both eyes, which was coming, I would then be eligible for U.S. Disability, but would not be eligible for Medicare for two years. This is crazy. The cost of the operations would be paid for in far less than a year of disability payments, and if I'm working, I'm paying taxes. And there are people who end up permenently disable from preventable causes, because they couldn't afford health care.

[anne]

Actually, though I know full well how fine medical care is in France, the point is made that employers are steadily ridding themselves of health care responsibility which leaves that much less possibility of continuing as such no matter Republican obstruction even to caring for the health of children in need.

Repeatedly I have set down the cost of a Blue Croos Blue Shield plan in Massachusetts, which is $595.52 a month per person with deducation and all sorts of co-payments even for a darned physical exam. French health care is terrific, ours is absurd.

[anne]

Sadly, the poignant story of the absurd limits on Medicaid in Georgia, complete with supposed recourse to charity when there is no such recourse, has been echoed. Michael Moore made a masterful film, and millions do understand, even to Jay Leno speaking of the wonderful time-consuming care his mother received in Britain after a stroke for what would eventually be a fee of $1500 because of all sorts of "extras."

There is waxing poetic....

[anne]

http://angrybear.blogspot.com/2007/10/medicare-payments-politics-and-patient.html

Notice STR's series of health care posts at Angry Bear.

[Turbo]

My dad just spent two years waiting for, and finally getting, two cataract surgeries in Canada. I'm not saying that the healthcare system works well here, there or anywhere for that matter, just that Americans who think they would be better off under a Canadian-style single payer system have probably never actually tried to use that style of system.

[anne]

I am pleased that your father has had the care finally, but the answer if this is a significant problem in Canada is to work to make the system more responsive including reversing a decision made about 1990 to limit medical school enrollments thinking there would be too many physicians. A blended system for Canada may be helpful, but the point is fixing problems. Canadians are not about to give over the system, and right now Canada is thriving and can easily modify the health care system.

[Patricia shannon]

Turbo, I was legally blind in one eye (worse than 20/200 when corrected as much as possible) for at least two years. So I needed cataract surgery for longer than that. I don't know for how long because I couldn't afford an eye exam, and thought I just needed a new prescription. I had to put a piece of tissue over the glasses lense for that eye at night and when the sky was overcaset, to be able to drive, because of interference with my vision. My better eye (before the operation) is now at the boundary of being legal to drive in Georgia (20/60). So I don't see how I could have been worse off in Canada.

[anne]

What I wonder is whether there are a significant number of international physicians in Canada, and if not why not and if so why are there delays in service is there are significant delays? If spending is the issue there should be no problem at all, for Canada is easily able to increase health care spending. Efficiency? Why? However, America is the prblem that I find far more significant.

[anne]

There is simply no way Patricia Shannon would not have been served better and faster abroad, and that includes in Brazil which I have long been thoroughly impressed by in terms of health care. Spain? Sweden? Japan? Of course.

[Turbo]

Canada doesn't have a physician shortage. Health care is effectively rationed by each provincial government capping the annual amount each doctor can bill. Busy surgeons often hit their cap in 6-9 months, which often means if you don't get your procedure done by June, better luck next year. I happen to agree with most Michael Moore films, but he doesn't bother to mention that supply-managed single-payer healthcare often results in lengthy waits for critical, but not immediate emergency procedures. Higher caps and more government money would obviously help, but bear in mind that Canadians vote for the governments that supply manage their healthcare, so presumably over the years they've voted for the taxation / healthcare mix they feel they can afford? I completely agree that the disparity of healthcare outcomes in the US is appalling, and government intervention is required. A single payer system, in my opinion, will not produce better median outcomes for Americans compared to the current system. But then again, I'm always amazed by the way any political discussion in the US is completely polarized into black and white. Nuanced arguements need not apply.

[save_the_rustbelt]

Physician groups in the midwest get a steady stream of faxes and e-mails from Canada - physician resumes from docs who want to quietly get out and move to the US.

After a near rebellion by family practice docs, I think about mid-90s, the system was adjusted somewhat, so a FP would not have to see 55 patients a day to make a living. At least that part of the system was improved on the payment side.

[Patricia Shannon]

http://news.yahoo.com/s/nm/20071009/hl_nm/foster_kids_dc;_ylt=As9y9.rbkExVb0mg4sjZ2ePVJRIF

After leaving foster care, many children end up homeless, without adequate access to health care, warn researchers in a report published this week in the Archives of Pediatrics and Adolescent Medicine.

[anne]

"Canada doesn't have a physician shortage. Health care is effectively rationed by each provincial government capping the annual amount each doctor can bill. Busy surgeons often hit their cap in 6-9 months, which often means if you don't get your procedure done by June, better luck next year."

Reference this; I know of no such limit but show us differently.

[anne]

"Physician groups in the midwest get a steady stream of faxes and e-mails from Canada - physician resumes from docs who want to quietly get out and move to the US."

This is meaningless. What are current physician per capita levels? Who is moving, who is not and why precisely? Otherwise this is just Canada bashing which I have heard for years with never data to show.

[Turbo]

This is out of date, but it's the first useful thing that came up in my search. Bear in mind, this isn't the physician's salary, but the billing cap out of which they also have to run their office, pay their malpractise insurance, assistants, etc. The bureaucracy that runs medicare in Canada can make US for profit schemes seem almost benevolant in comparison.

I agree with Krugman most of the time, but a workable public/private system is what's needed. Single-payer is a worse outcome for the average person, but clearly the richest country in the world has a lot of gaps to fill in it's healthcare system.

[Turbo]

Oops. My link didn't post, but just search under Ontario physician billing caps and you should find lots to keep you busy.

[anne]

Thank you, I will look later this evening and remember the more reference links or clues to links the easier. We need to know how we know what we think we know. If the complaint can be confirmed then the question is "why?"

[Turbo]

http://www.healthservices.gov.bc.ca/msp/legislation/pdf/salary.pdf

This document summarizes the Province of British Columbia's attempt to have all GP's become salaried government employees. I'm sure that would go over very well in the US.

Canada is a great place to live by the way, but people had better watch more than a Michael Moore documentary before they wish for that healthcare system.

[anne]

Thank you, I will read the source and search as you suggested. The argument should be helpful.

[Chris P]

the problem with mandated, non-free health insurance is the fact that for the poor, what is even worse than being paid a small amount is the unreliability of your work status. Currently unemployed and uninsured, I have no idea how much money I will be making by January.

[bakho]

Remember, any health care plan Congress and a new president will pursue will be subject to obstruction by the following:

The government "is spending money of future generations and those yet to be born," added Fred Thompson, He said future retirees should receive smaller Social Security benefits than they have been promised.

"I cut taxes 23 times. I believe in tax cuts," said Giuliani.

Giuliani responded that spending fell in New York while he was mayor, and rose in Massachusetts while Romney was governor. "The point is that you've got to control taxes. I did it, he didn't. ... I led, he lagged."

"It's baloney," retorted Romney. "I did not increase taxes in Massachusetts. I lowered taxes."

McCain of Arizona said President Bush was right to veto a children's health expansion bill, and he urged him to reject a multibillion-dollar public works measure as well."We've got to get wasteful spending under control," he said.

"We have to get spending under control," agreed Kansas Sen. Sam Brownback. No matter whether Republicans or Democrats are in control of Congress, he said, "the system is built to spend." Challenged to identify one government account he would cut, Brownback cited a program involving "advanced technology."

"If you want to control federal spending you must look at Social Security and Medicare," said Rep. Tom Tancredo of Colorado. He said he favors private Social Security accounts, or "forget the idea of ending deficit spending."

Health Care reformers have their work cut out for them. You can't just write these guys out of the debate.

[James Killus]

Anyone waxing poetic about a single payer healthcare system has probably not lived in a country that has one.

People who say things like this are counting on there not being many people in the audience who know people who have lived in countries with single payer health care. I know quite a few Canadians, many who reside in the U.S. They often go back to Canada for medical care.

The idea that some Canadian physicians are interested in immigrating to the U.S. is, at best, a neutral statement (a lot of Canadians immigrate to the U.S.). The non-neutral way of looking at it is that physicians are, as a class, more privileged in the U.S. This is not an argument that should hold much weight for non-physicians, as the money to pay for their privileges must come from somewhere, must it not?

And since no one seems to have mentioned that the U.S. pays considerably more for covering fewer people, with no significant improvement in health statistics, I will. Anyone who has had any significant interaction with the U.S. health care system knows that it is broken at practically every level. This includes most of the physicians I know.

[Lafayette]

Article: Wouldn’t that be simpler, easier to administer, and more efficient?

OK, now Krugman can explain how this is going to lower overall Health Care costs without bursting the Federal budget. How efficient would that be?

The single-payer system is the one that France adopted, and the French national health care system is also funded by a payroll tax. But, the similarity ends there.

The French system, to assure that Health Care does not bust the national budget, mandates practitioner service costs. Meaning it fixes their level of remuneration and pharmaceutical costs.

Krugman thinks that raising marginal income taxes will pay for the cost of caring for those not paying for the insurance? That's a lot of wishful thinking. Besides, it places the health benefits of the poor dependent upon the revenues of the rich. Whilst this seems morally correct, I suspect it is economically risky.

Lowering health care costs by mandating pricing based upon a fair return on products/services instead of market-based pricing will make the fiscal burden smaller for all taxpayers.

If the US subsidized the cost of education/training of health care staff, then practitioners wouldn't become hell bent on recuperating their very long servitude by high prices.

I suggest that is a better alternative than simply spreading high-cost medical services over more of the total population. That population is already paying a high indirect tax hidden within GDP priced to recuperate exorbitant health care factor costs.

No one ever mentions this fact that is making American industry less competitive, because they are myopically fixating on just coverage of the uninsured, and not the consequences of doing "just something".

[bakho]

Cost containment for the non-elderly population means delivering more primary care using lower cost people. Primary care needs to be able to identify and treat routine problems and refer more intractable cases to a specialist. Many countries do this with nureses.

For the elderly, we need a different model. One reason there costs are so high is that everyone capable of giving care is already working in most families. A lot of money could be saved if the elderly moved in with family members rather than nursing homes. More could be done with adult day care as a way to cut expense.

[jeff hoffman]

The use of nurses or physician assistants for simple primary care needs is not so much an option as a necessity for primary care physicians who want higher incomes than the drug reps that frequent their offices. In France what is the multiple of average wage earner to CEO in yearly income in a fortune 500 sized company company? Maybe 1:20? Earnings across the board are ridiculously skewed here and play a role in what professionals think they deserve, relative to others. I spent several hours last weekend performing so-called life saving procedures on two individuals at odd hours in ERs and will be ultimately reimbursed far less in medicare dollars than my dentist gets for a crown. Considering how far medicare has ratcheted down reimbursements to primary MDs, the cost of malpractice insurance, length of time in training, lifestyle issues etc, for many dentistry would be a better choice financially . Raising marginal tax rates among the fantastically rich seems a bit more equitable than taxing the merely rich providers of healthcare as a subset. Lafayette: Many physicians get state subsidized training and I have not seen any data to suggest that emerging from 7-10 years of postgraduate training with markedly less debt from a state school has historically influenced their career choices. As far as the earlier term Hillary-Care is concerned, I don't find it particularly abrasive from the standpoint of a group that was remarkably excluded from her original blueprints constructed with Magaziner et al., that is- health care providers. I remember laughing at the naivete involved in that misadventure when in touting the plan, she publicly lauded the Mayo Clinic as a model of integrated cost-effective health care, on national TV, no less. So where is this paragon of efficiency today? No longer in the business of accepting medicare assignment in my locality. They have publically announced that they can't afford to, due to medicare cutbacks. I'm not holding my breath awaiting the emergence of a health plan from a group of politicians (both male and female) that does not have the requisite genitalia to address the Medicare part D fiasco- you know, the inherently flawed plan that did not allow the government the leverage to play hardball with the pharmaceutical industry? Not much out of their quarters lately. There's a problem that could much more easily be addressed with something other than silence at this point.

[Lafayette]

jh: Many physicians get state subsidized training and I have not seen any data to suggest that emerging from 7-10 years of postgraduate training with markedly less debt from a state school has historically influenced their career choices

A weed called greed

You forget "foregone income". That is, compared to a person not in an apprenticeship program (internship), who is making market wages, by how much is the medical practitioner foregoing higher income in lower-paid internship over a long period of time. That should be compensated, I suggest, by a tuition-paid education.

That is, their internship at a discounted salary is their repayment for scholarship funding. And, they should be working at state established hospitals/clinics by expanding Medicaid for all, not just the destitute.

Let them compete with other practitioners who have "taken the high road". A wee bit of competition will do a world of good in medicine. Especially in program health care insurance.

The absolute cost of health care remains dependent upon labor compensation. Otherwise, how does one explain the 4x cost of American versus European health care? Technology? I doubt that seriously.

It would be helpful to see a uniform cost study of health care to understand the underlying costs. I maintain, nonetheless, that ALL education is an investment in the future development of the person and therefore the nation.

I have been unable to verify, but word has it that the greatest part of medical care cost comes after retirement. This would seem to make sense. Consequently, what are the numbers for Medicare and Corporate Insurance health care costs?

It is one the government should assume as a public service for as crucial a sector as health care. Enough of this silliness by which the cost of private versus public education is palliated by the use of philanthropic alumni funds.

People make oodles of money because of low tax rates, get a bit of moral intellect, feel bad, then assuage their conscience by giving money away to alumni, that reinvest it. This is puerile nonsense. Education is dependent upon how well the stock market grows asset values? Oh, my God.

(Why not do the same for defense? Because that would be idiocy. Oh, then it isn’t idiocy for national education?)

Proper taxation employed properly in providing public services is not a dark art -- a great many countries do it well.

It is a matter of will, and America is not up to it. It has abused the vilest narcotic on earth – a weed called greed.