In a 6/11/09 WSJ op-ed, Karl Rove, deputy chief of staff to former Pres. Bush, notes several concerns opposing a government run health insurance program.

Rove argues that a public option will eventually drive the 1300 private insurers out of the US health insurance market. He states that the lower fees that Medicare pays to hospitals (71%) and doctors ($81%) shifts costs to private insurers as doctors raise fees to offset the lost revenue. He quotes a Milliman study estimating a cost shift of $1800 per year for a typical family.

My personal experience does not support the data that Rove cites. Rove says Medicare pays less than private insurance, but my private insurance company pays 71% to my dentist for a routine procedure, less than the average percentage that Medicare pays. Why hasn’t my dentist stopped taking private insurance? Perhaps my insurance company, one of the largest in the U.S., is not typical of the private industry as a whole? I doubt it.

Rove argues that a public option “will lead to health providers offering less care.” That may or may not be true. In this downturn, a number of businesses in my industry have reduced their rates. Have we given less professional service? No. We are professionals. Will my doctor not order a blood test because of reduced reimbursement rates? I think most doctors would be insulted by such an insinuation.

Rove cites a Lewin Group estimate that “70% of people with private insurance…will quickly lose what they now get from private companies”. That may be true. For a decade, we small employers have watched insurance rates skyrocket, far above the cost of inflation. We opt for less generous benefit plans with higher co-pays, and higher contributions from employees to offset the escalating cost. Private insurers have offered few solutions to reduce this expense. Bureau of Labor Statistics (BLS) surveys show a steady decline in companies offering health benefits. In time, only the largest companies will be able to afford this kind of benefit to their employees, reducing the competitiveness of small businesses.

Rove contends that, although Medicare pays low rates, it is too expensive. Like private health insurance, Medicare suffers from the same escalating growth of health care spending in this country, and it is a real concern. While Rove lays the blame solely on Medicare, Kathleen Sibelius rightfully sees the growth in Medicare spending as a systemic problem of the whole health care system.

Rove argues that “Medicare and Medicaid cost much more than estimated when they were adopted” and to “expect a public option to cost far more than the Obama administration’s rosy estimates.” A wise word of caution. In many remodel jobs, and a health care overhaul is a huge remodel job, it is wise to add 25% to the original estimates. Obama’s estimates could use the same prudence.

Rove argues that “the public option puts government firmly in the middle of the relationship between patients and doctors,” cautioning that, as difficult as private insurers are to deal with, government is so much worse. Well said.

Rove contends that “Republicans have plans to … put patients and their doctors in charge, bring the benefits of competition and market forces to bear, and ensure access to affordable and portable health care for every American.” Presumably, this plan is different than the one that Republicans have touted for the past 15 years.

At emotionally charged committee meetings in mid-May, Senators hotly debated the provisions of a health care bill, Janet Adamy reported in a 5/16/09 WSJ article.

Obama’s suggestion of a Medicare like public plan, strongly opposed by Republicans, seemed to have little chance of advancing out of contentious committee hearings. Two other public plans were put forth: a multi-regional plan run by third party administrators; and state run plans similar to those for state employees. A third option was a public plan that would have to pay for itself and play by the same underwriting rules as private plans.

In a WSJ article 6/10/09, after announcements by the House and Senate, Ms. Adamy and Naftali Bendavid report on the progress of health care proposals.

The House draft outlined a national exchange for health insurance, included a public option and a requirement that most Americans have health insurance. Eligibility for Medicaid would be conditional on income alone, no longer requiring that someone be a parent. The draft includes subsidies for families and individuals making less than 4 times the poverty level. At current levels, the proposal would provide subsidies for individuals making less than $43K and families earning less than $88K. The Senate’s draft bill was similar, including even more generous subsidies of 5 times the poverty level.

Many details are missing in both House and Senate versions, including the most important detail: how to pay for it. Leaders in the House plan to have the final wording on the bill completed by July, work out differences with the Senate by September and have a bill in place by October.

In a 5/12/09 WSJ op-ed, Scott Gottlieb, M.D., a former official at the Centers for Medicare and Medicaid Services, criticized proposals for a health care system based on Medicare.

Medicare uses “its purchasing clout and political leverage to dictate low prices to doctors”, paying doctors 20 – 30% less than private plans pay. Although some advocate a public insurance option to cover the uninsured, Gottlieb (and others) predict that a public insurance plan will be less expensive and thus drive private insurers out of the market.

The lower reimbursement rates of a public health insurance plan will prompt doctors to take on fewer new patients with such a plan, a practice that is already occuring with Medicare patients.
Dr. Gottlieb writes “Government insurance programs also shift compliance costs directly onto doctors by encumbering them with rules requiring expensive staffing and documentation,” an onerous paperwork burden that adversely affects the 60% of doctors who are self-employed.

Medicare’s “fee for service” model is flawed, rewarding physicians for providing more care, not better outcomes.

This op-ed prompted a number of replies from other physicians. A California neurologist wrote that Gottlieb’s contention that Medicare pays 20 – 30% less than private insurance was “dead wrong.” He noted that “some insurance plans pay 5% to 10% more than Medicare rates” but the extra reimbursement is accompanied by “aggravation and overhead expense of dealing with private insurers and their patchwork of unfathomable private plan coverage, co-pays, deductibles, exclusions, required pre-authorizations and delays.”

At a high school reunion two years ago, I spoke with a classmate who had recently shut his practice down after 20 years to work for a company where he could spend his time seeing patients and doing research. “In my own practice, I was spending more of my time talking to case managers at insurance companies and managing the business that I was seeing patients” was his complaint.

A dentist wrote to the editor at WSJ saying that curtailing fraud, the introduction of electronic records and a single payer system would produce small gains. The biggest cost efficiencies would be the reduction of payments to doctors and hospitals, forcing many doctors to leave the field and hospitals to close. “Why should a bright, young, prospective medical student [spend] 10 to 15 years of additional education and training to do a job that pays piece-work wages, as an employee of the government.”

At my annual physical, my doctor at Kaiser enters a few salient facts, checks on a chronic condition, enters a few recommendations into the computer terminal in the exam room and he is done. My lab results are online. I may get an email from my doctor with a comment on a particular result.

When I got into an accident a few years back, there was no wasted time filling out a medical history. With little fuss and bother, I was able to get x-rayed and temporary treatment at one location, then get follow up care at another location. X-rays were digital and both they and my medical history were available to any practitioner at Kaiser. All of the people I came in contact with knew my history. Why can’t it be like that for everyone?

When we took our cat to the emergency room, we got a CD and an online link to test results and x-rays. We were given an access code to the data so that we could share the information with our regular veterinarian. Why can’t we treat people like we do our pets?

In a 5/19/09 WSJ article, Janet Adamy reviewed various schemes that the Senate Finance Committee is considering to pay for changes to the health care system.

In 2008, the “government gave up $194.2B in revenue due to health care tax breaks.” This tax subsidy was the largest single group of subsidies, 8% of total government revenues of $2.5T. Companies can deduct health insurance premiums for their employees and, in many cases, employees pay their share of the premiums in after-tax dollars. Max Baucus, Committee chairman, said repeal of the exclusion is not being considered.

Several proposals, however, aim to eat away at the exclusion. One proposal eliminates tax breaks for the cost of health plans above a certain value, with the health plan for federal employees serving as a benchmark. A second proposal cuts tax breaks for high income earners making more than $200K, if single, and $400K, for couples. A third proposal is a combination of the first two. Other proposals being considered are various taxes which would promote a healthier lifestyle, including higher alcohol taxes and a new tax on drinks with sugar.

The cost of the rebuilding the health care system has been estimated at $1.2T over ten years. The money has to come from somewhere.