Prevailing Health Principles

Recently the Institute of Medicine challenged our leaders to take a principled approach to achieving universal health insurance coverage in the U.S. by 2010. The president’s new budget fails to meet this challenge, offering instead proposals intended to garner more political points than new health coverage.

According to the IOM, the plight of more than 43 million uninsured Americans is a dire threat to the public health. Each year 18,000 people in the United States die needlessly as a direct result of being uninsured. It is well documented that the uninsured have to do without needed health care or get it later than they should. In addition to this being bad for their health, it is a drag on our economy. When the uninsured cannot get the health care they need, their lost productivity costs us all between $65 billion and $130 billion annually. In a nation as great as ours, these problems are a red-faced shame. The IOM called for action, outlining five basic principles for reaching universal coverage. The first four of those principles are:

1. Accessibility. Health insurance must be available to everybody. Today, people’s health coverage depends on their job, family status, age, income, or health. Most uninsured people are workers whose employers don’t offer health benefits or low income adults who aren’t eligible for Medicaid. Employer health plans and government safety net programs cover three-fourths of Americans under age 65. These mainstays of coverage, or a decent alternative to them, must be expanded so that everyone has access to health insurance.
2. Affordability. In addition, health coverage has to be affordable for everyone, regardless of income. The vast majority of uninsured have incomes below twice the poverty level. Their health insurance premiums will have to be free, or close to it, if we’re going to expand coverage.
3. Adequacy. The IOM also said coverage must be adequate to assure access to quality, necessary health care. That means "bare bones" plans – for example, plans that don’t cover prescriptions or that have deductibles of $1,000 or more – won’t work for any but the wealthiest and healthiest among us.
4. Always. Finally, coverage must be continuous, unlike today when Americans are constantly churning in and out of coverage. For example, even if we could wave a magic wand to cover all 9 million uninsured kids in the United States today, evidence suggests that by this time next year we’d have 4.5 million uninsured kids again. When we cover the uninsured, we should make coverage stick. Americans need health care that’s always there.

Unfortunately, in the budget he submitted to Congress on Feb. 2, the president proposed programs that fail to live up to these principles. Leading his agenda are refundable tax credits. He would offer a credit of up to $1,000 per person to buy individual policies, with no other help. That’s problematic in an insurance market that can and does turn people down or charge them more when they’re sick, or that can find ways to raise the cost of coverage for people over time after they become sick. The $1,000 annual subsidy is also problematic considering that annual per capita health spending is more than $5,000 per person. The limited credit is intended to foster competition to sell cheap policies, priced at about the credit amount. But cheap policies are already abundant today; they just don’t cover much. Annual deductibles of $1,000 to $5,000 are common, and key benefits – such as maternity care and prescription drug coverage – are scarce, or cost extra. So the principles of Access, Affordability, Adequacy, and Always are all violated.

The president also advocates association health plans (AHPs). These new arrangements ostensibly let small businesses join forces to negotiate better health insurance deals, as if they were a big employer. In reality, the AHP proposal would de-regulate health insurance and de-stabilize coverage by promoting "cherry picking." Instead of joining forces, small businesses with healthy workers would have incentives to churn coverage, constantly seeking to associate with other healthy groups and avoid sick ones. Insurers would have free reign to design policies to encourage this behavior. According to the Congressional Budget Office, AHPs could, indeed, reward the best cherry pickers with slightly lower premiums (at least, as long as people remain healthy) and the number of uninsured would decline by a scant 550,000. At the same time, however, premiums outside the AHPs (where sick groups would predominate) would increase, making coverage harder to keep for most other small businesses. Further, state insurance regulators warn that de-regulated AHPs will be a breeding ground for fraudulent coverage that evaporates when claims are filed. Once again, this proposal fails to meet all four IOM principles.

The IOM’s fifth principle is that our national strategy for getting to universal health coverage – whatever it is – must be politically sustainable in our society. That means we need leadership to engage this nation in an honest dialog of what it will take to guarantee health security for everybody. Here, the President really misses the mark. By offering false solutions, he’s trying to make the status quo sustainable. Although his proposals won’t help the uninsured, the rhetoric he cloaks them in is seductive – they require no new spending, cut taxes, and make no new government rules – and could even prevail. Hopefully that won’t happen. We can’t keep dodging the problem of the uninsured because it’s politically expedient. The stakes are simply too high.

Fixing our health care system so that it serves everyone will require resources and rules and hard choices. We can do it. Our nation has met even greater challenges before, but it takes leadership. We need leadership to build consensus for doing the right thing – building a system that satisfies the IOM’s principles and guarantees everyone access to health coverage that is affordable and adequate all of the time.

Karen Pollitz is a health policy researcher and adjunct professor at the Georgetown University Health Policy Institute. Her consumer guides to getting and keeping health insurance are on the web at www.healthinsuranceinfo.net.