Friday, July 24, 2009


Some time ago I was walking with a friend and the topic of health care reform came up. The friend stated: "clearly something has to be done .. there are so many uninsured people."

I may know a lot about health care but being caught off guard on a hungover Saturday morning, my response probably wasn't as succinct or clearly stated as I would have liked it to be. And the response I think is the most appropriate is that the uninsured are not the problem with the system but rather a symptom of the problem.

Here's what I mean: with some notable exceptions (like illegal aliens and young healthy people) the reason why there are so many uninsured people in this country is because health insurance has become prohibitively expensive for many employers to offer and for many individuals to buy. The real issue in America is not access but rather cost. As health insurance premiums have grown at double digit rates every year over the last 2 decades (all the while incomes haven't changed much, if anything, they have gone down), people are increasingly faced with an ugly trade off between health coverage and other spending. This has transpired in a few ways: many businesses have either stopped offering health coverage or increased the employee portion of the cost. To the extent that employees are faced with larger portion of the premium, it has clearly provided a disincentive to buy coverage (so called "take up" rate). And while other employers haven't asked their employees to foot a greater portion of the bill, almost all have shifted their employees to plans with higher out-of-pocket expenses - effectively leaving many "underinsured". And so, even if you still technically have coverage, chances are that when you get to the hospital, you now have a large deductible and a co-pay. In other words, the precipitous growth in health care costs (which drive premiums) has left many people out in the cold.

The reason for making this distinction between access and cost (ie, the uninsured are not the problem, but rather a symptom of a problem, which is skyrocketing costs) is twofold:

1. By focusing on the number of people without health insurance the implication could be that you could solve the perceived problem of access by simply throwing trillions of dollars to those who don't have coverage and get them insured. This would, at least temporarily, make everyone happy. I say temporarily because without addressing the underlying problem of cost and "bending the cost curve" (a popular expression these days), the problem would reemerge as further increases in costs would make insurance increasingly expensive to employers and employees (ie, right where we started) or, in the case of government funding, would lead to ever increasing deficits.

2. The focus on the uninsured also makes health care reform less appealing or relevant to the average voter. While there are unacceptably many uninsured Americans, the majority is still insured and the majority likes their health insurance. By talking about reform through the perspective of access, it is hard to inspire much urgency or support when the majority of people don't have an access problem. Other than feelings of sympathy, the horror stories of those who lack health insurance are not particularly motivating to those who do. In reality, however, even those that have insurance today and are happy or OK with it, are not immune from the underlying problem of cost growth. At a minimum, their premiums and out of pocket costs are rising at incredible rates year after year. More importantly, however, unless those trends are muted, the pool of uninsured and underinsured is ever expanding - and it is this threat that should make the need for reform very personal even to those who are currently covered.

On a related note, by focusing on costs rather than access, the problem becomes not only personally relevant to everyone but also inherently less partisan. It is easy to see how a conservative would not be particularly moved by the idea of "universal coverage". And it is also easy to see why my friend, who I mentioned in the beginning of the article, would relate the notions of health reform and uninsured in his liberal train of thought. Indeed, the very need for health reform is often questioned by some in the Republican party, on the grounds that there is nothing inherent about the right to health care. However, by focusing on the real problem - costs - reform suddenly sounds like a fiscal imperative, something that is surely more appealing to conservatives. And certainly, for a problem as big and complex as health care, it is useful to think about problems in ways that people across the ideological spectrum find appealing.

So, to conclude this little diatribe, because cost is the true problem that we should be addressing, I found it heartening that recently the public discourse has finally shifted in that direction. Not only in Obama's press conference on Wednesday but also in a recent slew of articles and op-eds on the topic (here, here and here). I really hope that the message is resonating - not just with the public but also with the lawmakers who are in charge of the sausage that is the legislative process around health reform.

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