According to a Center for American Progress report released today, 14,000 people are losing their health insurance every day. At that rate, I'm not sure how Mr. Gelfand can claim, "attempt[s] to portray [health care] as a sudden crisis [are] disingenuous." This clear crisis does not preclude reasoned debate on substantive issues, but there is room for debate and taking action this year.

Furthermore, it shows a lack of commitment to honest debate when Mr. Gelfand claims, "If we allow a new public plan to develop, it may well force us into single-payer, by cheating and regulating private insurers out of business."

The plans President Obama, Health Care for America Now, and yesterday, the Commonwealth Fund have laid out all fall for a public health insurance option to compete on a level playing field with private insurance. Nobody is suggesting public insurance plans "cheat." In fact, this notion of a level playing field is the key to the entire equation. There should be no unfair bias towards a public health insurance plan, just as there should be no unfair bias towards a private health insurance plan. If private industry is indeed more efficient than government, private insurance plans will have no problem with the increased competition.

Indeed, as Jacob Hacker notes, these two systems working together can lower costs and improve quality for everyone:

Public and private insurance each have distinct strengths. Private insurance has been quicker to provide new benefit options and offers greater flexibility in benefit design and payment strategies, while public insurance has proved more stable and better capable of controlling costs while ensuring access, especially for the most vulnerable. Acting alongside each other, with enrollees able to choose between them on a level playing field, public and private insurance can serve simultaneously as a safety valve and a spur for improvement for each other.

And this brings us around to the original question posed this week: What happens to those newly uninsured people who don't take COBRA or qualify for Medicaid?

It's an excellent question, and the answer right now, for those who can't afford COBRA (it's often too expensive, even with a 60% subsidy) and don't qualify for Medicaid, is they go uninsured. If they're lucky, they get by until they get their next job, hopefully one of the increasing few that offers health care benefits. If they're unlucky, they join the ranks of Americans who've been driven to bankruptcy by medical debt, the number one cause of bankruptcy in the nation.

This is precisely why we need a public health insurance option. Not only will it expand choice and compete on a level playing field with private insurance to drive down costs, but it will provide a guaranteed, affordable backup for everyone, so we all can get coverage if we ever lack it for any reason.

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The 87 billion dollars in Medicaid funding merely represents a temporary shift in the accounting ledger from the states to the federal government. But once the two-year federal commitment expires, states will be forced to pick up their share of the tab again. Will they drop people, or press to use the federal taxpayers as an open checkbook.  I think the latter.

Although these bailout funds are designated for Medicaid, it is important to recognize that the flow of dollars to the states does not ensure access for enrollees; it only guarantees payment to providers and institutions for the services they provide to Medicaid beneficiaries. Under this process, enrollees are dependent on providers and institutions to accept Medicaid, which is not a guarantee.

Congress should have set federal criteria for assistance and at the very least considered whether states have established reasonable cost-sharing requirements, restructured their benefit packages, and held spending and eligibility under control over the past years.

Congress should have required states to report on how funds are used and submit a plan for long-term Medicaid reform because that piece of entitlement reform cannot happen without the states.

On COBRA, as John Shiels already pointed out in this discussion, the majority of the unemployed are likely to be ineligible for the COBRA subsidies in the stimulus bill, so that will leave many unemployed without access to affordable coverage.    

For workers eligible for the subsidy, COBRA coverage will in many cases still be a prohibitively costly option. Congress should have provided a better subsidy arrangement for unemployed workers with more flexibility to opt the private coverage that works best for them and their families during these difficult economic times.

This was a missed opportunity for Congress to partner with the states to find affordable private coverage for those who may need additional options beyond COBRA.

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This economic recovery package will help the newly uninsured people in America keep health coverage for themselves and their families while they look for work. It will also allow states to maintain the safety net for struggling families at a time when it is needed most.   

However, this bill reinforces the fact that our health care system is broken and is badly in need of reform. Even before this economic crisis began, there were 46 million people in America without health coverage, including nine million children. Those numbers will rise and this legislation will certainly help them. But the economic recovery package is not the real reform our deeply flawed health care system needs―including ensuring health coverage for every child in America.  To help put our country on the road to economic stability, we must seize this opportunity to guarantee every child and family in America access to quality, affordable, comprehensive health coverage—regardless of economic conditions. 

The problem of covering the uninsured has been one that politicians and policy wonks have struggled with for a very long time. It must be addressed under the auspices of a comprehensive reform that reigns in costs as well as expands coverage. The stimulus bill’s Medicaid bailout and COBRA subsidy can serve only as a temporary band-aid.

I read both Newt and Dr. Reinhardt’s entries this week with great interest, because neither is full of empty platitudes, and both bring up some very important points that we need to think about. This got me thinking about several views I see expressed every week on this blog:

1) CRISIS CRISIS MUST ACT NOW, NO TIME TO THINK OR DEBATE. (Picture Uwe’s sinking cruise ship)

2) It’s okay to spend unlimited amounts of money, as long as we call it an “investment.” (Tuesday Group talking point?)

3) We should compromise between single-payer advocates and free-market advocates by creating a new public program to compete with private programs. (Usually crouched in talk of President Obama’s connector – Dr. Davis’ post is a good example)

Not only are all of these assertions false, but they could lead us to disaster. If we are going to talk about the implications of the $800 billion stimulus package, I think it is worth responding to these points.

1) Everyone wants to cover the uninsured, especially business – we pay for them through higher premiums, and we want healthy new workers. But this is a long-term problem and the attempt to portray it as a sudden crisis is disingenuous.

2) I am often disappointed with CBO scores for legislation that would improve health, because I do not think that they adequately take into account the amount of money America could save by improving health. However, the volume of this talking point has become deafening, and it has lost all meaning. Politicians and activists have taken to calling every initiative they want to implement "an investment.”

Enacting universal health insurance is not necessarily an investment – it may be a snowballing unaffordable spend – unless we do it right, harnessing market forces, improving quality, and implementing cost controls. If we do it wrong, the cost could be much more than the “cost of inaction” (another talking points phrase rendering meaningless by repetition).

3) A connector might or might not help with the problem – but a new public entitlement certainly will exacerbate our fiscal and healthcare problems. As if Medicare isn’t doing enough to bankrupt the nation, proponents claim a new plan would be super efficient and deny that it would be rife with hidden costs, noncompetitive influences, and government price-setting. If we allow a new public plan to develop, it may well force us into single-payer, by cheating and regulating private insurers out of business. If most agree that single-payer is not where we want to end up, why would we agree to this Fabian implementation that will bring us there?

What does all of this have to do with the stimulus? The bill was rushed through because we are in a crisis. We can’t let that happen to health reform legislation. And the health care provisions were only band-aids, more massive spending on programs that are not headed in the direction we want to go. While we endeavor to cover the uninsured, we need to be responsible stewards of the nation’s fiscal policy, and to protect the uniquely American aspects of our system that are successful. If we enact universal coverage by creating massive debts our grandchildren will have to pay, don’t be surprised if they are less than appreciative.

Updated at 9:25 a.m. on Feb. 19.

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The American Recovery and Reinvestment Act was designed to create or save 3.5 million jobs.  Subsidies for health insurance were created with a couple of ideas in mind: 

1)      Low-income people are more likely than high-income people to spend money as opposed to saving it.  We need to engender spending – and more spending in multiplier effects – to restore incentives to invest and hire (or rehire) workers.

2)      Economic downturns increase the strain on safety net programs in the states.   

Subsidies for COBRA coverage and increased support for the Medicaid program will engender increased spending, especially by lower-income individuals and the people that sell goods and services to them.  Over time, this spending will multiply in the economy as a whole.  Furthermore, providing states with additional funding for the Medicaid program will help stabilize state budgets and stave off additional budget and employment cuts. 

The health insurance subsidies included in the legislation will lessen the potential increase in the uninsured, but we have much work left to do.  The good news is that the Act funded two initiatives – health information technology and comparative effectiveness research – that stand to create jobs and lay the foundation for comprehensive health reform and a high-quality, high-efficiency delivery system.

Our economic crisis has heightened the public awareness of our health system’s gaps and placed increasing strains on its patients, payers, and providers.  This reinvestment and recovery effort will help reduce the human suffering caused by the economic downturn, but it will not solve the underlying, long-term problems of our health care system: inadequate access to affordable care, rising costs, and low-value for our health care dollars. 

We need comprehensive health reform to fix these weaknesses.  By all accounts, the Administration understands this and is going to lead Congress into a serious health care debate.  Now, as our nation is re-examining priorities in virtually all areas of life, is exactly the right time for such a discussion.

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With predictions that unemployment figures will rise even higher, growing ranks of newly uninsured patients outside COBRA and Medicaid expansion will further strain the health care safety net held together, in large part, by many of our nation’s teaching hospitals. Today, major teaching hospitals—which comprise six percent of hospitals nationwide—provide nearly half the nation’s charity care.

As individual patients and states continue struggling to make ends meet, these teaching hospitals will become even more vital to the health of communities. Finding resources to support this safety net is a challenge even under the best of economic circumstances.

The new economic recovery package is a critical step forward in addressing our nation’s unprecedented financial situation. However, we must continue to find ways to ensure that all Americans—especially those left uninsured by the faltering economy—have access to high-quality, affordable health care.

Updated at 1:23 p.m. on Feb. 18.

It is important not to overstate the potential impact of helping the uninsured to purchase COBRA benefits. Several studies have shown that roughly two-thirds of all workers would be eligible for COBRA if laid-off. These include covered workers in insuring firms that are subject to the COBRA requirement – i.e., firms with 20 or more workers. However, historically, most of those losing jobs have been concentrated among firms that do not offer health insurance and therefore are not eligible for COBRA.   

An article by Kapur and Marquis (Health Affairs, 2003) showed that only 21 percent of the unemployed had COBRA eligible coverage on their prior job. About 72 percent of the unemployed had been in a job that did not offer coverage and another 7 percent had a job with an insuring employer that was not subject to COBRA. Only about 12 percent of eligible unemployed people purchased COBRA. The implication is that the people losing jobs during the study period tended to be in non-insuring firms.

This is changing with the current recession. The economic downturn has been severe enough that we are seeing many more people with health benefits lose there jobs, which is increasing the number of unemployed who qualify. The 65 percent subsidy in the stimulus bill should also increase the percentage taking the benefit. But the majority of the unemployed are likely to be ineligible even today. Consequently, the COBRA subsidies in the stimulus bill will still leave many unemployed without access to affordable coverage.    

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The coverage expansion initiatives in the stimulus package, as well as the recent reauthorization and expansion of Children's Health Insurance Program (CHIP), are important first steps toward helping Americans get the health care they need in a precarious economic environment.

The bill's provisions to increase federal funding for Medicaid and to subsidize COBRA premiums will help fill some of the existing coverage gaps. Ensuring stable, affordable health insurance coverage for Americans who still cannot afford COBRA or qualify for Medicaid will require more changes, however. The federal government will need to set the rules for the operation of private markets and begin to lay the path towards a high performance health system. Specific steps include:

• Providing health insurance premium assistance to low-income and modest-income families who cannot afford family premiums, which now average over $12,000 even under employer plans.
• Strengthening, not weakening, employer coverage.
• Creating a national insurance connector—such as the one implemented by Massachusetts—that makes affordable health insurance policies available to those without access to employer coverage.
• Offering a public plan to small businesses and individuals would lower premiums by at least 20 percent and increase the stability of insurance coverage.
• Building on Medicare, Medicaid, and CHIP to cover older adults, the disabled who are in the two-year waiting period for Medicare, and low-income adults, as well as children.

Ultimately, these insurance coverage reforms must complement more far-reaching changes in the way we pay for and receive health care in the U.S. A forthcoming report by the Commonwealth Fund Commission on a High Performance Health System shows that a comprehensive set of strategies that provide adequate, affordable coverage for all, align incentives with value, and invest in essential information systems and public health measures has the potential to improve health outcomes and reduce projected growth in national spending if reform is started in 2010.

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I have long argued – and written about it – that the American health care sector, more than any other economic sector, now is THE locomotive of our economy.

BUSINESS WEEK’s economist Michael Mandel has long recognized it as well.

Indeed, I can show that without health spending, the first term of President George W. Bush would have been truly an economic disaster. Between 2001 and 2002, for example, over half of the dollar growth in GDP was added health spending.

Thus, providing uninsured Americans health insurance through whatever channel we have at hand would add to GDP and would create jobs, especially as none of that money would go to imports. The same claim cannot be made for tax cuts. They might end up in added savings balances, in off shore mutual funds or be spent on foreign goods at WallMart and Home Depot.

President Bush always claimed that added defense spending created added jobs. True. Marty Feldstein only recently argued for added defense spending on that ground. Agreed. But so does added health spending create jobs. It is just that simple.

The argument that our health system now is so bloated and wasteful that we should not pour good money after bad does not move me. It is not the uninsured who cause that waste. It is the people who wring their hands over our bloated health system who have caused that waste. How many of these well-insured people have ever refused a potentially wasteful test or procedure to save some insurance company money?

 As to the money earmarked in the Stimulus Bill for health care, I would ask readers to imagine a cruise ship sinking somewhere in choppy waters. It has some old-fashioned, somewhat under-powered life-boats onboard – albeit it with insufficient capacity. A motley fleet of pleasure yachts and fishing boats is moving as fast as it can to the scene.

Here are the options the captain of the cruise ship faces:

            OPTION A: Tell everyone to save themselves on whatever life boat, pleasure yacht or fishing boat is on hand and can accommodate them.

            OPTION B: Wait until the government has designed and implemented a more modern, coherent, streamlined, efficient rescue operation, be it at the risk of drowning in the meantime.

            If the captain put these options to a vote among the passengers aboard the cruise ship, I wonder how the anxious passengers might vote.

            I ask that question after reading Newt Gingrich’s post on this blog. Newt’s vision for a streamlined American health insurance system to replace the current patchwork certainly is worth exploring. Such a system, I presume, would have at its core a National Insurance Exchange of the sort proposed by President Obama – effectively the analogue of a farmer’s market for health insurance. Through that farmers market individuals or business firms could purchase health insurance from a nationwide set of insurers subject to sundry rules of proper behavior and a certain degree of oversight.

Every economist would agree with Newt that the tax preference granted the purchase of insurance should be equitable, that is, independent of how and where that insurance is bought. Economists generally would like that preference to take the form of tax credits, and not tax-deductibility. In my view, it should be means tested, because neither Newt nor I nor most readers of this blog need public support for the purchase of health insurance. We should target these public resources only on those who need public subsidies – e.g., enough subsidies to keep a family’s outlays for health care at or below X% of its discretionary, disposable income.

One would have to decide how the providers of health insurance should be regulated. Should they be subject to guaranteed issue or community rating, or should they be run on strictly actuarial principles applied to the individual? If the latter, how would one risk-adjust any public subsidy extended to chronically ill individuals? Precisely how?

And so on and so forth.

These are tricky issues that would, at best, take many years to resolve. President Bush II and a Republican Congress had fully six years to resolve these issues and did nothing or, if they tried, got nowhere. What would lead anyone to think that now is the time to get it done fast?

Allowing the purchase of health insurance across state lines may be ok, but what would it really buy us?

If premiums offered by Insurer A in State X are low relative to other insurers, why might that be? Is it because Insurer A buys health care in a region marked by low health-care cost per capita (Utah, Oregon, most of the Wheat Belt) and not in the Sun Belt, Massachusetts or New York (high cost states)?

Or is it that Insurer A is located in a state with very lax regulations – e.g., w/o strictures on underwriting practices? In other words, is “letting individuals buy health insurance across state lines” merely code for “driving regulation of private insurers to the lowest level of regulation in the U.S.”? Perhaps we should do that. But why not put that proposal in plain English for the voters to chew on?

In the meantime, hundreds of thousands of American families are or soon will be headed by unemployed adults who lost the family’s insurance with their job – both because some bankers in New York went off the deep end. These unemployed Americans are not bums. They are (or have been) hardworking Americans, possibly even with relatives standing guard in Paktika Province in Afghanistan. Even in the ideal market envisaged by Newt, where would these families get the money to buy health insurance on their own, especially if some of their family members may be chronically ill?

Coming back to the cruise ship, I would venture the timid guess – although I can’t be sure – that the passengers on the stricken cruise ship would vote for the motley rescue operation that is actually available to them – Option A.  They might reason, as Newt’s friend Donald Rumsfeld would put it: “You go to the rescue of a sinking cruise ship with the rescue equipment you have,”  leaving the American dream for the ideal rescue system to be pursued on another day.

Similarly, in the midst of the current economic storm, whose future path is as yet completely unpredictable, it may be the wisest policy to provide Americans protection against the financial inroads of ill health with the patchwork of public and private insurance vehicles we have on hand. Let us be thankful to have that patchwork on hand in these difficult times. After all, I cannot imagine (although I can’t be sure) that bankrupt American families would find much solace in the assurance that someday, perhaps even in this century, this country will at long last find the ideal health insurance system that already has eluded us for over a century.

Which does not mean, of course, that as a parallel effort to a rescue mission we should not keep searching for the ideal system, Newt’s vision prominently included.

Updated at 5:43 p.m. on Feb. 17.

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In this tough economy, expanding Medicaid and COBRA benefits is a necessary stop-gap measure. It's hard enough to be unemployed; we don't want the unemployed to also be uninsured.

The investment in the safety net through more support for Medicaid will maintain the program that cares for some of our most vulnerable populations. The current economic downturn has hit Medicaid hard. Rising unemployment has increased the number of people who need Medicaid coverage while falling state revenues have made it increasingly difficult for states to finance their share of Medicaid costs. At least 43 states have faced or are facing budget deficits. Several states have enacted or are considering enrollment and eligibility limitations, benefit cuts, and reductions in provider payments. The stimulus provides additional resources for state Medicaid programs that will ensure millions of Americans will be able to maintain their coverage or gain coverage when they otherwise would be uninsured.

Short-term COBRA premium assistance for the unemployed will keep health insurance coverage in reach for many people who lose their jobs. Millions will be able to maintain the private health insurance coverage they currently have for themselves and their families.

These temporary extensions of health care benefits during this time of economic turmoil, however, represent only the first step in a long process to meet a persistent national need. We must continue to work together on comprehensive health system reforms to ensure that all Americans have access to high-quality, affordable health insurance.

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The economic stimulus package makes an important contribution to better health care for Americans.  The provisions of the bill will help workers who lose their jobs retain health insurance and allow states to sustain their Medicaid programs.  The stimulus also provides support for the important work of moving toward electronic health records -- a promising tool for promoting higher quality care, including enhanced prevention and management of costly chronic diseases.

In addition, the package offers more than $1 billion of government funding for comparative research.  This initiative evolved in a positive direction during Congressional consideration of the issue.  The initial language that pointed toward limiting patient access to health care was modified to ensure that government comparative effectiveness research supports access to quality treatment and the ability of doctors to choose the type of care that is best for each patient.  

As the Obama Administration implements this new initiative, we expect it will be done with real transparency and public input into how research priorities are set and how studies are ultimately communicated and conducted. 

The stimulus program provides short-term funding for government comparative effectiveness studies, meaning the crucial task of legislating a long-term policy framework still must be done.  We look forward to working with the Congress and the Obama Administration as a framework is developed to improve health and assure access to high-quality medical care.   

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The stimulus legislation is like putting a band-aid on a heart attack: It does very little to address the fundamental problems we face in health. Consumers will still find barrier after barrier to getting insurance coverage if they lose it.

At the Center for Health Transformation, we have long advocated free, fair, and functioning markets as the essential element to expanding coverage. Specific changes like a nationwide marketplace for individuals to purchase insurance and equalizing the tax benefits for those who purchase insurance on their own and those who receive insurance through their employer are key elements to expanding coverage.

However, building on the recent passage of SCHIP, this Congress side-stepped these priorities and instead focused on public programs as the preferred vehicle to expand coverage. This much we know: States will be back in the exact same predicament when the bailout money runs out. What we need to do is not throw good money after bad, but address what governments can and should be doing differently that will help get us out of this spiral.

Government should provide the framework for everyone to obtain health insurance: through an employer, as an individual, as a group, or through a public program. Governments at all levels should prioritize, measure, and incorporate successful models into their public programs and through their role as employers to champion those initiatives that promote health, wellness, and prevention. Government should be flexible in providing new opportunities for states to expand insurance coverage and access to high-quality, cost-effective care.

Until we make real changes to allow the private market to actually work along side effective, quality-centered public programs, bailouts will be the norm, not the exception.

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The final economic recovery package worked out by Senate and House conferees is by no means perfect, but it will help to address some of the health care problems that America's families have experienced due to the recession.

One of the most significant and helpful measures in that legislation is the provision of $87 billion in additional matching funds to states for their Medicaid programs. As Families USA catalogued in two of our recent reports, many states have already cut back health coverage for low-income people and families -- some by reducing already-meager eligibility standards or implementing user-unfriendly enrollment systems designed to limit Medicaid participation, others by reducing benefit coverage, yet others by increasing cost-sharing requirements, and still others by reducing provider payments. Many other states are in the process of enacting similar measures.

These cutbacks, if implemented, would no doubt harm many millions of low-income people for whom Medicaid is a lifeline. The influx of new federal dollars to states is expected to avoid these damaging cutbacks -- like such temporary fiscal assistance to the states successfully achieved during the last recession. This is most commendable.

The legislation will also help newly laid-off workers and their families retain health care coverage. It provides assistance to them by offering a significant subsidy to help pay for COBRA premiums. This is very important. A recent Families USA report shows that the average COBRA premiums for family coverage consume 84 percent of average Unemployment Insurance benefits, thereby making COBRA impossible to afford. The new COBRA subsidies will enable many families to continue the health coverage they had in their previous job.

The health provisions in the bill, however, while laudable, do not provide enough help to laid-off workers and their families. Unlike the original House bill, the final legislation does not include temporary Medicaid eligibility for those who are ineligible for COBRA or who can't afford COBRA premiums even with the new subsidies. As a result, the ranks of the uninsured will no doubt grow significantly as the recession persists.

The regrettable absence of the Medicaid coverage provision helps to underscore the importance of enacting meaningful health care reform in the very near future. With the adoption of the economic recovery legislation, it is time to start the health reform process so that legislative action can be completed this year.

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