Len Nichols, a health economist and policy analyst, directs the Health Policy Program at the New America Foundation. Before joining New America, Dr. Nichols was the Vice President of the Center for Studying Health System Change, a Principal Research Associate at the Urban Institute, and the Senior Advisor for Health Policy at the Office of Management and Budget during the Clinton reform efforts of 1993-94. Previously, Dr. Nichols was Chair of the Economics Department at Wellesley College, where he taught for ten years. He also served as a member of the Competitive Pricing Advisory Commission (CPAC) and the 2001 Technical Review Panel for the Medicare Trustees Reports. He was on the advisory panel to the Robert Wood Johnson Foundation's Covering America project and has been a consultant to the World Bank, the InterAmerican Development Bank, and the Pan American Health Organization. Dr. Nichols received his Ph.D. in economics from the University of Illinois.
The public plan debate marches on this week as we discuss whether or not states should be allowed to “opt-out” of the public health insurance plan. Allowing states to choose not to provide the public health insurance plan as an option in their markets has its virtues. It establishes the infrastructure necessary to create a public health insurance plan nationwide, but it also makes the decision ultimately a state judgment. This may be a safer way to go for those who worry about government expansion. While we do not know the details of what kind of public plan… Read more
The gloves are off in the fight for health reform, and the insurance industry has decided that it's time to start throwing analytically indefensible punches. Two recent cases in point: (1) the headline grabbing "report" entitled the "Potential Impact of Health Reform the Cost of Private Health Insurance Coverage," by PriceWaterhouseCoopers , for AHIP (the main health insurance industry trade group); and (2) the "Blue Perspective" entitled "Age Discounts ‘A Must' to Encourage Young Adults to Purchase Insurance," by the Blue Cross and Blue Shield Association. Thankfully the Urban Institute, in work funded by the Robert Wood Johnson Foundation, has… Read more
This is another example for which both God and the Devil are in the details. No one disputes that some behavioral choices - smoking, diet, regular exercise, age and condition-appropriate screenings - affect health status, expected health costs, and therefore, our collective average premiums. It seems perfectly reasonable, especially to economists and to those who make good choices already, to use incentives to encourage socially responsible choices and to discourage those that impose costs on others. At the same time, smoking is addictive and extremely hard to quit for some people who really want to, obesity can be caused or… Read more
President Obama made two key points tonight. Number one, and most practically, he is still willing to compromise with those who still have an open mind, despite the way implacable ideological opponents have behaved this August (and before, and still tonight, Mr. Joe Wilson (R-SC), and no doubt tomorrow and forever). He signaled this through his willingness to implement malpractice reform, taxes on high end benefit packages, and linking the pace of coverage expansion with realized system savings. The latter in particular signalled both his commitment to fiscal responsibility and his confidence that so many experts we can all name… Read more
Age rating (varying premiums based on age), like medical underwriting (varying premiums based on health status), is one way for insurers to segment risk – separating the healthy from the sick, making insurance cheaper for some, but inaccessible and unaffordable for many others. In some markets today, premiums can vary as much as 11:1 based on a customer’s age. That means the oldest customer could pay as much as 11 times more than the youngest customer simply because of his or her age! In my view, this moves beyond actuarially fair into the immoral category. Let us not forget… Read more
Maybe most have read it already, but I just finished Doris Kearns Goodwin’s Team of Rivals, her study of Lincoln, who held this country together as it was literally tearing itself apart (not so different than now to observe the nightly news) with powerful communication skills, a profound focus on maintaining balance within his own party, and an uncanny sense of timing. As the Obama presidency began, I thought the FDR era was most relevant, now I think it is definitely Lincoln’s, cause of the magnitude of our internal divisions.… Read more
Some have dismissed the letter and offer to reduce cost growth from industry trade associations on Monday. I have no doubt this event was not about altruism. But I also doubt it was entirely about public relations. In fact, I think this event is important, maybe even catalytic. Essentially, industry spokespersons – whose job is usually defined as “just saying no” –sanctioned a level of savings that many of us (myself included) have long argued is achievable despite skepticism from others. In today’s tight budget times, this level of savings may actually be necessary for us to afford coverage… Read more
As we approach health reform in the midst of an economic crisis, we should think about what changes to our health system and its financing structure will both accomplish our goals and allow our business sector to thrive. As such, I believe we must seriously consider reducing our reliance on employers to finance our health system. Health care costs are a weight on U.S. employers and one of the largest impediments to small business creation. Many entrepreneurs fear being able to afford health care for themselves and their workers. Likewise, many small business owners (and potential owners) cannot imagine… Read more
When John Bertko and I wrote our vision for a competing public insurance option, our goal was move the debate over a choice of a public health insurance plan past the rhetoric and toward a more substantive conversation about policy choices. Judging by the blog posts here and around cyberspace, and the commentary in the print and broadcast media, I think we have succeeded in that goal. I hope others are as happy about that as we are. After reading the National Journal discussion and listening to feedback from other colleagues, I think it would be helpful to offer a… Read more
Let me be crystal clear: if the playing field is level, it is possible for public and private health insurance plans to compete in such a way that our citizens -enrollees and taxpayers alike - are well served and private health insurance plans that add value thrive. The choice of a public health insurance plan should not create an impasse or stall reform efforts. Appropriate insurance market reforms - minimum benefit package, guaranteed issue, guaranteed renewal, no pre-existing condition exclusions, modified conmmunity rating, risk adjustment - combined with subsidies and a requirement to purchase coverage could achieve satisfactory performance from… Read more
Medicare reform and broader health system reform are inextricably linked. We cannot change our Medicare cost trajectories without reforming the broader health system because Medicare buys care from the same inefficient system as the rest of us. Likewise, we cannot create a credible roadmap to a higher-quality, lower-cost (i.e., higher value) heath system without using Medicare as a catalyst for widespread private sector reforms. Moving the Medicare system toward a more value-based purchasing design is an integral part of comprehensive health reform. The two goals should not be viewed as separate, but rather complementary. The current economic crisis… Read more
There is no greater threat to our long-run fiscal stability than doing nothing about our struggling health system. Former CBO and current OMB Director, Peter Orszag, has long said that we do not have an “entitlement” problem, but rather we have a health care cost growth problem. I could not agree more. (And I object to the use of the word “entitlement,” but that’s a different argument for another day). The incentives and dynamics associated with health care cost growth are entrenched in our system. These inefficiencies will be defended intensely by powerful interests who stand to lose from value-based, transparent competition. Yet, the truth… Read more
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… Read more
The prospects for health reform in 2009 are still high, despite Senator Daschle’s withdrawal and the worsening economy. In fact, the economic crisis has made the case for reform even more compelling. Indeed, it is useful to remember that the health reform debate is far larger than any one man or woman and the underlying reasons for reform are unchanged. · Our health system is on a trajectory that cannot be sustained. The costs of inaction are high and they will only rise over time. Families, employers, and governments are all threatened by rising health care costs. These trends will… Read more
Health Information Technology (HIT) is infrastructure just like roads and bridges. We have neglected to invest in both for far too long. The impediments to HIT spending are formidable -- doctors are reluctant to take the time to adopt HIT, we lack the ability (but not the technology) to exchange data, and privacy concerns still threaten to derail legislation. Yet, we are now in a position to overcome them. A few successful public and private HIT programs are creating a greater awareness of what HIT can accomplish and we now have the political leadership necessary to disseminate these models and… Read more
The individual requirement to purchase or enroll in health insurance, once the market has been made more efficient and fair with insurance market reforms and once subsidies make it affordable, is a policy that must be part of any final package. Without a mandate, insurers will fear adverse selection and sabotage coverage reforms by bidding extremely high premiums. Also, without a mandate, higher income free riders – and yes, they exist – will continue to get away with paying less than their fair share. So mandates make markets both more efficient and more fair. In the primary season, these ideas… Read more
Instead of asking how much it will cost to reform our health system, we should first remember what failing to fix our health system costs our society. As a result of the lost productivity stemming from the premature death and prolonged illness of the uninsured, we sacrifice over $200 billion of potential economic value each year. That is more than it would cost to cover the uninsured. This is not just a moral issue (though it surely is one); it is also an economic issue of the first order. Premiums will continue to rise faster than wages if we do not… Read more
The point of insurance market reform worthy of the name is twofold: to make markets more efficient and more fair for all, not just for some, and to transition the business model of insurers away from risk selection and toward care coordination and high value care. In order to maximize value per premium dollar, we need to align incentives among insurers, consumers, and health providers. Guaranteed issue and modified community rating (I would allow age, but not health status rating), along with an individual purchase mandate and the subsidies to make that mandate humane, would enable insurance markets to extend… Read more
On Wednesday, Senate Finance Chairman Max Baucus (D-MT) made clear that reforming our health care system is an economic imperative and that comprehensive health care reform should be a priority for Congress. I applaud his leadership, vision, and willingness to work with colleagues, stakeholders and the public to “get it done” in this Congress. He has laid down a key cornerstone in our pathway to a high quality health care system that works well for all Americans. Senator Baucus emphasized two important messages on Wednesday: 1) The cost of “inaction is much more expensive” than reform, 2) We should approach… Read more
President-Elect Obama will need a balanced and savvy team he can trust to keep their eyes on the prize of health reform. The good news is Tom Daschle is going to be a key counselor and spokesperson, whichever specific position he takes. Former Senator Daschle has just the right equanimity, knowledge about the health system's strengths and flaws, Congressional leadership experience, plus a genuine passion for getting comprehensive health reform done, so as to be invaluable in private and in public to a new President with an ambitious agenda and intense competition for his time and attention. I also know… Read more
Related Link: http://www.newamerica.net/programs/health_policy
