Insurance and the state of states: Reality and plans are in collision

Recommendations made by President George Bush during his recent State of the Union address didn’t exactly follow those from two recent studies, including one released by the Institute of Medicine (IOM) on the uninsured.

After praising Congress for its approval of a Medicare drug bill, Mr. Bush said the best way to ensure Americans can choose and afford private health care coverage that best fits their individual needs is to control rapidly rising health care costs.

"Small businesses should be able to band together and negotiate for lower insurance rates," he said, "so they can cover more workers with health insurance — I urge you to pass Association Health Plans. I ask you to give lower-income Americans a refundable tax credit that would allow millions to buy their own basic health insurance.

"By computerizing health records, we can avoid dangerous medical mistakes, reduce costs, and improve care. To protect the doctor-patient relationship, and keep good doctors doing good work, we must eliminate wasteful and frivolous medical lawsuits. And tonight I propose that individuals who buy catastrophic health insurance coverage, as part of our new health savings accounts, be allowed to deduct 100% of the premiums from their taxes.

"A government-run health system is the wrong prescription. By keeping costs under control, expanding access, and helping more Americans afford coverage, we will preserve the system of private medicine that makes American health care the best in the world," Mr. Bush added.

Democrats have different view

Mr. Bush’s recommendations did not sit well with many congressional Democrats and some interest groups. As part of the Democrats’ response to the State of the Union speech, Sen. Tom Daschle (D-SD) pointed out that 43.6 million Americans do not have health insurance, almost all of them from working families, an increase of 3.8 million people since Mr. Bush took office.

"Those Americans lucky enough to have health insurance have seen their premiums go up each of the last three years," Mr. Daschle said. "The increase in premiums that middle-income families have seen over the past three years is larger than the four-year tax cut they’ve been promised. This is an invisible tax increase on middle-class families."

He complained that additional tax cuts will do little to make health care more affordable or reduce the number of people without insurance and will weaken health coverage for those who now have it.

Mr. Daschle pointed out that Mr. Bush did not address the opportunity for the federal government to use the power of 40 million Americans to lower prescription drug prices and obtain more affordable drugs from Canada rather than forbidding both.

"Drug companies and insurance companies are the only ones who benefit from that restriction," he said, "not the American people, and that’s why we want to change it."

Families USA executive director Ron Pollack said the president’s proposed tax credits will help only the wealthiest and healthiest Americans.

"When the proposed tax credits lure the wealthiest and healthiest into high-deductible health plans, they will leave only the sicker and poorer in traditional insurance. As a result, premiums for people who remain in traditional insurance — those who need insurance the most — are likely to soar. The president’s tax credit proposal will fail to help millions of hardworking Americans seeking relief from skyrocketing health costs. This tax giveaway for people who need help the least is the wrong prescription."

Universal coverage by 2010?

Less than a week before the president made his recommendations, the IOM issued its latest in a series of reports on the problem of the uninsured and called on the president and Congress to strive to achieve universal health coverage by 2010.

"Lack of health insurance in the United States is a critical problem that can and should be eliminated," said University of Michigan president Mary Sue Coleman, co-chair of the IOM committee that wrote the report.

"Achieving universal coverage will require federal leadership and support, regardless of which strategy is adopted to achieve this goal," she explained.

Rather than offer a specific strategy to be used to achieve universal coverage, the committee instead tried to assess and consolidate the evidence about the nation’s current approach to health insurance.

"Our purpose was to help policy-makers determine the best path to universal coverage by offering a set of principles by which the merits and limitations of proposed strategies can be assessed and compared," Ms. Coleman said.

"There are many thoughtful plans for extending health insurance already on the table. We leave the debate about the specifics and exact design of the necessary health insurance reforms to elected officials, policy-makers, and the public," she added.

Factors supporting principles

The committee’s principles were based on the evidence and conclusions reached in earlier reports, including:

  • Uninsured Americans get about half the medical care of those with health insurance and thus tend to be sicker and die sooner.
  • Some 18,000 unnecessary deaths occur each year because of lack of health insurance.
  • Only half of uninsured children visited a doctor during 2001, compared with 75% of insured children, despite the fact that lack of regular care can result in more expensive care for preventable or treatable conditions and disruptions in learning and development.
  • When even one family member is uninsured, the entire family is at risk for the financial consequences of a catastrophic illness or injury.
  • Tax dollars paid for an estimated 85% of the estimated $35 billion in unreimbursed medical care for the uninsured in 2001.
  • The burden of uncompensated care has been a factor in closure of some hospitals and unavailability of services in others, affecting all who are served by a facility, including those with insurance.
  • The United States loses the equivalent of $65 billion to $130 billion annually as a result of the poor health and early deaths of uninsured adults.

In its latest report, the committee outlined five principles it said should be used to judge any proposed solutions.

The first principle: Coverage should be universal, and the committee stated this is the most important.

"Any proposal that leaves a significant number of Americans without coverage will allow the consequences we enumerated in our previous reports to continue," Ms. Coleman said.

The other principles are:

  • Health care coverage should be continuous.
  • Health care coverage should be affordable to individuals and families.
  • Health insurance strategy should be affordable and sustainable to society.
  • Health care coverage should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered, and equitable.

To demonstrate how the principles would facilitate decision making, the committee used them to assess four generic solutions to covering the uninsured. The four prototypes included aspects of the broad range of proposals that are being debated, such as expansion of current public insurance programs, mandates on employers to provide coverage or individuals to purchase it, tax credits to subsidize premium costs, and a single-payer approach.

"The committee’s assessments reveal that each generic solution has strengths and weaknesses, suggesting that not only could individual strategies be improved with further refinements, but also that the best approach might wed the stronger elements of different proposals," the committee pointed out. "However, any of these prototypes does a better job of meeting the five principles than the status quo."

The committee said the need for prompt action toward universal coverage is seen in the escalating costs of the current situation. It set 2010 as a target date for achieving universal coverage to allow for development, adoption, and implementation of a comprehensive coverage strategy.

The date also is consistent with the federal government’s Healthy People 2010 initiative to increase Americans’ life spans and quality of life and to eliminate disparities in health among different groups.

More funding needed

Not operating only in theory, members of the committee said they recognized the current economic pressures on all levels of government and acknowledged that any plans to expand coverage likely will require additional public funding.

Because the level of additional funds depends on many variables such as the particular benefit package provided, the committee said it couldn’t say exactly how much any of the prototype plans might cost.

However, proposals that reduce the amount of time and resources needed to administer coverage could result in significant cost savings, which could be used to offset the funding increases.

In addition, the country will see economic benefits from the improved health and enhanced life expectancy that would come with universal coverage.

Ms. Coleman said that until universal coverage becomes a reality, the committee recommends that the federal and state governments provide resources sufficient for Medicaid and the State Children’s Health Insurance Program to cover everyone currently eligible, and to prevent the erosion of outreach efforts, eligibility, enrollment, and coverage.

Everyone has health coverage!

"Imagine what the country would be like if everyone had coverage," Ms. Coleman said.

"People would be financially able to have their health problems checked, to seek preventive and primary care promptly, and to receive necessary, appropriate, and effective health services. Families could live without the fear of having no help with medical bills. Hospitals and doctors would be able to provide care without jeopardizing their budget. This scenario is already a reality in much of the industrialized word. It could be a reality here as well," she explains.

"We believe that this is a goal worth pursuing because the costs of uninsurance to all of us — in terms of health, financial security, and access to care — are so great. In summary, our committee envisions an approach to health insurance that will promote better overall health for individuals, families, communities, and the nation by providing everyone with access to necessary, appropriate, and effective health services," Ms. Coleman added.

(More information is available at www.nationalacademies.org.)