As Congress gets down to its legislative business
this year, there is considerable pressure on lawmakers to address
the growing concerns about America's employment-based health care
system. In particular, the mounting number of uninsured Americans
has forced greater attention to the simple fact that the
employment-based health system leaves millions of workers without
coverage.
Further, many working families with good
coverage are angry and feel powerless because key decisions
affecting their health care are being made by their employers or by
insurers. They want to make those decisions themselves, or have
someone make sure those decisions are made in their family's
interests.
If
Members of Congress are to tackle these challenges successfully,
they must avoid instituting "solutions" to one problem that will
only exacerbate others. But to do so, they must identify--more
clearly than they have done in the past--the root causes of these
problems. And they should consider key principles of reform that
deal directly with these causes, not merely with the symptoms,
before shaping policy changes for the future.
WHY THE PROBLEMS EXIST
The problems of uninsurance and dissatisfaction with the
current health care system have significant but resolvable
underlying causes:
- Uninsurance. Today, there are
well over 40 million Americans, chiefly in working families, who
lack health coverage. The real cause of this problem is that
coverage is primarily employment-based, which is no longer an
effective way to provide insurance for major segments of the
population. Employer-provided coverage continues to be a good
arrangement for workers (and their families) who look forward to
long-term employment in large companies that offer comprehensive
health benefits. But it is not an effective way to cover people who
change jobs frequently, have spells of unemployment, or for other
reasons do not have a firm attachment to one employer. Nor are
employees of small firms typically able to obtain good coverage;
they are in very small insurance pools, and their employers
generally lack the skill and administrative capacity to arrange
good plans for them.
The current debate over "patients'
rights," requirements on insurers, and the enactment of mandates on
plans to cover certain services is irrelevant to the plight of
families who do not even have insurance. Worse still, regulation of
this kind, which drives up the cost of coverage and even
discourages employers from offering coverage because of the red
tape involved, actually will increase the number of uninsured
Americans.
It would make more sense for uninsured
working families to obtain coverage through large organizations
that could act as an alternative to employers, such as unions or
groups of churches. This option is rare today because the tax code
discriminates against such an alternative. The value of
employment-based coverage is treated as tax-free compensation by
the Internal Revenue Service, but there generally is no tax break
or other financial help available to families wishing to obtain
coverage through other large institutions with which they have a
more permanent affiliation.
- Frustration and
Powerlessness. Since a condition of the favorable tax
treatment of employment-based coverage is that employers own and
control the health plans of their employees, decisions about
coverage and services are made by employers or the insurers and
managed health plans they hire. These decisions often do not
reflect the interests of the workers and their families. In some
cases, the plans or providers may even withhold services that seem
to be assured in the description of the plan.
Faced with this practice, there is growing
demand that Congress legislate "patients' rights" requirements on
plans to provide specified levels of certain services, and
proposals to give patients greater latitude to sue their plans (and
employers who select them) when services are deemed inadequate.
Although such demands for action are
understandable, the proposed remedies largely miss the point.
Obviously, when the provider of any service fails to deliver a
promised service and that failure causes harm to the customer,
there is a case for legal action. But lawmakers should ponder
carefully whether encouraging an avalanche of litigation is likely
to be the way to improve health care.
Moreover, "body parts" mandates and other
steps to require plans to cover certain services miss the point
that the problem arises because plans are answerable to employers,
not employees. If plans were answerable directly to patients, and
if their business success routinely depended on satisfying those
patients (as is the case in the Federal Employees Health Benefits
Program which serves Members of Congress and their families), they
would behave quite differently because such plans could be "fired"
by dissatisfied families.
PRINCIPLES FOR REFORM
To address these problems in ways that deal directly with
their causes, not just with their symptoms, Congress needs to
fashion proposals that meet the following goals and principles:
Making it easier for employees to exercise
direct control, or ownership, over their health plans would also
address the anger with employer-sponsored coverage that occurs on
two fronts. There certainly are instances of promised services
being wrongly withheld, which may lead to actual harm. These cases
are appropriate candidates for compensation, and perhaps
litigation. But for the most part, the problem is that a patient is
irritated by a general pattern of poor service rather than by a
dangerous event.
In the regular marketplace for most
services, customers faced with poor service may decide to take
their business away from that supplier and go somewhere else. In
health care, federal employees in the Federal Employees Health
Benefits Program (FEHBP) are permitted to do this once a
year. But because the tax
system so skews control over health plan decisions for most
Americans by putting considerable selection power in the hands of
employers and very little in the hands of employees, this normal
guarantor of customer satisfaction breaks down in today's
system.
Fortunately, Congress can take steps
toward creating normal consumer pressure in employment-based health
care. Congress could:
-
Allow flexible spending account
rollovers. Congress could defuse some of the pressure for
increased regulation of employer-sponsored plans by allowing
workers with FSAs to roll over the unused balances in these
tax-free accounts at the end of the year (currently, these revert
to the employer). Doing so would encourage employers and employees
to make greater use of FSAs relative to traditional
employer-sponsored insurance. This in turn would give employees
greater opportunity to supplement their basic employer-sponsored
coverage by acquiring additional partial coverage that is more in
tune with their needs and desires. Such an opportunity to switch to
alternative coverage that they own and control would be an
effective antidote to the frustration over general deficiencies in
the employer's plan, and more effective than suing plans over
coverage.
-
Remove excessive regulation
from medical savings accounts (MSAs). Congress can give
even greater control to employees by stripping away the excessive
regulation on medical savings accounts, such as the number of
plans, the limits on the size of employers able to offer such
plans, and other regulations that discourage employers and insurers
from offering MSAs.
If the health insurance system is failing
to adapt to the service desires of patients, the proper lesson to
draw is that there is something wrong with the relationship between
the insurer and the patient (due to the lack of patient control
discussed above). The wrong lesson to draw is that politicians need
to act like medical experts and make medical determinations for
patients. It is significant that in the consumer-driven FEHBP,
plans routinely introduce new services in response to customer
demands; they would go out of business if they did not.
What Congress should do is take the steps
needed to remove the obstacles to a similar dynamic in the
insurance market serving private-sector workers, rather than
leaving those obstacles in place and adding a layer of politicized
mandates.