The next chapter in health insurance reform


Lawmakers are gearing up for another round in the nation’s never-ending fight over how to make health insurance universal and affordable.

Here’s my advice. Stop putting patches on a broken system. Help patients and families first.

What are their most immediate needs? When you step back from the policy arcana, people require plans that are affordable, pay for all essential services, and are readily available to everyone. 

The existing fragmented insurance system fails miserably on all three fronts. Half the population gets coverage through an employer. But if the worker gets laid off, the entire family loses coverage.

Workers whose employers fail to provide coverage may purchase plans on the individual market, thanks to Obamacare. But without subsidies, the premiums are unaffordable, leading many people to forgo coverage. 

Medicaid is an option for the very poor. But if you lift yourself onto the lowest rung of the economic ladder, you’re thrown out of the program.

Coverage of essential services is another patchwork quilt. Some employer plans offer generous dental, prescription drug and eyeglass coverage in addition to physician and hospital care. But a growing number are shifting their members into high-deductible plans, which require self-pay for critical services like preventive care and mental health treatment. 

These moves helped turn affordability into the most important healthcare issue for most Americans. With overall costs still rising slightly faster than the economic growth rate, employers have shifted some of the additional expense onto workers through higher premiums, co-pays and deductibles. This exposed families to the outrageously high prices their plans pay for services, especially at the nation’s hospitals, since they now pay the first $1,000 or more of the bill.

Given this indefensible hodgepodge of plans and policies, you’d think more than a third of the public would support the single-payer alternative, Medicare for All. Yet its proponents have never been able to convince a majority of the public it’s time to jettison private insurers’ hold on the system.

Indeed, in recent years, private insurers have succeeded in moving 40% of Medicare beneficiaries and 70% of Medicaid beneficiaries into managed-care plans. For many insurers, administering public plans has become their main line of business.

There’s another path. Policymakers can rethink how to regulate this fragmented, incomplete and impoverishing insurance non-system so that it meets patients’ and families’ need for comprehensive, affordable care.

The environmental arena provides a potential model for how to approach a new round of national insurance regulation. It’s called performance-based regulation. Under PBR, regulators dictate an outcome. They leave it to the private sector figure out how to achieve it. Auto mileage standards are a good example.

What elements should Congress include in a PBR for health insurance? First, seamlessness. People should be able to switch plans, whether government-run or private-run, without a break in coverage. Moreover, every plan could be required to ensure continuity of coverage when a person leaves that plan. Let’s add plan responsibility to the lexicon of healthcare reform. 

Second, no one should pay more than a set percentage of their income in total premiums, deductibles and co-pays.

People earning less than some percentage of poverty shouldn’t pay anything at all. The American Rescue Act provides a model. It set the standard at 8.5% of income for Obamacare plans. 

Essential benefits, network adequacy and health record portability should also be included in a comprehensive PBR for health insurance. The larger point is that if we’re going to have a system with multiple plans, we need a common set of standards.

Obamacare’s benefits regulations proved extremely popular. The same would happen for a PBR that required every plan to offer seamless switching and comprehensive benefits at an affordable price.



Leave a comment