Insurers Get $465B in Subsidies. Uninsured Could Get Fined.
A list of offered amendments to the Senate Finance Committee’s bill during a healthcare reform meeting on Capitol Hill last week. (Photo by Chip Somodevilla/Getty Images)
With Sen. Max Baucus (D-Montana) behind the wheel, recklessly careening over majority sentiment and then steering health reform onto an insurer-owned toll road, labor and progressives have been focused on trying to retrieve the "public option" from the side of the road.
But there are other serious problems with the Senate Finance Committee plan. Its bill would require virtually all uninsured Americans to buy unreliable and unaffordable private insurance policies.
This comes at a time when 41% of Americans reported difficulty in paying medical bills, according to a 2007 Commonwealth Fund study.
Once such a compulsory yet unaffordable plan is implemented—scheduled for 2013, according to the finance committee bill—there is likely to be a mass uprising that could trigger a middle-class backlash against everyone associated with reform.
Organized labor’s intense concentration right now on the "public option" is understandable. After all, much of labor had been hoping for a single-payer plan under which America’s avaracious for-profit insurance bureaucracy would be eliminated.
The single-payer plan would free up some $400 billion in annual wasted overhead costs, vastly lowering the cost of reform. It would leave patients free to choose their own doctors, and liberate doctors to practice proper medical care without insurers trying to minimize treatments in order to maximize profits.
The national AFL-CIO passed a pro-single payer resolution at its recent convention in Pittsburgh, culminating a solid organizing effort that enlisted 39 state federations and hundreds of labor councils and locals in supporting single-payer.
Public support for a far-reaching public component of health reform is extremely strong. A NY Times/CBS News poll released Sept. 24 showed 65% backing for "government-administered health insurance plans [that would] compete with private insurance plans." Only 26% were opposed.
Such overwhelming support for more fundamental reform is all the more remarkable given the weak message that Obama and Co. have utilized in arguing for reform. Drawing on polls that were slanted to show that Americans wanted to keep their current insurers, "They asked no concrete questions on things really hate about health insurers, on issues that really matter," political linguist George Lakoff told me.
Lakoff, the author of Don’t Think of an Elephant and other books on political communication, said that Obama and his team have presented policy-wonk arguments instead of creating a different values-based "frame" on healthcare.
Most fundamentally, "The Obama people have not been drawing on values, and they have not been pointing out the villains," according to Lakoff. "They should have been saying that insurance coverage is not healthcare, and that health insurers make money by denying care. "They really dug a hole with their message." (Lakoff outlines substantially similar points here to those in the interview.)
These errors in the basic message have flowed from Obama’s early abandonment of his previous support for single-payer, expressed forcefully as a state senator in Illinois. Obama’ s new tune: "We don’t want a huge disruption as we go into healthcare reform where suddenly we’re trying to completely reinvent one-sixth of the economy," he told a New Mexico crowd in May.
Obama’s argument was answered forcefully by Dr. Marcia Angell of Harvard Medical School on The Bill Moyers Journal:
What he has essentially advocated is throwing more money into the current system. …. Our problem is that we spend two and a half times as much per person on health care as other advanced countries, the average of other advanced countries [$7,290 per capita in the US cf. $3,6o1 in France in 2007]. And we don’t get our money’s worth. So, now [Obama] says, Okay, this is a terribly inefficient, wasteful system. Let’s throw some more money into it.
Echoing Obama, Baucus ruled single-payer "off the table" early on. This was hardly surprising, given that Baucus raked in $3 million in campaign contributions from the health and insurance sectors between 2003 and 2008, according to the Washington Post, amounting to 20 percent of his total contributions. Baucus even relied upon former Wellpoint insurance lobbyist Liz Fowler to write much of the Senate Finance bill.
True, the Democrats are pushing some important advances in all their bills: no more pre-existing conditions (more on that shortly), no annual or lifetime limits, and no terminations of coverage just when you need it most. There will also be a big expansion of Medicaid and community health centers for the poor.
However, the Baucus/Wellpoint bill contains some features which one would not normally consider worthy of the term "reform":
Subsidies to industry. Private for-profit insurers will receive an estimated $465 billion in federal subsidies to help pay for the coverage of people currently uninsured, according to Sen. Jay Rockefeller. Health insurers have already enjoyed a 428% increase in profits from 2002 to 2007.
Fines for uninsured. Ordinary citizens will face mandatory purchase of private insurance, with substantial fines ($750 for failure to buy single coverage, $1,900 on family policies) to back up the mandate. This alone is bound to create substantial public outcry. As progressive economist Robert Kuttner has noted, "Universal social insurance signals government help. A mandate signals government coercion."
In return for gaining a huge "captive market" of tens of millions of new
premium-payers, health insurers would be required to stop denying policies or claims on the basis of pre-existing medical conditions. But as United Electrical workers political director Chris Townsend told me, "What’s to stop them from denying you on the basis of a bad credit record with medical bills?"
Loophole. Moreover, "In exchange for issuing policies to sick people, insurers get to jack up premiums for older people… letting them charge four times more," writes long-time consumer health advocate Trudy Lieberman.
Unaffordable. Now here comes the mind-blowing part: Families earning just above the median income–$54,000–would pay $5,300 annually in the least-expensive "silver" plan outlined by the Senate Finance Committe.
But before receiving any coverage, families making $54,000 must shell out $5,000 in deductibles payments before their insurance kicks in, on top of their premiums. That would mean that families must shell out $10,300 a year to get any coverage.
The absence of effective cost controls. "We are about to force at least 30 million people into an insurance market where the sharks are circling," said California Lt. Gov. John Garamendi, a Democrat who served as the state’s insurance commissioner for eight years. "Without effective protections, they will be eaten alive."
But Democrats have shied away from regulating premiums in the face of charges from business leaders and Republicans that controlling what insurers charge would be meddling too much in the private sector. As a result, while states have long supervised what companies charge for mandated automobile and homeowners insurance, the idea has been largely banished from the healthcare debate.
Weak ‘cooperatives.’ Instead of giving all Americans the right to sign up for a Medicare-style program, Baucus and his allies have substituted a weak system of cooperatives. These nonprofit insurance cooperatives would be pitted against already-existing for-profit insurers who have well-established provider networks and quasi-monopolistic market share, notes Kip Sullivan, Minnesota health activist and author of The Health Care Mess.
"The co-ops will likely lack the resources to survive, and can only continue to exist if they are leaner and meaner than the private insurers and actively cherry-picking in signing up young, healthy patients," Dr. Steffie Woolhandler of Harvard Medical School told In These Times. "There’s been a bait-and-switch game with the public option."
In response to Baucus’s blatant service to the insurers, it’s been heartening to see new AFL-CIO President Rich Trumka and more than 60 members of the House Progressive Caucus declare that they won’t support healthcare reform without a "strong public option." But this has yet to be crafted. Progressives may be placing far too much weight—and hope—on just two lines of House bill HR 3200, according to an analysis by Sullivan.
A truly vigorous public component of healthcare reform must be carefully structured so that any American can join, providers are strongly encouraged to take part, and the plan can operate on distinctly different principles than for-profit corporations. Such a public option would still be unable to reap the administrative savings that a single-payer plan would, but it would stand a far better chance than the version outlined in HR 3200 or the pathetic co-ops in the Baucus plan.
Ideally, such a public option would serve as a measuring stick against which to compare the policies and premiums of private insurers. But equally important, it would be our best hope to sustain momentum for a genuine single-payer plan further down the road.