Talking healthcare
Recently, Calvin professor of philosophy Ruth Groenhout and Calvin professor of political science Doug Koopman discussed healthcare in America: what's wrong, what's right, what could fix the system and who's going to pay. (Note: The professors were interviewed separately for this Q&A.)
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What is wrong with the current U.S. healthcare system?
Groenhout: It really is hard to know where to start. We’re spending far more dollars—both real dollars and percentage of the GNP—on healthcare than any nation in the world, and we don’t get good results. Our average life expectancy is okay, but it’s higher in other countries—Japan specifically. Our infant mortality rates are not low at all. If you go to some inner-city, rural areas, our infant mortality rate is similar to that of a third-world country, and it’s a terrible outcome. If we’re spending more than any other country in the world, why are we getting results that are mediocre at best in terms of these general health parameters?
Koopman: What’s wrong is to some extent the flip side of what is right. That should be mentioned, too. American healthcare is highly innovative. Americans receive the latest procedures, treatments, and prescription drugs quickly. Individuals receive rapid and thorough attention from specialists. Quality care is available throughout the nation. Specialty centers are distributed broadly, and not just in a few centers. The problem is that this prompt and quality attention is mostly—although not entirely—available to the insured. While the uninsured do usually get care, and often very good care, much of the cost of their care is shifted to the insured—and to taxpayers. With estimates of more than 40 million out of 300 million Americans uninsured, that can be quite a cost shift—and a real inequity.
How can Congress provide care for the uninsured?
Koopman: There are two senses of “how” in your question—procedural and political/financial. Procedurally, the “how” is easy. Government just requires everyone to purchases health insurance, penalizes those who don’t purchase it—or employers who don’t provide it—and subsidizes the purchase for those who cannot afford it (not those who just say they cannot afford it). Financially and politically, however, the “how” is very difficult … Expanded coverage has to come with a way to pay for it—a combination of more taxes and government borrowing and lower per capita spending on health care. That’s the key political problem—finding the acceptable combination of taxes, borrowing, and cost controls.
Groenhout: There’s about three different models that people are working on. One is universal healthcare, single-payer system. That’s what they’ve got in Great Britain and Canada, where, basically, the government provides healthcare for all its citizens … Canadian healthcare gets slightly better results than the U.S. at about half of the cost. The downside to this is that sometimes you have to wait for non-emergency treatment, and Americans have generally not been in favor of big-government solutions—unless it’s Social Security, which they love. A lot of people think this is the ideal solution, but I doubt it would ever pass.
The second option is to use private insurance. The Netherlands uses a system of private insurance, and they get very good results. But here’s the kicker. Their system is very, very heavily regulated. Insurers are required to offer a basic healthcare package in their coverage. They don’t get to pick and choose what they want to take care of. The rates they can charge are set by the government … And, probably most important, the insurance companies are not allowed to pick just the healthy people to cover while rejecting the sick ones for coverage … The countries that have used it have a really strong ethic of collective responsibility … The U.S. has got a competitive culture …We tend to operate with this model where one group does well at the expense of another … So I don’t know if that system would work here.
The third option—and from my understanding that’s what the Obama government is working on—they’re trying to establish a hybrid system. The hybrid is that private insurance would still work as it does but with more regulation. And then the government would also offer health insurance. So, if, for example, I’m a really small employer, it’s really expensive for me to try to provide insurance for the five people who work for me. But the government can pool all those employers and provide coverage for them in a way that’s efficient.
What do you think of Obama’s approach?
Groenhout: I think Obama’s approach is about the only one that’s politically viable, and he’s doing it well.
Koopman: He has a few general objectives, but he’s letting Congress do most of the detail work. His strategy is a good one, at least to get some kind of plan in a reasonable time frame. Healthcare change has to pass the Congress, of course, and the legislative process is precarious and unpredictable. Congress is likely to do things that Obama as a candidate said he would not do—like mandate coverage or tax the value of health insurance benefits—but which are probably necessary to reach the goal of covering most of the currently uninsured.
In a hybrid system, what would prevent an corporation or institution from dropping its employees from the company healthcare plan and forcing them into government plans?
Koopman: Nothing very substantial, at least in the long run. That is why a lot of major corporations want this to happen, to reduce their labor costs. For example, some versions of reform would allow our domestic auto industries can make cars for less because they would not be paying health benefits for their employees.
Groenhout: Under the current plan, there are two things that are meant to prevent that. The first is regulating private insurance companies to require coverage without regard for pre-existing conditions …If Priority Health is required to offer coverage to people regardless whether they have pre-existing conditions or not, then, in a sense, Calvin will pay the same rates for all of its employees, and has no incentive to try and dump some of them on the government plan. The second policy in the current Obama plan is that employers who want their employees to use government health insurance have to pay for that insurance in one way or another. So there’s no free ride here, and (at least in theory) no dumping. Employers either pay for private insurance or government insurance, but they still pay either way.
What would work?
Groenhout: This is where the left and the right should come together. We need to pour our efforts into preventative care and stop trying to offer every technological intervention we can find for everyone … I mean, if we could give prenatal care to everyone, and we could do it with nurse practitioners and physicians assistants, we can do that very cheaply. But instead we’ve got all kinds of women with no access to prenatal care. A significant percentage of their babies will be premature, underweight. They’re going to spend time in the neonatal intensive care unit, the NICU, and the cost there in terms of money, and in terms of burdens on people’s lives—I mean, the costs of long-term disabilities and such, are tremendous. So, you’ve got a system right now where we don’t pay for the easy stuff and you do have to pay for the hard stuff. It’s just not a well-ordered system, but I do think there’s some cause for hope. If we could get beyond some of these political battles, it seems that we do know what the answer is.
Koopman: I think the alternative that provides the broadest additional coverage with the lowest additional costs is one that requires everyone to buy health insurance (and otherwise plan for their health care costs), and then lets individuals decide how they’re going to do that. Conceptually, there are four ways to reduce healthcare spending. One, the nation could just do less health care—ration it. The problem with that is the severe rationing required to get American healthcare spending down significantly is probably politically untenable. Two, insurers could just pay less for each procedure, treatment or intervention. That is what Medicare and Medicaid have done over the years, but that has led to physicians and other providers refusing to serve such patients. Reimbursement limits also provide incentives to “overtreat” illnesses to increase provider income. Three, theoretically at least, the nation could induce or require people to change their lifestyles so they will require fewer and less expensive health care treatments. That is very hard to do in the individualistic, narcissistic, and “quick-fix” American culture. Four, the political powers could introduce more market incentives in health care coverage—have consumers bear more of the costs and provide them information and choices to spend money more wisely. That’s difficult, too, as people don’t like to think of healthcare as a commodity susceptible to market incentives. But, in the real world, successfully providing nearly universal health insurance coverage in an affordable way will include elements of all four options—rationing, payment limits, lifestyle changes, and market incentives.
What’s the major political or ideological divide on this issue?
Koopman:I would say the major divide is over how well individuals might be able to navigate a more market-oriented approach to obtaining health insurance. Some, skeptical of consumer sophistication, advocate more of a top-down strategy, in that the government and other insurers tell individual people how to behave—consumers what to purchase and what kind of healthy habits to follow, and providers what procedures and treatments may and may not be done and what the payment will be for them. The bottom, decentralized approach believes in consumers more, and emphasizes giving them more information, and sometimes more money, to let them make their own choices. This side can accept a mandate that people buy insurance, but lets them choose what kind of plan they want, what kind of coverage it has, what kind of deductibles, etc. Congress seems headed far more in the former direction than the latter, but there will be elements of both in any legislation that makes it into law.
Groenhout: I think the right has sort of boxed themselves into a corner on this one because they tend to argue that any government involvement is a problem—a bad thing. But we’re going to need some government involvement, whether it’s a mandate that everyone buy insurance, or a government-run system of health care. On the other hand, the left tends to want to promise everything to everyone, and we can’t offer that in health care—the money’s simply not there. So the left needs to learn to set limits, and that’s kind of unpopular, too.
5. Who pays?
Groenhout: Obviously, if we get the system that’s pushing through now, each of us has to pay. Or, if Obama gets his system pushed through, then we’re all going to pay. But, of course, we’re all paying already. Some economists argue that, for middle class citizens in particular, real wages have been almost stagnant in the last 10 years because the rising cost of healthcare insurance, which goes up every year, actually eats up any increase in salary. So, employers try to offer raises, but that gets taken with the increase in healthcare premiums or the cost of out-of-pocket deductibles. So, we’re already paying.
Koopman: You and me. We pay. Taxpayers pay. Insurance holders pay. You either pay it in higher taxes or higher premiums. The more interesting payment questions are generational and distributional. Generationally, will the new system, assuming it is enacted, be paid for from day one or will future taxpayers be paying for current benefits—a situation we now have in Medicare and Medicaid? Distributional-ly, which income classes will pay more? Broad and good coverage will take a lot more money than the “rich”—however one defines that group—has. So, the middle class will pay—median family income in the U.S. is now just over $50,000. But at least some in the middle class will be better off with the changes, too.
