Healthcare: are we making it more difficult than it needs to be?

I’m confused by the direction the health insurance issue is heading – or I should say by what seems like a lack of any clear direction. Walldon has been covering the Edwards healthcare insurance plan (“It’s not always the media’s fault” and “Edwards' health care proposal,”), and it seems to suffer from the same problem as the Clinton Administration’s plan in the 1990s – too much complexity, too hard to explain in a few words, and that means it will not succeed in rallying public support. Then a couple of weeks ago, Kevin Drum criticized the President’s healthcare plan, saying the following:

He wants to push the country toward "consumer directed healthcare," a euphemism
for gutting the current insurance system, in which third parties pay for most
medical costs, and replacing it with a system in which consumers pay directly for healthcare and insurance only kicks in if you suffer some kind of major disaster.

This statement by Kevin confused me, too. As I understand it, Bush does not want a system where “insurance only kicks in if you suffer some kind of major disaster,” because he does not want a Federal system at all. But I’m also confused about what Drum is implying. On the one hand, Drum in other writings seems to favor something like extending Medicare to everyone, a “single-payer” system. Yet I would understand that as a system, a Federal system, in which “insurance only kicks in if you suffer some kind of major disaster” – in the sense that the Federal insurance still is subject to various deductibles that may or may not be limited to a certain extent by privately-obtained supplemental insurance. So the difference between Medicare and the major medical that Kevin is referring to, besides whether it’s Federal or not, is a matter of how “major” is “major,” isn’t it? But on day one, isn't Medicare "consumer-directed," too -- or any program with any deductible?

So what are we talking about when we say we need a government-based healthcare insurance? It seems to me there are four basic non-negotiable principles:

(1) it must be absolutely universal – none of this “most of the currently uninsured stuff” – in order to have a proper risk-sharing program;

(2) it can never be lost – i.e, it is decoupled from employment;

(3) it must fundamentally mean nobody can be financially destroyed by a medical disaster; and

(4) it must be extremely simple to explain: no regional anything that is an essential part of explaining how it works, no employer role, nothing like that.

In other words, I would see the initial Federal involvement for a form of single-payer umbrella insurance, with the long-term political issue being how low the umbrella starts – i.e., how big the deductible is or how “major” the “major disaster” needs to be, and, further, how much it will cost. But isn’t that what Medicare actually is, but just with the umbrella kicking in very early in the process of incurring costs? Isn’t that what any insurance with a deductible (and in a sense, a co-pay) is?

Once we get the basic system in place -- if you want, call it “Medicare-lite” for everyone (i.e., with higher deductibles than Medicare requires because of present budget limitations) -- then the insurance companies can fill in the gaps as they do under Medicare now with various choices in supplemental policies. Most of these supplemental policies also have some kind of deductible, and I believe virtually all of them have co-pays. From there, the on-going political argument can ensue over how far down towards day-one costs the umbrella can be extended, and how small the co-pays can be or when they will go away after X amount of expense. Employers can offer the supplemental insurance, too, and it will be orders of magnitude less costly because of the Federal umbrella. We also need to figure a way for the poor to have the benefits or the equivalent of the gap insurance, and perhaps should also somehow include some basic preventive services – like annual physical after the appropriate age, annual mammogram, etc. Perhaps the states could do the supplemental insurance.

But in the meantime, we will have established the basic structure of a system that makes perfect sense within the political philosophies that either strongly favor (Democrats) or can accept (most Republicans) national risk-sharing of certain kinds of risks through our federal government: Federal umbrella or “major-major health” insurance involving everyone sharing in the worst risks. It would mean elimination of at least those worst risks from loss of a job and its benefits, with substitution of an easily calculable risk that will in a very significant way (1) decrease the fear factor among employees themselves, a virtually universal fear that keeps people in jobs they really would like to leave and where their productivity is less than optimum; (2) reduce the fear of employers over spiraling and unpredictable costs that constrains hiring new employees, since now any insurance offered by employers or negotiated by unions can be simply the equivalent of the supplemental insurance at cheaper group rates; (3) reduce overall employment costs for producers, thus allowing better competitiveness. A huge sum of private savings will be freed up, too, to help pay for the change and some plain old pot-sweetening for employers and employees alike. Insurance companies get to continue playing in the game, too, with a system that, while revenue is gutted along with liability, could actually be more genuinely and predictably profitable -- as administrative costs decrease and the system is politically sustainable.

The way I see it is that Step 1, the thing all Democrats should be promoting as a constructive start that we can build upon in the future, and one that – critically important -- every American can understand clearly from four (4) common words, is absolutely universal, absolutely portable “Universal Umbrella Health Insurance.” How does it work? Easy. “When your costs go past a certain amount, the government picks up the cost.” Fourteen (14) words, 10 of them one syllable. It will at least protect most Americans against a devastating, unlimited financial disaster for any health catastrophe. Even a maximum $10,000 exposure (with a deductible or out-of-pocket maximum of that amount) -- hardly affordable to the very poor but at least limited and within a multiple-year earning power of most families headed by low-wage workers -- would be better than nothing, and possibly substantially solvable if some subsidization of supplemental insurance for lower-income people can be devised. Even $20,000, if that’s the best we can do fiscally due to the Bush budget disasters would put the structure in place with some real benefit for almost everyone. Moreover, as we finally shed unnecessary government costs like the Iraq war, national decisions to fund lower and lower deductibles could become feasible without changing the structure of the system.

Making a huge break towards a better future doesn’t seem like it needs to be the excruciating brain surgery that it is being made out to be. Is there something fundamental I’m not getting here?