To Our Health: Three Plans for Better U.S. Care

The time for expanded U.S. health insurance has come--and gone--more than once in this country’s recent history. Yet the last decade of this century may at last see all Americans obtaining the kind of universal coverage that citizens of other countries have enjoyed for many years.

Support for the idea of universal care goes back many years. Even the American Medical Assn., which torpedoed President Harry S. Truman’s 1949 national health-insurance plan by labeling it “socialized medicine,” saw virtue in it, briefly, before World War I. There were other efforts, but pressures for universal coverage eased following the adoption of Medicare and Medicaid in 1965.

Now private corporations and public opinion both demand major change, and the Bipartisan Commission on Comprehensive Health Care is developing recommendations for Congress.

What needs to be done?

Our top priority should be better access to care for the uninsured, who may number as many as 37 million.

One of the leading current proposals, and the best of many market-oriented schemes, is the Consumer-Choice Health Plan by Alain C. Enthoven and Richard Kronick of the Stanford University School of Business. Its core idea involves organizational “sponsors,” both private employers and public agencies that would be set up by state governments. Sponsors would contract with health-plan providers--mostly health maintenance organizations (HMOs)--to offer a range of coverages at varying prices. Sponsors would pay 80% of the cost. Consumers could choose the plan that best matched their needs and would pay the remaining 20% for coverage.

Building on the existing employment-based system, Enthoven-Kronick would require that all employers cover full-time employees and pay an 8% payroll tax on the earnings of uncovered employees. The tax would help subsidize health-care costs for those with incomes below 150% of the poverty line. For people below the poverty line, the subsidy would be complete: no premium.

With the subsidies, Enthoven and Kronick expect to achieve nearly universal coverage. They claim a strong cost-control component for their program because there would be price competition among provider plans.

But every panacea has problems. The emphasis on stimulating market competition also stimulates, as the authors acknowledge, competitive strategies “that could destroy efficiency and fairness” in pursuit of profits and position. Continuous monitoring would be necessary.

Asking employer sponsors to monitor their own plans forces private businesses to make sophisticated judgments, medical and financial, on details of health care. Not many firms are able to become health managers on such a scale. State sponsors would face the same problem.

The assumption that competing plans will be available in sparsely populated or poor areas is quite dubious.

Finally, many physicians are not likely to appreciate the possibility that large prepaid group practices could end up as the successful competitors. Available evidence also suggests that patients given a real choice display no great love for HMOs, except in the few parts of the country where long-established institutions of high repute exist.

In short, the Consumer-Choice plan may be an economist’s theoretical dream but it could be a nightmare, in practice, for patients, doctors and administrators.

Physicians for a National Health Program, an organization of 400 doctors, offers a much different plan--a universal program, nationally funded but state operated. Based on a program in Canada, private insurance would not be allowed for coverage duplicating the public plan. Each hospital would receive a “global budget”--a fixed sum--for the year, negotiated in each state.

Proponents expect that, in the long run, funding for the program would come from a progressive national income tax. But for a transition period, a mix of national and local, public and private sources would finance the demonstration. As an eventual ideal, this proposal has much promise, since the Canadian system offers advantages in availability and cost. As a practical matter, within a time span that might help people currently uninsured, it is a dubious proposition.

A President and Congress, reading the public mood after the demise of the 1988 catastrophic-care law, is unlikely to adopt universal health insurance all at once.

The political problems of interest-group accommodation would also be enormous in the physicians’ plan. Canada is ideologically more open to public-sector initiatives than the United States. The proposal acknowledges that elimination of private insurance plans would be “politically thorny,” but claims it is “within the prerogative” of Congress. Legal prerogative is not the issue; political strength is, and the insurance industry has plenty of that.

The most practical approach, one that might stand a chance of legislative approval in a time of stringent budgeting, is a middle way--building on the employment-based tradition and gradually adding a federal-state public program for those uncovered in any other way. Sen. Edward M. Kennedy (D-Mass.) has pushed a bill through the Senate Labor Committee that uses this approach.

Kennedy’s basic health benefits bill, S 788, requires employer-provided coverage for all full-time employees and dependents, but with financial aid for small businesses. For the uninsured, it would establish an income-related program phased in over the ‘90s, with those below the poverty line getting immediate coverage.

Private employment would remain the core factor; we would not have to fight the battle of “socialized medicine” again. It would also ensure basic coverage for all persons in poverty, thus getting away from the complex categorical restrictions of Medicaid and Medi-Cal. And by requiring sliding-scale premiums, it would embody reasonable self-responsibility.

Kennedy’s proposal also has a political leg up: the American Hospital Assn. supports it and it fits the AMA’s conditional approval of employer-mandating.

A major disadvantage is that it would take a decade to reach all of the uninsured. But the phase-in pattern allows for incremental improvements along the way.

The Kennedy proposal would also complicate an already fragmented U.S. system, adding a new public program to Medicare and Medicaid. We need to meld those two existing programs, while making the new coverages an incremental extension of a unified public-sector health insurance system.

That could make the 1990s the decade in which the right to health care becomes a political reality.