A California Model for Health Insurance : Garamendi plan might have something to offer the nation

If anyone needs more evidence of the power of the President’s bully pulpit, consider the tremendous effect of President-elect Bill Clinton’s promise to reform the nation’s health care system. He hasn’t even taken office yet and already health industry lobbyists are scrambling to influence what reforms will garner support on Capitol Hill.

A major health care policy shift is in the air. Indeed, Clinton has promised such a shift, though he has been careful since the election to remind the voters not to expect miracles.

While a health care reform plan proposed in California doesn’t fall into the miracle category--important details have yet to be worked out--the President-elect would do well to seriously consider what it has to offer the nation. The catch-phrase for the plan--conceived by a Stanford health economist and a Wyoming physician and proposed by state Insurance Commissioner John Garamendi--is managed competition . The seeming contradiction of the term is the clue to its political appeal.

Managed competition implies that in some ways the liberals were right: Every American should have access to affordable health care, and obviously the system isn’t accessible or affordable when more than 35 million have no health insurance. And managed competition implies that in some ways conservatives were right: The way to fix the problem isn’t to impose a government-run health care system but to rely on market incentives.

The Garamendi plan, although it has run into political roadblocks in California, has been touted as having national potential because it covers both the necessary bases of true health care reform: cost containment and access for everyone to basic, quality medical care.

All Californians, employed or not, would be covered. The plan would create quasi-public regional insurance purchasing corporations to bargain with the existing network of clinics, health maintenance corporations (HMOs), hospitals and doctors. It would contain costs through the use of new insurance pools and simplified billing. Coverage for everyone would be financed through contributions from employers and employees based on payrolls and wages. Under the current pell-mell system, employers and insured employees already are shouldering the burden--and buckling under that load of virtually unchecked spending for doctors, tests, prescriptions and hospitalization.

There’s really nothing Clinton has said about national health care reform that contradicts the basics of the Garamendi plan. Before the election Clinton vowed to provide coverage for all Americans, control costs, establish a minimum benefit package, encourage the development of community-based “managed care” networks of doctors, hospitals and insurers and eliminate waste and fraud.

Government must have a place in ensuring fairness; the market must have a place in ensuring choices for the medical consumer. In the new thinking that must take place if the nation’s health care system is to be reformed, the government and the market can meet.

Fever Chart

The U.S. spends more of its gross domestic product on health care than other industrialized countries.

Health care expenditures as % of gross domestic product.

Source: Organization for Economic Cooperation and Development, Consumer Reports