Archive for August, 2009

A Town Hall Meeting 3000 Miles from Washington, DC

August 17, 2009

Seaside, Oregon, is about as far away from Washington, DC, as you can get in the continental U.S. Not quite 3000 miles, but almost (2860 to be exact). And it seemed very far away from the sound and fury of the health care debate in the nation’s capital when I attended a Town Hall meeting last Friday. Sen. Ron Wyden was the speaker at the event, which was attended by over 400 people crowded into the Seaside High School cafeteria.

As we waited, the crowd was calm and polite, but there was a murmur of anticipation and an undercurrent of tension. We had all seen the stories about disruptions and threatened violence at similar Town Hall meetings across the country. Would it happen here? We could see people standing at the back with signs opposing health reform. Would they interrupt the proceedings and cause problems? We all respect freedom of speech, but somehow it wouldn’t seem like “freedom” if someone else was shouting us down and disrupting our attempts to learn about the health reform proposals.

To my pleasant surprise, everyone behaved well; the process was orderly, and the tone was respectful. People asked Sen. Wyden some tough questions: Why not simply expand Medicare for all? Will there be enough doctors to take care of everyone? What will happen to the federal deficit? How can we reduce the administrative hassle for doctors? Why do you take campaign contributions from insurance and drug companies? Sen. Wyden is very knowledgeable about health care and answered the questions thoroughly, but – more importantly – he didn’t speak down to anyone. He explained the issues clearly and tried to help people to understand the complexities of the challenges we face. I overheard him talking afterwards with a member of the U.S. Army color guard who said, “I learned a lot from what you said and what the people were asking today.” Isn’t that the basic idea of a Town Hall meeting?

The scene reminded me of the well-known Freedom of Speech painting (one of the Four Freedoms series) by Norman Rockwell. A man in a flannel shirt and leather jacket is standing up to speak at a Town Hall meeting, and the people around him are looking up with interest and curiosity. Many people think Rockwell was just a talented illustrator who painted sentimental themes. They may be right from an artistic perspective, but I think he tapped into something important about us – something we often forget. Big issues like health care are too important to leave to the special interest lobbyists, the experts and the cable television commentators. We need to have conversations in every one of our communities around the U.S. We need to listen, share our ideas, learn from each other, move toward consensus, and trust the wisdom of the people.

During the past few weeks we’ve heard about the disruptive and abusive tactics used by opponents of health reform at some Town Hall meetings. We haven’t heard, however, what happened at the hundreds of other Town Hall meetings across the country. I suspect that most of them are like the one I attended in Seaside, where people are struggling to find common ground to address one of the biggest problems we face – providing access to affordable, high quality health care for everyone. Seaside may be far from Washington, DC, but it’s close in spirit to Stockbridge, MA – the home of Norman Rockwell – and thousands of other communities in the U.S. My faith in the American people is being strengthened, one Town Meeting at a time.

Are “Cadillac” health plans the problem?

August 3, 2009

The debate over proposals to tax health insurance plans is confusing and frustrating.  The proposals are usually described as a tax on “gold plated” or “Cadillac” health coverage.  According to the media and many spokespeople on the Hill, these health plans with “overly generous benefits” supposedly encourage overuse of medical services and drive up the overall costs of health care.  People express outrage that Wall Street executives have expensive tax-subsidized health benefits that include coverage for cosmetic surgery.  Is this really a problem?  If we fix this, will it raise lots of revenue and bend the cost curve?  I don’t think so.

The problem is not “Cadillac” coverage, whatever that is.  I know that some economists believe that people ought to have more “skin in the game” by paying a significant share of the costs of medical services they receive.  I agree, but only up to a point.  Health care services are not like other goods and services.  If you give me more money, I might build a fancier house, buy a new car, go to more concerts, fly first class, etc., because I like all of these things.  Frankly, I don’t particularly like going to the doctor, and I wouldn’t spend my extra income on more blood tests, CT scans, colonoscopies, or surgeries (ouch!).   It’s fine to have modest copayments to discourage unnecessary doctor visits or to encourage use of generic instead of brand name drugs, but onerous cost sharing when someone is seeking medical care won’t solve our problem.  A tax on “Cadillac” plans won’t raise much revenue, and it won’t bend the cost curve in any significant way.

A recent article by Alec MacGillis in the Washington Post makes the same points.  Most of the experts he interviewed agreed that increasing copayments and deductibles is unlikely to slow the growth of health care costs.  But I think this misses the point, or – to be more precise – mixes together two different issues.

When people are making decisions about health care that affect their pocketbooks, there are two steps.  Before deciding whether to go to the doctor or to undergo surgery, people have to decide which health plan to choose. Most people who work for large employers usually have a choice among multiple health insurance plans, usually an HMO and several PPOs.  (For example, federal government employees in Portland, OR, can choose among plans offered by Blue Cross Blue Shield, Aetna, United, Kaiser Permanente, and several others.)  The real issue is that most people don’t have much financial incentive to choose the efficient, high value health plan that is offered to them.  Most large employers pay the full premium for employees (or a % of the full premium), regardless of the cost.  These employers are, in effect, subsidizing the inefficient health plans and providers.  And this is encouraged by the open-ended tax subsidy for employer-paid health benefits.  If the tax exclusion were capped at a reasonable level, people would have to pay more for higher cost health plans, and they would benefit if they chose a lower cost plan.  (For more background, there are some useful articles about this issue by Jonathan Cohn, Ezra Klein, and Paul N. Van de Water.)

When I say “higher cost health plan”, I’m not talking about richer benefits; this is about higher costs for the same benefits.  How can some insurers’ premiums be lower, even for the same benefits?  Some have made investments in IT and streamlined their claims processing systems, so their administrative costs are lower.  Some work closely with groups of physicians and hospitals that are committed to using evidence-based clinical practices and reducing unnecessary medical services.  But why would an employee join one of these more efficient plans if they don’t get to keep the savings?  And why would a health plan go to all the trouble of becoming more efficient if their customers are not price sensitive?

The bottom line: the proposal to tax “Cadillac” plans has populist appeal, but it is attacking the wrong problem.  Instead of making people pay more when they need health care, we should provide incentives for people to enroll in more efficient health plans.  A cap on the tax exclusion of employer-paid health benefits – ideally, adjusted for income – would allow people to benefit from choosing a more efficient, high-value health plan.  It would also encourage healthy competition and help to bend the trend of health care costs overall.