To Your Health
Lawmakers Debate Insurance Options
Notice all the new drug stores opening on corners where gas stations, grocery stores, or branch banks used to stand? The U.S. population is aging and a big wave of baby boomer retirements is just beginning to hit. We’re already big-time consumers of health care and our appetite for prescriptions and potions is poised to grow. When today’s surveyors of public opinion ask any group of likely voters to name their top concerns, a substantial percentage is sure to rank health care high on the list. So last spring, when it was time to choose a topic for The Great Debate at the Wisconsin Federation of Cooperatives annual meeting, it took just minutes to settle on health care, and the question of taxpayer-financed coverage versus the private insurance market.
Strong advocates were recruited: two state Senators, one Democrat, one Republican; one from Wisconsin, one from Minnesota. Jon Erpenbach (D–Middleton) chairs the Wisconsin Senate’s Committee on Health, Human Services, Insurance and Job Creation and is the chief proponent of a taxpayer-financed universal health coverage plan called Healthy Wisconsin. David Hann (R–Eden Prairie) is a member of the Minnesota Senate’s Committee on Health, Housing and Family Security and a defender of constitutional limits that specify no role for government as a health insurance provider.
Their competing views were shared with hundreds of Wisconsin Federation of Cooperatives and Minnesota Association of Cooperatives members gathered in the Twin Cities in mid-November.
Why Not Everybody?
Erpenbach led off the debate with a description of the health coverage he receives as an employee of the State of Wisconsin.
“I’m a divorced father and for my two kids and myself for health care I pay $64 a month,” Erpenbach says. “That’s it. Why do I pay only $64 a month? Because there’s 230,000 people eligible for the state employee plans. And the State of Wisconsin doesn’t tell me what doctor to go to, whether I have to pay a fee for service or be in a HMO or a PPO or whatever the case may be. The State of Wisconsin just tells me I have insurance and it costs me $64 a month.”
The unavailability of that same plan to non-state employees was a factor in the Wisconsin Legislature delivering a state budget more than three months behind schedule last year, as lawmakers argued whether to include Erpenbach’s Healthy Wisconsin program. Ultimately they did not, but the idea hasn’t gone away. Erpenbach continues:
“The taxpayers of the State of Wisconsin who pay for my phenomenal insurance don’t have access to the same kind of health care choices I have, number one, and what may be even more important, they don’t have access to the same kind of health insurance portability that I have, and I think that’s simply wrong.”
He explains Healthy Wisconsin, calling it “really simple.” Anyone who lives or works in Wisconsin would support the program with a tax amounting to 4 percent of his or her gross Social Security taxable income. The individual’s employer would pay a share equivalent to 10-1/2 percent of that same income. Erpenbach says the resulting 14.5 percent works out to about $140 a month from the average household and about $370 a month from the average employer paying for the average employee, to make available “the same health care choices that I have” as a member of the Senate.
Who Makes the Rules?
Senator Hann opens his remarks by declaring himself in favor of universal health care, but wary of the question, “How do you get there?”
“We have to decide as a nation whether we are going to continue down the path that we have largely followed the past several decades, of saying we want health care to be something that is provided for us in some form by the government.”
He traces the history of government’s involvement in health insurance to World War II, when employers used insurance as a sweetener in employee compensation packages to get around government wage and price controls and provide an inducement to recruit needed workers.
Today, Hann says, there’s still no constitutional mandate for government to provide insurance. “We really ought to answer the question: If government’s responsible to set prices, to determine quantity, to determine quality, to manage the outcomes, to manage the facilities, all these aspects of health care, then what are we except wards of the state?”
It’s more than an idle question of philosophy, Hann contends, painting a picture of government intruding into every corner of private life and personal choice:
“If I’m going to ask the taxpayer to provide funding for health care for my fellow citizens and the costs keep going up, why should I not at some time be able to expect to say, ‘You know what? I don’t think we should allow certain people to do certain things, because when they do those things it adds to the cost of health care and we shouldn’t be tolerating that; we should be saying let’s not have that happen.’”
Hann warns, “It’s just a matter of time before we have to deal with the result of having health care provided for us by the government.”
Where’s the Control?
It’s clear that health insurance issues involve more than one kind of cost and that controlling those costs is uppermost in the minds of both debaters. Erpenbach points out that in Wisconsin, the total of all costs related to health care, including administrative expenses, is about $42 billion annually and on track to double in 10 years.
“Our economy in Wisconsin is not going to double. Something has to be done.”
The answer, he says, is mandatory participation in a program like Healthy Wisconsin to create the largest possible risk-sharing pool. It must be mandatory, Erpenbach says, “Because if you have the option to be in it, and you happen to be pretty damn healthy, the insurance companies might come along and cherry-pick you. They’re going to give you a lower rate. And then the rest of us are sort of left behind. So we make it mandatory.”
Hann sees a different path to control cost. “One of the reasons we have costs today in the health care system that are rising out of control is because we have started this process of interfering in the marketplace,” he says, calling for choices to be handed back to consumers.
His preferred role for government involves “giving people more options, reducing the impediments to insurers trying to devise more insurance products, reducing the mandates that are put on those insurance products that require people to have coverage they do not wish to have. There are a lot of things we could do to encourage the development of a more robust marketplace for health care.”
The alternative, Hann says, is to “get the smart people in a room and get them to figure this out and impose it on everybody and that’ll be the solution,” an approach he says won’t work. “I don’t think there’s any example in this country of that approach to decision-making working.”
Hard Numbers = Clear Choices
Though the two senators appear to agree on very little, one point of common ground on the current health care system might be the ease of finding examples of things that seem to make no sense.
Erpenbach cites the case of a modest-sized business in his senate district, a company with 65 employees, no history of major claims, and an outstanding record of employee retention with an average tenure of 17 years. In 2007 the company was hit with a 45-percent increase in health insurance premiums because its workforce is getting older—not an appropriate reward, Erpenbach says, for having such good worker relations that people stick around long-term.
If a program like Healthy Wisconsin gathers up those 65 people and puts them in a risk-sharing pool with four million others, the cost impact of their increasing age goes away, he says.
It’s hopeless waiting for a change like that to happen voluntarily, Erpenbach says. “Insurance companies aren’t going to budge until government steps in and says ‘move.’ They don’t want anything to change because they’re making money the way things are.”
He points the finger at hospitals as well, saying, “Non-profit hospitals are having a terrible time not showing a profit; they get around it now by building new facilities in a kind of health care arms race.” Instead, he says, hospitals “need to excel in certain areas and then they can start planning better together to serve their community, not just what’s in their own four walls.”
Hann returns to his core contention that problems arise when costs and benefits are separated, as he says they already are and will be even more in a health care system “dominated by some political process.”
“If I come to you as a politician and say I have a plan where you don’t have to pay for the cost of the decisions you make, who’s not going to say yes? If you have a majority of the people in an election who say ‘I want that,’ and a minority of the people are paying for it, who wins those elections?”
Even under existing health insurance arrangements, Hann says, “We don’t have any idea of the cost. We do not have a mechanism for us to determine what the value is of the thing we’re purchasing. I think that is the fundamental problem with third-party pay—why shouldn’t we know what the costs of our decisions are?”
Back to You
Ultimately the choice comes down to what the public is willing to support. And both debaters endorse Erpenbach’s statement that legislatures are “reactive bodies; we don’t originate much.”
“Our constituents identify things they want and we deliver them if we can,” he says.
Hann sounds another cautionary note, asking, “Do you want [health care] decisions made by you? Or do you want people like me, who don’t know anything about you and your life and your decision-making, to make up the rules and tell you how to live your life and how to pay for those costs?”
History shows the answers don’t come as quickly as you’d expect.—Dave Hoopman |
