Seize the Day

President Barack Obama indicated in his inaugural address that making quality healthcare more affordable to all Americans would be one of his Administration’s top priorities. Even without current economic conditions, this is a Herculean task — in addition to the estimated 47 million uninsured in this country, more than 25 million Americans are under-insured — but it is crucial that we address the crisis in healthcare and implement effective, transformational reforms while public and political will exists. The deepening recession and the growing number of Americans struggling to afford care for themselves and their families only increases the urgency of reforming the nation’s broken healthcare system.

President Obama understands that lack of access to preventative care and early treatment is a major contributor to healthcare costs, and that healthcare costs are at the core of the economic crisis that we now confront. Healthcare spending in the United States is approaching 20% of GDP, and healthcare costs are responsible for industry’s inability to compete in the global market. For example, the federal government has spent billions of dollars bailing out American auto manufacturers, which spend more money on healthcare for current and pensioned employees than they do on steel. They are no longer car companies; they are healthcare companies that happen to make cars.

There are a great number of stakeholders in the current Byzantine healthcare system: health plans, employers and other purchasers, labor unions, patients, patient advocacy organizations, government, medical associations, hospitals, the pharmaceutical industry, and the list goes on.

In fact, most Americans do not find much of a healthcare “system,” but rather a frayed patchwork of unreliable and inconsistent programs, providers, and facilities. As a result, they routinely experience delays in getting care for a variety of medical problems. They receive less preventative care and poorer treatment for both minor and serious chronic and acute illnesses — which, in addition to leading to poorer health outcomes, also increases the cost of care.

How do we fix such a badly broken system?

Reform must be transformational, not incremental. Little changes will make little difference; they may shift who pays, but changes will not meaningfully ease the burden without both reducing costs and ensuring that those costs are shared fairly. There are four fundamental pillars that will transform healthcare in the United States and that must be the basis for any effective reform plan.

1. Affordability and sustainability: Healthcare must be affordable, and the system must be sustainable. “Affordable” healthcare means not only that anyone who has to buy into the system — individuals, employers, and others — can meet the expense of doing so but also that government can support its share of costs. “Sustainable” means that the system is affordable over the long term. Medicaid worked just fine at first but has proven unsustainable over periods of double-digit health-cost growth with single-digit tax-revenue growth.

2. Portability and universality: Health insurance must be portable. The problem with the employer-as-provider model is that when a person loses his job, he loses his coverage. Why is it that when we change or lose jobs, we do not lose our homeowner or auto insurance, but we lose our health insurance? The growing tsunami of the uninsured is a direct result of the growing tsunami of the unemployed. Healthcare coverage must apply to everyone and must leave no one out.

3. A mandate: There must be a requirement that every person has coverage. If there is no requirement, then we face the death spiral of insurance: People get coverage only when they are sick, and healthy people buy no coverage or minimal coverage, resulting in a shrinking pool of people who make deposits into the system without making major withdrawals. The only way to avoid this death spiral is to require that everyone has coverage, and this individual mandate does not have to be punitive. The President’s suggestion that we require all children to have health insurance is a good start; but, ultimately, we must require coverage for all.

4. Quality coverage: “The juice has to be worth the squeeze.” The healthcare coverage provided under any reform plan must be comprehensive enough so that people do not feel ripped off by whatever costs they are required to share. Under the current “system,” many people who have insurance are still unable to afford the care they need because out-of-pocket expenses are too high.

As the economy has worsened, national copayment charities like the HealthWell Foundation have seen a surge in applications for assistance from these under-insured. These people have health insurance, yet still cannot afford treatment.

Effective healthcare reform requires coverage with low enough copayments for people to afford, no exclusions for pre-existing conditions, and coverage for chronic care and prevention. When everyone is covered, the pool of healthy people will be large enough to offset the cost of the sick.

In addition to the human toll, healthcare costs are crippling our economy and threatening our international ability to compete. Reform must be bold and transformational, and the stakeholders must be brought to the table early — armed with audacious ideas but prepared to compromise. The ultimate product is not likely to look exactly like President Obama’s current vision, nor exactly like any of the reform proposals suggested so far, but compromise must be the fifth pillar of health reform.