by jd in nyc
Tue Sep 18, 2007 at 08:12:21 PM PDT
What do prostitution, pot and private insurance have in common? They all coexist peacefully in the Netherlands. In legalizing prostitution, the Dutch also controlled it in a way that dramatically reduces the disease and violence associated with it in most nations, while allowing consenting adults the freedom to pay for sex and to get paid for it.
In regulating private health insurance and aligning its incentives with those of the people, the Dutch have managed to keep costs low, quality high, and give everyone coverage. And it isn't just the Dutch who do it. So do the Germans, the Swiss and other nations to one degree or another. Their costs are slightly above those of single-payer nations, on average, but they have fewer access problems (like wait lists for elective surgery).
So how do they do it, and why are so many on the left convinced it can't be done? And why do all the top tier Democratic candidates propose systems that are like those of Germany and Holland (multipayer) rather than England or Canada (single payer)? Despite the earnest arguments of good diarists like bonddad, I have come to tell you that you have nothing to fear from multipayer universal healthcare.
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If you’re Dutch, your health care system manages to be high quality and low cost, spending about 10% of GDP or $4,000 per person per year (3,000 euros with a weak dollar). This compares to about 16% of GDP or $7,000 per year in the US. Your yearly increase in health care costs was around 3% in 2006, compared to over 7% in the US. There is no clear overall difference in the quality of care for those who receive it, with the US doing better on some measures and the Dutch doing better on others.
Where the Dutch do far better than the US, of course, is in giving everybody access to that care at a price they can afford. Over 99% of the Dutch get it, compared to somewhere between 60%-80% of Americans, depending on how you define "access" and "affordable."
Private insurers in the Netherlands cover around 1/3 of the costs, about the same as in the United States. The Dutch system has long had a hybrid public-private arrangement, as has Germany, France and, actually, the US. The US spends more on government-provided insurance than it does on private insurance. What this means is that it doesn’t matter whether a nation retains private insurance. What matters is how it does so.
This is a fundamental point, and unfortunately many progressives have been blind to it because they have become committed to the belief that insurers are either downright evil or necessarily have interests at odds with the interests of the individual, and thus single-payer is the only solution....
Fortunately, universal health care is coming and the right will lose this debate. But what is coming is almost certainly not single-payer.
The first wave universal healthcare system in the U.S. will expand, not shrink, private health insurance. You have nothing to fear from this, so long as a Democratic regime creates the system and a few simple rules are followed.
1. All individual insurance is guaranteed issue: no insurer can turn you down for coverage based on pre-existing conditions, nor can it drop you once you get sick. When the insurer can't get drop you, it immediately has a much stronger incentive to take care of you. A stitch in time saves nine, and all that.
2. All individual insurance is community rated: insurers can't charge you 10x as much as your neighbor because you are 50 and have diabetes, whereas she is 25 and has no illness. Large risk pools are created so that the healthy subsidize the sick.
3. The cost of insurance is determined by ability to pay: the poorest get it for free, and lower income individuals have a sliding scale of subsidization.
4. Individual and/or employer mandates: if a substantial number opt out of the system, they are disproportionately likely to be healthy and/or poor. each group causes its own escalating problems if allowed to opt out, so this must be strongly discouraged by making it never to one's financial advantage to do so. Penalties must be higher than the cost of coverage for your income bracket (or firm size).
5. Universal, standard basic insurance package: this has the benefit of ensuring everyone has real health coverage and not crap insurance, and it also lets every provider know a large range of things that are going to be covered no matter what. It dramatically reduces bureaucratic complexity from what we have now, even if it isn't as simple as single-payer.
6. Some means of comparing and purchasing insurance options in a straightforward and transparent way: self-explanatory, I think. This was the national insurance exchange in Clinton's 94 plan, and is the Health Connector in Massachusetts' current system. Universal access to FEHBP fills that role in Clinton's new plan.
7. Some additional set of mechanisms for rewarding insurers for helping people to be healthy, but not for enrolling a disproportionate number of people who are already healthy: the idea is to discourage cherry picking, which is hard to do in a guaranteed issue system but possible, and encourage wellness and disease management activities on the part of insurers. There are several options here that I won't go into.
Now, there is nothing wrong with single payer in itself. The problem is just with the extreme difficulty of making it a reality in the U.S. But my point here is that this should not disappoint you very much. There are perfectly good UHC systems out there that retain private insurers. These systems are far, far better than our current hodge-podge of misaligned incentives.
They have three chief advantages: 1) they are easier to enact because they don't attempt to get rid of a several hundred billion dollar industry; 2) they don't give Americans a new government target to bitch about; 3) they give those who want different insurance options the ability to pay for "premium" coverage, such as all elective and cosmetic procedures, perhaps vision, perhaps a higher rate of reimbursement to providers so that there is less out of pocket spending, etc. I was going to add a fourth advantage, that they provide for more competition which spurs innovation, but I haven't yet seen evidence that this occurs in a meaningful way in other nations.
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