What's wrong with this picture? President Clinton unveils his proposal for health-care reform. Immediately, the American Medical Assn. and the Health Insurance Assn. of America rush to embrace it. Consumers beware. If that happens, we know this debate has started out missing a critical element: a national health-care budget that would make the difference between real and ineffective reform. But these two big vested interests are working hard to make sure a budget is written out of the script for reform.
After years of stonewalling to stop national health care, the AMA and HIAA now say that everyone should be mandatorily covered through a system of "managed competition." For these two powerful interests, however, managed competition stands for a version of health care reform that they like. Key features include:
* Consumers choose from a regional menu of large, prepaid health-care plans that offer identical basic benefits; prices can be compared. To assemble the menu, government, employers and individuals pool their purchasing power and negotiate with a limited number of plans.
* Employers would be required to pay for the lowest-cost plan and would be penalized for choosing higher-price plans since the additional money expended would not be tax-deductible.
* Consumers could pay extra for one of the more expensive plans and there is no limit on what those plans might charge. Consumers, however, would have tax and economic incentives not to pay more since any extra payment comes out of the consumer's take-home check, unlike now, when health benefits paid for by the employer don't count as taxable income;
* There would be no cap on the extra charges and no budget for the total dollars managed through the competitive pools.
Under the AMA's and the HIAA's proposal, would health-care inflation finally slow down, with choice and quality maintained? Or would the bargain-basement plan leave most people feeling they have no option but to pay extra to get the quality benefits they need? Without a health-care budget, that unacceptable outcome is all too likely. Why? Because without a budget, no real reform is demanded of the health plans and health providers who, through irresponsible practices, have fueled today's galloping rate of health-care inflation.
Take administrative waste. Contrary to popular perception, public programs are dramatically more efficient than private ones, with Medicare using about 5 cents of every health-care dollar for administration compared with 15 to 25 cents from the typical, large private insurer.
So long as health-plan providers can charge an unlimited amount for the basic plan, what will motivate them to streamline their administrative practices? But if they operate under budget limitations--that is, the extra charges for premium or out-of-pocket expenses can exceed the basic, lowest-cost premium only by a set percentage--then there's pressure on the plans to cut down the administrative expenses or lose business. If they fail to cut waste and instead cut back on service or quality, consumers would switch plans.
Similarly, without a budget, what will motivate physicians, whose decisions drive the majority of health-care spending (diagnostic tests, hospitalizations, outpatient visits) to get a grip on the 25% to 35% of wasteful, inappropriate decisions they make? When physician practice patterns are compared from one health plan to another, from one hospital to another, from one region to another, inexplicable statistical differentials leap out with no better outcomes for patients.
Isolated medical communities have, in fact, been self-motivated to use peer pressure, comparative data and in-service training to squeeze out the 25% to 35% wasted on unneeded, risky care.
We need a budget on total spending for each managed competition pool, with no escape valve at the expense of consumers and no leakage in health-care security through shrinking benefits. Only a budget can ensure that the trillion dollars the United States will spend on health care by 1994 will produce the universal coverage, the quality, the choice and the comprehensive benefits we deserve.