Health care napkin #3: the plans

Here is napkin #3 of 4 in my ongoing visual explanation of the health care debate. This napkin draws from the fundamental pieces illustrated in napkins #1 and #2 and maps out that actual legislation being proposed.

(You can download the whole sequence here on SlideShare.)

This is the cover of Napkin #3.

Let's map out what proposed legislation is really on the table. (Does not include 'death panels' or 'assisted suicide'. Sorry.)

Today (with the exception of Medicare), America has a purely business-driven insurance model. Insurance companies collect premiums from us (usually through our employer), invest that money until needed, then pay the providers and keep any profit. To keep costs manageable, these insurers restrict who and what they will pay for.

There are 3 new models on the table. The first option changes nothing substantial except demands that private insurers cover all citizens.

The second option adds insurance "co-ops" (or exchanges) on top of the current system and legislates that all citizens must have insurance from one or the other. (No fundamental changes are demanded of the existing private insurers. These co-ops offer non-profit pools of insurance that citizens may choose to pay into instead of paying private insurers. (More on co-ops on Napkin #4.)

 

The third option adds a government-managed insurance option to the existing system and makes health insurance mandatory for all citizens. The government option can't make a profit by law. It does not replace today's insurers but adds another option for people who chose not to pay a private insurer but legally are still required to have insurance.

 

When this debate began in March 2009, most political conservatives were happy to keep the existing system in place. It was the White House that demanded reform and wanted to create the government insurer in Option 3. As the debate has gotten nasty, the White House seems to have given up on Option 3 as too politically difficult to achieve. The conservatives likewise realize that the status-quo isn't going to last, so are hoping for Option 1.

 

The many bills being developed and debated stretch across this spectrum. H.R. 3200 is the Democratic House bill sponsored by Rep. Dingell. It promotes Option 3. The big Democratic Senate bill sponsored by Sen. Kennedy appears to support both an Option 2 and 3. Senator Wyden's bill (also a Democrat) supports Option 1. The Republican House and Senate have been slower to propose options. It looks like both Rep. Blunt and Sen. Coburn's bills will support Option 1. 

 

The private insurance industry does not like any of these options. All options open the insurance market up to increased competition (either private, non-profit, or public) which upsets the few remaining big private insurers who presently hold most of the market.

 

Of all options, the private insurers see the first as being the least threatening, so have gone to extraordinary lengths to demonize Options 2 and 3. Town hall meeting participants have picked up on several misconceptions and are out-shouting participants who want to open the debate to all options.

 

In the next and final napkin, we'll look at how the underlying differences in each option would impact me.

Comments

[used bucket trucks]

i Love the your illustrations

[Simon Bruce]

Thanks, I love these napkin summaries!
For me I am not sure why we in the US have put up with such a crummy health care system. Neither the quality of health care delivery nor the payments systems are anywhere near the quality we all deserve or should expect. We pay far too much in insurance premiums, and let’s be really clear about who really pays for health care. It’s not the government or the employer. When an employer pays for health insurance it is the employees that generate the wealth that pay those premiums. It is we who pay the taxes that are used for government sponsored program and thus it is we who pay for it all. We are paying for the extraordinary high cost of health care delivery (twice the cost per capita compared to Canada) and the extraordinary levels of profit and administrative costs to the private health insurance industry. Something in the order of 30% of private health insurance premiums go to administration and profit. We have a $3.4-3.6 trillion dollar industry but we average citizens are not receiving that much value or return on our investment
That said the value we get from the health care delivery system for these high premiums is abysmal. 100 thousand people killed every year because of medical errors and mistakes! Several million people harmed every year because of medical errors and mistakes!
We have a long way to go to achieve the highest quality of care.
We have a long way to go to achieve equitable care (45 million un or under insured).
We have a long way to go to achieve truly patient and family centered care.
Yes we have small pockets of success but by comparison to other countries we still can do much better and achieve much better value.
Right now our current private health insurance system rations the care we receive. We ration the care we receive by our own choices. It is an illusion in my opinion to think that our current private system really does give us choice. Maybe if we were all independently wealthy we would have choice and insurance premiums are of no consequence but of course we are not.
My solution is that first we have to address the quality of care and care delivery models to achieve significantly improved value for money and thus reduce the demand side of the equation, and secondly we must address the payment side. Is private insurance really the best way, the most efficient and effective way of transferring money from my pocket to the providers of care? I think not, but am willing to be proven wrong.

[Jason]

There's a couple of other points here - many people don't pay their own insurance premiums, their employers do. This contributes to most of the problems with denials for pre-existing conditions when people change employers. Let people pay directly for their insurance and this will go away.

Second, HSAs (health savings accounts) have been shown to be a very effective bridge. People control their own spending and only use insurance when they go over a deductible ($3,500 for a year). This lowers insurance premiums by about 75% and allows a tax deduction for the people paying. Whole Foods implemented it and it has been very successful for them. No reason it couldn't be rolled out it a larger format, by just encouraging employers to stop paying premiums, but instead give money directly to employees and having them manage their spending through an HSA.

[arizona insurance]

If Congress chooses a plan that causes private health insurance to cease to exist, we have done ourselves and our nation a disservice.

[Matthew Holt]

Dan, you're mistaking who's the formal sponsor with who's really behind it. HR3200 comes out of House Energy & Commerce which is run by Waxman, who run that committee since the start of the year http://www.washingtonpost.com/wpdyn/content/article/2008/11/20/AR2008112001778.html

But I did make the mistake of mixing up the 2 veteran Michigan Dems. Conyers is associated with HR 676, the single payer bill which should be on the far right of slide 10, and what you call the Dingell bill is actually Waxmans's (From the tri-committee in the House but with Waxmans Energy & Commerce driving it) & Dodd's (subbing for Kennedy as he's sick) from Senate HELP. The one that you have as Kennedy's (pointing up and left from his name) including coops is Baucus & Conrad, from the Senate Finance committee.

And nonetheless I think the insurers are happy with anything not including a public option...

[Chris]

To Morethoughtfulchris:

I didn't know I had to give you specifics as to why I oppose single payer. My reason for opposing single payer is that it will be a government run entity that in no way could be effective. Considering they can't even run Medicaid/are with any efficiency, why should I trust government run Health Care.

As to the "lies" from the conservative side, you see it your way, I see it mine. But actually, I think all pols lie, so when are you going to open your eyes as to the lies on your side?

I am for a system that helps to reduce my insurance costs by Torte Reform, competition of for-profit carriers (sorry, but government offered insurance isn't competition, it is an uneven playing field), personal responsibility by those taking from the system, and sensible regulations on insurers and providers. A reform that ends up costing me more money is not reform.

To Digital Roam: Thank you for further explanation, but sorry, the wording you use shows your bias as to which side of the issue you are on. Claiming to be a capitalist doesn't mean you aren't of a liberal persuasion. The fact that you lament "The irony for me is that had Obama called this "insurance reform" from the beginning his proposals would have flown through congress." says it all. Unfortunately, calling it "Insurance" reform is just smoke and mirrors to cover what they are really trying to attempt.

You also make false claims on our level of health care not changing. Wrong. Our care will be rationed, that is the only way to keep costs down.

As to the thinking/shouting issue, I agree, shouting gets you nowhere. But then, telling our elected officials how we want them to vote doesn't get us anywhere. Both parties are going to vote how their leaders tell them, not how their voters ask them.

Thanks for the attempt, some things were interesting, others, not so.

[Dan Roam]

Sorry Matthew: H.R. 3200 is Dingell. http://www.opencongress.org/bill/111-h3200/show

And re-read slide 10.

[Matthew Holt]

OK, now you really need help, Dingell is not behind HR3200, that's Waxman -- Dignell's pro single payer or Medicare for all. And the insurers don't all view option 1 as a bad idea, or the least bad solution. Most f them see it as a way to a) get much more government money into their coffers--which has been the fastest growing part of their business for a decade & b)drive several of their smaller competitors out of business.

There are also plenty of ways to change insurers behavior and their incentives--see Zeke Emmanuel's proposal

[Emme]

I think I love you a little bit.

Sorry there is nothing more, it is just lovely to see "Healthcare" coupled with thinking in a shouting world.

[Melinda McClendon]

I would like to see your explanation of the value of Tort Reform as it relates to Healthcare Reform. Or do you have a napkin large enough for that? Excellent overview, very helpful.

[Peg]

"We have a purely business-driven insurance model"??

Where?

The health insurance business is laden with government regulation.

Make our insurance system more of a real market - and make it insurance, in the real sense of the word - and then judge it.

Our current system is nothing remotely like a true business driven model.

[Dan Roam]

Aaron - Insurance companies figure prominently in this series because they are whom the government's debate is about. Any legislation passed will impact you and your insurance far more than you and your health. Whether this is what the debate *should* be about is irrelevant; it's the insurance reform train that has left the station and that's the train I'm trying to draw.

Joel - Same response: all the programs you mention probably should be rethought and revamped. But I'm not trying to explain what *should* be debated; my goal is to clarify what IS being debated. The reason for the public outcry is that the White House did a miserable job explaining what their initiatives were about. Now they're paying dearly for it.

The irony for me is that had Obama called this "insurance reform" from the beginning his proposals would have flown through congress.

[Aaron]

I don't get it...insurance companies concerns appear to play a prominent role in this series, but why are their concerns legitimate or relevant? Why are we placing insurance companies ahead of actual health? If the goal is better health, then why would I care that insurance companies might lose? If they were doing their job in the first place we wouldn't need the reform.

If competition were applied to health care providers (sans insurance) you may have a case for competition, although the demand is almost perfectly inelastic. But what are insurance companies competing on? Who has the best actuary and who can drop the most coverage. I don't see health represented in that equation. I don't think expecting the consumer to evaluate their purchase only after the catastrophe they are insuring against is sound ("now that I'm dead, I'll know to choose a different insurance company!").

[Joel]

Dan,

Interesting visual, but I think your napkins oversimplify the issue. Real American people who would like to see the government tackle existing issues like Medicare, Medicaide, and Social Security, before trying to solve something new and larger. This is not about insurance companies pouring money into sinking alternative options, but rather a very real backlash from America. No doubt, things need to be changed, but lets focus on the programs that are already there to help the poor, destitute, and needy. They need to be revamped and made effective to ensure that we do not leave these Americans behind.

Overall you have great pictures, but the message is off.

-- Joel

[Elizabeth]

As you've laid it out I'm further convinced we should just leave things the way they are. The goal is two fold: reduce how much gets spent on healthcare in this country, make sure no one slips through the cracks (coverage for all). The only way to "spend less" is for someone to actually make less money. And it comes down to a few groups: hospitals, doctors, insurance, business, pharma. So far we are just shifting costs and spending more.

I work with people who earn a bit over minimum wage. They would technically be considered insured. But they have $1000 deductible for every family member covered. To cover any dependants is several hundred a month. Any serious illeness would break them. Not to mention they can't afford short term disability so they really would be in trouble.

So far- everyone in DC seems to be missing the point.

[arizona carpet cleaners]

Keep in mind that if govt controlled health care is adopted politicians will try to out do one another with how much they can give away (to continue getting reelected). They will bankruptcy our nation in a few short years.

[Dan Roam]

Chris,

I understand your sensitivities but you're wrong. I began this effort last week with no political agenda. I wanted to understand the issues as clearly as I possibly could. As I have studied them and worked through them, the explanation you see above has emerged.

If you sense a political bias, it is only the outcome of a deductive, rational look at the pieces actually lying on the table.

I'm a capitalist. I own a business. I love to make money and hate to pay taxes and insurance premiums. But I still do because I live in a society that gives me more than I could possibly dream of getting anywhere else.

What has emerged to me is that our exclusively for-profit insurance model is breaking the system. Competition will clean up everybody's act.

Yes: ALL options are going to end up costing me more. That is inevitable. Given that, I want to understand and control to the greatest degree possible how that money is spent.

I'm not a believer in big government, nor am I a shareholder in any private insurance carrier. But after looking at this I'd rather have my insurance money going to support an open-ended and regulated system than one controlled exclusively by the demands of shareholders of a half-dozen corporations.

This isn't auto manufacturing or vacation home sales. This is health. They are not the same.

I hope others will see that.

[morethoughtfulchris]

Notice how Chris doesn't really provide any specific argument against single-payer. It's just really bad for you 'cause, you know, it is (no matter what Stephen Hawking says).

Nor does Chris acknowledge that people showing up to town hall meetings from out of district with guns and signs that threaten violence are, you know, kinda nasty.

Nor does Chris mention that conservative lies about liberal proposals for healthcare reform (e.g. "death panels", government raiding private bank accounts, etc.) are "smoke and mirrors" strategies straight outta the "big lie" political propaganda playbook.

The only thing Chris seems interested in mentioning is that the "costs" that conservatives are looking to keep down are their own taxes while maximizing the profits of the insurance industry which donates heavily to their political leadership. Because, ya know, taxes are bad and profits are good, 'cause, ya know, they just are, alright?

Thanks for the napkins, but I'm not sure it's gonna do much for people like Chris.

'Cause you can lead a conservative to facts but ya can't make 'em think.

[Jeff Gorham]

Glad you couldn't wait a day. These may be the clearest explanation out there to-date.

[Chris]

I was there with you until you decided to malign the people attending the town halls. You said yesterday you had no bias, but it clearly shows in today's napkins. Saying the Reps have been "slower" to propose options. Saying the debate has gotten nasty, your inference being that Obama can't get what he wants because the other side is being nasty.

It's all in your choice of words and your obvious disdain for the health insurance entities.

Most conservatives I know are not looking for status quo, they are looking for options that help reduce costs, but not the plans which Obama and his ilk want. That in no way lowers our "costs", it just increases it with the taxation we all know is going to have to take place to pay for his option.

We also do not want single payer health care. And for all the smoke and mirrors the left is trying to employ, that is exactly what he has said in numerous speeches that have been video taped. That is what many in his administration are pulling for. Sure, the bills in their "current" forms may not say that, but it is just a slippery slope down to single payer.