Health care napkin #4: impacts and conclusions

Here is my 4th and final napkin in the health care series. (For now, anyway.) This napkin illustrates the impact upon us of each of the plan types, and offers three concluding questions.

This is the cover of the 4th and final napkin.

This napkin shows how the various insurance reform options will effect me.

In review: there are three main options in debate. All of them mandate universal coverage for all Americans; the difference is the degree of government-backed coverage they provide.

We should note that earlier in the debate there was a 4th option. Sometimes referred to as "single-payer", this option proposed a single national health insurance plan.

This option was not supported by the White House and is effectively off the table for any debate this year.

So what do these 3 options really mean for me?

If I am presently employed and covered, I will pay more for insurance under all proposed plans.

So why should we reform insurance? Because health care costs are already bankrupting the country and if we do nothing now, it's going to cost much more very soon.

At this point in the debate, the actual additional costs are unknown. What is known -- what we can try to influence -- is how the money will be taken from our pockets. Will we pay higher premiums to private insurers, lose our existing health care tax benefit, or pay more direct taxes?

An additional aspect of the various plans we need to be aware of is whether our employer continues to pay our insurance premiums on our behalf to a carrier they select (called "Defined Contribution" in the secret code of the insurance industry), or do they pay us in health care vouchers that we can spend on any insurance program (called "Defined Benefit"). The difference means an additional $250 Billion in revenues collected annually by the government to cover health care with no impact on our compensation and employer costs.

The good news is that under any option our health care at least shouldn't get any worse. All plans in debate allow us to keep existing coverage and providers as long we keep the same employer. And all plans will ensure that more Americans have health care insurance, which is the whole point.

Although today's debate is more about insurance than health care, there are several ideas to address on the "provider" side of the equation to help drive down costs: reforming malpractice will save the entire system money. The pharmaceutical industry has many opportunities to assist in minimizing costs. New technologies (most of which are expensive up-front to enable) could well create efficiencies that save huge amounts of money. These are all worth debating, but none of them are at the core of today's debate. For now, it's about insurance.

 
When all is said and done, there are really only three essential questions we need to ask ourselves in order to know how we should individually feel about insurance reform: first, should paying for our health be a profit-driven business? Second, since change is coming no matter what, how do we want to pay for it: as profits for insurance company shareholders or as taxes to the government? Third, will we be better off by continuing to shout at each other, or by listening and thinking?

Two things to remember: one, it is neurobiologically impossible to shout and think at the same time. Two, there are influential parties in this debate who do not want us to listen or think. Ask yourself who stands to gain the most by encouraging us not to think, and you'll know which option you are for.

Tony and I thank you for staying with us this long, and sincerely hope these four napkins have made things at least a little clearer.

Comments

[mar]

There are many countries in South America that offer better health care to their citizens than we do at a fraction of the cost!

We blow billions of dollars on health care yet can't provide something as simple as a neighborhood first aid clinic, which has existed for decades in many countries.

The solution to the health care crisis is to offer publicly funded health insurance to everyone while letting people purchase private health insurance if they prefer to do so (option 3).

This will force insurance companies to lower their premiums in order to compete with government-provided insurance.

This option will mean paying more taxes, but obviously it will still be considerably cheaper than private insurance, and won't make people dependent on their employers for their health care needs.

This current economic crisis has proven that free markets will not solve society's problems, especially not in the health care industry, when
the primary motivating factor of free markets is to maximize profits.

[mister worms]

I enjoyed your napkin series. However, I have a bone to pick about your equation of HR 676/single payer insurance with socialized medicine. There is a big difference between the gov't as the insurer and gov't as the healthcare provider (aka socialized medicine). Under HR 676, the gov't would not directly employ healthcare providers. I think it would be a good idea to fix that napkin. We don't need more confusion in this mess of a debate.

This makes your illustrations more complicated, but another point is that some form of single payer and socialized healthcare already exist in our system and it's not going anywhere (Medicare, Medicaid and the VA system).

[Mike]

First let me say I regularly use your visual codex. Your sketching method is really great for communicating clearly. For example, it really made it clear how biased and oversimplified your reasoning is regarding health care in America.

[erik aronesty]

I lost my insurance.... and thought, at first, I was going to be stuck with a $1800/month insurance bill I couldn't afford. I pay for my own HSA plan now... it's cheap and it works great. But the problem with HSA's is that people on them tend to opt for LESS medical intervention and LESS drugs. While this is probably HEALTHER is the *vast* majority of cases, it's not PROFITABLE.

HSA's are "on the rise"... and our outpacing "managed care" plans. This is SCARING the pharma lobbysists who helped PAY FOR OBAMA's campaign (although they really supported Hillary more in the beginning)

This is the "kill HSA" bill ... and you'll notice that HSA's are NEVER mentioned in the national debate because they are DEAL BREAKER.

The majority of uncovered people can afford HSA's ... so why let the government BREAK a system that's WORKING. Why not just PROMOTE them, allow them to be TAX DEDUCTIBLE and even SUBSIDISE them a bit to make them more affordable for lower income users?

[Sarah]

I'm not buying this nonsense one bit. The government interfering with my healthcare to the point they want to is unconstitutional but that probably won't be a problem considering this administration would like to abolish the constitution.

[Headhunter]

Your statement, "The government option can't make a profit by law." informs me that you have no idea what you are talking about.

If government could make a profit that would be a good thing. Of course we're talking about government so making a profit is not even a possibility. Our federal government can't even GIVE money away without screwing it up. See the Cash for Clunkers program if you need proof of that. As a matter of fact I defy you to point to even one gov't program that is run as inexpensively and efficiently as a private business.

I just don't understand why anyone would trust our government to do anything, least of all something as personal as their own healthcare.

[James]

I am to assume that your argument is sound - "Because health care costs are already bankrupting the country ... the actual additional costs are unknown." Just please assume the worst so we can move forward with government intervention.

This is a load of crap. I don't care how many documents you've gone through or hours its taken you to draw your stick figures, this is not an argument. Are you assuming that healthcare costs shouldn't go up? Maybe we should have the same healthcare we had in the 20s? 50s? 70s? at the same cost. Maybe we should give up the R&D that goes into curing Breast Cancer or heart disease? Maybe we should give up all of the advancements, they don't cost anything, right?

There is a reason world leaders come to the USA when they are fatally ill. I know. the talking heads and certain think tanks want us to believe that the socialized medicine in Europe has so much higher survivability rates and cost less. But that doesn't seem to apply when their elite get sick.

You want good healthcare? You have to pay for it and sticking the government in middle of it will only cost everyone more and slow down all of it like implanting a double bacon cheeseburger directly in your heart.

[Indalecio]

Like in every country with public healthcare, private insurers will have to compete with public insurance (which is perceived as "free" because it's paid by taxes) and they'll have to lower rates and earnings. Here in Spain I have private insurance for 250€ /month for all the family (4 people). No premiums. And the insurer still makes a lot of money out of it.

[Craig Hughes]

"If I am presently employed and covered, I will pay more for insurance under all proposed plans."

I'm not sure I understand why I "pay more" under the public insurance option. If I (or my employer) drop the private insurance plan, and I'm now paying a bit more in tax instead, why do you say that I'll be paying more? The argument for the non-profit public insurance option is that it'll in fact be cheaper than paying for private insurance, since it's not trying to make a profit.

[new taxes] - [private insurance] > 0?

Not clear why you think that.

[Michard Rilhouse Sixon]

Wow! Where to begin? Talk about an oversimplification....it was almost painful to read each of these "messages", it was kinda of like trying to explain the rise of fascism in Europe with stick figures and smiley faces.

Where you are inherently and somewhat childishly wrong, is the assumption that I can trust my government to do what it says? The track record to the contrary is extensive and ongoing on both sides of the aisle. The government should first learn how to fix/fund/manage Medicare before it EVER attempts to intervene or insert itself in any way into our health care system. The one "napkin" that is missing is the one that specifically explains how any of the government reforms would be paid for? That napkin is curiously blank.

Let's not shout....how stupid.
Shout, get mad, get passionate! Fight what you believe in!

[Karen]

The one part that bothers me the most - "if you remain with the same employer" Even the President's plan ties me to my present employer if I want to keep my present, private health insurance. If I change employers I should be able to sign up again for a private health insurance plan. It is wrong for the government to tell me I have to be stuck in my job or I'm on the public plan.

[phd in yogurtry]

I saw your slideshare show. I am clueless about co-ops and exchanges. Napkin #5 perhaps? Or a link to help me digest this latest piece? Thank you!

[Sebastian]

Kipp, your food analogy is colorful, but not entirely accurate. Of course it's okay to make a profit selling food. It's also okay to make a profit providing health care. But insurance companies don't make a profit from providing health care, they make a profit from paying for health care. Their business model is more accurately analogous to that of some middleman who charges a fee to take your money and hand it to the grocer.

[kipp]

ugg... "Your..."

[kipp]

You're "three simple questions" may be constructed to leave us with only one "obvious to all us who are right-thinking" answer - but they are a little more complicated.

1)first, should paying for our health be a profit-driven business?

Should paying for food be a profit making business? Food is even more important than healthcare - why are we letting grocery stores make a profit?

2) Second, since change is coming no matter what, how do we want to pay for it: as profits for insurance company shareholders or as taxes to the government?

Unlike profits to shareholders (which don't evaporate and actually get spent on things like paying laborers, secretaries, gardeners and plumbers, tips at restaurants and maybe charitable contributions) taxes are spent by the government on things like the War in Iraq, the prison system, and drug prohibition. What's the "right" answer supposed to be here?

3) Okay - #3 is a fine question. Nothing wrong with thinking over shouting...

[John]

First, admitting that you are "speaking in secret code" does not help your credibility, and, second, nor does saying that the White House has never supported a single payer system. That's either intentionally misleading (lying) or just ignorant of Obama's past statements. He's been quoted as saying he prefers a single-payer (totally government-run) system. That's not just a small misrepresentation in your illustration, it's a major sticking point for many people.

[steve]

Should be required reading.

Thanks

[Zoe]

Well, you may not have it perfectly right but you have it right in spirit and most important you make a good visual explanation.

It might take a napkin to get some of the people, some of the time. to understand how they are being fooled into thinking their present or non-existent plans are the cat's whiskers.

[Lynne]

I love this series, but there are two key issues you didn't cover that I wish you had.

One, if everyone must be covered and we don't get a public option, what's going to happen to people who can't afford the premiums?

Two, portability is another important reason for reform! Gone are the days when you could stay at the same employer for 20 years. Now you're lucky if you don't get laid off after two months! And even if you stay with the same company, if you get an out-of-state transfer you have to change plans AGAIN! We need an affordable way to stick with the same insurance for as long as we want, no matter who we're working for or what state we're living in.

[Griff Lindell]

Love your ability. Take issue with the reductionism at the end (shouting or thinking). False proposition. Shouting occurred when the object of the shout spouted spacious comments not born of thought, but of position papers. Anger resulted. Voices raised. It is interesting that those who would regulate the industry will not, themselves, have to abide by same. I want THEIR coverage. OR, THEY should put themselves under "mine" (whatever THEY decide are in MY best interest - hah!)

[Jason]

Very good series. One nitpick -- single payer and "socialized medicine" are not the same thing.

[Dan]

Oops Matthew, this time you got me. I'll flop them this evening. That's the problem speaking in secret code: even the people who *think* they get it, don't.

[Matthew Holt]

Given that I've been mixing up old Michigan Congressmen I'm not one to talk, but you've flipped defined contribution with defined benefit.

[Nupek]

health benefits offered by morning walk
The secret of longevity for a major section of people who are ‘ octogenarians ‘ – That is People who are in their eighties would be morning walk which was done for decades. People have nowadays gradually started realizing the importance of morning walk in shaping the health of human body. But still there are umpteen number of people who do not unwind themselves from their mechanical lives. Technological advancements have made life more simpler in all respects but we humans must also pay the price for it if we do not allocate time in our hectic schedule for some physical work like walking or visiting Gym’s. Around fifteen years ago, TV remotes were rarely found in houses and hence we used to walk at least for changing channels. But now ? Sitting hours together in front of the idiot box, continuously feeding the stomach with snacks or sweets, leading to obesity. If you question a doctor on the health benefits offered by walking he would give you a long lecture. Let us see some of the benefits.
1) It is a stress buster which instills a feeling of freshness to the body as well as mind.
2) blood circulation is promoted, reducing greatly the chances of high blood pressure.
3) Checks obesity by burning unnecessary calories of fat in the body.
4) It makes the joints more strong and hence people would be less susceptible to Orthopedic troubles associated with old age.
5) Chases away neck pain and back pains.
6) If you go walk in a park surrounded by trees, you will inhale more fresh air, containing higher concentration of oxygen, thereby bringing down breathing problems too.
7) Keeps sugar levels under control.
http://nupek.com/health/health-benefits-offered-by-morning-walk/

[Michael]

Thank you for this series. It's been very helpful. On the other hand it does emphasize to me the degree to which Americans or at least American politicians are cutting apart the problem into little pieces and thereby missing some of the biggest cost reducing and access promoting measures undertaken by Europeans and others: creating a non-profit core to the health system via either a single payer, a highly regulated all-payer or (and this is really unlikely here) a socialized medical system. Currently we are trying to hard to live by the creeds of the "free market" in the area of health care where the most serious economists in this area (Kenneth Arrow among others) say that the market is almost always dysfunctional in the area of health insurance and payment for health services.