Stanley Feld M.D.,FACP,MACE
I will conclude analysis of John Edwards’ plan for healthcare even though he has dropped out of the presidential race. His plan represents the goal and direction of the Democratic Party with respect to healthcare reform. It will fail.
John Edwards had experienced the dysfunction of the healthcare system when he was suing physicians and hospitals.
He realized then the healthcare system did not make any sense. He took advantage of it. It still doesn’t make any sense. There are too many perverse incentives.
“Mr. Edwards did not propose a universal coverage plan when he ran for president in 2004, focusing instead on expanding enrollment of children. But a day after the Kerry-Edwards ticket lost, his wife, Elizabeth, was found to have breast cancer, and his family began its first-hand education in the vagaries of the system.”
“I mean, when you get the statements by the providers and the insurance companies about what’s covered and what’s not covered, even for two people who are well versed in the law and experienced with the health care system, it seems completely arbitrary in many cases,” said Mr. Edwards, a lawyer. “It doesn’t make any sense.”
Senator Edwards is correct looking at the system from the patients’ point of view. He ought to look at the system from the physicians’ point of view. The healthcare system makes less sense from the physicians’ point of view. Even though patients complained about their healthcare insurance carrier before 2004 he did not hear them until his family was one of the 20% of the population needing the system at any one time.
“The public nature of Mrs. Edwards’s illness — she announced a recurrence at a news conference last year — drew people with health care horror stories to the Edwards campaign. As health care costs and the number of uninsured continued to rise, Mr. Edwards sensed that people were ready for more radical surgery on the insurance system.”
Something needs to be done about the healthcare insurance system. If Senator Edwards understood how we got to this point he would understand his proposed solutions will not fix anything.
“I concluded that something bolder was needed, that the health care system had become increasingly dysfunctional,” he said. “And my contact with a lot of uninsured Americans, who were not children, made it clear to me that the plan had to be universal, that it had to cover everybody.”
I agree. Healthcare reform plans have to be universal. It should also be clear that absolute control has to be removed from the insurance industry. The control of the healthcare system has to be transferred to the consumers and not the governments.
“Under Mr. Edwards’s proposal, which resembles the plan adopted in Massachusetts in 2006, the government would require individuals to have insurance (illegal immigrants excepted).”
The Massachusetts plan is failing already. There are critical shortcomings of the plan. Thousands of residents are exempted from the insurance requirement because they cannot afford even subsidized premiums. The reason is the healthcare insurance industry has been instrumental is setting the price and protecting its vested interest.
“Mr. Edwards’ proposal would prohibit insurance companies from rejecting high-risk applicants and would restrict their profits and overhead to 15 percent of revenue from premiums.”
This is a good idea. It might motivate the insurance companies to compete with each other and decrease the premium prices. The more people a company insures the more premium dollars it collects. The percentage profit from premium would be decreased but the total amount of revenue would not.
The defect in this idea is it lacks real price transparency with respect to insurance real costs. The healthcare insurance industry could easily load the administrative overhead and keep their profit from premiums below 15%.
“Government subsidies and tax credits would be available to low- and middle-income families that cannot afford insurance. Those below the federal poverty line — currently $21,200 for a family of four — would get free coverage, Mr. Edwards said. Those making less than 250 percent of the poverty level — currently $53,000 — would be heavily subsidized and there would be some financial help for those making up to about $100,000.”
There is no question that the definition of people eligible for subsides should be higher than the antiquated definition of poverty. This subsidy is exactly the increased money the insurance industry wants injected into the present system.
However, the patients must be responsible for their care or else any plan will fail. Consumers have to have ownership of their healthcare dollar and incentive to use it wisely. Nothing in the Democratic Party’s or Edwards’ plan takes incentive into consideration.
“Employers that do not offer medical benefits to their workers would have to contribute 6 percent of their revenues to the regional government pools that would offer Medicare-style plans. Midsize businesses and employers with large numbers of low-wage workers might be asked to pay less, and the smallest businesses would be exempt.’
“To pay for those subsidies, which account for much of the estimated $90 billion to $120 billion cost of the plan, Mr. Edwards would rescind President Bush’s income tax cuts for those with incomes above $200,000. Additional revenue would be produced through a broad menu of cost-control measures.”
Punitive measures have never been effective. Just image the resistance of employers and entrepreneurs to mandates that represent tax increases.
Mr. Edward is proposing private sector promotion that will fail. The new Democratic president would then say “Gee shucks”, everything else we have tried has failed. The only thing left is create universal healthcare using a single party payer.”
There you have it. If they succeed in passing this type of reform we have arrived at socialized medicine through the backdoor.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.