The national discussion of health care reform has huge implications for our state, and I believe it is critical that Congress and the president reach an agreement that moves us down the road to real reform. The heated rhetoric and spurious charges that opponents of any reform were making in August seem now to have quieted down a bit, and both houses of Congress are moving toward their own versions of a reform package. Speaker of the House Nancy Pelosi released the new House leadership bill (the Affordable Healthcare for America Act, H.R. 3962), and Senate Majority Leader Harry Reid is expected to release a new Senate leadership bill some time in early November. While I have strong preferences as to what needs to be in the final legislation, the good news is that some fundamental reforms that will address the most serious problems of our health care system are now under serious discussion.
It is important to remember why we are undertaking this exercise: The current system is not working. In New York, 2.5 million people, or 13 percent of the state’s population, do not have health insurance. The uninsured are overwhelmingly represented by groups like the poor (47 percent of uninsured adults in New York State have incomes under 200 percent of the federal poverty level), minorities (while 13 percent of whites are uninsured, 21 percent of African Americans, 23 percent of Asian/Pacific Islanders, and 31 percent of Latinos are uninsured), and immigrants (30 percent of the uninsured are non-citizens).
Health care costs continue to skyrocket while millions go without any health coverage at all. To the extent that these millions receive care, it is through emergency rooms – after they are already far more ill than necessary – which is a horribly ineffective way to deliver services, both in terms of the health of the individual and of the cost to the system.
Critics of reform claim health care will be rationed under the new system while they fail to acknowledge that we have more rationing of healthcare in the United States now than anywhere else in the developed world. But since that rationing occurs under the guise of inability to afford to treatment, or by the denial of coverage by insurance companies, some seem to see that as acceptable. It is not.
The costs of continuing our current system are simply unsustainable. Over the last decade, employer-sponsored health insurance premiums have increased 119 percent – four times the rate of inflation. A study of bankruptcy filings in 2007 found that 62 percent of them were related to medical expenses, and that it was not just the uninsured who were affected. In 80 percent of those bankruptcies, the filers had insurance that failed to adequately cover their costs. Without national health care reform, by 2018, national health care expenditures are expected to reach $4.4 trillion – more than double 2007 spending.
Fundamental reform must meet the following basic criteria:
The plans proposed by the House and the Senate all attempt to balance these goals with greater or lesser degrees of success. I believe the reluctance of some in the Senate to support a public option undermines the ability to achieve the appropriate balance of these goals because it leaves private insurers with little incentive to change their long-standing practices and huge profit margins, which have led to the skyrocketing costs we now see. A robust public option will provide more choice for consumers and businesses and create greater competition in the insurance market.
The arguments against a public option are also often blatantly self-contradictory -- arguing that we can't let government into the insurance business because government is inefficient, at the same time suggesting government would drive private insurers out of business by offering better benefits at a lower cost. And these critics seem to forget that government has run Medicare and Medicaid with much enrollee satisfaction for years.
The health care industry is a huge part of our economy, directly employing the equivalent of more than 357,780 full-time workers in New York, including 72,000 registered nurses. Nationally healthcare makes up more than 17 percent of our gross domestic product.
Reforming health care is not an easy thing, and we have certainly seen past presidents who took on this issue fail. But this time around there seems to be a greater recognition that we must address this crisis now, both for the well being of our citizens and for the economic health of the country. We can and should fight over the details of the final plan, and hopefully do so in a civil and constructive manner, but in the end we must recognize that the worst possible outcome is the status quo -- a broken health care system, with out-of-control costs, which leaves millions of Americans unprotected.
Liz Krueger, a Democrat, is the New York state senator from District 26 on Manhattan's East Side.
What does health care reform mean for New York?
The better question might be what New York’s strict insurance regulations and high spending on Medicaid means for the nation. If Congress follows in our footsteps -- as key bills in the House and Senate seem to do -- New York's situation might not get any worse, but certainly won’t get any better.
And the status quo is simply unsustainable in the long run.
New York’s world class hospitals and physicians offer cutting edge health care -- at least if you have good health insurance. Currently, there are about 2 million uninsured in the state, about 14 percent of the non-elderly population (residents over 65 are covered by the federal Medicare program).
But Albany has not ignored the problem of the uninsured. New York’s private, individual health insurance market is among the most heavily regulated in the nation. New York state laws mandates "guaranteed issue" of private health insurance, meaning that insurers cannot deny coverage because of health status, such as pre-existing conditions. The law also mandates community rating, which requires insurance companies to charge policyholders the same premium, regardless of age, gender or health.
These policies were intended to make insurance more affordable for New Yorkers who are older or who have chronic health conditions. Instead, prices have shot up, as young, healthy people were charged higher premiums and decided they were better off without expensive coverage they would probably never use.
In fact, the market for individual, unsubsidized health insurance has nearly disappeared, plummeting by 96 percent since 1994, after the reforms were implemented. New York City residents can expect to pay at least $9,036 a year for individual coverage, or $26,460 for family coverage -- hardly the "affordable" premiums reformers expected.
As the private market atrophied, Albany responded by expanding coverage through public programs like Medicaid. But New York’s Medicaid spending (projected to be over $49 billion in 2010) is breaking the state budget. We spend far more on Medicaid than any other state in the nation, in part because the program has become heavily politicized in Albany by powerful union lobbyists. Gov. George Pataki, for instance, cost tax-payers billions when he cut a backroom deal giving raises to workers in the powerful Service Employees health care union in return for their support for his 2002 re-election bid.
To their credit, Gov. Eliot Spitzer and then Gov. David Paterson recognized that Medicaid spending was out of control and the state wasn’t getting above average health outcomes for our much higher levels of spending. But fixes to date have been largely cosmetic -- in fact, Albany has used federal stimulus funds to expand Medicaid coverage. Paterson projects that nearly one out of every four New Yorkers may be on the Medicaid rolls by 2013.
In New York's Footsteps
The reform plans being considered in Washington, D.C. closely follow New York’s flawed strategy, including guaranteed issue and community rating requirements, increasing Medicaid coverage (to cover people with incomes of up to 150 percent of the federal poverty level) and billions in new taxes on health insurance companies along with heavy subsidies to help the uninsured buy government-mandated coverage. The only twist is a requirement that the uninsured must buy coverage, and employers must offer coverage or pay a penalty, moves that advocates hope will help keep young and healthy residents in insurance pools and so lower costs.
The problem is that this approach has already been tried in Massachusetts, which added an individual mandate in 2006. Since then, state spending has skyrocketed, and the Bay State has the most expensive insurance premiums in the country -- projecting double-digit increases again next year.
If Congress continues on its current trajectory, we’ll see more of the same: higher insurance costs, higher health care costs, more taxes and more deficit spending. That’s bad news for New York, which is already grappling with a severe fiscal crisis.
If we’re going to get control of our health care costs, lower the number of uninsured and reform safety-net programs like Medicaid, we need to get beyond the screaming matches and finger-pointing that characterizes so much of the health care debate.
Here’s how:
-- Let markets do what markets can do well: set prices and allocate resources. In a recent report from the Manhattan Institute’s Empire Center for New York State Policy, researchers Stephen Parente and Tarren Bragdon advocate for a handful of market-based reforms that could make private health insurance much more affordable.
They found that repealing the community rating and guaranteed issue laws would reduce the number of uninsured by 18 percent and 19 percent respectively, and lower premiums by 42 percent. Letting New Yorkers buy health insurance plans licensed in Connecticut and Pennsylvania, where policies can cost 25 percent less than in New York, could allow as many as 26 percent of the uninsured to buy their own policies. Overall, these market reforms would lead up to 780,000 New Yorkers back into the private market.
-- Set up a safety net for New Yorkers with high-cost, chronic illness. Parente and Bragdon advocate creation of a pool for high-risk New Yorkers who would otherwise have to pay high premiums. Today, 35 states have such pools.
-- Tell Congress to focus on real, bipartisan reforms that gradually bend the cost curve of health care. The president promised not to sign any health-care bills that cost more than $900 billion or increased the deficit by one dime. The current bills meet that pledge -- but only through fiscal gimmicks, such as assuming that Medicare will slash physician reimbursements by more than 20 percent starting in just two years. That will never happen, pushing the House and Senate versions of reform well north of $1 trillion. New Yorkers will pay for those costs through higher taxes, lower wages, and higher insurance premiums.
A better approach is to start with basic, fundamental reforms -- like fixing the tax treatment of health insurance. Economists generally agree that excluding employer-provided health insurance from income taxes is unfair (the rich get more of a benefit than the poor), arbitrary (why link insurance to employment?) and expensive (by making health insurance seem free, workers ask for generous plans that drive up health-care spending).
Replacing that exclusion with a universal tax credit or standardized tax deduction for all Americans would help millions of the uninsured afford coverage, put money back in people’s pockets through higher wages, and slow the growth in health care costs that is crippling private and public budgets.
The basic idea has been embraced by everyone from Sen. John McCain to one of Obama’s health care advisors, Jason Furman. By mixing a safety net for those with chronic illness to market incentives that put patients and families in control of their own portable health insurance, we can help slow the rise in health-care costs and cover the uninsured.
We have tried time and again to fix health care by relying on top-down solutions cobbled out behind closed doors in Albany and D.C. They have failed every time. We need a different approach.
Mr. President, do you still have that reset button?
Paul Howard is the director of the Center for Medical Progress at the Manhattan Institute and managing editor of MedicalProgressToday.com.
All eyes are now on Washington’s health care reform efforts. But since the 1980s, health care reform in this country has largely been generated at the state level. There is a critical danger that the health care legislation being developed in Washington will legally block state initiatives. The power of interest groups limits what we can realistically expect from Congress, so it is important that the legislation protect and promote the ability of states to do more.
Here’s some of what states have done -- with New York in the forefront. Programs for prenatal care for low-income pregnant women began at the state level in the early 1980s and later led to national legislation to provide federal support. Senior citizen prescription drug programs were created in many states long before Medicare Part D was enacted, and many would agree that the state programs are better designed. The Child Health Insurance Program, or CHIP, began with state programs in a few states and then was supported by federal matching funds. The recent change to let CHIP cover children in more moderate-income families was a response to state efforts to expand the highly successful program. Several states expanded publicly-funded health coverage for low- and moderate-income adults.
State governments have led the way in protecting consumers in the private insurance market. Laws limiting restrictions on pre-existing conditions, rules protecting consumers and health care providers from being unfairly denied payment for medically necessary services, and other reforms have come from our state capitols, not Washington.
In some states, giant multinational drug companies have been reined in by state legislation restricting marketing and pricing abuses.
Each state is different. Some will want to do more than Washington does, and some won't. This is America, after all. The federal legislation should be a floor, not a ceiling.
"Pre-emption" is the legal term for one level of government taking over a field of law and barring other levels of government from acting in that area. Sometimes federal law explicitly pre-empts state or local laws. Even when there is no specific pre-emption language, the courts often rule that a federal law has pre-empted the field.
Major corporate interest groups often push for language in federal legislation to pre-empt state or local government action. They don't want state laws to give consumers more protection than a federal law provides. On the other hand, federal law can also specifically allow state or local governments to enact additional legislation.
In this instance, health insurance companies and big employers will argue that allowing state initiatives will make it impossible for them to operate across the country. That doesn’t hold water. Multi-state companies have always worked with different state laws on insurance or consumer protection, different labor markets, and even different zoning or environmental laws. Anyone smart enough to run a multi-state company can handle that complexity.
We should be more concerned about families who will need help from their state government in dealing with gaps in coverage and consumer protection that will likely be left when Congress is done.
Some lobbyists say they want to "let" people buy health insurance from out-of-state companies. But insurance companies can already sell policies to people in other states -- as long as they obey the state’s insurance laws. What the lobbyists want is a clause in the federal legislation to make it easy for out-of-state insurance companies to sell without complying with state laws.
I hope Congress will enact strong legislation to give all of us access to quality affordable health care. But no matter how optimistic one might be, let's also be realistic. With special interest lobbyists sitting at the health care reform table in Washington, at the end of the day there will be a lot of room for improvement. Families and health care providers will need somewhere to turn.
If Congress pre-empts state health reform initiatives, it will shut down the engine that has done the most in recent decades to help Americans get the health care they need.
No matter what Washington does, we will continue to need the new ideas and improvements that can come from the 50 states – whether it is expanding access to affordable coverage or protecting consumers and health care providers. Congress must guarantee that state reform efforts can go forward.
Richard N. Gottfried is the state assembly member from the 75th district on Manhattan's West Side and chairs the Assembly's Committee on Health.