Your Money or Your LifeYour Money or Your Life

On Your Own in Bush’s

Ownership SocietyConsumer-Directed Health Care

Leonard Rodberg, PhD

PNHP-NY Metro Forum

January 25, 2005

Caution: BewareCaution: Bewareof Neo-Orwellian Bush-speakof Neo-Orwellian Bush-speak

"Political language ... is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind."

George Orwell

Consumer-directedConsumer-directedvs.vs.

Consumer-friendlyConsumer-friendlyandand

Doctor-friendly Doctor-friendly

Ingredients of a “Consumer-Directed Ingredients of a “Consumer-Directed Health Plan”Health Plan”

• Tax-deductible Health Savings Account (HSA)

e.g, $2,000• High-deductible Insurance Plan, e.g., $4,000• 20% coinsurance• Limit on out-of-pocket expenses, e.g., $10,000• No pre-existing conditions• Preferred-physician organization (PPO)• Large out-of-network costs

Sample Consumer-Directed Sample Consumer-Directed Health PlanHealth Plan

Origins of CDHCOrigins of CDHC

• Economists’ opposition to insurance:

create “health care market”

• Employers’ desire to shift costs to employees

• Right-wing support for individualism

and privatization

Two Views of Consumer-Two Views of Consumer-Directed Health CareDirected Health Care

The health care system “must be responsive primarily to individual consumers, rather than to third-party payers…A consumer-drive system will empower all people … to make decisions that will directly affect … their own health. This empowerment gives people a greater stake in, and more responsibility for, their own health care.

Sen. Bill Frist (R, TN), NEJM, Jan. 20 2005  These high-deductible plans are not consumer-driven, nor do they

offer much choice. They simply shift costs to so-called consumers who pay more out of pocket, making it difficult for patients to get the care they need.”

Cong. Pete Stark (D, CA) 

Variation in Health Care CostsVariation in Health Care Costs

Health Care Costs Health Care Costs Concentrated in Sick FewConcentrated in Sick Few

Cost Sharing Reduces Cost Sharing Reduces Likelihood of Receiving Likelihood of Receiving Effective Medical CareEffective Medical Care

Cost Sharing Reduces use of Cost Sharing Reduces use of Essential DrugsEssential Drugs

Problems with CDHCProblems with CDHC

• Regressive: benefits higher-income people

more than lower-income

• Does not help those with pre-existing

conditions

• Reduces necessary care

• Will lead to more medical bankruptcies

More Problems with CDHCMore Problems with CDHC

• Would lead to insurance “death spiral”

• Destroys “shared risk” concept of insurance

• Will not reduce or control health care costs

• Imposes cash nexus in doctor-patient relationship

Kennedy calls for Medicare for AllKennedy calls for Medicare for AllI propose that, as a 40th birthday gift to the American people, we expand Medicare over the next decade to cover every citizen - from birth to the end of life

It's no secret that America is still dearly in love with Medicare. Administrative costs are low. Patients' satisfaction is high. Unlike with many private insurers, they can still choose their doctor and their hospital

I propose to phase in Medicare for All, age group by age group, starting with those closest to retirement, between 55 and 65, [and]… every young child… Payroll taxes should be part of the financing, but so should general revenues, to make the financing as progressive as possible.

January 12, 2005