Many tell us what to think. I ask my readers to be skeptical. Question me and others.

Health care

Where is the concept?

An open letter to President Obama regarding health care reform

Dear Mr. President,

I agree with your assertion that the health care crisis is an economic issue. We have the best doctors, the best hospitals, and the best drugs; however, they are out of reach for too many Americans. Costs have spun out of control. I commend your audacity in declaring this state of affairs as unsustainable, and your determination to reform it.

Three pages missing
I could not afford to read every line of the 1018-page document; nevertheless, I read the chapters deemed essential, and as many reviews as I could. I found three pages missing. Of those three pages, I expected the first to summarize your diagnosis of the current crisis, with an itemized list of the key causes. On the second page, I anticipated an outline of the solution that you selected. On the third page, I sought an explanation of why your solution is better than others. Instead, you threw at me 1018 pages of legal lingo, knowing that it would be physically impossible for me to comprehend all the provisions of this proposal before Congress will vote on it. I cannot speak on behalf of other taxpayers, but I found it disrespectful.

What is health insurance, and what should it be?
In my spare time, I conducted some personal research on the problem. In line with my engineering background, I tried to define the subject of my inquiry as a first step. To my surprise, I could not find a definition of the term “health insurance” in any U.S. government-issued document. I found definitions of “health insurance coverage,” “health benefit plan, ”and “health insurance issuer,” but the definition of health insurance itself was nowhere to be found.

In other words, Mr. President, you are initiating one of the largest social reforms of our time, putting about $1 trillion of taxpayers’ money at stake, on a venture that has an undefined subject. This puts you in the same camp as your predecessor, who in a similar manner, without defining the subject, started wars in Iraq and Afghanistan. In your defense, most of your opponents do not care to define health insurance either.

For the insurance industry, “health insurance” means covering claims within agreed limits for the term of one year. What is the value of this offer for a healthy individual who barely uses medical services? If after buying this insurance for twenty years, this individual will develop some chronic illness, this person will be priced out of the system due to preexisting conditions, unless he or she works for a large corporation or the government. What is the value of health insurance that will not cover a sickness when it becomes serious? It is no wonder that many people gave up on paying a premium for health insurance as it is now.

Thus the question is, what should “health insurance” be? The only health insurance that a reasonable person would like to have is lifetime health risk insurance. This insurance would include what we now call catastrophic coverage, would pay for expensive treatment of chronic diseases, and cover end-of-life care if needed.

Most presently sold health insurance plans include routine medical care. An average person sees a doctor once in a while due to a bad flu, skin rash, toothache, or cut finger. Those routine doctor visits are part of daily life, similar to our other unexpected expenses. Once a while, our refrigerator breaks and in short order we need to find some way to pay for the repair or replacement. Some of us buy extended warranty plans that pay for the repair in advance, and some pay for the repair when the refrigerator breaks. Similarly, some of us might prefer to buy health maintenance plans that pay in advance for those minor every day medical routines, some might prefer to pay out of pocket when the need arises.

One may notice that presently sold health insurance plans are a combination of one-year catastrophic coverage and a health maintenance plan for routine medical care priced accordingly to the health risk on the individual or a group. One of the ways of resolving our health care crisis is in separating these two products and treating them differently.

Why do some people not buy health insurance?
For people buying health insurance as individuals, the currently offered plans offer practically no insurance in case of serious sickness. About 18% of the uninsured make more than $75,000 per year; they can afford to buy health insurance, but did not do so since they gain little or no advantage from it. Regardless of whether they buy health insurance or not, in the case of a major chronic illness, they would be priced out of the insurance plan, and end up using government-sponsored programs anyway. Staying uninsured is a rational choice.

In your interview with Dr. LaPook, you stated that you would introduce an individual mandate, forcing those who could afford it into buying health insurance. You did not seem very concerned with the reasons why they did not buy health insurance in the first place. It took you only six months in the Office to acquire an attitude that our essential problems could be resolved by using the powers of the federal government to force Americans to do things that they do not want to do of their own will.

Freedom of choice or compulsion?
As a society, we decided that it would be inhumane to leave a sick person with no care. Out of compassion, we provide charitable care, which in the end increases the price of health insurance premiums (for those who buy health insurance), and the cost of government-run healthcare programs. Now, we have reached a point that where all agree that something needs to be done about it.

There are two schools of thought for obtaining social goals. One is in using the power of the government to mandate what is believed to be the right thing and then enforcing this under the compulsion of the government apparatus. You seem to be leaning toward this approach.

I prefer a different method, based on finding out what people want and then letting them do it by eliminating obstacles. I might be wrong, but it is my assumption that most uninsured Americans would like to have the comfort of carrying decent health insurance. Furthermore, the minimum they really want is health risk insurance, providing lifelong coverage in case of accidents, chronic illness, and end-of-life care. Jumping ahead of your possible answer, we do not need a government run insurance company. People would gladly buy this kind of insurance from existing insurers as long as the government could guarantee portability of these sorts of plans in the case of the insurer’s bankruptcy. Therefore, there would be a role for the government, albeit very limited; this is rather as the Founding Fathers preferred.

This health risk insurance would form a legal framework for what we already do: subsidize health care for the poor, unfortunate, and socially misfit. With this understanding, Americans would accept so-called “community rating” for this very basic insurance, meaning that the wealthy would subsidize the poor, the health conscious would pay more to cover for the higher health risk of the obese, drunks, and smokers.

Statisticians can calculate the probability that I will live healthy until the age of a hundred and then one day not wake up, incurring no medical expenses. Similarly, there is some probability that tomorrow I may acquire some medical condition that would require expensive medical treatments for decades to come. Somewhere between those two extremes, there is a number of dollars per insured person, which the insurer would need to have on hand in order to stay solvent. Health risk insurance would build a cash-accumulating account associated with an insured individual, intended to cover the costs of expensive medical care. If the funds are not used during that person’s lifetime, they become available for use by others in the pool, whose costs of medical care exceed the money accumulated in their accounts.

When providing someone with health risk insurance, the insurer would be interested in keeping the insured in good health, so it would offer health maintenance plans suitable to preexisting conditions of a person or a group. Furthermore, the insurer would be interested in invoking more health-conscious behavior in its reckless customers. If an insured person decides to switch his or her health risk plan to another provider, the cash associated with his or her account would go with that person. Before letting this cash go, insurers would make an extra effort to find a health insurance plan suited to the situation of that person.

By giving a tax credit matching the health care premium of a current decent health insurance plan, there would be no need to mandate the purchase of health risk insurance. In fact, not buying this rudimentary health risk insurance would mean a cash loss for most taxpayers. Those who are too poor to pay income tax would receive a voucher for health risk insurance.

This approach would leave room to downsize, and maybe even phase out completely, the current government-run health care programs, releasing some of the cash needed to underwrite the start-up of the health risk insurance plans.

Additionally, the health risk insurance plans, as outlined here, would create mechanisms pushing down the costs of health care. However, more factors cause costs increase.

Why have health insurance premiums become so high?
With many healthy people not buying health insurance, the premiums go up for those who buy. However, this is just one, but not the main, reason for the skyrocketing costs of health care.

Currently, whoever gets health insurance as a job benefit or government entitlement (Medicare, Medicaid, VA or TRICARE), milks it to its limits, as he or she does not feel a connection between the price and service obtained. Third parties pay 86% of the medical costs of people with health insurance. Neither those who receive nor those who deliver health care are concerned about the price. With the pool of people holding good health insurance shrinking, doctors and hospitals are inclined to get busy providing whatever profitable treatment they can justify when they seize a patient with a good health insurance. Skyrocketing health care costs are the obvious and logical consequence.

When criticizing the current system, some say that the mess we are in proves that, in the case of health care, the free market system does not work. Facts prove the opposite. The government, both on federal and state levels, is so over-concerned with the quality of health care that Americans receive that it heavily regulates the whole industry.

Heavy-handed licensing restricts access to medical practice, limiting consumers’ choices. After all, in many urgent cases people go to the emergency room not because of the severity of their sickness, but because they cannot find a family physician who could see them. Mr. President, please help me understand how a government-run insurance plan would resolve this problem.

As you correctly pointed out in your speeches, in some states the costs of health care went up much more than in others. You indicated that, under your administration, the government would get busy finding the reasons for these differences and would create policies reflecting this. I have another suggestion. If I live in a state with high health care costs, and if insurance plans offered in another state are more suitable for me, I would like to be able to purchase my health insurance plan from this other state. Presently, state regulations do not allow me to do this. Mr. President, could you increase my freedoms by helping me in eliminating these restrictions? This would create competition between states, pressing down the price of health care, without any work from the federal government.

Excessive hospital care costs often make splashy points in debates on health care. However, if I could find a way of providing hospital care for the half the price that existing hospitals charge, I would not be allowed to do so. Before opening a new hospital, I need to obtain a “certificate of need” from my state. There, a few state bureaucrats, heavily lobbied by the owners of the existing hospitals, would deny my petition on the grounds that the beds in the existing hospitals are not fully utilized, hence no new hospital is needed. They would conveniently overlook the fact that the resources of existing hospitals are not fully used because many people who need their services cannot afford them. With the prices cut in half, my hospital would not only provide health care for some of those who cannot afford it now, but would also put out of business the expensive hospital, lowering health care costs for everybody. Mr. President, could you help me by getting rid of “certificate of need” regulations?

Critics of the current system often cite instances of hospitals charging hundreds of dollars for an item that one could buy for a few dollars at Walgreens. They forget that there are two parties in every transaction: a seller and a buyer. The seller might ask for the moon, but as long as the buyer does not accept the price, nothing happens. Instead of focusing on sellers asking excessive prices, I would shift attention to buyers accepting them. The U.S. government pays for 46% of all health care costs through its programs, and is the largest buyer of health care services. Therefore, it has the power to set prices. In plain language, greedy doctors, money-seeking hospitals, and profit-thirsty insurance companies do not set the prices of health care. The prices are set by what their largest customer, the U.S. government, agrees to pay. Mr. President, I have difficulties in comprehending how a public insurance plan run by the government can help us in resolving this problem.

In the previously mentioned interview with Dr. LaPook, you said that you want to create a public insurance plan in order to discredit the arguments of skeptics who claim that “government is widely inefficient and can never have anything done.” Let me suggest to you that you can prove these skeptics wrong in a much simpler way, without creating a new government entity. For all practical purposes, the government is already in the health care business. Within the last ten years, the costs of both Medicare and Medicaid have roughly doubled. If within the next year you can reverse this cost escalation, one year from now I will look favorably at your idea of creating a public insurance plan.

What is the purpose of business?
Most Americans who have health insurance have it selected and in large part paid for by their employers. This appears to be the American way of handling it. Although, if personal freedom and the right of each individual to pursue happiness are core American values, then health insurance chosen and paid for by corporations is downright un-American. It means undignified patronizing. It is limiting someone’s freedom of life through an essentially not business-related dependence attached to the employment contract.

This practice started during War World II when employers offered extra benefits to attract workers, circumventing government-imposed wage limitations. It is a relic of wartime government intervention into the economy. What is the rationale behind expecting an employer to select and pay for the health insurance of his or her workers, and their families? The purpose of business is making a profit by selling its product. The government takes its share of this profit, and in exchange provides the infrastructure for business to function. It pays for law enforcement, it monitors the education of youngsters, and guarantees technical infrastructure – water, sewers, roads, postal service, electricity, phone lines, etc. The government takes care of these essential services by administrating them itself or by regulating and closely monitoring businesses that provide these services.

Is it too much to ask that a business be able to select its workers from a pool of people healthy enough to do the job without having to take into account the cost of their insulin injections or the cost of healing the broken bones of their children? Should not the health of the public be a part of the infrastructure like water, sewer, education, and national security? And obtained in a similar manner?

Mr. President, please give me one good reason why my employer should buy me my health insurance. Should he select the plan suiting his personal preferences, or mine? Should he include abortion in the plan, and – indirectly – force me to pay for it, despite the fact that I consider it morally wrong?

Nevertheless, most small business owners work extended hours struggling to survive. You plan to drop one more administrative task on their shoulders. Forcing businesses to provide servitude in a kind of administrative work, which should be handled by the federal government, is an ungracious tax.

Lastly, forcing business to pay health insurance will affect their bottom line, especially in the current economic downturn; prices and unemployment will go up. With one hand you hand out money to stimulate economy, and with another you take it back.

Mr. President, I heard you say on several occasions that abandoning the routine of employers buying health insurance would create disruption that you are not ready to accept. Unfortunately, this is the essence of the current problem. If anything is worth changing, this is. Real change always causes disruption. If you cannot endure it, please call off your promise of change.

How urgent is it?
Americans are fed up with the current health care system and want speedy reform. On the other hand, the reform we need to make is at least a few decades past due. How much more damage will we suffer if the current system remains unchanged for another year? How much damage can we cause if we pass a reform that is not well thought out and contains provisions that many Americans disapprove of?

By creating obligations affecting every American, this reform touches the basic values of our political system. It is much more than who pays for health care and how. It is about what core American values, as defined by our Founding Fathers, mean to us today. I find it deeply disappointing that you put so much energy in pressing for a speedy legislation process, avoiding discussion on the concept behind your health care reform proposal.

This text can serve as an outline of an alternative concept of health care reform. Maybe it is worthless, as I do not have the wisdom and resources available to the federal government. However, before considering your proposal, I would like to see at least one, preferably two alternative proposals, equally detailed as yours is. Furthermore, I would like to have at least several weeks of public discussion of the pros and cons of the presented proposals. Out of this process, Americans will support one of them.

By following this regimen, you, as President, would be able to take credit for the best health care reform plan that American people were able to bring up. Unfortunately, as it is now, one can get the impression that it is less about fixing the health care system but more about implementing certain political concepts shared by some present leaders in Washington. This ideological leaning is prevalent in the report prepared by your Council of Economic Advisers. According to my unscientific observations, about 50% of Americans do not share ideological leanings of your advisers. In preparing your health care reform proposal, you dismissed their views and the American tradition behind them.

Its is your call Mr. President; in selecting the health reform plan you have to chose between political beliefs on one side, and a cold analysis of facts on the opposite side. It may take a little longer than we all would desire. However, it is worth some extra time and effort, because, in its very essence, the current debate is not about health care. It is about America defining itself at the beginning of the 21st century. What does it mean to be an American here and now? What do the fundamental concepts of individuals’ freedom that led to the original rise of America mean to us today, and do we care?


Henryk A. Kowalczyk

A version of this text was published by Huffington Post

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