The hope for an inclusive system of health insurance is fading, accompanied by a mixture of disappointment and relief. We had ended up with badly "gerry-mandered' legislation. There is, however, one option for moving the puck forward that would be difficult for Republicans to oppose. The proposal is simple: Those who are turned away by insurance companies are given the option of purchasing Medicare coverage. Surely we should not leave any of our citizens without any health insurance option. If the private market will not provide it, the government must step in. Insurance companies will not be able to argue that the government option is under-cutting their market. The government option would only be offered to those whom the private market abandoned.
The immediate counter-argument is simple also: The government would end up covering only the most costly patients, and that would drive up rates. In fact, however, we have history here so that we don't need to speculate. The Medicare system came into existence on exactly the same principle. The government offered coverage for the people over 65 whom the insurance companies did not want to cover. Of course the elderly have always been our most expensive patients. Still, a health insurance option for them was the only civilized thing to do. The fact is that more than half of all medical expenditures in the US are already covered from public resources, and state involvement is particularly heavy for the indigent and for the high-cost patient. So it's not as if the government were to be hit with an entirely new burden with which it is not already acquainted.
Of course there is a larger agenda here in what is being proposed. The new regime is unlikely to equilibrate very quickly. At the outset, the government program will simply mop up those who have already been dumped by their insurance companies, as well as those who had their applications rejected at the outset. Over time, however, insurance companies will continue to compete for the most profitable individual clients by raising underwriting standards, and more denials of coverage will ensue. Individual participation in the government insurance program will continue to grow, and the private insurance market will increasingly shift to handling Cadillac plans for the high-end, lower-risk client. The large employer-based and institutional market will remain in the private sphere.
For all practical purposes, we would have a robust public option without having sold our soul to the insurance and drug companies. What we would not have, of course, is an individual mandate for insurance coverage of one kind or another, and this indeed presents a problem. In the absence of a mandate, young people will take their chances and pass on the health coverage. There is a soft remedy here as well, however, and it is taxation for the free-loaders. In all of insurance, there must be a risk pool that includes those who are not at high risk for medical care. The existence of the tax will be an additional incentive to bring people into the risk pool. If a good portion of the financial burden has to be borne anyway, why not pay just a bit more to actually get the coverage? Anyone with private coverage would be exempted from the additional tax.
The above would be a uniquely American solution, and it would take us to near universal coverage at a pace that would not be wrenching to existing institutions. All would have time to adapt. All would move toward their ideal role. The government would be offering a more complete safety net in health care, and the existing insurers will maintain their position in employer-paid health care, complemented by high-end coverage for the well-to-do.
