Friday, December 15, 2006

Health Care Reform is Alive at the Federal Level

Much of the talk lately about fundamental health care reform has come at the state or even local level. The claim has been that the federal government is in such disarray, at this point, talk of serious reform is all but out of the question for the next couple of years.

But, a couple of days ago, Sen. Ron Wyden managed to get the ball rolling against that thinking with a bold and innovative plan to provide universal coverage to nearly every American while keeping our current system of privatized insurance intact.

Here's the basic idea. Employers would take all of their health care spending for 2007 (or the first year after the plan is enacted) and pay it out as wages to employees. Employees would then use the extra wages to purchase a private health insurance plan from a regional pool that would be created. Plans in these pools would be required to provide coverage at least equal to the coverage currently enjoyed by members of the US House and Senate.

After two years, employers would stop paying out extra wages to employees and start paying into an insurance fund based on annual revenue and their number of FTE employees.

Details of the plan's funding can be found here (other info can be found here). Also, Ezra Klein of The American Prospect has been taking a detailed look at the plan, and his takes thus far can be found here, here, and here.

The bottom line is that this plan would provide coverage for over 99 percent of the US population -- around 45 million more Americans than the existing system -- and it would save the country billions of dollars over the next decade alone, all the while maintaining the privatized insurance industry.

According to the Lewin Group, a top-notch actuarial firm that specializes in health care financing, Wyden's plan -- called the Healthy Americans Act -- would save the country approximately $1.4 trillion over the next 10 years. The first year alone would realize a savings of around $4.5 billion, savings that will directly benefit businesses, families, and state/local governments (see funding citation above).

These savings would result primarily through administrative efficiencies created by pooling the privatized insurance plans into regional groupings and also increasing price competition for the plans involved.

Unfortunately, Wyden's plan doesn't have much chance of becoming law as long as President Bush is in the White House. But now that Dems control Congress, passing a plan like this in late 2007 or 2008 could make it a key issue heading into the 2008 presidential race. If enough Americans get behind it -- and the polls suggest a majority will -- pressure could be put on both major party candidates in the 2008 race to pledge signing the bill if elected.

State and local reform may be the best place to go in the near future, but fundamental reform at the federal level shouldn't be forgotten. And, just as importantly, our elected officials at the federal level shouldn't be allowed to get off the hook on proposing and supporting such reform.

UPDATE: Health policy expert Matthew Holt's take on Wyden's plan is here.

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