Edson: Why we can’t let big business threaten universal health care

Editor’s note: This op-ed is by Cassandra Edson, a member of the Vermont Workers’ Center’s Health Care is a Human Right campaign. She lives in Montpelier.

Over the last several weeks, big business and fake employer groups came out to kill H.202, Vermont’s universal healthcare bill, with their deadly embrace. Hypocritically asserting their support of health care reform, they have been successfully pressuring senators into weakening the bill, thus possibly inflicting death by a thousand cuts.

These opponents turned against ordinary Vermonters who desperately need universal, publicly financed health care, not just another marketplace where insurance companies restrict our access to care while relentlessly driving up costs.

H.202 proposes a slow transition to universal healthcare via setting up a so-called insurance exchange. This exchange is a marketplace that sells health care as a commodity to those who can afford it, and its establishment is required by federal law. Until a waiver for this requirement can be obtained, the transition to universal healthcare follows the scenario outline in Dr. Hsiao’s report. That report also tells us why an exchange alone, even when coupled with a public option, will neither create universal access nor achieve real cost savings.

An exchange will not significantly increase access to health care for Vermonters. In fact, if we want Vermonters to gain coverage, we need a good number of employers to participate in the exchange. If all businesses employing up to 100 workers would be required to join the exchange, we could get coverage for more people. This could also create a reasonably large risk pool that might start reducing costs. These benefits would be very modest compared with what a universal health care system could achieve.

Yet for reform opponents, even this tiny step is too much: They seek to limit the number of employers participating in the exchange, and are trying to water down the bill sufficiently to achieve this. The fewer employers participate in the exchange, the fewer people will obtain coverage and the more expensive coverage will be for everyone, inside and outside the exchange.

Once in the exchange, an individual’s access to care would depend on whether they can pay considerable premiums, deductibles and co-pays. Moreover, not everyone would get the same benefits — some Vermonters would be more equal than others, based on how much money they have. The only hope for making the exchange slightly more affordable, and slightly more equitable, would be to limit the number of insurance companies and benefit plans in the exchange.

Ideally, everyone in the exchange would get the same plan with the same benefits, so that risks are spread among as many people as possible, thus lowering costs for everyone. This would also enable us to simplify administrative procedures and set us on a path toward a single payment channel for providers – a key cost-saving feature in Hsiao’s report. Health financing experts agree that an increased number of insurers increases costs, as this fragments the risk pool, reduces the leverage each insurer has in negotiating prices with providers, and adds administrative costs.

The calculation is simple: the fewer insurers are involved, the larger the risk pool and the lower the costs. This is yet another reason why health care cannot be treated as a market commodity — competition increases rather than decreases prices. We shouldn’t be surprised that by this, their job is to make money and serve their shareholders. But we cannot let our elected officials let them successfully turn our universal healthcare bill into a tool for a profit-making marketplace that limits access to care and inflates costs for everyone.

Vermonters have demanded — and the administration and Legislature have agreed — that we create a universal, publicly financed health care system that provides medical benefits as a public good for all. Everyone participates — individuals, families and businesses — so that everyone can benefit. Like fire departments and roads, a public good is a service that belongs to us, with costs and benefits shared by all. Those seeking to opt out to pursue their own financial gains, threaten the well-being of all Vermonters. We must not allow them to put profits before people.

Comments

  1. Ms. Edson,

    You suggest that we need a publicly-financed healthcare system, “not just another marketplace where insurance companies restrict our access to care while relentlessly driving up costs.” But if the system is publicly-financed, rather than financed by our premiums through insurance companies, then all that means is that the state of Vermont is going to restrict our access to care while relentlessly driving up costs, rather than insurance companies doing so.

    The cost-savings the state will be able to achieve through administrative efficiencies, coordination of care, etc. will be dwarfed by the fact that there is literally *unlimited* demand for healthcare services, and when there is little or no direct cost to people who use those services, costs will absolutely explode. The only tool the state can use to combat this will be rationing of care, but costs will still inexorably rise, because the state will be reluctant to be as draconian in its rationing as will be necessary to keep costs under control.

    Because single-payer does not get to the root of the healthcare problem, it is merely an effort to mask the symptoms. As such, whether its the state or the state-regulated insurance companies, costs will continue to rise and rationing and denials of care will continue to be used in a futile attempt to mitigate the economic facts that spring from infinite demand.

  2. Ann Raynolds :

    One fact Jamal: Health care insurance NOW is funded through FOR-PROFIT businesses which must pay dividends to stock holders and seems to believe in high administrative salaries (note CEOs are routinely paid multi-million dollar salaries); a health care SYSTEM governed by the public, which is what the single payer concept is, is NOT a business, but rather a funding mechanism for providing health care. WE can own it!

    • Ms. Raynolds,

      I would sooner put my trust in a for-profit business that is run by highly-paid executives than I would in that same work being done by a Statehouse full of elected representatives, few (if any) of whom have ever run a healthcare insurance business. There’s a VERY good reason that CEOs and other executives are paid huge salaries: those who can successfully run complex, high-stakes businesses are RARE, and therefore command high salaries. If one company doesn’t pay them what they’re worth, then another company will; it’s that simple.

  3. Pam Ladds :

    The panic and misinformation engendered by the idea of a single payer system never ceases to amaze me. I am a Brit by birth, lived with a single payer system until I was thirty and worked in health care. Then I came to the USA (31 years ago), continuing to work in health care. I have lived and worked in 3 states (NY, PA and VT). A single payer system allows for competent health care to be available to all, it is not dependent on where someone lives or works, whether or not they have a pre-existing condition, and it allows for prevention which is ultimately cost saving. Is the system perfect? No! But it certainly beats what I currently see. I am RN (41 years). I see health care workers, ambulance, police and firefighters – people who work to save the lives of others, with no access to affordable health care and massive exposure to disease and injury. I see big businesses who call 35 hours full time (they don’t mention the mandatory overtime) so that they don’t have to provide healthy insurance at an affordable price. Tax payers end up paying far more for emergency health care for far sicker people. Of course this isn’t factored in when the cost of single payer is discussed. The system we have currently treats health care as a commodity, users of the system as “consumers” with that that implies, and is set up to benefit big businesses and middle men who skim off the top. The argument that single payer is expensive makes no sense in the context of a for-profit insurance industry. People do not need health insurance, they need health care. Society does not need a medical industrial complex, it needs to keep its members healthy and productive. Want to attract business to Vermont? Single payer where we all pay in a way that is fair and all have equal access will bring industry – large and small. It will allow people to move freely to where the jobs are, not keep them locked into exploitative work situations. We will all benefit.

  4. Jamal wrote `and when there is little or no direct cost to people who use those services, costs will absolutely explode` … to which I ask `Substantiated evidence?` (and please – don’t quote opeds)

    • Ms. Schneider,

      About 50 years of healthcare history testify to the factual basis of my statement. The fact that employer-provided healthcare insurance has been tax-deductible for 50 years, along with the advent of Medicare/Medicaid, have increasingly disconnected people from the direct costs of their healthcare consumption.

      Even the Obama Administration and liberal Democrats in Congress acknowledge that a disconnect between people’s healthcare consumption and the direct costs are a significant factor in raising prices. Witness the huge controversy over the excise tax on “Cadillac” health insurance plans; the reason behind that provision was the explicit acknowledgement that when almost EVERYTHING is covered through a person’s insurance plan, it represents a strong upward pressure on prices, which affects everyone. You may recall that labor unions – those vociferous supporters of socialized medicine – were adamant that they must be exempted from that rule, since their healthcare plans are “Cadillac” plans.

    • Doug Hoffer :

      all analyses of single payer plans (including the Lewin report years ago) assume increased usage by those effectively shut out of the system (i.e., the uninsured and the under-insured); but that is a relatively short-term effect as folks address outstanding health issues and get into a routine of regular care

      however, if what Mr. Kheiry said was true, all of the countries with national health systems would have experienced explosive cost increases (that is to say, more than the nasty increases we’ve been living with for years); it should be easy enough to check it out

      if that had happended, I’m pretty sure we would have heard about it

  5. Karl Riemer :

    Thank you, Pam Ladds, for injecting a breath of sense and reality into a debate overwhelmed by nonsense and prevarication. There’s a long-standing, tested and proven solution to the problem of access to health care. With many subtle variations, that solution is single-payer insurance. Letting pursuit of profit dictate access to health care has driven us to the deplorable situation we’re in today, in which people suffer horribly, physically, because they don’t have the means to pay for medical attention. Many others make life decisions – employment, marriage, divorce, adoption – based solely on a desperate need for otherwise unobtainable health insurance. This corporate insurance model is impoverishing and demoralizing the United States. I use the word advisedly: morally, the United States is devolving into a third-world country by standing still while the rest of the world tries to protect its citizens instead of its insurance companies. This ridiculous talk about how much rational, decent health care will cost is bestial. It assumes people are as rapacious, indolent and amoral as corporations, it ignores plainly evident examples everywhere to the contrary, and it proclaims the United States of America doesn’t deserve a place in the 21st century. Absurdities like “there is literally *unlimited* demand for healthcare” and “costs will absolutely explode” defy reason, evidence, and common decency. It’s nonsense, code for “I’ve got a good thing and no interest in sharing it”. Defense of a system that sells, for profit, access to health care, especially when that system is destroying this country while around the world countries have successfully escaped it, is despicable and profoundly unpatriotic.

    • Mr. Riemer,

      Your contention that my arguments are false, absurd, nonsensical, and in defiance of reason and evidence are perfectly fine, but you are dead wrong to suggest that I’m trying to say “I’ve got a good thing and no interest in sharing it.” In fact, I have a five-figure deductible, for which I pay an appallingly high monthly premium to maintain. It’s decidedly NOT a good thing. I actually believe market-based solutions and less government regulation will provide better access than the current system, OR a single-payer system.

      Also, most people agree that one of the bedrock principles of our nation is that free and open debate are critical to our success as a nation; to suggest that someone is “profoundly unpatriotic” for participating in a political debate is ridiculous.

  6. Amelia Silver :

    Well said Pam. I couldn’t agree with you more. Have you published this piece, or any other, on the need for health care (not insurance) in a newspaper? You should. Thanks.

  7. walter carpenter :

    “There’s a VERY good reason that CEOs and other executives are paid huge salaries.”

    The CEO of blue cross makes four to five times what the governor of Vermont (no matter who that is) is paid. I happen to know what both salaries are. Other top executives at Blue cross also make more than the governor or any other elected or appointed public official in our state. If you factor in their bonuses and stock options The governor runs a far more complex structure than blue cross or any other health insurance company.

    While the CEO of blue cross does oversee his (or her) part of the screwy medical-industrial complex, the governor also runs complicated health care systems. He or she is also fixes the roads, deals with taxes, energy issues, welfare, and oversees many other complex and intertwining systems that work (or are supposed to) for the people of the state. Give me one good reason why a CEO of a health insurance company needs to make these salaries when a governor in charge of much more makes much less. Private health programs are costly, cover much less for much more, have high deductibles where their insurees have to pay so much out of pocket. Medicare, for example, covers much more for much less.

    Another case in point is how in 2007, for example, the CEO of Cigna made a paltry $25 million. The head of the Veterans Administration, a far more complex institution than Cigna, made $168 grand a year, spare change by the cigna standards, while overseeing 1400 VA hospitals, thousands of staff members, and millions of military personnel that are now coming home with gruesome wounds and psychological problems from two wars. Give me one good reason why a cigna CEO must make $25 million by denying care and other practices to placate nervous investors, while the head of the VA has to do so much more. There is no reason.

    • Mr. Carpenter,

      The opinion of one person about what a reasonable or fair salary should be is totally irrelevant. The actual pay and benefits of those offices – Governor, CEO, or whatever – have been set over a period of *decades* through a process involving millions of people, thousands of companies, thousands of government positions, and millions of decisions. The result is a system that pays people exactly what it takes to retain their services.

      There is no shortage of qualified, competent people wanting to run the VA or run for Governor of any state. Therefore, the pay scales for those offices are obviously adequate. The fact that a CEO can command a $25 million salary is an indicator that she is actually WORTH that amount of compensation. Do you really believe that a board of directors for any for-profit company in the world would agree to pay that amount of money if the SAME skill-set were available for 90 percent less, as your argument implies?

      As much as you might hate it, the fact is that the market determines how much a person’s knowledge, skills and abilities are worth. To say “there is no reason,” as you claim, is to dismiss the decisions of millions of people and decades of systemic decisions simply because you don’t think the outcome is “fair.” If you believe it’s more “fair” for the value system of a few people to be substituted for the collective wisdom of millions of others’, then there is indeed a label for that political outlook.

      • Doug Hoffer :

        Mr. Kheiry

        I’m a little surprised you would actually say that CEO’s are necessarily paid what they’re worth. We’ve known for years that CEO pay has not been based on long-term performance issues. CEO pay is established by boards of directors whose members are often close to (if not appointed by) the CEO. If nothing else, look at the run-up to the financial crisis. Firms paid CEO’s and other top people enormous sums of money as the companies were being destroyed.

        And your suggestion that CEO pay schedules have been subject to decisions by millions of people is just laughable. To equate my purchase of a health insurance policy as a vote for the CEO’s pay is absurd. Furthermore, these same companies have fought every attempt by shareholders to participate directly in such matters.

        • Mr. Hoffer,

          I don’t deny that there can be a clubby atmosphere between a company’s officers and its board of directors, but the majority of companies avoid such conflicts of interest because it creates bad publicity and adverse reactions for their stock prices, for which they are all accountable. Why else would you read headlines about CEOs and other company officers being forced out of their positions for performance issues?

          When it comes to pay of CEOs, governors and others being subject to millions of decisions by millions of people, I stand by that. Whether someone’s skills are worth $15 an hour or $400,000 a year, the entire range of salaries is not the product of random decisions made in a vacuum; the director of the VA’s salary, the CEO of Blue Cross/Blue Shield’s salary, and Governor Shumlin’s salary… these are the product of all that have gone before them and all that is happening around them now. It’s systemic, rather than the outcome of some perfidious, back-room conspiracy.

  8. Christian Noll :

    I agree with Karl and Walter.

    Thanks also to Pam Ladds. What you say is so true.

    I second; Ann, Rama and Amelia also.

    It appears there are some muckrakers or maybe “Lobbyists” who post here!

    Thank you Cassandra for submitting this to vtdigger

    • Mr. Noll,

      Since I’m the only one disagreeing with the columnist and others on this page, I assume you’re referring to me when you refer to muckrakers or “Lobbyists.” You are perfectly free to construe my comments as muckraking, I suppose, but I can assure you I’m not a lobbyist. Nobody pays me for my opinions; they are my own and I share them because I care about Vermont and its future financial viability.

      It’s interesting that I’ve been accused of being paid to make comments on Vt. Digger. This has happened three or four times already; it seems that quite a few liberals have trouble believing that somebody can espouse less government without being paid to do so.

      • Christian Noll :

        Thank you Mr. Kheiry,

        I didn’t notice that you were disagreeing with the columnist, but if it makes you feel any better, I’m probably more of a “Muckraker” in the literal definition of the word than you are. I do think however, we all have a little “Muckraker” in us from time to time.

        I never said you were a lobbyist either and I’m not so sure “Lobbyists” have to be paid in the traditional sense of the word. Yes it is interesting. I’ll agree with you on that!

        “Liberals?” Ha! How many “Liberals” do you know who voted for Ronald Reagan? I bet not many.

        I don’t feel that “a free market economy” is good for accessable healthcare, that’s all. Yes I agreed with those other commenters because I actually experienced very similar events in my own life as those described.

        Remember what Walter Matheaw said: “Never Assume anything” that way you won’t make an (ass) out of (u) or (me)

  9. Margaret MacLean :

    I was in a drug store recently beside the cash register was a can with a picture of a young woman on it. I put my change in the can. The girl at the register said thanks! Thats Amy she used to work here summers during college but she has a rare kind of cancer and she is no longer on her parents health insurance. She can’t work and she can’t pay the bills we are all so worried about her and her family.

    Pam as a fellow Brit who grew up with the value that we are one nation and we all take care of each other, it is hard to explain how angry, sad and horrified I am by these cans in stores. In this case a lovely young woman begging for change which won’t come close to covering the costs involved.

    It makes me sick that CEO’s make millions while young women like Amy are forced to beg.

    Jamal I can’t understand why as a fellow countryman you do not feel a responsibility to people like Amy? For a country as rich and strong as the USA the health care system is not just financially unsustainable it is morally bankrupt.

  10. Ms. MacLean,

    You are mistaken if you take my opposition to single-payer as opposition to helping others. I believe radical reform is necessary to fix the current healthcare system, which is a hideous hybrid of government and the private sector. I simply believe that single-payer creates more problems than it solves (to say nothing of the system in use in the U.K.). I oppose many government programs, but it’s an unjustified leap of logic to suggest that this means I’m morally bankrupt.

  11. Ron Pulcer :

    I would like to avoid the prior ideological and philosophical flame wars, and try to offer a possible pragmatic solution to attracting more companies small, Medium and LARGE to participate in the exchange / GMC risk pool.

    I work now for a company that has about 350 employees, but not all of them are in Vermont or even New England (but that’s yet another part of the system design that has not been figured out). So my employer is not a small company, but it is not anywhere near a large company like IBM.

    My current employer in Vermont pays 80% of my healthcare insurance premiums and I pay 20%. I am grateful that my employer provides this benefit. My employer has been doing the “right thing” for many years / decades. But given the Hsiao recommendation (11% / 3% payroll tax split), which is all we have to go on right now, from my estimates, it “could” result in higher premiums than my employer and I are currently paying.

    So, rather than using the “stick” approach, with a hard and fast “requirement” to join Green Mountain Care at potentially a much higher premium than what my employer and employees are paying now, perhaps a “carrot” approach might work:

    Once the Green Mountain Care board decides on the cost per patient, a comparison of the GMC rate and the benefits provided could then be compared to what my employer and I collectively pay currently in premiums and what benefits we receive (what is covered).

    Based on that comparison, perhaps a healthcare inflation cap could be used to “throttle” the healthcare costs for companies that have been doing the “right thing” all along, so that the inflation for first year entry into GMC does not exceed our already high yearly inflation. From then on, there should be a smoothing mechanism so that the yearly inflation hopefully is not as bad as the current system (single payer is supposed to contain costs, so this would enforce it).

    If such a “carrot” approach with a “throttle” mechanism were used, it might 1) increase the size of the risk pool (what Ms. Edson is advocating for), and 2) allow some skeptical businesses to give the Green Mountain Care risk pool a try, and not spend their time and energy fighting the legislation in subsequent years (which just causes more inflation in the products and services that they sell)

    Frankly, I am tired of all the “ideological” arguing. We need vision. But we also need some practical, pragmatic solutions. Hopefully, this idea might be considered. I think it might work for not only an employer with 350 employees, but also a much larger employer like IBM.

    Lower income Vermonters would pay less payroll tax for their GMC (same percent x lower wage) under the Dr. Hsiao plan. Likewise, companies that already are providing healthcare should also not have to be penalized by paying excessively more than what they are already paying. I think that a first-year inflation cap and subsequent throttle mechanism might be a pragmatic solution.

  12. walter carpenter :

    “The opinion of one person about what a reasonable or fair salary should be is totally irrelevant.”

    Why is it totally irrelevant? And I’m sure that I am not the only one with these opinions.

    “Do you really believe that a board of directors for any for-profit company in the world would agree to pay that amount of money if the SAME skill-set were available for 90 percent less, as your argument implies?”

    I refer this statement to Doug Hoffer’s answer “CEO pay is established by boards of directors whose members are often close to (if not appointed by) the CEO.” Doug said it best. My point here was that a ceo of one company, a private one, is paid an astronomical sum to run one private company while a ceo of a public institution that is nationwide and serves far more people with a far greater range of illnesses, injuries, etc does not even make in a year what this private ceo makes in a day. My point here is why should a CEO of a private company, whose job it is to deny care and increase stock value, get a stratospheric salary while a ceo of a public institution that actually cares for millions gets the spare change. Why is a private CEO worth $25 million a year? There is no reason.

    CEO pay has absolutely no relevance to skill. I too have worked in large corporations. I have seen what they make and how they do it. As Doug said, they are rewarded for laying off tens of thousands of workers and driving the company into the ground, bankrupting a company but increasing shareholder value.

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