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Summary and Discussion

Len Nichols, Vice President
HSC


Len Nichols: Well, sometimes when you get to speak in the middle of the day, it’s right before lunch and you get to make your opening joke by saying I hate to be the last thing between you and lunch. I think now I’m in a place where I’m the last thing between you and your afternoon nap, so I’ll be even quicker, if I can.

We’ve had a lot of talk about metaphors, and I guess the two that stick in everyone’s mind are the pig, with or without lipstick, and wine. Richard Sorian, who’s our Director of Public Affairs, was clever enough to show me I could say "wine" or "swine." That’s why he’s in public affairs and I’m not.

But I know that the difference, therefore, you can sort of narrow it down, make it seem like it’s not that big a difference, because it’s only the simple letter S. I don’t know about you, but I remember in first grade actually learning the letter S. It’s very complicated. It’s very slick. And you can often get it backwards quite easily. So I will say that is a good metaphor, and we’ll stick with it.

All I want to do basically is briefly remind us of what I think we can almost agree on or the things we still agree on. I will say we probably won’t get unanimity, but I think we might get a majority vote on some of these, and then a little bit about what I think some of the implications are, and then Paul’s going to wrap up the meeting.

It seemed like we started with a fairly innocuous statement that the market for non-group insurance is small and shrinking. Well, immediately people agreed small but not shrinking. It turns out, apparently, in some parts of the world it’s actually growing. But then we managed to disagree quickly that that’s not necessarily a good thing; that is to say, it can be bad to interpret that the market’s growing. But certainly we all agree it’s smaller than the group market and that, in fact, it’s going to be smaller than the group market for quite some time.

The one thing I think we have no disagreement about is that administrative loads in the non-group market are higher than they are in the group market and than they are certainly in the large-group market.

We also agreed, it seems, that there is perhaps extreme fear of adverse selection in the non-group market, and most of us agree that it’s a reasonable thing to fear adverse selection in the non-group market because people are buying coverage on their own as opposed to part of a group that was formed for a purpose other than health insurance.

What there is, however, is a great deal of disagreement about how to deal with those fears of adverse selection. And what I heard today was a quite fruitful discussion between the relative merits of regulation on the one hand, reinsurance on another, more creative uses of high-risk pools. I think that’s where a lot of creative policy analysis will play out over the next few months.

It seems to me that we could make the statement--and, again, I don’t think we got unanimity, but I think we would have a majority vote on this--that the market does work--despite the incredible list of horrible stories that we just heard, the market does work for some people. But the market probably can never work for other people. And it seems to me those two things, you might disagree about whether it’s 80/20, 60/40, 70/30, whatever, but there are groups of people who fall into both camps, it seems to me.

To me the biggest disagreement is really about what to do about those for whom the non-group market does not work. And a lot of the dispute and a lot of the heat in the policy dispute at the national level really comes down to this disagreement about what to do about that population.

I also think we implicitly uncovered what I would call a more fundamental agreement, and here’s where I’d like to tie some folks’ comments together.

I would go so far as to say that we do agree that our collective social willingness to pay for coverage for the unlucky, those for whom this market does not serve well, our social willingness to pay for them is too low to create universal coverage. Mark Pauly talked about it as government failure or social failure versus market failure. Deborah Chollet talked about it as our unwillingness to subsidize high-risk pools to an adequate degree in virtually every state. And Karen Pollitz talked about it with those examples she had, real-world examples of people for whom the Bush tax credit would not even cover the increase in premium they would face because of the health condition they have.

In all of those different ways, it seems to me, and countless more, we can agree that we’re not willing to pay what it would take to cover all of our fellow citizens.

Therefore, I found it even more interesting to go back and reconsider Jack Hadley and Jim Reschovky’s work which Jack presented, which showed that the tax credit proposals that are on the table would provide substantial subsidies for, again, a large fraction of the population that might be considered the target population for an initiative to cover the uninsured. And, thus, it seems to me we can move the ball to the point where we can say, okay, it’s not perfect, it’s not going to work for everybody, but it could provide good--the tax credit proposals could provide a substantial subsidy for some.

But then what I heard was a more fundamental disagreement later on the basic question: Is it wise to spend limited tax dollars on people who would then be sent off into the non-group market, protected or not by Steve Larsen and his friends? That is to say, is it the wisest use of our resources? And here it seems to me a very good question was raised, I think by Mark Hall, well, compared to what? Compared to nothing, as Mark said, it’s a no-brainer. Fundamentally, if your only alternative is to do nothing or to do this, then clearly it makes sense to go ahead and do that.

However, of course, we can all imagine alternative uses of those monies. David Nexon talked about how one could use monies instead of doing the non-group subsidy to go into the group market or to expand public programs. And some people, of course, strongly support that alternative to the non-group market, and that’s where, obviously, disagreement has been in Congress for some time.

Each of those options has pros and cons, and I don’t need to go through them for this audience. I will merely point out that one of the difficulties, it seems to me, with the public program expansion option, unless it’s going to be funded completely at the federal level, states right now are clearly in very dire straits. They’re not going to have a lot of excess dollars. They’re going to be hard-strapped to hang onto the Medicaid SCHIP coverage they have now. So holding that out as an option is just somewhat optimistic, it seems to me, in the next year or two, unless you can put full federal dollars in it.

Well, then it seems to me it’s worth taking a step back and remembering the kind of beginning outline of Kate Baicker’s presentation about how there really are 41 million uninsured out there, let us not forget, and it’s a very diverse group. And that would seem to me to suggest that you’re probably going to have to have different kinds of options to reach them, and that seems to me to be, again, a no-brainer about which we could almost agree.

So then the final debate, it seems to me, over the wisdom of whether one wants to spend money on people who will go off into the non-group market is in some ways a debate about timing. In some ways it’s kind of a triage debate. Do you want to cover the relatively low risk who could take the tax credits and go buy in the non-group market without a great deal of intervention and without a great deal of regulation? Do you want to subsidize the low risk first, if you will, on your march to universal coverage? Or do you want to focus your limited public dollars on the high-risk population? And it seems to me reasonable people can disagree about the wisdom of that sequencing.

On the one hand, you can clearly cover more people cheaper if you go the low-risk route. You could also, arguably, cover more people with less additional interventions that are required. But you’re not going to cover the people who need the care the most. There’s no question that that kind of basic triage reality is the case. I mean, sometimes I like to ask myself the question: What would the Sisters of Mercy do if they were presented with the queue? They would treat the sickest first. And so there’s a sense in which that may indeed be the wisest--and certainly it’s the wisest policy in an emergency room. Whether it’s the wisest policy in a congressional debate about limited public dollars I’ll leave to people with higher pay grades and more votes behind their desks than mine.

Okay. So, finally, then, it seems to me I’m left almost--not quite startled or stunned, but, nevertheless, I’m shamed, along with Liz Fowler. And I want her--and I think she’s probably gone because Hill staff have real things to do rather than listen to me. But basically I felt bad for her because she talked about how disappointing it was that they were not able to spend the $28 billion that was in the budget, couldn’t agree on anything about what to do. And I guess I just sort of would like to pose the question to both sides here, fundamentally, or both sides everywhere, and that is, ask yourself this question, you know, when you look in the mirror before you go to bed at night: Do my policy preferences risk elevating the perfect to be the enemy of the good?

Fundamentally, it seems like if we all agree some people could be served by this market, but other people can’t be served by this market and need some other kind of intervention, it shouldn’t be too much rocket science for analysts like ourselves to devise policy options that real people could pass.

Thank you very much.

Paul Ginsburg: Well, thank you, Len. That was a really great closing of the intellectual part of the meeting. I’ll close the rest of the meeting.

I would like to urge you to fill out the evaluation forms and leave them as you leave the room. I can assure you we use them and look at them very carefully.

Also, for those who have friends that couldn’t come here, the webcast on Kaisernetwork.org will be available starting at noon tomorrow. And I want to just say what a wonderful job the speakers did today. They had interesting things to bring forward, and they kept referring to each other, and also we really were able to get a lot in during a limited amount of time. So I’m grateful to them.

I want to thank John Iglehart and his colleagues at Health Affairs. They’ve really been terrific people to work with to put this conference on, and I think the role of--the fact that two organizations were involved in this I think made it a much better conference.

And, finally, I want to thank the HSC staff that worked very hard on this: Richard Sorian, Roland Edwards, Teri Armstrong, Bridget O’Leary, and Mukarrama Terrell, and there may be others, and let’s give them all a good hand. So the meeting is adjourned.

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