Reaching the Summit on Health Reform

by Janet Trautwein

President Obama recently convened lawmakers from both parties at the White House for a summit on health reform. Although the attendees failed to strike a grand  compromise, Democratic congressional leaders still have time to incorporate some  Republican ideas in order to produce a final bill that’s genuinely bipartisan.

Such bipartisanship would be politically astute, thanks to the disappearance of  the Democrats’ supermajority in the Senate. But it’d also be good policy, as several ideas for improving the reform package, like strengthening the individual mandate and redoubling efforts to control health costs, could attract support from both parties. Lawmakers should ensure that these important fixes are at the center of the final legislative product.

Two broad principles formed the core of the original reform package and should remain at the center of a new bipartisan measure. First, insurers should not be allowed to reject applicants with pre-existing conditions. And second, all Americans must maintain insurance coverage.

Both principles are critical to the success of reform. If coverage is guaranteed irrespective of a patient’s health status or medical history, it’s in his best interests to avoid purchasing a policy until he’s sick and actually needs it.

That’s where the mandate comes in. It prevents people from gaming the system and ensures that insurance prices won’t spiral out of control. After all, if there’s no penalty for going without insurance, then the risk pool will be comprised entirely of older, less healthy patients who need the coverage — and whose care is extremely costly. Insurers would have to compensate by raising premiums, until coverage was unaffordable for just about everyone.

The initial reform package failed to address this problem. The Senate bill, for instance, would only fine people who choose to go without insurance $95. Eventually, that fine would increase to $750. But by then, the average individual insurance plan is expected to cost $5,000, according to the Congressional Budget Office.

For most healthy people, it would be far cheaper to simply pay the fine and pick up a policy down the road. Without a stronger individual mandate, universal coverage will be impossible to achieve — and health costs will continue to increase apace.

A renewed push for healthcare reform should also devote more attention to checking the rapid growth of health costs. One effective cost-control initiative supported by lawmakers from both parties is medical malpractice reform.

Many doctors fear the prospect of a debilitating medical-liability lawsuit — and understandably so. Roughly one in seven doctors faces such a suit each year. In order to protect themselves, doctors often order more tests and procedures than necessary. Such “defensive medicine” increases annual medical costs by close to $200 billion.

Several modest reforms, including caps on non-economic damages, would help curb this wasteful practice and thus lower health costs. In fact, research shows that direct malpractice reform, including caps on non-economic damages, lowers health expenditures by 5 to 9 percent without any impact on mortality or medical complications.

Medical-liability reform would also improve patients’ access to care. The Department of Health and Human Services estimates that states with caps on malpractice damages have 12 percent more physicians per capita than do states without.

President Obama has expressed interest in implementing meaningful malpractice reform. He’s in step with voters on the issue, as a majority of Americans supports malpractice limits.

Americans are desperate for substantive healthcare reform. But as the election in Massachusetts demonstrated, they’re not on board with the budget-busting bills currently under consideration. It’s time for lawmakers to heed the voters’ call and work toward a more bipartisan version of health reform.

Janet Trautwein is CEO of the National Association of Health Underwriters.

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