Unpacking The Healthcare Debate: Interview With Pamela Mearsheimer
By Leslie Pratch
Leslie: Welcome, Pamela! Could we take a few minutes to talk about what is going on with the health care debate? Ive been following your blog on business and public policy and just finished reading your synopsis of the November 2009 Business Week story on health care policy. I was impressed by just how much waste (approximately $700 billion/year) could be eliminated. Even without reducing fraud completely, reducing waste could free up billions of dollars to offset the expected 10-year investment in implementing a public option system.
Pamela: Hi, Leslie! I think it is important to try to understand what is going on, as health care policy affects all of us. First, lets agree on what health insurance is. It is a means of spreading risks. The greater the number of individuals in the system, the more the risk is distributed across all members, and the cost to insure each individual goes down. Second, the debate affects each one of us. Most of us want coverage and no one wants his or her choice to be constrained. No one really wants to build up wasteful, inefficient programs that require still more dollars to fund (except those who will find steady work in such a bureaucracy).
Leslie: Only the most hard-hearted person could argue in favor of denying health care to those who need it. Certainly, government plays a role in not only protecting the state militarily but also ensuring a baseline level of healthcare for all citizens.
Pamela : A productive, flourishing society has healthy citizens who practice preventive and ongoing care to ensure good health, which treats diseases in the early stages, and provides emergency care whenever needed.
Leslie: On the other hand, isnt it everyones business to ensure that the federal government outlays equal tax revenues and to avoid deficit spending when possible?
Pamela: Engaging in large deficit spending over time will hinder a country and create downward pressures on the growth of the economy. Many in the U.S. fear that a universal health care system will bankrupt the country. On the other hand, many statistics point to the tremendous cost to society of the high percentage of uninsured Americans and the growing costs to us all if a plan is not implemented.
Leslie: Yes, U.S. businesses need to find a way to cut salary and fringe costs per employee to be competitive in tomorrows global economy. Healthcare is a big fringe cost to businesses. A universal option would be one way to reduce this cost. Can you disentangle the mixed public-private partnership that characterizes the U.S healthcare system?
Pamela: Ill try! In the United States, most people receive health insurance through their employers. With full employment, low costs and a strong economy, this system usually works; however, the cost of providing health insurance to employees is having an adverse impact on the bottom line of so many companies, especially the smaller ones. Compared to past decades, fewer companies offer health insurance, and most companies offer less generous plans.
In addition, unemployment rates are high and many of those who are without work are now also without health insurance. The cost of private health insurance for those who do not get health insurance through a group plan is often too high to bear. As a result, unemployed individuals often go without. Interestingly enough, many senior citizens are happy with their health plan, which is usually Medicare.
Leslie: What is the biggest problem in health care reform?
Pamela: The uncertainty of what exactly will happen. Many interest groups and individuals are afraid that the current situation, challenging as it is, will only get worse.
Leslie: I imagine individuals would evaluate the how good a health care situation is according to different criteria. Can you elaborate what those criteria might be?
Pamela: The concern of the political right is choice and the cost of a public option, as broader access will ultimately raise taxes. An unarticulated but potent fear on the right is loss of innovation. The concern of the political left is coverage for all.
Leslie: Would you spell out the conflict between the two sets of concerns?
Pamela: Let me give an example of what might happen if government played a larger role. In 2006, Massachusetts implemented universal health care for the state by mandating the purchase of health insurance, providing subsidies for those who cannot afford health insurance, and providing a centralized marketplace for health insurers so that the consumer has greater choice of insurance options. The bill is essentially a way to provide health insurance coverage, not a way to provide health care. Although the new plan has been in place for only a few years, we can see a few results, both desired and not.
First of all, the percentage of insured individuals has increased dramatically. Approximately 97% of Massachusetts residents now have health insurance coverage. Although his figure may still fall short of the 100% goal, the percentage of insured is much higher than in every other state in the country. Second, the undesired result is that the costs of providing health insurance for all have been enormous. At the time the bill was passed, there was little to no discussion regarding cutting costs. Now that the state budget is out of control, Massachusetts has gone back to the drawing board to find out where to cut costs.
A recent Business Week feature article focused on 10 ways to cut health care costs now. The emphasis is on NOW because many groups in the private sector cannot wait to cut costs. They are struggling and must cut costs now. Examples of success abound, and most of them feature eliminating waste and fraud in the system, and practicing sensible preventive care.
Leslie: How can we in the U.S. lower employee salary and fringe costs? Beyond reducing fraud, how do we bring about truly effective and lasting change?
Pamela: The only way is through a comprehensive and lasting federal plan. Many have feared that universal health care reeked of socialism. But socialism is a knee-jerk rejection of government-sponsored care. A better way to think about the health care industry is to use an example from our own economic system, namely, Wal-Mart. Like government, Wal-Mart is a single buyer of goods and services with tremendous buying power. Using Wal-Mart as analogy to universal access as an option we get the antithesis of socialism. One can argue that a single buyer of services will create pressure to lower costs, and can enforce abuses of the system.
In addition, cutting fraud and waste will save money which will reduce overall costs. Business Week points out that $700 billion is wasted every year in the U.S. medical system, and if just half of that were saved, there would be enough funds to provide health care for all Americans!
Leslie: Welcome, Pamela! Could we take a few minutes to talk about what is going on with the health care debate? Ive been following your blog on business and public policy and just finished reading your synopsis of the November 2009 Business Week story on health care policy. I was impressed by just how much waste (approximately $700 billion/year) could be eliminated. Even without reducing fraud completely, reducing waste could free up billions of dollars to offset the expected 10-year investment in implementing a public option system.
Pamela: Hi, Leslie! I think it is important to try to understand what is going on, as health care policy affects all of us. First, lets agree on what health insurance is. It is a means of spreading risks. The greater the number of individuals in the system, the more the risk is distributed across all members, and the cost to insure each individual goes down. Second, the debate affects each one of us. Most of us want coverage and no one wants his or her choice to be constrained. No one really wants to build up wasteful, inefficient programs that require still more dollars to fund (except those who will find steady work in such a bureaucracy).
Leslie: Only the most hard-hearted person could argue in favor of denying health care to those who need it. Certainly, government plays a role in not only protecting the state militarily but also ensuring a baseline level of healthcare for all citizens.
Pamela : A productive, flourishing society has healthy citizens who practice preventive and ongoing care to ensure good health, which treats diseases in the early stages, and provides emergency care whenever needed.
Leslie: On the other hand, isnt it everyones business to ensure that the federal government outlays equal tax revenues and to avoid deficit spending when possible?
Pamela: Engaging in large deficit spending over time will hinder a country and create downward pressures on the growth of the economy. Many in the U.S. fear that a universal health care system will bankrupt the country. On the other hand, many statistics point to the tremendous cost to society of the high percentage of uninsured Americans and the growing costs to us all if a plan is not implemented.
Leslie: Yes, U.S. businesses need to find a way to cut salary and fringe costs per employee to be competitive in tomorrows global economy. Healthcare is a big fringe cost to businesses. A universal option would be one way to reduce this cost. Can you disentangle the mixed public-private partnership that characterizes the U.S healthcare system?
Pamela: Ill try! In the United States, most people receive health insurance through their employers. With full employment, low costs and a strong economy, this system usually works; however, the cost of providing health insurance to employees is having an adverse impact on the bottom line of so many companies, especially the smaller ones. Compared to past decades, fewer companies offer health insurance, and most companies offer less generous plans.
In addition, unemployment rates are high and many of those who are without work are now also without health insurance. The cost of private health insurance for those who do not get health insurance through a group plan is often too high to bear. As a result, unemployed individuals often go without. Interestingly enough, many senior citizens are happy with their health plan, which is usually Medicare.
Leslie: What is the biggest problem in health care reform?
Pamela: The uncertainty of what exactly will happen. Many interest groups and individuals are afraid that the current situation, challenging as it is, will only get worse.
Leslie: I imagine individuals would evaluate the how good a health care situation is according to different criteria. Can you elaborate what those criteria might be?
Pamela: The concern of the political right is choice and the cost of a public option, as broader access will ultimately raise taxes. An unarticulated but potent fear on the right is loss of innovation. The concern of the political left is coverage for all.
Leslie: Would you spell out the conflict between the two sets of concerns?
Pamela: Let me give an example of what might happen if government played a larger role. In 2006, Massachusetts implemented universal health care for the state by mandating the purchase of health insurance, providing subsidies for those who cannot afford health insurance, and providing a centralized marketplace for health insurers so that the consumer has greater choice of insurance options. The bill is essentially a way to provide health insurance coverage, not a way to provide health care. Although the new plan has been in place for only a few years, we can see a few results, both desired and not.
First of all, the percentage of insured individuals has increased dramatically. Approximately 97% of Massachusetts residents now have health insurance coverage. Although his figure may still fall short of the 100% goal, the percentage of insured is much higher than in every other state in the country. Second, the undesired result is that the costs of providing health insurance for all have been enormous. At the time the bill was passed, there was little to no discussion regarding cutting costs. Now that the state budget is out of control, Massachusetts has gone back to the drawing board to find out where to cut costs.
A recent Business Week feature article focused on 10 ways to cut health care costs now. The emphasis is on NOW because many groups in the private sector cannot wait to cut costs. They are struggling and must cut costs now. Examples of success abound, and most of them feature eliminating waste and fraud in the system, and practicing sensible preventive care.
Leslie: How can we in the U.S. lower employee salary and fringe costs? Beyond reducing fraud, how do we bring about truly effective and lasting change?
Pamela: The only way is through a comprehensive and lasting federal plan. Many have feared that universal health care reeked of socialism. But socialism is a knee-jerk rejection of government-sponsored care. A better way to think about the health care industry is to use an example from our own economic system, namely, Wal-Mart. Like government, Wal-Mart is a single buyer of goods and services with tremendous buying power. Using Wal-Mart as analogy to universal access as an option we get the antithesis of socialism. One can argue that a single buyer of services will create pressure to lower costs, and can enforce abuses of the system.
In addition, cutting fraud and waste will save money which will reduce overall costs. Business Week points out that $700 billion is wasted every year in the U.S. medical system, and if just half of that were saved, there would be enough funds to provide health care for all Americans!
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