Universal Health Insurance: will it control the cost of U.S. health care?

Abstract

Universal Health Insurancewill it control the cost of U.S. health care?* William P. Gunnar Plain and simple, the cost of health care in the United States is at the core of the debate over health care reform in the months leading to the 2008 U.S. Presidential election. U.S. health care costs too much, and the cost of paying for health care can be blamed for unacceptably high corporate overhead, record numbers of uninsured, and increasing demands on the federal and state governments to limit entitlement programs. David F. Drake's Mandate for 21st Century America: Universal Health Insurance proposes an income-based tax-financed catastrophic universal health insurance benefit with government oversight on provider activity. In theory, such health care reform would allow free-market forces to bring the cost of health care under control. However, universal health insurance as Drake describes will do little to control health care costs; moreover, implementation of this plan may have unintended deleterious consequences. Drake and I approach the debate over health care reform from different perspectives. [End Page 285] Drake holds a doctorate in business administration, has written on health economics, finance, and regulation, and has published this book following 25 years with the American Hospital Association, from which he retired as Senior Vice President and Secretary-Treasurer. I, on the other hand, have recently graduated from law school with a certificate in health law while continuing, as I have for 16 years, to actively practice thoracic and cardiovascular surgery. In the past three years, I have published a handful of law review articles and essays on topics related to health care reform. We thus bring varied backgrounds, experiences, and interests to this discussion. Drake predicts that the U.S. health care system must undergo reform because the current system is too costly to American business, fails to provide unqualified access, and is associated with poor patient safety. He argues that the federal government, whose duty it is to protect the citizen from risks beyond their control, must indemnify those with catastrophic illness through a universal health insurance (UHI) program. Specifically, the federal government should cover all health care expenditures above a means-tested deductible, proposed to be between 10 and 20% of the family income (presumably net annual income), and should provide long-term loans to those unable to pay the assessed deductible. For those impoverished, first-dollar (zero-deductible) coverage would be guaranteed. To finance this program, Drake proposes the elimination of health spending deductions for health savings accounts and the elimination of the tax-exempt status of employer contributions for health insurance benefits. Under Drake's UHI program, individuals desiring health insurance with first-dollar coverage could do so affordably, since the federal government would absorb the risk of adverse selection; the insurance premium need only apply to covering risk for the deductible amount. With regard to the employer, Drake opines that the marked reduction in health insurance premiums would offset any new tax on employee health benefits, encouraging employers to maintain employee health benefits as a wage benefit. More than likely, however, the tendency for employers would be to limit non-tax-deductible overhead, thereby effectively eliminating employer-sponsored health benefits. Drake goes on to propose the introduction of a private agency, called the Health Care Financing Agency (HCFA), accredited and supervised by the Department of Health and Human Services to act as a consumer advisor, enhancing the consumer's ability to find and purchase health care services, certifying that health care expenditures are appropriate, and ensuring the correctness of deductible calculations and federal benefits. The cost associated with the HCFA would be proportioned between the federal government and the consumer. Alternatively, each state would be responsible for developing a plan for monitoring and controlling the health care costs of the catastrophically ill, either through managed-care organizations or rationing of specific high-cost treatments. If implemented by Congress, Drake's version of UHI would have tremendous impact on American business but little impact on the overall cost of health care, [End Page 286] the access to health care, or the quality of health care delivered. More importantly, the introduction of such sweeping health care...