Webcast Recap

This event was co-sponsored by the Global Health Initiative; the Program on Science, Technology, America, and the Global Economy; and the Division of United States Studies at the Woodrow Wilson Center.

Robin Cook, physician, best-selling novelist, and Member of the Wilson Center's Board of Trustees;
James Morone, Professor of Political Science and Urban Studies, Brown University;
Michael Cannon, Director of Health Policy Studies, Cato Institute; and
Paul Seltman, Counsel, Drinker Biddle & Reath LLP

"Reforming our health care system is surely one of the dominant issues in our public discourse, demanding informed and open dialogue of the sort we have today," said Woodrow Wilson Center Director Lee H. Hamilton in his introduction to an October 3, 2007 Director's Forum on expanding health care coverage in the United States. Robin CookThe United States spends a higher proportion of its gross domestic product (GDP) on health care than any other nation, yet "for most of the parameters we use to measure the overall effect of health care, we aren't number one. It's very sobering," said Dr. Robin Cook, Wilson Center board member, physician, best-selling novelist, and moderator of the event. He attributes these rankings to the high rates of uninsured and underinsured people in the United States, in combination with rising health care costs. Cook introduced James Morone, Michael Cannon, and Paul Seltman, who offered three distinct proposals for expanding health care coverage: a single-payer system, an employer/individual mandate, and a free-market option, respectively.

A Single-Payer System

James MoroneJames Morone, a professor of political science and urban studies at Brown University, presented the case for a single-payer, government-administered approach to providing universal health coverage. Discussion of the possibility of organizing a centralized health program in the United States began in the 1970s, when Canada implemented such a program, explained Morone. Canada's program was able to keep costs relatively stable at a time when an increasing percentage of the United States' GDP was shifting toward health care costs, fueling discussion of alternative systems in the United States. "We are now five percent GDP higher than Canada on health care spending," said Morone. In the last six years, health care spending in the U.S. has increased two percent, while the rest of industrialized countries, including Japan, Germany, and Britain, have kept cost relatively steady. "This is an unstable system," he said. "We can't continue to transfer money into the health care system forever."

"We have examples from around the world of nations who manage to control their health care systems as a part of their economy," he said. Most of these nations possess single-payer systems, in which a monopsony buyer—a single buyer who sets demand for a product—sets the price for everyone. "There are some exceptions [to a monopsony buyer system], but precious few. We are the outlier, both in rising costs and in the way we set our health care prices," said Morone.

Rising costs are compounded by lack of insurance; poor outcomes, such as reduced life expectancy; and increasing health disparities, continued Morone. "We are gathering somewhere between 700,000 and one million additional uninsured people every year…Even worse is the patchy health insurance that people with insurance have," he said.

Morone's solution to the challenges facing the U.S. system is to expand the Medicare program, allowing access for all. "I present Medicare for all in the humble sense of knowing it is not going to pass next year," said Morone. It "would meet all the challenges I have just mentioned and there is a basic logic that makes it work. The irresistible force that says more, more, more, meets the unmovable object, taxes. You want more? We have to pay more in taxes. It forces us to make that decision. This is why it works." According to Morone, this principle works well in keeping defense spending, another single payer system, from continually increasing; defense spending has never increased more than five years in a row, not even during the height of the Cold War.

Morone also commented on general strategies for health care reform. "This is not going to be solved by incrementalism. We aren't going to cover 50 million people, much less rein in health care costs [by integral implementation]. Health reform is going to be a big bang if it is going to be changed at all…For the case against incrementalism -- see the State Children's Health Insurance Program (SCHIP) -- and what's going on right now." According to Morone, it is difficult to tie health benefits to employment in a globalized economy; employer mandates are not mobile and will not on there own adequately address rising costs. The drawback Morone identifies in market-driven proposals is the attempt "to use the competitive model in a way that also solves social problems. The problem is, entrepreneurs in a dynamic environment are likely to be one step ahead of the poor regulators who have to try to contain them in a system that gets everybody covered."

Cook responded to Morone by arguing that an expansion of Medicare would still require cost containment measures. "Medicare is probably the biggest cause of medical inflation ever," he said. "We over-pay procedures, and under-pay cognitive services, which is what primary care practitioners really provide. In the ‘90s, we all thought it was the general practitioner who was going to save American medicine. But the trouble is, nobody paid them."

Free Market Health Care

Michael CannonMichael Cannon, director of Health Policy Studies at the Cato institute, presented a market-based approach to health care reform. "I think the question is, who do you want to control the decision of what type of insurance you buy? Whether a treatment is medically necessary? Do you want it to be the government, do you want it to be your employer, or do you want it to be you?" said Cannon.

Cannon presented two hypothetical situations, one in which the government provided complete coverage of medical care, and a second in which the government played no role in health care provision but costs decreased two to three percent every year. While the first system may appear more equitable, said Cannon, it is really the second option that provides equity, as it lowers costs now and in the future.

"Why are prices in health care so high?" asked Cannon. "Because you get little or no competition among medical professionals and facilities and insurance companies, and the government keeps pumping more and more money into the system." The benefits of a free-market approach to health care are exemplified in other sectors, he argued. "Look what has happened over time to all sorts of very expensive products [i.e. televisions, computers, microwaves, cell phones] only available to the wealthiest. These products become more and more available over time, and what makes that happen is market competition," he said. According to Cannon, we do not see the same progressive price reduction in health care because of too much government involvement. As it is, "interest groups can lobby [the government] to protect themselves from competition," said Cannon.

Cannon argued the government controls too much of the United States' health care spending, not too little. "The average family of four [spent] $26,000 on health insurance this year. The average family policy offered through an employer is only $12,000. The other $14,000 is to buy health insurance for other people, through the government, through taxes. $26,000 taken out of this family's income, and they don't have any say in it. It is very hard for an individual to say they want to buy less insurance, and save for out-of-pocket expenses," Cannon said.

A key aspect of Cannon's market-based approach allows workers to control more of their income, in a model he calls the Four E's, which stands for earning, entry, exchange, and exit. Such a system, said Cannon, returns power to the consumer to maintain control of their earnings, enter and exit the health insurance market at will, and set the terms of exchange within the market. He sees a need to increase competition between insurance companies to drive down costs, primarily by allowing inter-state purchasing of insurance by consumers. A free-market plan can take several forms, explained Cannon, including Health Savings Accounts and tax credits. His proposal would allow minimal continuance of government involvement in programs such as SCHIP and Medicare.

According to Cannon, the current U.S. health care system spends too much on unnecessary and often harmful care. "It is hard to find any benefit we are getting from the additional money we spend on health care," he said. A single-payer or employer/individual mandate approach would not fix these flaws, he continued. In either approach, said Cannon, someone other than the worker controls the money. Therefore, the incentive will remain for special interests to seek priority from the government, reducing competition and encouraging price inflation.

An Employer/Individual Mandate Approach

Paul SeltmanPaul Seltman, counsel at Drinker Biddle & Reath LLP, sought to find middle ground between free-market and single-payer approaches to expanding health care coverage. "One extreme argues that everyone ought to be on their own to buy health insurance, and while this may sound intriguing, it is unrealistic and has many drawbacks, not the least of which: it lacks social responsibility. The other extreme argues there should be a single national health insurer. "While this has some advantages," said Seltman, "it is out of step with the American people's values. It abandons the free market and demands little individual responsibility. I believe the best hope for such a solution is an employer/individual mandate hybrid that harnesses market competition in a socially responsible way." He continued, "A combination of employer and individual mandates can help us achieve universal coverage in the most expedient and politically practical manner, paying homage to Americans' sense of individualism and fairness by combining individual choice with shared responsibility among individuals, employers, and the government." Individuals need to be encouraged to practice more responsibility in obtaining health coverage, and society plays a role by providing accessible options, he argued.

In Seltman's plan, employers would be required to provide insurance to employees or pay a set amount in payroll taxes, individuals would be required to have health insurance coverage, and the government would be responsible for subsidizing coverage for the poor (for as high as 300 percent of the Federal Poverty Level). Essential to his proposal is a requirement that insurance companies accept any individual as a client, regardless of that person's medical history. This condition would be an incentive for health insurers to keep costs lower, as they would be competing on quality-of-care measures to attract consumers, who could "walk with their feet" if they were unhappy with their insurance provider. A mandate system would decrease the overall cost to insurers by increasing "pooling" of healthy and unhealthy individuals and by placing greater emphasis on health promotion, prevention, primary care, and chronic disease management programs, improving the health of the general population, said Seltman. In addition, administrative and marketing costs would decrease through increased use of health information technology and electronic records. All of these developments would translate into lower premiums for consumers, argued Seltman.

While Seltman admitted that the "devil is in the details" of any health care reform plan, several versions of this model "show tremendous promise," he said. Most importantly, he said, "I firmly believe that these employer/individual mandates are [the] most politically viable…political viability is a very important feature, and if we don't have that, then 47 million Americans will continue to be uninsured, and that number is going to keep climbing."

Moving Forward

Cook remarked that we have moved past the point of asking whether we should change health care to a discussion of how to change health care. "There is no doubt we should change it," he said. "There are so many things wrong. This has happened four times in the past, when there is a flurry of activity and thought and the general public seems to be behind [health care reform], and then nothing happens. And now…things are much, much worse," he said. "It is about patients ultimately," concluded Cook. "It is not an intellectual argument. It is about people. Medicine is where the public comes up against science….It is so apparent we have to change health care."

Drafted by Michaela Hoffman

Previously at the Wilson Center:

The Stem Cell Controversy
January 18, 2006
A Director's Forum with Dr. Robin Cook, physician, best-selling novelist, and Member of the Wilson Center's Board of Trustees; Michael West, President & Chief Scientific Officer, Advanced Cell Technology, Inc.; and William Hurlbut, Consulting Professor of Neurology and Neurological Sciences, Stanford University Medical Center, and Member of the President's Council on Bioethics.