The Common Good
August 2008

Heal Thyself?

by Elizabeth Edwards | August 2008

When it comes to our health-care crisis, some argue for market-based solutions, saying that "consumer-directed care" will give us more freedom to choose the plan that's right for ...

Last March, after I gave a speech in downtown Cleveland, a woman, pressed and dignified in a business suit, leaned over and whispered in my ear. “My name is Sheila, and I am afraid,” she said, her face softening. “I am afraid for myself and for my children. I have a lump in my breast, but I cannot get it checked because I have no insurance.”

She must have been working, for few of us would dress in a suit and stockings voluntarily, and she must have been terrified. A mother thinking of her children, and terrified. “Stay right here,” I said, pressing her arm and going to search for relief for her.

But in the minutes it took to find someone who might be in a position to help a working mother find the health care she needed, she was gone. Perhaps her lunch hour was over. Perhaps she was already late getting back to work. Or perhaps she thought that she had not, in fact, whispered in the right person’s ear.

That moment in Cleveland was Sheila’s insurance policy. That was what stood between attention to a lump that might be cancer and the inattention that could lead to her death. I am terrified for her, and if by some divine providence she reads this piece, I ask her to please find me again. I want to help Sheila and the millions—yes, millions—whose stories are similar to hers. There are 47 million Americans who lack health insurance: That’s nearly one in every seven Americans, who, if a health crisis strikes, will need to hope for a miracle.

Sheila’s story is a parable of a health-care system in crisis. Most intelligent observers (and I say “most” advisedly) agree on that. What they don’t agree on is where we should go from here.

In the landscape of the health-care debate, two very different paths lie in front of us. Which one we choose will speak volumes about who we are as a nation and what values we hold dear. Our choice will determine what we say to women like Sheila—whether we say, “We are with you. Your challenge is our challenge too, and we will help you face it,” or simply shrug and say, “Sorry, you’re on your own.” That’s the moral choice we face today and which path we walk down is up to us.

This decision tends to get obscured by the feel-good language that certain politicians use when they talk about health care. Too often, the fuzzy language of compassion and inclusiveness masks harsh policies that would make our current health-care crisis worse. In this political season, it’s critical that we understand what politicians are really saying about health care, so that we can make an informed choice.

LET’S START BY examining what proponents of market-based solutions mean when they talk about giving families and individuals more freedom to choose the plan that’s right for them.

They call it “consumer-directed care,” the goal of which, as a scholar at the Heritage Foundation recently put it, is to “expand personal ownership and control of health insurance and transfer the control of health-care dollars to individuals and families.” That might sound good, but what they’re really saying is, “You’re on your own.”

What they don’t tell you is that in order to get the control and freedom they promise, you have to give up your employer-sponsored care and enter the individual market. Once you do that, you are literally on your own to deal directly with the big insurance companies and drug companies. In addition to having to navigate a whole new forest of corporate bureaucracy, the kicker is that in those negotiations, you and your family would have far less leverage than larger entities with more buying power, such as businesses or the government, have today.

To me, the notion that going up against the big insurance companies and drug companies on your own constitutes “freedom” or “control” is dubious at best. Real freedom is the ability to control your own destiny through your own actions and decisions. But if you’re in the individual market, it often doesn’t matter how responsible you are, or how well you plan—if the insurance companies decide they don’t want to offer you a decent deal or even sell you insurance at all, you’re up the creek. You’re left alone like Sheila.

This also creates a problem for people like me and many others who are living with cancer and have “pre-existing conditions.” That term of art covers a wide range of conditions, from the one I face to much milder ones like allergies.

Now let’s look at what “individual markets” do for individuals trying to live healthy lives with pre-existing conditions such as melanoma or hay fever. What most people want is a decent health plan that covers their needs: doctor visits, medicine, emergency care, and hospital stays. Some people talk a lot about how the individual market will drive down prices and improve quality by increasing “competition.” But the kind of competition they are talking about is really a race to the bottom—a rush by insurance companies to limit coverage or simply avoid covering people with serious conditions.

Insurance companies make money when they do not have to pay for our health care. As long as you allow insurers to underwrite coverage and deny access to people, you encourage them to offer plans that combine a cheap monthly premium with cheap coverage. So even if Sheila didn’t have to whisper in my ear for dire help because she had one of these plans, her insurer still may have found some reason to deny her medicine, follow-up care, or coverage of her mammograms.

PROPONENTS OF THE market-based philosophy also like to claim that their plans on the individual market will cost less.

The problem is, the plans they point to as examples cost less because they’re worth less. As insurance guru and Georgetown University professor Karen Pollitz has said, “It’s true that the advertised prices for many individual policies in many states are eye-poppingly low. The policies often cover very little: $5,000 deductibles, four doctor visits a year, no drugs.”

In the last few years alone, scholars at the Harvard Medical School, the policy journal Health Affairs, and Consumer Reports have all published studies showing that individual market policies offer weaker protections than policies on the group market, often excluding basic benefits such as maternity, prescription drugs, and pre-existing conditions. Skimping on coverage is just one trick the insurance companies have up their sleeves, ready to spring on people who enter the individual market.

Another trick to keep costs low is what’s known as the “death spiral.” Health insurance companies lure healthy candidates into cheap plans. Once the number of people who bought into the plan reaches a certain ceiling, the companies close the door to new entrants, and then steadily increase the price over time as the people in the group get older, sicker, and require more care.

If you are a healthy member of the group who can get a cheaper plan, you can opt out. But no new healthy members are allowed in to replace them—so over time, the group locked into the plan gets smaller, sicker, and less able to negotiate a good deal. As the companies raise prices inexorably, many members are simply forced out because they can no longer afford the cost of care.

I wish this were made up, but it is not.

A man named Jesse Paul told his story to Consumer Reports. He is a 59-year-old Indianapolis lawyer, who paid $25.50 a month for his individual, $100-deductible Prudential major medical policy when he took it out in 1980. His premiums rose steadily for years, but he didn’t think much of it because the size of the increases seemed reasonable. But when he went to renew his plan in 2003, his premium shot up from about $1,200 to about $1,900 a month.

Now, Paul didn’t whisper in someone’s ear to ask for help—he went to the state’s insurance department and complained. Paul learned that “the policy had been closed to new entrants for years, that he was one of only 400 to 600 customers left in the state, and that the premium increase was permissible under Indiana law. Paul reached his breaking point when he got his latest renewal notice in August; the monthly premium was now $4,284.”

Another danger of the individual market approach is that, just as the gold speculators of the Wild West clustered in the most profitable locations, insurance companies would be free to cluster in whatever states offered them the loosest regulations. This is exactly why the credit card companies are mostly located in either Delaware or South Dakota—and we know how well this has turned out in recent years.

Here’s how it happened. In 1978, the Supreme Court ruled that banks must follow the regulations of their home states, including the laws governing interest rates. South Dakota, sensing an opportunity, lifted its interest rate cap altogether, and Delaware followed suit shortly thereafter. Credit card companies flocked to those states, because then they were allowed to advertise and sell cards to people in New York that were governed by the far looser laws of South Dakota or Delaware.

Today, insurance companies are required to follow the laws of the states where their plans are sold, not just the laws of the states where their companies are based. However, conservatives are proposing to change that and allow insurers to choose the state laws they want to be regulated by. The companies wouldn’t even have to move to that state—they could simply file paperwork there, and voila! they get to operate under looser regulations.

To be fair, the conservative plan is not just a stitched-together series of corporate giveaways. There is a real theory behind it, which holds that the reason health care is so expensive is that people use too much of it. The best way to make health care cheaper, the theory goes, is to make people use less of it; and the best way to do that is to shift the costs and risks off of employers and onto individuals.

Personally, I think the notion that people splurge on health care fails the laugh test. I don’t know about you, but I’ve never heard anyone say, “Sorry I was late for dinner, Elizabeth. I got the urge to swing by the doctor to have X-rays, a CT scan, and unnecessary blood work done because I was bored.”

NOW THAT WE understand what is really meant by “individual markets” and “consumer-directed care,” we can ask the larger question before us: Do we, as a nation, believe in insurance or not? The principle behind insurance is risk-sharing—the idea that healthy people with lower risks and lower cost should subsidize care for sick people with higher risks and higher costs.

We do this in part because the reality of life is that while you may be in the healthy category today, you could land in the sick category tomorrow—and because of factors out of your control. You could get hit by a bus or have something else happen that requires urgent care. God forbid that should occur, but if it does, you’ll be really glad others are pitching in to subsidize your costs.

We do this for practical reasons, but we also do it because it’s the right thing to do. Our society is based on the idea that we’re all in this together. If you’re born healthy and disease-free, great. But others are not so lucky, and part of your responsibility as a member of this society is to help them out.

If you need a visual to fully understand the clear choice we have in the coming months, then I suggest a You­Tube video called “Battle at Kruger.”

It takes place in a South African national park, where a herd of Cape buffalo at a watering hole is attacked by a pride of lions. The lions set upon the smallest, most vulnerable member of the herd and pick him off, knocking him into the water as the other buffalo flee in fear. A crocodile also attacks, and the calf is briefly subjected to a tug of war between the predators before the lions pull it out of the water. The poor buffalo is doomed, right? Not so fast. When the rest of the buffalo realize what has happened, they turn around and charge back to scatter the lions and reclaim their shaken but still living member. The herd sticks together, and they take care of their own.

The comparison to buffalo may be less than flattering, but it sums up the choices we face in the health-care debate today. Down one path, we push as many people as possible into the individual market, leaving them to fend for themselves against the lions and the crocodiles, and hope for the best. Down the other path, we stick together, we strengthen the bonds that bind us together, and we uphold our commitment to each other’s basic health and well-being.

When we band together, we can make this system work. Right now, it’s not working nearly as well as it should. But our response should not be to abandon our principles—it should be to embrace them even more tightly, and fashion a system that more fully reflects them. Universal health care does just that.

In America, there is still hope that, if we whisper in the right person’s ear, some harm can be avoided. I am whispering for Sheila now, into the ears of anyone who will listen. We cannot leave her terrified and alone.

Elizabeth Edwards, author of Saving Graces, is a senior fellow with the Center for American Progress. Her husband, Sen. John Edwards, was a Dem­o­cratic candidate for president.

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