Anthem Rate Hike Is Clarion Call for Health Care Reform

Anthem Blue Cross's response to Health and Human Services' Secretary Kathleeen Sebelius's request for an explanation for the 39% rate increase for its 800,000 individual policyholders in California makes some sense if viewed in isolation from the much larger problem - the elephant in the room, actually - of ever-increasing health care costs which, unfortunately, none of the bills stalled in Congress adequately address (on this point, I agree with Republicans, although their proposed solutions - medical malpractice reform to reduce the practice of defensive medicine and allowing insurance companies to sell across state lines, which would have them moving to whatever state had the least regulatory enforcement, as the banks did in moving their credit card operations to South Dakota and Delaware, won't yield even a fraction of the necessary savings.

The answer, in my view, is a single payer system that covers all Americans so that the risk can be spread across the entire population, but that was taken off the table by the Democrats before a single hearing was held (Max Baucus's Senate Finance Committee, for instance, didn't even invite a single payer advocate to testify back last Spring).

Next best would be a government mandate for individuals and businesses, but, and it is a big but, with a public insurance option so that the government isn't simply handing the health insurance industry 30 million new customers with no obligations to treat them fairly or do anything to control costs. In addition, let's not only repeal the antitrust exemption but give the Justice Department Antitrust Division the funding to break up heavily concentrated health insurance markets that exist in many states and which, as any lawyer who has even a basic understanding of Section Two of the Sherman Act (and I am such a lawyer) will tell you leads inevitably to monopoly pricing (see Anthem's 39% rate increase).  If health insurance companies were forced to compete, not only with a government-sponsored (but not subsidized) health insurance plan but with each other (after being broken up into smaller companies), then they would have a powerful economic incentive (that they don't currently have) to actually control costs in a way that also delivers better health care outcomes.

Better and lower costs health care outcomes would depend, in turn, on an emphasis on preventative care, voluntary adoption of best practices(the ones who don't will be priced out of the market), and major changes in the health care delivery system (such as paying doctors salaries not based on the number of procedures they perform but on their health care outcomes, such as in the U.K., where doctors get bonuses by persuading their patients to, for example, quit smoking and lose weight so as to reduce the risk of stroke and diabetes) and reigning in the enormous costs associated with end-of-life care (such as by reimbursing doctors for having providing end-of-life counseling so that patients, if they elect, can put in place living wills expressing a desire not to be kept alive by extraordinary means).

 It is sad that the language in the health care bills reimbursing doctors for providing end-of-life counseling - language that, once upon a time, before the Republican party became the Party of No, had bipartisan support - got thrown under the bus by the Democrats after it was horribly twisted and miscast by Betsy McCaughey and her evil twins, Sarah "Death Panel" Palin and Chuck "Pull the Plug on Grandma".  While it seems to have become the third-rail of the health care reform debate, the potential cost savings are so huge (a 60 Minutes story a couple of months ago pegged it at north of $50 billion per year or $500 billion over ten years) that it should be put back on the table (memo to the President: how about raising the issue at the health care summit with Republicans on February 25th?).