How Could Oregon-style Healthcare Reform Satisfy Liberals, Conservatives and Libertarians?

2018.01.03 Cuatro_manos_entrelazadas

Can Liberals, Conservatives and Libertarians find common ground on an approach to reforming healthcare?
– If you are Libertarian, click here.
– If you are Liberal, click here.
– If you are Conservative, click here.

Jump to Summary Conclusion

For Libertarians

For Libertarians

For Libertarians

Americans are divided politically, now perhaps more so than at any time since the Civil War. The issue of healthcare is no exception.

One model for understanding the political and moral divide is laid out by Jonathan Haidt, a social psychologist from New York University, both in his book The Righteous Mind and his TED talks. His research supports the idea that moral intuitions are hard-wired into our brain circuits as individuals and groups. Those intuitions resonate deeply with each group’s sacred values on the one hand and disgusting revulsions on the other. Intuitions, sacred values, and revulsions drive political decisions at a primal level. In turn, each group rationalizes its intuitive decisions using its political theories, and each group constructs defensive reasons against competing counterarguments.

Gut check first, then head.

Let’s use Haidt’s model to present to a Libertarian audience a persuasive explanation of the merits of the Oregon Health Plan of 1994. That Plan used cost-benefit analysis and a public engagement process to keep Medicaid spending constrained within a tight budget in 1994, and could serve as a model for reforming the whole U.S. healthcare system now.

Libertarian Values and Ideas
Here is a profile of the Libertarian value system.
– Sacred: Liberty, proportional fairness
– Repulsive: Tyrannical oppression, cheating
– Key political ideas: Individual freedom, government non-intrusion

Libertarian Narrative on the Healthcare System
Up until World War II, medical care was a free market. True, the AMA had been organized in 1847, and operated like a guild, forcing out competitors like homeopaths and snake-oil hucksters. But doctors’ market advantage was constrained by their strict code of ethics that put patient welfare ahead of their self-interest. And their market success was driven by real advances in medical science. And true, in 1933 Blue Cross introduced insurance into the market, but this insurance covered only catastrophic hospitalizations, and thus did not otherwise perturb the healthcare free market. But then during World War II the government made health insurance premiums tax deductible, and the Courts decided that insurance could be used by labor and management as part of workers’ payroll package. Further, in 1965 Lyndon Johnson’s Great Society intruded even more into healthcare by creating Medicare and Medicaid. Once tax dollars were involved, healthcare went into a spiral of ever-increasing costs and ever-escalating regulations, culminating in the Affordable Care Act of 2009 (ACA). The ACA law mandated “essential benefits” for everyone and enacted an “individual mandate” for all citizens to buy insurance, even if they did not want or need it. Once enacted, this new entitlement became so entrenched that it resisted full repeal, even after the 2016 election installed staunch anti-ACA Republicans in the White House, Senate, and House.

Oregon Health Plan Respects Libertarian Values

Oregon used cost-benefit analysis to rank-order healthcare services according to costworthiness. The priority-setting process was guided by extensive citizen involvement in town halls. The least costworthy services were eliminated from coverage, such as cosmetic procedures, last-ditch cancer treatments, ineffective back surgeries, and unproven therapies. This leaner plan of comprehensive, costworthy services fit within the tight budget, and could be offered to all Medicaid-eligible citizens on a voluntary basis. Private primary care doctors were fairly paid through existing commercial HMO delivery systems, without any interference in the wider healthcare system. Despite a more limited package of “essential benefits,” Medicaid patients were highly satisfied with the comprehensive care and with availability of qualified, fairly paid physicians. Almost 2/3 of eligibles did enroll.

Thus, Oregon avoided giving unlimited health benefits to citizens who did not earn them. Rather, Oregon Medicaid established a budget it could afford, and set limits on healthcare services that were provided to low-income citizens in order to stay within that budget. But did so fairly, and with their voluntary participation and consent. Oregon accomplished this by using a publicly agreed methodology to cut the least valuable, overly costly services. And it avoided undue interference in the commercial healthcare system.

Objections and Responses
Critics argued that the Oregon Health Plan did not curtail the Medicaid entitlement. In fact, the Plan actually expanded the number of enrollees by 100,000. However, the counterargument response is that from a fiscal perspective, the Plan did in fact did modestly slow the growth of the state’s per-enrollee Medicaid expenditure through cost-effective use of resources and elimination of low-value services.

In addition, some analysts theorize that improving the health status of low-income citizens may allow many of them to acquire new work skills or to participate more fully in the work force, eventually providing a pathway toward less economic dependence and off the Medicaid rolls. Likewise, ensuring adequate healthcare for children is thought to be necessary (though not sufficient) to prepare them for independent, productive adulthood. These claims could not be proven over the short 8-year life of the Oregon Health Plan, and will likely remain an unprovable theory, since doing so would entail tracking a large group of individuals and control groups over their entire lifespan, and would require scientifically adjusting for multiple factors besides health status that influence productivity and economic independence.

Conclusion

Realistically an Oregon-style approach would not dismantle the entire edifice of interferences in the free market for U.S. healthcare. However, it would set limits on unearned healthcare benefits. This approach would also provide a mechanism that operates through market forces, that is transparent and accountable, that does not infringe on individual liberty to enroll, and that minimizes government involvement. Oregon’s Health Plan proved effective in 1994 at constraining costs, while maintaining access and quality.

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For Liberals

For Liberals

For Liberals

Americans are divided politically, now perhaps more so than at any time since the Civil War. The issue of healthcare is no exception.

One model for understanding the political and moral divide is laid out by Jonathan Haidt, a social psychologist from New York University, both in his book The Righteous Mind and his TED talks. His research supports the idea that moral intuitions are hard-wired into our brain circuits as individuals and groups. Those intuitions resonate deeply with each group’s sacred values on the one hand and disgusting revulsions on the other. Intuitions, sacred values, and revulsions drive political decisions at a primal level. In turn, each group rationalizes its intuitive decisions using its political theories, and each group constructs defensive reasons against competing counterarguments.

Gut check first, then head.

Let’s use Haidt’s model to present to a Liberal (Progressive) audience a persuasive explanation of the merits of the Oregon Health Plan of 1994. That Plan used cost-benefit analysis and a public engagement process to keep Medicaid spending constrained within a tight budget in 1994, and could serve as a model for reforming the whole U.S. healthcare system now.

Liberal Values and Ideas
Here is a profile of the Liberal value system:

– Sacred: Care for the vulnerable, liberty, fairness (equality)
– Repulsive: Harm, oppression, inequality
– Key political idea: Social justice

Liberal Narrative on the Healthcare System
Up until the late 19th century, medical care was primitive and ineffectual. It played at most a marginal role in the national economy. Then care the scientific advances starting in the late 19th century. With them came the need to set standards for medical education, medical licensure, and drug purity. New treatments were more expensive, and so group insurance was developed to finance accessible care for average workers, at first through non-profit Blue Cross plans. During World War II, health insurance was made tax exempt to offset the effects of wage freezes. This set the stage for the U.S.’s employer-based health insurance system. But employer-based health insurance left out vulnerable citizens who were not in the work force, such as the chronically ill, elderly, disabled, and poor. And so during the prosperous 1960’s Lyndon Johnson’s Great Society brought these uninsured under a more inclusive umbrella with Medicare and Medicaid. But this bonanza of public dollars led to the corporatization of healthcare and a drive for profits, all too often over health. The healthcare sector grew from 5.5% of GDP in 1965 to over 18% in 2016. Some of this growth was attributable to innovative treatments, but for the most part it left U.S. paying twice as much for healthcare as other industrial economies and ranking dead last among them for results. The Affordable Care Act of 2009 reduced the uninsured from 18% down to 10%, but the recent Tax Cut & Jobs Act is projected to reverse that trend back to 15% or more. Neither of these laws addressed soaring healthcare spending nor the health of citizens, but only tinkered with healthcare finance around the edges.

Oregon Health Plan Respects Liberal Values
Oregon used cost-benefit analysis to rank-order healthcare services according to costworthiness. The priority-setting process was guided by extensive citizen involvement in town halls. The least costworthy services were eliminated from coverage, such as cosmetic procedures, last-ditch cancer treatments, ineffective back surgeries, and unproven therapies. This leaner plan of comprehensive, costworthy services fit within the tight budget, and could be offered to all Medicaid-eligible citizens on a voluntary basis. Private primary care doctors were fairly paid through existing commercial HMO delivery systems, without any interference in the wider healthcare system. Despite a more limited package of “essential benefits,” Medicaid patients were highly satisfied with the comprehensive care and with availability of qualified, fairly paid physicians. Almost 2/3 of eligibles did enroll.

Thus, Oregon avoided disenrolling any eligible citizens or denying them basic, comprehensive care. Oregon accomplished this by using a publicly agreed methodology to cut the least valuable services that were not worth their cost. Priority setting was done fairly, and with citizens’ voluntary participation and consent. The plan enjoyed public acceptance and 88% patient satisfaction.

Objections and Responses
Critics at first objected to quirks in the cost-benefit methodology that resulted, for example, in dental care being rated more valuable than life-saving appendectomy. But these quirks were remedied by soliciting “common sense” input through extensive town hall meetings to reprioritize the rankings.

Remaining critics raised objections to “rationing” services for low-income patients. But healthcare economists and philosophers countered that low-income patients – and in fact all savvy insurance purchasers – desire and deserve the real choice for a lower-cost package of limited health benefits that is “worth the money,” not just a menu of higher deductibles and copays but the same old package of exorbitantly costly, low-value care. Since low-income citizens understood and consented to the Oregon Plan, their autonomy and right to make their own budget choices was respected.

Conclusion
The Oregon Health Plan did not arbitrarily cut benefits or enrollees in order to achieve its budget target. It used a public process using an agreed methodology to set limits and priorities, and achieved widespread acceptance. This approach proved effective in 1994 at constraining costs, while equitably expanding access and maintaining quality.

Back to Top

For Conservatives

For Conservatives

For Conservatives

Americans are divided politically, now perhaps more so than at any time since the Civil War. The issue of healthcare is no exception.

One model for understanding the political and moral divide is laid out by Jonathan Haidt, a social psychologist from New York University, both in his book The Righteous Mind and his TED talks. His research supports the idea that moral intuitions are hard-wired into our brain circuits as individuals and groups. Those intuitions resonate deeply with each group’s sacred values on the one hand and disgusting revulsions on the other. Intuitions, sacred values, and revulsions drive political decisions at a primal level. In turn, each group rationalizes its intuitive decisions using its political theories, and each group constructs defensive reasons against competing counterarguments.

Gut check first, then head.

Let’s use Haidt’s model to present to a Conservative audience a persuasive explanation of the merits of the Oregon Health Plan of 1994. That Plan used cost-benefit analysis and a public engagement process to keep Medicaid spending constrained within a tight budget in 1994, and could serve as a model for reforming the whole U.S. healthcare system now.

Conservative Values and Ideas
Here is a profile of the Conservative value system:

– Sacred: Loyalty to national interest, respect for authority, protection of the vulnerable, liberty, fairness (of opportunity), ethical purity
– Repulsive: Betrayal, subversive disorder, harm, tyrannical oppression, cheating, corruption
– Key political ideas: Preservation of the community, economic opportunity, economic growth

Conservative Narrative on the Healthcare System
Perhaps no group was more respected after the end of World War II than the medical profession. It gave Americans “wonder drugs,” “miracle cures” and discoveries into the mysteries of life – DNA, immunology, biomedical engineering advances. It conquered diseases like polio and AIDS, and revolutionized coronary bypass, transplant and joint replacement surgeries. Americans prided themselves on medical progress, and willingly made generous investments in innovations through premiums, donations and taxes. They also supported extending the benefits of healthcare to the elderly (Medicare) and poor (Medicaid). As the healthcare system steadily grew, more and more dollars flowed through the system. But during the first decade of the 2000s, healthcare spending reached a point at which employers’ healthcare group insurance premium deductions completely offset their employees’ paycheck increases. Through all this health finance bonanza, healthcare stakeholders – professionals, hospital systems, health insurers, pharmaceutical industry, academic researchers – began fragmenting into separate interest groups, flush with lobbying budgets, but with a weakening commitment to the common good. Corrupt elements of each stakeholder group were discovered to be compromising their professional ethics for their own monetary gain, undermining the public’s previous trust in them. Moreover, Democrats and Republicans all recognized that continued relentless growth of healthcare spending was not sustainable and was eroding vitality on a national scale. But politicians seemed unable to make meaningful reforms.

Oregon Health Plan Respects Conservative Values
The Oregon Health Plan of 1994 was the product of a 5-year process. The Plan was built on an ingenious idea – that health services could be ranked according to their cost-effectiveness. The Plan was further refined with extensive public input and orderly political procedures. And the final Plan recognized low-income beneficiaries’ ethical prerogative to consent in advance to a limited insurance package in exchange for coverage of highest-value essential benefits, first-dollar coverage, and universal access. So, the Plan was the happy marriage of Yankee ingenuity, civic engagement, and cross-partisan compromise. It successfully achieved satisfaction among patients, participation among doctors (through fair payments), and coordination with the commercial healthcare sector, while constraining costs.

Objections and Responses
Skeptics point out that the Oregon Health Plan eventually unraveled in 2002. Analysts attribute the Plan’s failure to an economic downturn, quirks of the Oregon state budgeting process, Plan miscalculations (raising out-of-pocket copays), and wavering political support by a new Governor. They argue that any such health reform plan is likely to encounter political, economic, administrative and budgetary obstacles.

Defenders counter-argue two points. First, the fact that the Plan was adopted with wide political support demonstrates that consensus is possible in the realm of healthcare. The fact that it enjoyed public acceptance for 8 years demonstrates that it was a practical success. Second, the Plan’s eventual failure was primarily due to external factors, not flaws in the Plan itself. However, defenders do point out that any such healthcare reform initiative will need a built-in continuing public-private effort to maintain support from all stakeholders and to flex with changing external circumstances.

Conclusion
The Oregon Health Plan responsibly and fairly set limits on Medicaid benefits in order to achieve its budget target while maintaining equitable access. The Plan used a public process that employed an agreed methodology to set limits and priorities, and thereby achieved widespread acceptance. The Plan operated through market forces and limited government involvement. This approach proved effective in 1994 at constraining costs, while maintaining access and quality.

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Summary Conclusion

Summary Conclusion
We can see from our look at the “political narratives” of each different group that the U.S. healthcare problem looks different from each group’s separate perspective. But we have also seen that the Oregon Health Plan of 1994 found an overlapping solution that resonated with each group’s “sacred values” and avoided transgressing its repulsive aversions. Conservatives saw in the Plan a balance between preserving order and providing to all citizens an equitable (though limited) share of the benefits of the “communal” health system. Liberals hailed a fair package of health benefits to 100% of vulnerable low-income eligible. Even though the Oregon Plan did not entirely dismantle the entire set of constraints on market freedom, as favored by Libertarians, at least the Plan left existing freedoms intact, used a cost-benefit “purchase decision” methodology, avoided heavy-handed government intrusion, acknowledged limits on health benefit entitlements of low-income citizens, and provided a theoretical potential pathway for them out of dependency.

This practical, consensus-driven approach modeled after the Oregon Health Plan could guide U.S. healthcare system reform in the 21st century.

Now, take action.

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Image Credit: By Cecilia Grierson – Lámina 114c de GRIERSON, Cecilia: Primeros auxilios en los casos de accidentes é indisposiciones repentinas, Libreria y Casa Editora de Nicolás Marana, Buenos Aires, 1909, p.208.This file was derived from: Grierson Primeros Auxilios.djvu, Public Domain, https://commons.wikimedia.org/w/index.php?curid=56331190

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