by Marita Bujold | September 8, 2009 • The first day of the term designer and teacher Mary Gibson wasted no time challenging her students to apply their problem solving techniques to one of the nation’s most pressing problems-reforming healthcare. (The following is a fictional account.)
“Good morning. As you know, this class is designed to highlight current issues. Our purpose is to accurately identify problems and analyze flaws in designs or systems.
Since Congress returns to Washington tomorrow to continue the national debate about healthcare reform, our first assignment will be to explore that issue.
If you have been following the debate, you know that this is a high stakes issue and there is no consensus about how to reform healthcare.
There is consensus that the current costs of healthcare in the United States are not only too high, they are unsustainable.
In addition, 44 million Americans have no healthcare insurance. These are people who are working. But their jobs do not provide coverage.
Congress is trying to determine how costs might be contained and how to ensure access for everyone.
We will do the same.
Are there any questions so far?
“Okay. So we have identified two problems so far. Costs are unsustainable and healthcare is not universally available.
When you read the material to prepare for class, you found that one of the proposed solutions is to offer people a choice of a public healthcare insurance. This idea has generated significant support and has also become a point of contention.
The private insurance companies oppose a public option. Some leaders in Congress do as well.
Can anyone tell me from the perspective of design how these two approaches differ? Kate?”
Kate: “Private insurance companies are designed and exist to sell insurance to make a profit. They operate the same way that other businesses do who trade on the stock market to make profits for their shareholders. Their objective is to make money, not provide healthcare.
In contrast, the public option is designed to provide access to healthcare. They have no need to make a profit. “
Ms. Gibson: “Good summary. Now tell me more about how the two approaches impact our costs. Someone else. Eric?”
Eric: “Well, since their objective is to create profit, private insurance companies must ensure that they have revenue to compete with other companies. I read that companies raise the premiums nearly every year. Our family has health insurance through my mom’s job. My Dad is self-employed. I talked to my mom about our insurance. She said that the premiums have risen for each of the past ten years. We have not had any big health problems, but the premiums keep going up.”
Andrew added: “My dad works for the school district. He told me that premiums for teachers rise annually, too. The money that taxpayers contribute in state and local taxes for schools is eaten up by insurance costs. He is annoyed with this because schools cannot control the costs of the premiums. The insurance companies determine how much they will charge. And that means that the schools have fewer resources for teaching students. ”
Ms. Gibson: “Okay. But why do private insurance companies raise the cost of premiums?” Melanie?
Melanie: “Well, they have expenses typical of a company that is traded on the stock exchange. They pay a CEO and conduct ad campaigns as well as pay lobbyists to persuade Congress to support their businesses. Compare the administrative costs for private insurance and Medicare. Medicare spends 2-3% of its operating budget on administrative costs. Insurance companies spend between 20-30% of their budgets on administrative costs. Medicare does not have a CEO who is paid millions of dollars in salary and stock options every year. “
Ms. Gibson: “ And who can remind us what Medicare is?” Adam?
Adam: “Medicare is a federal government program designed to help senior citizens have access to healthcare. The program is available to all seniors.
I have a question. After I read the materials to prepare for today’s class, I kept wondering why people object to a public option when it is clear that it would cost far less than paying more for premiums every year for private insurance. No CEO, no advertising budget, no stockholders to satisfy. Why should healthcare be connected to making profits?
Ms. Gibson: “This is a question that many people are asking. Ben, you have something to add?”
Ben: “ I have a friend whose cousin’s family went bankrupt when their insurance would not cover all of the cost of their healthcare. The dad was in a car accident and the insurance company capped the benefits so the family had to pay for the surgery costs from their own pocket. They lost their house and everything. And the car accident was not even his fault. The other guy ran a red light.
Now my friend’s cousin is living with their grandparents and he had to switch schools because his grandparents live too far away for him to attend his old school. That isn’t fair. No one should lose everything because they need to have surgery or any other medical problem.
Kate: “With a public option, people would not go bankrupt.
One of the other problems with the current system is that insurance is tied to employment or being a full time student. As a college student, I have coverage through my parents’ insurance. But when I am no longer a student, that coverage ends. When I graduate I hope that I have a job that offers healthcare coverage, but not all employers offer that benefit. Private insurance is expensive. I read that some businesses cannot afford to offer insurance coverage. So what if I take a job because it is the right job for me, but there is no healthcare coverage?
Ms. Gibson: “You raise an important question, Kate. Young people today often do not have coverage. But as we know, they can be victims in car accidents or become ill. Some have prior conditions that make them ineligible for private insurance.
We have only a few minutes left for the class. From a design perspective, let’s review.”
Ben: “The objective of private health insurance companies is to create profit. They are not in the business of providing healthcare. This conflicts with the needs of the insured.”
Ellen: “In contrast, a public insurance option does not have to answer to the stockholders. It is designed to deliver care and it does not have the overhead costs of the insurance companies. There are no profits, no CEO salaries, and no advertising budget. Nor is there a budget for lobbying Congress.
And anyone can access the public option. No exceptions.