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By Rodrigo Muņoz, M.D.
APA President
American medicine owes a great deal to psychiatrist Arthur R. Traugott, M.D., and the AMA Council on Medical Service (CMS), which he chairs. In a report adopted by the AMA House of Delegates in June, titled "Empowering Our Patients: Individually Selected, Purchased, and Owned Health Expense Coverage," they have outlined recommendations on the structure and implementation of a health care financing system in which individuals-not employers-select and own their health care coverage. While space does not permit me to give a full account of the council's 17 recommendations here, I will summarize the reasons that I believe we should support them. My hope is that employers will come to realize that it is in their best interests not to interfere with their employees' health care choices.
The CMS's proposals put the rights and responsibilities for health care coverage where they really belong: on individual patients. "In any freely competitive labor market," states the report, "fringe benefits, including health expense coverage, are not a 'gift' from the employer or union, but are part of the total compensation paid an employee. An individual in a job without such benefits will receive commensurate higher cash salary. Therefore, all money spent for health insurance in the employment setting is truly the employee's, and any tax subsidy for such spending should accrue to that employee."
While some employees may wish to turn to their employers for information on plan benefits and guidance on how to select a plan, employees should have a wide selection of options to consider, select the care plan they believe best meets their particular circumstances, and receive any tax benefits resulting from health care expenditures. Under such a system, employees become the true decision makers.
Another important aspect of the CMS report is its emphasis on "defined contributions," which are predetermined amounts that employers would give to employees for the purchase of health care coverage, as opposed to "defined benefits," which are the benefits that employers select and offer to employees.
Defined contributions have reduced inflation in health care plans such as those offered under the Federal Employees Health Benefits Program, one of the most successful in the nation. In contrast, defined benefits have produced absurd situations in which an employee may have access to many covered services except those that are really needed or that cost too much in the view of the employer. Many psychiatrists and their patients are all too familiar with this situation.
The CMS also recommends that the amount employees should have to pay for their health care premiums be calculated with fairness in mind. The AMA should "encourage employers, unions, and other employee groups to consider the merits of risk-adjusting the amount of the employer direct contribution toward individually purchased coverage. Under such an approach, useful risk adjustment measures such as age, sex, and family status would be used to provide higher-risk employees with a larger contribution and lower-risk employees with a lesser one."
The majority of the 42 million uninsured Americans today are the working poor. Under the CMS recommendations, they would be given tax credits for purchasing health care coverage and have access to affordable coverage through group-purchasing cooperatives. The CMS recommends that these cooperatives be sponsored by regional or national organizations and provide a choice of plans.
Following the CMS's thinking, I propose that we stop using the term "health insurance." In the title of its report, the CMS uses the term "health expense coverage" instead of "insurance." The term "health insurance" is increasingly meaningless in the midst of increasing copayments, deductibles, denials, and nonpayment of health care bills.
Dr. Traugott received an enthusiastic reception at the AMA House of Delegates in June. Let's work on the same or similar proposals at APA. In an election year when health issues are on everyone's minds and many candidates are running on an anti-managed care platform, it is a favorable time for action.
If you would like a copy of the CMS report, it can be obtained by calling the APA Answer Center at (888) 35-PSYCH).