REFORM: If You Hold It, They Will Come

Forget about the Nationals' new stadium (you already had?), the hardest seat to get in town this summer has been at the Senate Finance hearings on health reform. We arrived 20 minutes early yesterday to find the halls of the Senate's Dirksen building packed. And for good reason, as the day's testimony on 47 Million & Counting: Why the Health Care Marketplace is Broken was as refreshing as the room's AC (68.2 degrees!)

The hearing opened with video testimony from Lisa Kelly, of Lake Jackson, Texas. Kelly is one of the 25 million underinsured Americans we wrote about yesterday. Kelly purchased a limited benefit plan with a $189 monthly premium that provided fine coverage for her allergy pills but was woefully inadequate when she was diagnosed with leukemia in 2006. Kelly's trials were the subject of a recent piece in the Wall Street Journal. Forced to dip into her savings and currently saddled with nearly $137,000 in medical debt, Kelly, was asked what she thought Congress should do. Her answer was particularly moving:

"I don't know what's the right or wrong thing to do. I know health care is expensive and that doctor's time and medicine is expensive. But they were charging me for things I didn't need. Everybody should be able to go in and get health care whether you have money or not."

Kelly's testimony set the tone for a particularly interesting hearing that focused on why our current system fails to meet the needs of so many Americans and what to do about it.

Raymond Arth, president and CEO of Phoenix Products, in Avon Lake, Ohio, presented the plight of small businesses on behalf of the National Small Business Association. Until 2003, Arth said, he was able to provide acceptable coverage for his employees while managing to keep costs down. But then, the numbers started to catch up with him. In 2007, his firm faced a 22 percent increase when he tried to renew the insurance plan, He switched to a high deductible plan and was "forced to pay a little more to cover much less." This year renewal rate is 35 percent above last year's, and Arth says he's run out options to deal with what amounts to a $40,000 increase in premiums.

Aetna's CEO Ron Williams, presented the insurers' perspective, stressing that rising premiums and deductibles were a reflection of rising health care costs. He came out in support of an individual coverage requirement, and suggested if such a system could be achieved, bringing everyone into the system, insurers could abandon the current business model of medical underwriting and risk selection and instead focus on improving their members health and managing the quality of care they receive.

Mark Hall, a professor of law and public health at Wake Forest University, rounded out the testimony by emphasizing the "80-20 rule" of health care, which is that about 80 percent of the costs come from 20 percent of the population (for a more academic examination of this distribution check out this recent Health Affairs article). Such a distribution creates incentives for medical underwriting and leads to natural risk segmentation as healthier people select plans with the benefits (and costs) they expect to need. The key, Hall said, was to achieve risk pooling independent of health status.

With all likelihood, the Nationals' season ends in September and D.C.'s Southeast sluggers would do well to add a lefty-righty combination similar to Senate Finance chairman Max Baucus (D-MT) and ranking member Chuck Grassley (R-IA), whose bipartisan leadership on health reform has been impressive early on. Of course, there's no offseason for health reform, and we hope Baucus, Grassley, and all of Congress will continue to step up to the plate.