Consider the following health insurance plan.
It refuses to pay for certain medical care and then doesn’t offer a clear explanation. It does pay for unhelpful care that ends up raising premiums. Its customer service can be hard to reach or unhelpful. And the people who are covered by this insurer have no choice but to remain with it — or, at best, to choose from one or two other insurers that are about as bad.
In all likelihood, I have just described your insurance plan.
Health insurers often act like monopolies — like a cable company or the Department of Motor Vehicles — because they resemble monopolies. Consumers, instead of being able to choose freely among insurers, are restricted to the plans their employer offers. So insurers are spared the rigors of true competition, and they end up with high costs and spotty service.
Americans give lower marks to their health insurer than they do to their life insurer, their auto insurer or their bank, according to the American Customer Satisfaction Index. Even the Postal Service gets better marks. (Cable companies, however, get worse ones.) No wonder President Obama’s favorite villain is health insurers.
You might think, then, that a central goal of health reform would be to offer people more choice. But it isn’t.
Real choice is not part of the bills moving through the Democratic-led Congress; even if the much-debated government-run insurance plan was created, it would not be available to most people who already have coverage. Republicans, meanwhile, have shown no interest in making insurance choice part of a compromise they could accept. Both parties are protecting the insurers.
That’s a reflection of the thorny politics of health care. On one hand, big interest groups are lobbying hard to keep some form of the status quo. Insurers don’t want people to have more choice. Neither do employers and labor unions, which now control huge piles of money spent on health care. Nor do hospitals and drug makers, which benefit from all the waste now in the system.
On the other hand, the people who stand to benefit most from having more choice — all of us — are not agitating for change, because the costs of the system are hidden from us. A typical household spends $15,000 each year on health care. But most of it comes in the form of taxes or employer deductions from paychecks, which means insurance can seem practically free.
As a result, people may not like their insurer, but they don’t hate it, either. If anything, they are more anxious about losing their insurance than they are eager to be given more choice. And that anxiety has driven the White House’s decision to pursue a fairly conservative form of health reform.
To be clear, the versions of reform now floating around Congress would do a lot of good. They would make it far easier for people without an employer plan to get health insurance and would make some modest attempts to nudge the health system away from its perverse fee-for-service model.
Yet they would not improve most people’s health care anytime soon. Giving people more control over their own care would. White House advisers, however, decided against that option long ago. They worried that opening up the insurance market would destabilize employer-provided insurance and make Mr. Obama’s plan vulnerable to the same criticism that undid Bill Clinton’s: that it was too radical.
They may well have been right. Then again, given all the flak they have been taking anyway, they may have been wrong.
The best-known proposal for giving people more choice is the Wyden-Bennett bill, named for Ron Wyden, an Oregon Democrat, and Robert Bennett, a Utah Republican, who introduced it in the Senate in 2007. There are other broadly similar versions of the idea, too. One comes from Victor Fuchs, a Stanford professor sometimes called the dean of health economists, and Ezekiel Emanuel, an oncologist and an Obama health-policy adviser.
In the simplest version, families would receive a voucher worth as much as their employer spends on their health insurance. They would then buy an insurance plan on an “exchange” where insurers would compete for their business. The government would regulate this exchange. Insurers would be required to offer basic benefits, and insurers that attracted a sicker group of patients would be subsidized by those that attracted a healthier group.
The immediate advantage would be that people could choose a plan that fit their own preferences, rather than having to accept a plan chosen by human resources. You would be able to carry your plan from one job to the next — or hold onto it if you found yourself unemployed. You would never have to switch doctors because your employer switched insurance plans.
The longer-term advantage would be that health insurance would become fully subject to the brutal and wonderful forces of the market. Insurers that offered better plans — plans that drew on places like the Mayo Clinic to offer good, lower-cost care — would win more customers.
“That’s the way the rest of the economy works,” says William Lewis, former director of the McKinsey Global Institute.
Politically, though, the full voucher plan is still too radical, which is why the Wyden-Bennett bill has attracted support from only 13 other senators — four Republicans, eight Democrats and Joe Lieberman. So Mr. Wyden has come up with a narrower version.
It expands the exchange that Democratic leaders are already planning to create for the uninsured so that many more people would be allowed to use it. (If the exchange were limited to the uninsured, any government-run insurance plan, a crucial part of reform for many liberals, would not be available to most people.) But Mr. Wyden isn’t having much luck with this idea, either. The support for the employer-based system is simply too strong.
And the defenders of the employer system have some legitimate arguments. An insurance exchange may end up having some of the same pitfalls as 401(k) plans, in which some workers make poor choices. Having employers navigate the complex landscape of insurance, the defenders say, may be better for employees.
Here’s what I would ask those defenders, however: Given all the problems with health care — the high costs and decidedly mixed results — how comfortable are you defending the status quo? Why force people into a system you think is better for them?
If people were instead allowed to choose, all but a small percentage might indeed stick with their employer plan. In that case, a Wyden-like proposal wouldn’t amount to much. It certainly would not destabilize the employer-provided insurance system.
Then again, if lots of families did switch to a plan on the exchange, the impact would be quite different. With fewer employees signing up for on-the-job insurance, companies might shrink their benefits departments. The number of companies offering insurance would keep dropping. The employer insurance system could begin to crumble.
But wouldn’t that be precisely the fate that the system deserved?