Will primary care lead the way to universal coverage?

Family physicians and internists alike are seeking the grail of health care for all. In their quest, they'll fight some fierce political dragons.

By Ken Terry
Managed Care Editor

What would you think of a proposal for providing universal health insurance that involved an employer mandate, a payroll tax, a single-payer option, and Oregon-style rationing? You might guess you'd entered a time warp and were revisiting Hillary Clinton's infamous health care reform plan. But, in fact, it was the American Academy of Family Physicians that floated this draft proposal at the end of last year.

The AAFP Congress of Delegates will consider the plan next October and decide how to amend it. While some health economists say the current draft would be dead on arrival in the Republican-controlled US Congress, AAFP President Richard G. Roberts asserts that the society will vigorously push whatever plan it finally adopts for achieving universal coverage.

Why is the AAFP weighing in now on this topic? "Because the problem of the uninsured and underinsured has not gone away. It's grown worse, and that's in the midst of the most robust economy anyone can remember," says Roberts, who practices in Belleville, WI. "Family doctors, probably better than anyone, understand that lack of insurance delays care, and that care delayed is care denied."

The AAFP recommends that everyone be guaranteed a basic-benefit package covering the services "that most people need at some point in their lifetimes." This would be combined with catastrophic insurance that would pay for very expensive services. The combined basic and catastrophic coverage would be funded with a payroll tax on all businesses. Employers would pay two-thirds of the tax, amounting to 3 percent of payroll, and the rest would come out of workers' paychecks.

This approach leaves a wide gap in coverage between the basic and catastrophic benefits. The AAFP assumes that many employers would buy "middle-tier" insurance with the difference between the payroll tax and the amount they now pay in health costs, which averages 8 to 10 percent of their payrolls. Businesses could also give workers a flat amount to set up medical savings accounts or to buy middle-tier insurance themselves.

The AAFP plan would cap out-of-pocket expenditures for services not covered by the basic benefit package at $5,000 per year for individuals and $8,000 per year for families. The catastrophic insurance would require a 20 percent copayment, but the total out-of-pocket liability for any individual or family would be $10,000 annually.

The proposal would leave in place Medicare, Medicaid, and other government health insurance programs—with one big exception. The portion of federal and state Medicaid funds that now underwrite basic benefits would be shifted to the universal-coverage pool, which would be administered by the states. The combination of the payroll taxes and diverted Medicaid funds would be distributed to the states on a uniform per-capita basis. Then each state would have the choice of paying providers directly on a fee-for-service or capitated basis, or contracting with private health plans.

Physicians could benefit from the plan's 'income transfer' mechanism

If this proposal were implemented, physicians would see a 30 percent increase in utilization of their services, says the Lewin Group, a consulting firm hired by the AAFP. That would put an additional $16 billion a year into their pockets.

Employers as a group would spend 17 percent more on health care than they do now, including the cost of "wrap-around" insurance to cover the middle-tier benefits. But Roberts notes that this includes all of the employers that don't currently insure their workers or else provide only bare-bones coverage. He argues that many other businesses would actually spend less on insurance, because better access to office-based care would reduce the cost shifting that now occurs when uninsured people seek primary care in emergency rooms.

Mark V. Pauly, a health economist at The Wharton School, predicts the opposite. Employers that currently buy health insurance would spend more for basic benefits, and the same for coverage above that level, he says. So they'd have to lay out more overall.

There's no disagreement over the fact that high-wage workers would get socked. Those making over $100,000 a year would pay an additional $3,000 a year for coverage, and all households would pay an average of $547 more per year, according to Lewin. Roberts candidly admits that the AAFP plan is "an income-transfer mechanism. It takes money from people and companies who have more income to buy basic health benefits and gives it to people who are less well off." In that respect, it's similar to the AMA plan, which relies on refundable tax credits to transfer health funds from the affluent to the working poor and the lower middle class.

Both Pauly and Uwe E. Reinhardt, a health economist at Princeton University, regard the AAFP proposal as self-serving because it defines basic benefits as services provided by family physicians and other primary care doctors. Roberts says this definition was designed for purposes of economic analysis. In practice, he says, "basic benefits are not defined as what primary care doctors deliver. They're defined as a basic set of services that virtually all of the population can or should be using. Not everyone is going to need a heart transplant, laser surgery, or some exotic medication. But everyone needs periodic health exams, preventive services, acute care, and so on. Obviously, family docs do a lot of it. But any physician or health care professional could provide some of those services."

The proposal recommends using "an explicit, evidence-based process" to determine what's in the basic benefits package. The authors add: "The [AAFP] task force notes that states such as Oregon and Washington have established models for prioritization and that their experience would be instructive."

While the Oregon Health Plan was initially hailed as bold and visionary, some observers have assailed it for cutting off coverage of services that might be beneficial to some patients. When questioned about this inherent problem of rationing, Roberts replies, " 'Necessary' is often in the eye of the beholder." He cites the case of bone marrow transplants with high-dose chemotherapy as a treatment for breast cancer. Although the treatment has become so common that some states mandate its coverage, several recent studies showed that the intervention is useless and harmful, he notes.

Is the ACP plan a better political bet?

The American College of Physicians-American Society of Internal Medicine, which has been calling for universal coverage for a decade, will soon unveil its own proposal. A recently issued "statement of core policy principles" stresses the need for "sequential reforms that expand coverage to targeted groups." These reforms would establish a timetable for reaching universal coverage by expanding access to insurance.

"We'd probably start with coverage for low-wage workers who don't qualify for Medicaid and can't afford insurance on their own," says Robert B. Doherty, the society's senior vice president for governmental affairs and public policy. "But we wouldn't stop there; we'd have a plan to move up to 150 percent of the poverty line, then 200 percent, and then 250 percent, until everybody was covered."

While Doherty doesn't rule out any approach, he doubts that the AAFP's tax-financed, government-administered proposal has much chance of being adopted. "It's useful to put that model out there for discussion," he says. "It's certainly one way of expanding coverage to people. My initial reaction is that it's going to be hard for Congress to swallow in the current political environment."

Asked whether the ACP-ASIM would favor any proposal requiring employers to pay for insurance, he replies: "We're going to try to come up with something that could have some bipartisan support. That means something that's not DOA with the business community or that's going to turn away Republican members of Congress in droves."

One sharp difference between the AAFP and ACP-ASIM philosophies is that the latter organization wants to include in the basic benefit package all services proved to be medically effective, not just those that most people need. But the ACP-ASIM would also prioritize coverage for services of marginal value, Doherty adds. "We'd want to look at a mix of primary care and preventive services that are clinically effective and help improve patient care. Beyond that, it becomes partly an issue of cost and feasibility."

Turning insurance on its head

From the viewpoint of The Wharton School's Mark Pauly, the AAFP approach turns the whole idea of insurance upside down, because it covers the most affordable services but not the expensive ones. While he agrees that low-wage workers may need subsidies to buy insurance, "I don't think what they most want is a basic benefits package," he says. "They want protection against high-cost illnesses they can't afford to pay for, not the basic ones they're sure to need."

The AAFP's idea of dividing up the health care financing pot on a uniform per-capita basis could backfire on family doctors, Pauly asserts. Since the cost of delivering medical services varies from one area to another, imposing uniform budgets on basic benefits could result in family physicians in some localities being underpaid relative to their fixed costs.

"If that were the reimbursement basis for the basic services, it would tend to drive physicians away from family practice and toward specialties whose services aren't constrained by that budget," says Pauly. "That would be especially true in what were formerly the high-cost areas." In low-cost areas, he says, FPs would do better than they do now. But overall, "the plan would create more specialization than there already is in cities like New York. It wouldn't pay to be a family physician providing the basic services for that kind of money."

Pauly also questions whether physicians as a whole can ever agree on what should be included in a basic benefit package: "Every provider believes his services should be included, and each has a good argument."

 

Ken Terry. Will primary care lead the way to universal coverage?. Medical Economics 2001;6:89.