Chapter 2

The Commission believes that federal action is urgent, not only because of the millions of Americans without adequate coverage, but because the current system of job-based and public health care coveragewhich still provides adequate protection for most Americans is falling apart. As health care costs continue to rise, the proportion of workers with jobbased coverage will shrink. Small employers face increasingly formidable barriers in the private insurance market, and large employers are reducing benefits in efforts to limit costs. Public programs fail to cover millions now in need because of limited budgets and categorical restrictions on whom they may serve. And the demand for care is rising.

The Commission concludes that, in the absence of systemwide reform, the proportion of Americans without adequate health care coverage will grow, and the burden of caring for those who cannot pay will overwhelm the system, putting us all at risk of inadequate access to care. As costs continue to rise, more and more dollars will go to services of uncertain value, while millions of Americans will go without basic and necessary care.

To prevent such a disaster the Commission unanimously adopted the following goal:

The Commission is committed to the development of recommendations for public policies that will assure all Americans access to health care coverage that allows them to obtain necessary care and assures them adequate financial protection.

Regardless of the strategy the Commission chooses, coverage should:

• Be affordable to Americans of all incomes; • Promote quality of care; and

Be supplemented or modified, where necessary (in "underserved" areas or for special population groups), by special programs to assure that service is accessible.

The Commission is equally committed to reaching agreement on how to raise the financing required to assure access, through public or private means, and, in order to assure a realistic prospect of enactment, to structurally addressing the problem of health care costs while assuring

access.

Before selecting its preferred course of action, the Commission explored two major alternative strategies to achieve this goal. (See Appendix B for a detailed discussion.) The first was an expansion of the Medicaid program to cover all the poor plus subsidies to help the near-poor purchase private health insurance. The Commission believes that such an approach would be an inadequate response to the crisis. Even the substantial expansion of public support that the Commission considered would leave an estimated 14 million Americans-about half the population now uninsured-without access to affordable coverage and would provide no help to additional millions whose coverage is inadequate. With so many still uninsured, cost shifting and the burden of uncompensated care would still mean inequity and instability in the system as a whole. Finally, broadening the public program for the poor but making no requirements on employers would allow employers who do not now provide coverage to continue to shift responsibility to others. That approach could also reduce employers' willingness to cover employees who are now protected, shifting substantial costs from employers to taxpayers.

The second major alternative the Commission considered was replacement of the current combined job-based and public approach with national health insurance. The Commission is convinced, however, that such a drastic departure from our current system would be controversial and disruptive to the majority of Americans for whom insurance still works, and would totally shift fiscal responsibility from employers to taxpayers. Furthermore, movement to a single federal system would eliminate diversity and choice that many believe, appropriately guided, would increase the strength and flexibility of our health care system.

obligations that is related to ability to pay, and to provide the additional financing, as necessary. Therefore, the Commission recommends that the small employers encouraged to provide coverage receive tax credits/subsidies to reduce the costs of private insurance; that employers required to provide coverage be able to obtain it from a federal program for a contribution set at a fixed share of their payroll expenses; and that low-income workers and nonworkers receive subsidies to keep their contributions within reasonable bounds.

3. The Commission believes that private insurers and government should each play a role in administering health care coverage. But there is a critical need for reforms to strengthen both private and public performance making coverage not only available but also adequate to ensure access to care. In order to preserve and expand private insurance as the primary source of job-based coverage, the Commission recommends requirements that would bring an end to the underwriting, rating, and marketing practices that are unraveling private insurance protection for small employers. At the same time the Commission recommends that responsibility for providing public coverage be shifted from states to the federal government, severed from the welfare system, uniform across the country, and pay providers at rates determined by Medicare rules.

4. The Commission believes that universal health care coverage that ensures people access to necessary care must meet an adequate minimum standard. That standard should establish basic protection for the currently uninsured and underinsured and preserve protection for the currently insured into the future. For public and private coverage, the Commission recommends a federally specified minimum benefit package that includes preventive and primary care as well as other physician and hospital care. Individuals would be responsible for a share of premiums and service costs on all but preventive services-up to a maximum and subject to ability to pay.

5. The Commission believes that action cannot come too soon for the millions without coverage and millions more who see their coverage threatened. However, an effective system cannot be put into place overnight. It will take time to develop and implement.

To balance these concerns, the Commission recommends that the system be put in place a step at a time. The first and most critical step in expanding coverage is to ensure protection for pregnant women and children who are now uninsured and to initiate reforms that reverse the disintegration of the private insurance market for small employers. This would create an en

vironment in which employers will have an opportunity to provide the coverage the Commission expects. The second step, to take place in years two through five of implementation, is to effect a series of incentives and requirements for employer coverage, giving employers time to adjust to their new obligations. The final step, to occur in year five, is to extend the federal government's coverage for all nonworkers.

The Commission believes this sequence of steps allows immediate action to address the most urgent problems and provides an orderly transition to universal health coverage.

Strengthening the Health Care System

The Commission recognizes that universal health care coverage can only be as sound as the health care system itself. Coverage that buys unnecessary or inappropriate care, that pays for poor quality, that fails to promote efficient delivery, or that shifts costs from some purchasers to others, wastes private and public dollars that could be used elsewhere.

The Commission disagrees strongly with the view that we cannot extend coverage to the uninsured until we control health care costs and reform the health care system.

The Commission believes, on the contrary, that expanding access to quality care and containing costs through increased efficiency are equally urgent and fundamentally intertwined goals. Ultimate success in reaching either goal can be achieved only through an integrated strategy of system reform. The Commission's recommended strategy has six parts.

1. The Commission believes the nation needs a national system of quality assurance aimed at defining appropriate or necessary services and ensuring that patients receive these services.

The Commission recommends that national practice guidelines and standards of care be developed and implemented; that a uniform data system on all health care services, regardless of payment source or setting, be developed and implemented to support research on treatment outcomes and assessment of provider performance; that new methods of quality assessment and assurance be developed and tested; and that local organizations be developed and held accountable for effective quality

assurance.

It is also imperative that we find a better way to deal with the problem of malpractice. Because there is, at present, insufficient evidence to support specific