Friday, July 17, 2009

Senate Considers Use of Nonprofit Health Care System, Rather than Government, to Provide Universal Health Care: Random Thoughts

According to the New York Time's political blog, The Caucus, senators considering the massive 615 page "Affordable Health Choices Act", are debating whether to use nonprofit health care providers, rather than a government run system, to serve the uninsured:

Senator Kent Conrad, Democrat of North Dakota, said that negotiators continued to discuss some of the most controversial issues including a compromise on the government-run insurance plan that would instead use nonprofit health cooperatives to provide the desired competition with for-profit insurers.

I suppose in theory using the nonprofit health care system, rather than government, to provide health care for the uninsured suits the American tendency to disparage anything public or "government" run.  My wife and I, for example, are currently trying to figure out whether to put our kids in private rather than public schools.  Some people cringe at the very mention of "public school" without ever having even visited a public school.  I am a product of public schools so I tend towards defense and indignation at the popular notion that private schools are somehow better.  Anyway, the idea that nonprofits might be better suited or even sufficient to provide universal health care seems dubious at best.  First, the standards for nonprofit health care are so unclear that it can hardly be assured that the nonprofit health care community will actually fill the market gaps that leave millions uninsured.  Safe to say that there is no absolute requirement to "feed the poor" to achieve nonprofit, tax exempt health car status.  Indeed, there are millions to be made by tax exempt health care providers who have no inclination to serve the poor.  To substitute the nonprofit community as a reliable source of health care for the poor therefore first requires a revamping of the requirements for tax exempt status for those institutions.  Second, nonprofit health care is sometimes (but not always) as beholding to the same market forces that motivate for-profit health care providers.  Note too, what the quoted language above actually says.  It says that senators are considering using nonprofit health cooperatives "to provide the desired competition with for-profit insurers."  Right now there are all sorts of rules in the tax code that are designed to prevent nonprofit health care providers from competing with for-profit insurers.  Nothing is written in stone, of course, but it seems to me a lot of changes will need to be made to the tax code if we are going to now encourage nonprofits to compete with for-profit insurers. There is a whole body of law designed precisely to keep tax exempt organizationsn from competing with for-profit insurers.  All of that will need to be revised and then eventually for-profit insurers will cry fowl, particularly if the proposal has the intended outcome of forcing for-profit insurers, and all health care providers, to reduce their fees.  For those interested, the bill (linked to above) has many provisions for grants and other payments to nonprofit health care providers.  Like many senators, I suspect, I have not yet had time to read 615 pages of legislative language.  But including several provisions for government spending on nonprofit health care provides all the more reason to better define what we mean by "nonprofit" (or tax exempt) health care.


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