Who should be allowed to deny coverage?

Merrill Goozner is an award-winning journalist and author of “The $800 Million Pill: The Truth Behind the Cost of New Drugs” who writes regularly at Gooznews.com.

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The Washington Post’s Pulitzer Prize-winning columnist Steven Pearlstein this morning outlines a likely compromise outcome for health care reform. He begins the column by reminding readers that Ted Kennedy regretted his failure to sign a deal with President Richard Nixon, who’d offered the Democrats legislation far more progressive than President Obama’s plan. “When it comes to historic breakthroughs in social policy, make the best deal you can get, leaving it to subsequent generations to perfect,” Pearlstein writes. That was Kennedy’s attitude, and it’s a sentiment I endorse.

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However, there’s a lot of tough-to-swallow objections to Pearlstein’s proposed compromise. Allowing low-cost, high-deductible plans is bad health policy since it will be poorer Americans without employer-provided coverage, i.e., those who are often sicker, who are most likely to take advantage of such an option. That sets up a financial incentive for them to skip routine and preventive care.

The other group opting for high-deductible plans will be the young who believe themselves invulnerable. Allowing them to opt out of insurance for routine care is just another form of adverse selection.

But it was Pearlstein’s proposal on “rationing” that raised the most questions. Allow comparative effectiveness research, he said, but “promise that the results would not be used as the basis for denying coverage.”

A few questions for Dr. Pearlstein:

1. Do insurers, including Medicare and Medicaid, deny coverage now? (Hint: Of course they do.)

2. On what basis do they make those decisions? (Hint: Follow the money.)

3. If the government specifically says that comparative effectiveness research will “not be used” for making coverage decisions, on what basis should those decisions be made? (Hint: See answer to number 2.)

And how about physicians and hospitals? Will they be able to use the results of this research to deny care, which in some circles is referred to as not paying for useless tests, procedures and the more expensive drugs that have generic alternatives? If not, where’s the cost control?

To control costs, Pearlstein would end Congressional meddling in health care decisions by creating a panel of independent experts, which every two years will propose structural reforms for Medicare and Medicaid that Congress can either endorse or reject. Let’s assume for the moment that Congress allows physicians and hospitals to use comparative effectiveness research to help meet the financial limits imposed by those payment reforms.

Now it is the doctors, group plans, clinics and hospitals that are “denying” care. Is that acceptable?

Of course, the Democrats in Congress could follow columnist Charles Krauthammer’s suggestion this morning and simply give up on cost control — for the time being. Offer universal coverage through a mandate, pay for the poor, regulate against adverse selection, ban insurance rescission after people get sick. It will add billions to insurance company coffers, but so what? “They will, in reality, have been turned into government utilities. No longer able to control whom they can enroll, whom they can drop and how much they chan limit their own liability, they will live off government largess — subsidized premiums from the poor; forced premiums from the young and healthy,” he writes.

Rationing, he assures us, will come down the road, when the whole system becomes irrationally unaffordable. Are we rich enough to kick the cost-control can down the road? I doubt it. Krauthammer’s plan is the ultimate bait-and-switch. If Democrats bought into his seductive logic, they’d find themselves roundly attacked — justifiably — as free-spending liberals not capable of minding the public purse.

Until Congress and the administration identify someone who will be socially (and legally) sanctioned to say yes to rational medical rationing, there’s no hope of holding down costs — or enacting health care reform.

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