DATA UPDATES EXCERPTS (September 1998)
New England Journal of Medicine Editor Calls for Single Payer
The New England Journal of Medicine
June 1, 2000 -- Vol. 342, No. 22
Patients' Rights Bills and Other Futile Gestures
Health care reform is once more at the top of the political agenda, after some six years of neglect in the wake of the failure of the Clinton plan. During those six years, the issue was generally considered one of the third rails of American politics -- not to be touched. What is causing the turnabout? There are three reasons. First, after a period of stagnation during the mid-1990s, inflation in health care costs is again sharply on the increase. Second, the number of Americans without any health care insurance at all, or with inadequate coverage, continues to rise. And third -- and most important politically -- middle-class voters are getting fed up with the abuses of managed care. They are frustrated by shorter hospital stays, restricted choices of doctors, arbitrary denials of coverage, increasing deductibles and copayments, and all the other methods by which the industry resists actually providing services to sick people.
Since the demise of the Clinton plan in 1994, it has been generally agreed that reform of the health care system cannot be full-scale. Conventional wisdom holds that the Clinton attempt failed in large part because it was too sweeping. According to this view, reform needs to be incremental to succeed. Thus, what few reforms we have seen since 1994 have merely nibbled at the edges of the access problem. For example, the Kennedy-Kassebaum statute, which permits employees who leave their jobs to continue their health insurance (if they can afford to pay for it), and the expansion of insurance coverage for children are quite modest in their scope and effects. Similarly, attempts to deal with the abuses of managed care have been piecemeal -- for example, legislation to require 24-hour hospital stays after childbirth.
It is in this spirit that a number of "patients' rights" bills are being offered, both in the U.S. Congress and in state legislatures. The proposals differ from one another in some respects, most notably in the population to which they would apply and the extent to which patients would be permitted to sue their managed-care companies. However, all have in common efforts to restore to patients and their doctors control over medical decisions -- control that has increasingly been assumed by third-party payers and managed-care plans. For example, the bills provide for appeals mechanisms when services are denied, for treatment in hospital emergency departments when patients plausibly believe it is warranted, and for decisions about referrals to be made by doctors and patients, not by health plans and employers.
I very much agree with the aims of patients' rights bills. But I also believe these bills will not achieve their ends. Rather, I am afraid they will have effects opposite from those intended. Patients' rights bills will simply swell the ranks of the uninsured. Why such a perverse effect? The reason is that employers are not required by law to offer any health care benefits at all, and they will not do so if they believe the disadvantages to them outweigh the advantages. Patients' rights bills will tend to tip that balance. Insofar as they have teeth, they will inevitably increase the costs of managed-care companies, which will simply pass their increased costs along to employers. Employers may then decide to drop health care coverage altogether, or to limit it sharply through stratagems such as "defined contributions," rather than pay the higher premiums for standard benefits. Workers, for their part, may elect not to accept health care insurance, because of the growing direct costs to them. Thus, patients' rights legislation will very probably increase the number of uninsured and underinsured people. The tougher the regulations, the more likely this outcome. The fundamental problem is that it is impossible to regulate health care in an employment-based system if employers can opt out.
The threat that patients' rights legislation will increase the number of the uninsured and underinsured may not be fully realized in our present economy, when we have nearly full employment and many employers have a strong incentive to offer good benefits to attract workers. However, we need to remember that even in this booming economy, the ranks of the uninsured and underinsured are steadily increasing. Most of the newcomers to these ranks are employed. With a downturn in the job market, bargaining power would probably begin to shift from employees to employers. In that case, a very large number of employers might be quite willing to drop or reduce health care benefits, especially if premiums were rapidly increasing.
That is exactly what the managed-care industry and many of its allies in Congress argue in opposition to patients' rights bills. I believe they are correct about the probable effects of such bills on the number of the uninsured and underinsured, but they are wrong in concluding that the present managed-care insurance system is essentially sound. (The only change the industry advocates from time to time is an expansion of coverage by managed care, but with premiums, of course, set by the private market and subsidized by government.) What we should instead conclude is that the private managed-care market has been a miserable failure at delivering health care. It has creamed off ever larger percentages of health care premiums in bloated administrative and marketing costs and profits, it has rewarded health plans that cherry-pick the healthy and avoid the sick, and it has resisted at every turn providing adequate services to those unfortunate enough to need them.
There is no question that patients' rights -- and doctors' rights -- are essential in any decent health care system. But they cannot be legislated in isolation in a system whose every incentive works against these rights and where the provision of health care insurance is purely voluntary. What needs to be changed is the system itself. Contrary to conventional wisdom, incremental changes, such as patients' rights legislation, will not work. In a competitive private market, they simply provoke reactions that nullify the social objectives of the legislation.
This is not the place to present in detail a plan to overhaul our health care system. But there are three major changes that would address the difficulties in ensuring patients' rights that I have discussed here.
First, employers should get out of the health care business altogether. There is no reason to believe they are good proxies for their workers when it comes to health care decisions. Indeed, they have a clear conflict of interest, since they have a strong incentive to keep premiums as low as possible.
Second, just as employers are not good proxies for their workers, so investor-owned managed-care companies are not good proxies for doctors. They, too, have a conflict of interest. They have obligations to their investors as well as to their enrollees. That the former often take precedence is evident from all the ways in which the industry limits medical services even while maintaining high profits and executive salaries. In my view, there is no place for these businesses in a good health care system.
Finally, health care insurance should not be optional, as it is in our employment-based system. Just as everyone over the age of 65 is covered by Medicare, so should everyone under that age be covered. In a 1993 editorial in these pages, I called for a universal, single-payer system and suggested that we could attain that goal by extending Medicare to all Americans. The need is even greater now. Those who worry that such a reform would increase taxes should remember that we all pay for health care anyway -- through our paychecks, deductibles and copayments, and the prices of goods and services -- and that Medicare is far more efficient than the market-based part of our health care system.
Election year 2000 is the time to look again at our health care system in its entirety, not just in bits and pieces. The insurance industry will once again mount a campaign to prevent that from happening. Harry and Louise will be back, perhaps with aliases. But can they convince the American public once again that government is the bogeyman and that the private sector will take care of their health care needs? I doubt it. We've had six years of hard experience, and we know better.
Marcia Angell, M.D.