Equity in Health Care
Few would disagree that equity, or fairness, should be a goal of our health care system. Most of us want to see fairness in the way that we allocate our health care resources and fairness in the way that we fund our system.
For the uninsured and underinsured, the benefits of an equitable system of universal health insurance are obvious. Access to affordable health care would be assured. For the purchasers of health care, including employers, the government, and more affluent individuals, the adoption of publicly administered, universal insurance would provide mechanisms for containing health care costs, a goal that has been elusive for market based health plans. And, very importantly, it would assure the return of free choice of providers of health care. But, because of our progressive tax system, those taxpayers that fund a larger portion of our national budget understandably are concerned about the impact on their contribution to an equitable system that shifts more costs to higher income individuals. So is equity in health care good or bad for the affluent, especially business owners?
Equity is to be clearly distinguished from the unrealistic and inequitable goal of equality in health care. Equal access to cosmetic surgery, to penthouse suites in ivory tower medical centers, or to detrimental high technology interventions would waste resources and introduce inequity by forcing some to pay for such excessive services that are utilized by others. That would be unfair.
Of the two aspects of equity in health care, funding of care and allocation of resources, let's first look at equity in allocation. With our abundant health care resources, and with the excess capacity in our system, access to care should be available to everyone. But what care? Acute appendicitis, meningitis, a fractured hip, a heart attack, all require and would receive appropriate emergency services, regardless of how it is funded. Some preventive services, especially those with public health implications such as immunization programs, are, in general, readily accessible. On the other hand, management of chronic medical conditions, periodic screening for disorders with effective interventions, pharmaceuticals, and other beneficial services frequently are not accessible to those with limited funds or inadequate health care coverage, simply because of lack of affordability. In fact, this deficiency in our system is so great that, in spite of excess resources, of all industrialized nations we have the most inequitable mechanisms of allocating these resources.
What should be the basis of our decisions on allocation of our health care resources? Quite simply, services that prevent premature death and services that maintain or improve quality of life should be accessible to everyone in an equitable system. We currently have enough funds allocated to health care to assure equitable access to virtually all beneficial services for everyone. The inequities in allocation arise primarily from the financial barriers characteristic of our system, and usually not from barriers due to limited capacity.
The other issue of equity, funding of health care, is more complex than is commonly realized. What would be an equitable method of funding care? Fairness would dictate that each individual contributes his or her fair share, but that no person should suffer a financial hardship as a result of accessing the health care system. Since an equitable system would assure that the contribution of low-income individuals would be below the threshold of financial hardship, they would not be able to afford to contribute an equal amount as would higher income individuals. The result is that higher income individuals would be absorbing more costs than their sector would generate.
This concept of inequality in contributions to an equitable system has been a major stumbling block to enactment of health care reform. Inevitably, there is fear that a public funding system, whether through a tax or a premium, would "unfairly" burden higher income individuals, an irony since, in this instance, equity is falsely perceived as being unfair. The affluent sector has been successful in assuring that equitable systems are not adopted because of the distributive tax policies involved.
We currently have enough funds dedicated to our health care system, but is that funding equitable? Half of health care dollars already pass through the hands of the federal government, primarily collected as payroll taxes and general tax revenues. Payroll taxes are at a fixed percentage, creating a greater tax burden for low-income individuals who have little, if any, disposable income, and often do not have enough income to meet their most basic needs. Thus payroll taxes can be inequitable. Although general tax rates theoretically are set at levels that establish equity through their progressive bracketing, the perception of equity varies with the prevailing political element in control.
Health plan premiums tend to be inequitable. Those paying the premiums are paying costs that have been shifted to them from those that are not paying the full costs of the services they have received, even though they may be capable of doing so. Those paying premiums also are paying for expensive health plan bureaucracies that are not providing value for the health care dollars they consume. In addition, premiums "assigned" to lower income employees, whether nominally paid by the employer or the employee, constitute a significantly larger percentage of their net income than do the premiums paid on behalf of higher income employees, a gross inequity. Further, for employment-linked insurance plans, the tax system provides greater implicit discounts for higher income individuals than for those with lower incomes. This regressive tax policy is highly inequitable.
And then there is the hidden burden of funding health care through mechanisms that are often not considered when calculating the nation's health care costs. As examples, we should consider the added costs of the medical component of homeowners' policies, auto insurance, workers' compensation insurance, and malpractice and other liability coverage. Contributions to medical charities are part of the funding, but the deductibility also shifts the tax burden to others. A much greater shift of the tax burden occurs with established tax policies such as the tax deductibility of employer provided insurance. Funding of community clinics also may increase local taxes. The products that we purchase include added health care related costs of the businesses involved. Several of these more obscure funding sources overlap, shifting costs to a degree that it is sometimes difficult to know who is paying what in health care. But they all perpetuate significant inequities in the overall funding of our health care system.
Thus, besides the inequity of our allocation of resources, the funding of health care in the United States is the least equitable of all other industrialized nations. Those relatively affluent individuals that are concerned about the inequality of an equitable system of funding care should look more closely at the much greater inequalities of the inequitable system that we now have. Unequal equity certainly is better than unequal inequity.
Without changing our health care delivery system, and without increasing the financial resources dedicated to health care, we can bring equity to the funding of health care, and we can bring equity to the allocation of those health care resources that provide value. Equity would be realized by the simple measure of adopting a publicly administered program of universal health insurance.
Don McCanne