We need major health reform
By Glen Peterson
My View
The Free Press (Mankato, Minn.)
August 25, 2009
The author of two recent My View columns argues against a “public option” being added to our health care system in one column and argues that health insurance should be private in another column. Referring to a report published by the World Health Organization that compared 191 nations, he cites one WHO analysis of “being responsive to patient needs” in which the United States had the highest rating.
He fails to mention that was just one of many analyses conducted, and in the same report the WHO ranked the U.S. 37th in overall health system performance, just ahead of Cuba and Slovania and just behind Costa Rica.
Why does the U.S. compare so poorly to the rest of the industrial world? Among many reasons, our costs are excessive and a great number of Americans are uninsured or underinsured. These problems can be directly attributed to the practices of private health insurers who uniquely in the U.S. provide our primary means of connecting consumers with providers.
According to data published in the medical journal Health Affairs, in 2009 health care spending in the U.S. will total $2.5 trillion or $8,160 per capita (approximately double the health care spending in other industrial countries). Health care spending will account for 17.4 percent of the U.S. gross domestic product (GDP), compared to typically around 10 percent among other industrial countries.
Approximately 60 percent of the funding for health care comes directly or indirectly from taxes. We already pay as much per capita in taxes for health care as do residents in other nations that cover 100 percent of their citizens without additional costs to consumers or to businesses. Approximately 20 percent is paid by consumers for charges such as premiums, deductibles, co-pays, and other uncovered costs. The final 20 percent comes from employers who provide health insurance as part of employee compensation.
Where does the money we pay for health care go? While publicly administered health care programs such a Medicare or Veterans Health Administration have administrative overhead of about 2 or 3 percent, private insurers have varying costs for overhead. A widely cited and accepted average of 20 percent is consistent with the range of 10 percent to 30 percent that is estimated by Paul Keckly, executive director of Deliotte Center for Health Solutions. Executive compensation is just one example of why private insurer overhead is so costly. Current and previous CEOs of Minnetonka-based UnitedHealth Group both have been awarded unexercised stock options worth hundreds of millions of dollars. The previous CEO, who was ousted in a stock options backdating scandal, had many years of annual compensation of more than $50 million.
The Minnesota Office of the Legislative Auditor admits that oversight is inadequate and estimates overhead of “non-profit” health insurers to range from 6 percent to 20 percent. CEOs of Minnesota’s three major non-profit health insurers consistently exceed $1 million each in annual compensation with one CEO receiving closer to $3 million in many years. Among other “overhead” costs we are all paying for, The Center for Responsive Politics reports that insurers and HMO’s have contributed more than $40 million to current members of Congress over the past 10 years.
Recently private insurers are spending over $1 million per day on lobbying. Some insurers also pay employees whose job is to find ways and excuses to deny the claims of policy holders, even when denials are life threatening. It is not publicly administered programs that operate “death panels.” These examples of exorbitant costs are being paid for with our money intended to provide needed health care.
A second major problem associated with private health insurance has to do with limited coverage. With 47 million Americans having no form of health insurance approximately 16 percent of Americans have no systematic, reliable access to needed health care services. This “rationing” is virtually nonexistent in other industrial nations.
Also, in a recent study published in The American Journal of Medicine, researchers from Harvard found that 62.1 percent of all bankruptcies in the U.S. were related to medical costs. Of these, 75 percent actually had health insurance. Even with private health insurance, policy holders are tremendously vulnerable to caps, exclusions, denials and similar gaps that can result in needed treatments not being provided and bills not being paid.
Closer to home, during the August recess, staff from Congressman Tim Walz’s campaign office report retrieving over 130 personal stories from Congressional District 1 residents telling of being unable to get insurance, being dropped from insurance, having claims that are denied by insurers, and going broke or bankrupt. These abuses do not occur in publicly operated systems such as Medicare or the Veteran’s Health Administration, or in other industrial nations with entirely or primarily publicly administered health care systems.
The United States has by far the most expensive health care system in the world. Still, millions of Americans are un-served or underserved in our system. Much of the excessive cost and inefficiency can be attributed directly to the uniquely American approach of using private insurance as the “middleman” or connection between consumers and providers. Publicly administered systems in the United States and in other industrial nations have demonstrated the ability to better meet the needs of more people for less money. This fact should be a primary consideration in enacting much needed major health care reform.
Glen Peterson is a professor of rehabilitation counseling at Minnesota State University. He is an active member of the Minnesota chapter of Physicians for a National Health Program and of the Minnesota Universal Health Care Coalition, with whom he is a member of the Steering Committee and chair of the Community Organizing Committee.
http://www.mankatofreepress.com/letters/local_story_237225053.html