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Providing health care for all shouldn't make insurers rich

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Providing health care for all shouldn't make insurers rich

By Milton Fisk and Kay Mueller
Herald-Times
Guest column
April 24, 2008

Government subsidies and outsourcing may be good for business without always being good for the public. Medicare outsources the administration of its prescription drug program, Medicare D, to private insurers. Medicare Advantage — Medicare C — subsidizes managed care insurance plans for seniors choosing them. Several current presidential aspirants — Clinton and Obama — would subsidize the purchase of insurance for the low-income uninsured. Each of these plans offers private insurers protection against a less wasteful plan, one that does without private insurers.

Involving the insurers in the Medicare drug and Advantage plans is a needless drain of Medicare funds.

The drug companies charge much more for the drugs used under Medicare D than they do for the same drugs bought by Medicaid. The law forbids Medicare to negotiate prices of Medicare D drugs with the pharmaceuticals. Medicaid bargains a 30 percent discount on drugs while the insurers running Medicare D bargain only a 5 to 10 percent discount. Medicare C’s Advantage Plan turns over managed care to private insurers, paying them 10 to 12 percent more than Medicare pays for seniors in its regular program.

Suppose one of those presidential aspirants wins. What would the subsidies they want cost? They want subsidies to help at least the poorest two-thirds of the 47 million uninsured buy insurance.

The insurers would be in for a windfall injection — from the government and low-income individuals — of about $150 billion each year. Any industry would love this. But would it serve the public interest?

The answer comes from looking at how to get quality health care to the uninsured for much less. The private insurers operate with enormous overhead. Profit is an essential part of it, since without it, investors turn away.

Then there is marketing, lobbying, paperwork, computer systems, colossal salaries for upper level managers and the expense of constantly merging and reorganizing. In sum, overhead accounts for roughly 25 percent of premium income, while overhead for Medicare is five times less!

The presidential aspirants who promote this kind of insurer protection plan recognize the waste involved. So what is their response? They would make subsidies contingent on reducing overhead. Sen.Clinton’s plan says premiums are not to be dedicated to “excessive profits and marketing.” This might reduce overhead from 25 percent down to 15 or 20 percent of premium income — still three or four times more than Medicare’s overhead. How can anyone stand before the public and say they want to waste billions of taxpayers’ dollars just to protect the insurers?

It is not right to use the uninsured as an excuse for making the insurers richer. We don’t need the insurers to provide the uninsured with health care.

Those proposing insurance protection plans spread the view that we shouldn’t help the uninsured unless the corporations make a buck out of it. Whatever happened to the public interest?

This guest column was written by Milton Fisk and Kay Mueller, who are members of the research committee of Hoosiers for a Commonsense Health Plan. Fisk is also an author of a book on health care reform.

U.S. must look for a health care system to cover everyone

By Robert Stone, M.D.
Bloomington Herald Times
Guest column
April 25, 2008

Nationally, the week of April 27 to May 3 is Cover the Uninsured Week. Locally, many of the 883 GE employees and their families are getting closer every day to becoming uninsured. Since World War II, access to health care in this country has been based on employer-sponsored insurance, but the percentage of workers covered by their employers peaked in 2001 at 65 percent and has been dropping ever since. The projections are that in a very few years less than half of Indiana workers will have coverage through their work. We’ve heard about the problems the auto industry has in paying for health care, but small businesses are feeling it even more, dropping their coverage at an even higher rate. The problem of the uninsured is not just “their” problem, it’s “our” problem. We are all just a layoff, a plant closing or a divorce away from being uninsured.

To make matters worse, we have a new epidemic of under-insurance. From 2000 to 2006, insurance premiums rose 87 percent while earnings increased only 20 percent over that same six-year period. The national average cost is now $1,000 a month for family coverage. While premiums have soared, deductibles and co-pays have gone up, too. In the desperate attempt to find a policy with affordable premiums, the fine print becomes crucial. For example, the official plan offered to Indiana University students has an annual maximum benefit of $75,000 per injury or illness. You can spend that much in one week in the intensive-care unit!

It is becoming clear that our current medical economic situation is unsustainable, with medical costs rising faster than inflation, insurance premiums rising much faster than earnings, while the number of uninsured just keeps rising. We don’t even need to go into the moral dimension of the richest country in the world allowing a rapidly growing number of its people to live under Third World medical conditions.

Taking into account that costs are out of control, how can we possibly contain them? The essence of insurance is that the greatest efficiency is achieved with the largest risk pool. The essence of bargaining for good prices is the use of bulk purchasing. The most cost-effective medical care is preventive care. How can you incorporate all that in one solution? By setting up an all-inclusive system that brings everyone into one big risk pool, in other words, a universal system.

How can we run a universal system in the most cost-effective way? The government will have to be the paymaster. Doctors and hospitals should stay private and independent.

Where is the model that we can use? Our 40-plus years of experience with Medicare. In the mid 1990s, when officials in Taiwan decided that their market-based health insurance system was failing, they looked at the experiences of other countries around the world and ended up with a system very much like our Medicare, but for everyone, not just those over age 65.

Is that socialism? I hardly think so. If Medicare is not socialism for everyone over age 65 right now, why is it socialism if we cover the rest of us? Is it any different from our “socialized” police force or fire department?

Is Medicare perfect? No, but it is a solid foundation to build on. Do you see long lines of seniors waiting outside of doctors’ offices around town? No, waiting lines are not a problem. Do Medicare patients get second-rate care? No, quality is no worse in Medicare than private insurance, and in many ways better.

Cover the uninsured? Aid for the under-insured? And those at risk of losing their insurance? That’s getting to be about everyone under Medicare age. Let’s cover everyone. Medicare for all!

This guest column was written by Robert Stone, M.D., director of Hoosiers for a Commonsense Health Plan, and state coordinator, Indiana chapter, Physicians for a National Health Program.

Providing health care for all shouldn’t make insurers rich

By Milton Fisk and Kay Mueller
Herald-Times
Guest column
April 24, 2008

Government subsidies and outsourcing may be good for business without always being good for the public. Medicare outsources the administration of its prescription drug program, Medicare D, to private insurers. Medicare Advantage — Medicare C — subsidizes managed care insurance plans for seniors choosing them. Several current presidential aspirants — Clinton and Obama — would subsidize the purchase of insurance for the low-income uninsured. Each of these plans offers private insurers protection against a less wasteful plan, one that does without private insurers.

Involving the insurers in the Medicare drug and Advantage plans is a needless drain of Medicare funds.

The drug companies charge much more for the drugs used under Medicare D than they do for the same drugs bought by Medicaid. The law forbids Medicare to negotiate prices of Medicare D drugs with the pharmaceuticals. Medicaid bargains a 30 percent discount on drugs while the insurers running Medicare D bargain only a 5 to 10 percent discount. Medicare C’s Advantage Plan turns over managed care to private insurers, paying them 10 to 12 percent more than Medicare pays for seniors in its regular program.

Suppose one of those presidential aspirants wins. What would the subsidies they want cost? They want subsidies to help at least the poorest two-thirds of the 47 million uninsured buy insurance.

The insurers would be in for a windfall injection — from the government and low-income individuals — of about $150 billion each year. Any industry would love this. But would it serve the public interest?

The answer comes from looking at how to get quality health care to the uninsured for much less. The private insurers operate with enormous overhead. Profit is an essential part of it, since without it, investors turn away.

Then there is marketing, lobbying, paperwork, computer systems, colossal salaries for upper level managers and the expense of constantly merging and reorganizing. In sum, overhead accounts for roughly 25 percent of premium income, while overhead for Medicare is five times less!

The presidential aspirants who promote this kind of insurer protection plan recognize the waste involved. So what is their response? They would make subsidies contingent on reducing overhead. Sen.Clinton’s plan says premiums are not to be dedicated to “excessive profits and marketing.” This might reduce overhead from 25 percent down to 15 or 20 percent of premium income — still three or four times more than Medicare’s overhead. How can anyone stand before the public and say they want to waste billions of taxpayers’ dollars just to protect the insurers?

It is not right to use the uninsured as an excuse for making the insurers richer. We don’t need the insurers to provide the uninsured with health care.

Those proposing insurance protection plans spread the view that we shouldn’t help the uninsured unless the corporations make a buck out of it. Whatever happened to the public interest?

This guest column was written by Milton Fisk and Kay Mueller, who are members of the research committee of Hoosiers for a Commonsense Health Plan. Fisk is also an author of a book on health care reform.

Marcia Angell on relationship between coverage and costs

Health Reform You Shouldn't Believe In

By Marcia Angell
The American Prospect
April 21, 2008

All of these variations in the Democrats’ plans run into this intractable dilemma: If the system stays essentially as it is and we try to expand coverage, costs will inevitably rise. On the other hand, attempts to control costs will inevitably reduce coverage. Without fundamental reform, coverage and costs have to move in the same direction. Yet, we don’t have the option of expanding both coverage and costs. At 16 percent of gross domestic product, our health-care system is already unaffordable. In fact, costs are the central problem; universal health care would be easy if money were no object. Furthermore, none of the proposed reforms offers any workable mechanism for controlling the unsustainable inflation in health costs. Attempts to regulate private insurers to prevent the worst abuses would probably do little more than add to the complexity and administrative costs of the system.

The proposed reforms also make the fundamental mistake of confusing insurance with health care. As many Americans are learning, the two are not the same — not by a long shot. Health insurance can easily be too skimpy or too laden with exceptions and co-charges to be of much use. What people really want when they’re sick is medical care, not medical insurance, just as they want education for their children, not the opportunity to buy education insurance.

The only workable solution is a single-payer system (there, I said it), in which everyone is provided with whatever care he or she needs regardless of age and medical condition. There would no longer be a private insurance industry, which adds little of value yet skims a substantial fraction of the health-care dollar right off the top. Employers, too, would no longer be involved in health care. Care would be provided in nonprofit facilities. The most progressive way to fund such a system would be through an earmarked income tax, which would be more than offset by eliminating premiums and out-of-pocket expenses.

This is not the same as Medicare for all. Medicare is embedded in our market-based entrepreneurial private system, and therefore experiences many of the same inflationary forces, including having to deal with profit-maximizing hospitals and physicians’ groups. Doctors’ fees are skewed to reward highly paid specialists for doing as many expensive tests and procedures as possible. As a result, Medicare inflation is almost as high as inflation in the private sector and similarly unsustainable.

…the private insurance industry has managed to convince many political leaders, including progressives, that a single-payer system is unrealistic. But what is truly unrealistic is anything else. My greatest concern about the Massachusetts plan is that when it unravels, people will draw the wrong lesson. They will assume that universal care at a cost we can afford is impossible, and give up on it. It’s not impossible; it’s just unlikely to be achievable while leaving our dysfunctional system in place. Can we make it right? I’m tempted to say, “Yes, we can.”

http://www.prospect.org/cs/articles?article=health_reform_you_shouldnt_believe_in

Comment:

By Don McCanne, MD

Yes we can!

Health Reform You Shouldn't Believe In

What the Massachusetts experiment teaches us about incremental efforts to increase coverage by expanding private insurance.

Marcia Angell
The American Prospect
April 21, 2008

For all their promise of change, Democrats are remarkably timid about changing the health-care system. The system now costs twice as much per person as those of other advanced countries and delivers worse average outcomes. It prices tens of millions of people out of health coverage altogether and limits care for countless others. Yet leading Democrats are clinging to this system, proposing to cover more people but not changing the system itself except at the margins. The timidity extends to choice of words. No one is supposed to say “single-payer” or “national health insurance” anymore, because that is “politically unrealistic”; the most we are allowed is to talk of reforming the system incrementally so that someday it will morph into “Medicare for all.”

Thus, the proposals for reform taken most seriously by Democrats — including Barack Obama and Hillary Clinton — would retain the central role of the investor-owned private insurance industry as well as the thousands of for-profit businesses it pays to deliver medical services. This is the industry, mind you, that has brought us to the predicament we’re in now, so let’s take a quick look at it.

The U.S. health system is unique in treating health care as a commodity to be bought and sold in a marketplace. Care is distributed according to the ability to pay, not according to medical need. Private insurers compete by avoiding high-risk individuals, limiting services for those they do cover, and, whenever possible, shifting costs to other payers or to patients in the form of high deductibles and co-payments. We have the only health system in the world based on avoiding sick people. It’s a chaotic and fragmented system that requires mountains of paperwork, which is one reason premiums are so high. Employers who offer health benefits react by capping their contributions, so that workers pay more out of pocket and bear the full brunt of premium increases.

Insurers contract with hospitals, HMOs, and other health facilities to provide the care. They, too, are often for-profit businesses that promote lucrative services for well-insured patients (such as coronary catheterization for Medicare recipients), while giving short shrift to less profitable ones (such as psychiatric services for the indigent). To compete in a market environment, even not-for-profit facilities behave in much the same way as for-profit ones. Doctors often act as entrepreneurs, investing in health facilities to which they refer patients. And because they are usually paid on a fee-for-service basis, they have a strong incentive to overuse tests and procedures that have the greatest profit margins.

All of this drives up costs to the overall system, while yielding profits for the various players within it. In fact, there’s a fundamental illogic to trying to contain costs in a market-based system. Markets are about expanding, not contracting. Like all businesses, hospitals want more, not fewer customers — but only as long as they can pay. Conventional wisdom holds that we need to retain this system because many Americans are satisfied with it. But except for industry spokespeople and politicians whose campaigns they support, I’ve never met anyone who actually is. Many people like their doctors, but that is not the same as liking the system.

The reforms favored by leading Democrats vary somewhat, but all have at their heart expanding insurance coverage through public subsidies for those who can’t afford the premiums or, alternatively, permitting those without access to good, affordable insurance to enroll in a new Medicare-type program that would be set up to provide them with coverage. Some reform proposals include a mandate requiring everyone to be insured.

Many proponents hope that a parallel Medicare-like system would eventually crowd out its less efficient private competitors, that under a play-or-pay requirement, employers would gradually decide to stop providing coverage and just pay into the common pool. However, this wishful thinking overlooks the power of the private health industry, through its huge lobby, to influence the rules so that it continues to profit while the public system is undermined.

All of these variations in the Democrats’ plans run into this intractable dilemma: If the system stays essentially as it is and we try to expand coverage, costs will inevitably rise. On the other hand, attempts to control costs will inevitably reduce coverage. Without fundamental reform, coverage and costs have to move in the same direction. Yet, we don’t have the option of expanding both coverage and costs. At 16 percent of gross domestic product, our health-care system is already unaffordable. In fact, costs are the central problem; universal health care would be easy if money were no object. Furthermore, none of the proposed reforms offers any workable mechanism for controlling the unsustainable inflation in health costs. Attempts to regulate private insurers to prevent the worst abuses would probably do little more than add to the complexity and administrative costs of the system.

The proposed reforms also make the fundamental mistake of confusing /insurance/ with /health care/. As many Americans are learning, the two are not the same — not by a long shot. Health insurance can easily be too skimpy or too laden with exceptions and co-charges to be of much use. What people really want when they’re sick is medical care, not medical insurance, just as they want education for their children, not the opportunity to buy education insurance.

Despite the Democrats’ coalescence around the same approach for achieving universal care, only one such plan has been implemented — the Massachusetts health-reform plan. It is therefore worth looking at in some detail.

MASSACHUSETTS MIRACLE OR MIRAGE?

This plan, which was enacted in April 2006 amid extraordinary hoopla, set out to cover the 500,000 to 750,000 uninsured residents of the state, and to see that the coverage for everyone else met a minimum standard. To that end, the state would purchase insurance for everyone with incomes beneath the federal poverty level, and partially subsidize it for those earning up to three times the poverty level (which now comes to $31,200 per year for an individual). Everyone else — roughly 200,000 to 250,000 people — would have to purchase his or her own insurance or face stiff fines. The legislation established a new state agency, the Commonwealth Health Insurance Connector, which would try to make sure insurance was affordable and met the minimum standard and which would also determine the level of subsidies.

Financing the plan was iffy from the outset. When fully implemented, it was projected to cost the state only $125 million in new money the first year — not very much in a state with a $26 billion budget. Mostly it would be financed by diverting existing funds from two sources: Medicaid, under a two-year waiver that would permit federal money to be used for this purpose, and the state’s generous “free care pool,” which was established to provide direct services to uninsured patients in safety-net facilities and is supported by assessments on hospitals and insurers. There would also be a paltry fine on employers who didn’t offer insurance, but no one thought that would be an important source of funding. Success would depend crucially on the individual mandate requiring those with incomes more than three times the poverty level to pay for their own insurance.

What’s happened since then? While those beneath the poverty level signed up for free insurance in even greater numbers than anticipated, very few people who were required to pay for their own insurance signed up. Even those eligible for partial subsidies were slow to enroll. The deadline to purchase insurance had to be extended, and 60,000 uninsured people were exempted from the mandate because — yes, that’s right — they couldn’t afford it (so much for universality). The state modified its requirement that all insurance meet a minimum standard. Jon Kingsdale, the executive director of the Commonwealth Health Insurance Connector, told me that was because the federal Employee Retirement Income Security Act prohibits states from setting standards when employers act as their own insurers (didn’t the Massachusetts legislators know that when they crafted the law?), but he said that next year workers will be responsible for somehow upgrading their own policies, or (you guessed it) be fined.

Don’t get me wrong. Massachusetts is to be congratulated for seeking to extend health care to everyone in the state. Every decent society should ensure health care, just as it does education, clean water, and police and fire protection. Massachusetts’ plan is an ambitious and well-intentioned effort. But unfortunately, it’s extremely unlikely to work for three main reasons.

First, the individual mandate is harsh, regressive, and probably unenforceable. It requires the near-poor to pay a much higher percentage of their income on health care than their more affluent neighbors. Although insurers are prohibited from charging more for people with medical conditions, older people have to pay more. The premiums for a 57-year-old are twice as much as for a 27-year-old. According to the Connector’s Web site in March of this year, the least expensive plan for a 57-year-old had a premium of $4,700 per year, a $2,000 deductible, and substantial co-pays and co-insurance up to $4,000 per year. (That cap did not include prescription drugs.) So a hypothetical 57-year-old with a $32,000 annual income (just over three times the poverty level) could pay as much as $8,700 out of pocket — or over a quarter of his income. Family plans are, of course, different, but the effect is the same. Next year, those who haven’t purchased insurance will be fined half the premium of the lowest-priced plan. Truly this is the Squeeze Blood from a Turnip Plan.

It also lets employers off the hook. They’re supposed to pay a $295 per employee fine if they don’t provide health benefits, but they’re now considered to have met their obligation if they offer benefits to just 25 percent of their employees or contribute 33 percent of the premiums — no matter whether employees accept the offer and no matter how skimpy the coverage. And a $295 fine is no incentive to provide insurance that costs upward of $5,000. So the growing problem of underinsurance will be left to workers themselves to solve.

Second, like all such plans, the Massachusetts strategy pretends that having insurance is the same as having health care. The Connector makes much of the fact that some 300,000 people who were previously uninsured now have insurance, but most of those already had access to health care, either through the free-care pool or Medicaid. So it’s something of a shell game, with money that would have been spent directly on health care passed through insurance companies instead (which keep quite a lot of it).

The Connector offers a choice of insurance plans from four different companies for those eligible for state subsidies (called Commonwealth Care), and from six companies for those who have to purchase their own (Commonwealth Choice). There is a trade-off between premiums, on the one hand, and deductibles and other out-of-pocket costs, on the other. The plans with the lowest premiums have the highest deductibles and other costs. But those who select the cheapest plans are likely to be precisely those least able to afford high out-of-pocket costs. So they could end up with health insurance that they can’t afford to use but have to pay for anyway. The speaker of the Massachusetts House of Representatives, Salvatore DiMasi, one of the prime movers behind the plan, wasn’t worried. He told /The Boston Globe/ last year, “We’re moving to universal insurance and then toward insurance that has substantial benefits. That’s the key.” Can he really believe that after people have signed up for stripped-down coverage, and costs have continued to climb, there will be the money and political will to add to the benefit package?

Third and most important, there is no effective mechanism for containing costs. Insurance companies can set premiums as high as they like. If they’re much higher than the competition, of course, the Connector can choose not to offer those plans. But if all the companies raise their premiums at about the same rate, there’s not much the agency can do. And sure enough, premiums have continued to rise faster than the background inflation rate (10 percent for Commonwealth Care next year). The only way to hold them in check is to cut benefits or increase deductibles and co-payments. (The Connector actually favors increasing co-payments to prevent Commonwealth Care from becoming so attractive that employers will drop coverage and send workers to the state plan.) Insurance will quickly become too expensive, as well as increasingly inadequate. The state, which now faces a $1.2 billion budget shortfall and health costs of $147 million more than projected, will not be able to contribute much more from general revenues. Funding depends utterly on the Medicaid waiver being renewed in July, by no means a sure thing.

THE VERDICT: SINGLE-PAYER

Massachusetts is not the first state to come up with a plan to provide near-universal health insurance to its residents, although it is the first to rely on an individual mandate. Maine tried it in 2003, Minnesota and Tennessee in 1992, to name a few. And Massachusetts made an earlier attempt in 1988. All were greeted with great enthusiasm and fanfare in the media. And all failed and died with scarcely a whimper. More recently, California, inspired by Massachusetts, tried to pass similar legislation. Despite Gov. Schwarzenegger’s support, it died in the state Senate in January. It didn’t have resources anywhere near comparable to those in Massachusetts, mainly the Medicaid funds and free-care pool, and had to rely more on employer contributions. What all the state efforts have had in common is that they left our current dysfunctional system essentially intact and simply tried to expand it around the edges.

The only workable solution is a single-payer system (there, I said it), in which everyone is provided with whatever care he or she needs regardless of age and medical condition. There would no longer be a private insurance industry, which adds little of value yet skims a substantial fraction of the health-care dollar right off the top. Employers, too, would no longer be involved in health care. Care would be provided in nonprofit facilities. The most progressive way to fund such a system would be through an earmarked income tax, which would be more than offset by eliminating premiums and out-of-pocket expenses.

This is not the same as Medicare for all. Medicare is embedded in our market-based entrepreneurial private system, and therefore experiences many of the same inflationary forces, including having to deal with profit-maximizing hospitals and physicians’ groups. Doctors’ fees are skewed to reward highly paid specialists for doing as many expensive tests and procedures as possible. As a result, Medicare inflation is almost as high as inflation in the private sector and similarly unsustainable.

In addition, Medicare is not what it once was. For the past eight years, it has been at the mercy of an administration intent on dismantling and privatizing it. The prescription-drug benefit enacted in 2003 is an example. It’s a bonanza for the pharmaceutical industry because it forbids Medicare from using its purchasing power to get good prices. Medicare recipients have also been encouraged to enroll in private health plans, which are paid on average 12 percent more than it would cost traditional Medicare to care for the same people. Even as public funds are siphoned off to the private sector, premiums and co-payments have been increased, and there are now proposals for means testing — a superficially attractive idea but ultimately a grave threat to any public program.

Over the years there have been many independent analyses of the costs of converting to a single-payer system, either within a state or nationally. They include studies by the General Accounting Office, the Congressional Budget Office, and consulting firms, such as the Lewin group, hired by state governments and, in Massachusetts, the state medical society. Most found that a single-payer system would initially cost roughly the same as the system it replaced, while providing universal coverage, and over time would be much cheaper.

Polls have shown that most people, and most Massachusetts doctors, favor a single-payer system. The Boston Globe called for a national single-payer system last May. In an editorial about the big three automakers’ desire to transfer health costs to the autoworkers’ union, the Globe said, “It would make more sense for the federal government to oversee a national health system financed from taxes. The cost could be spread across the entire population, rather than borne by Chrysler or other companies that no longer enjoy the assured profitability of their best years.”

Nevertheless, the private insurance industry has managed to convince many political leaders, including progressives, that a single-payer system is unrealistic. But what is truly unrealistic is anything else. My greatest concern about the Massachusetts plan is that when it unravels, people will draw the wrong lesson. They will assume that universal care at a cost we can afford is impossible, and give up on it. It’s not impossible; it’s just unlikely to be achievable while leaving our dysfunctional system in place. Can we make it right? I’m tempted to say, “Yes, we can.”

Marcia Angell, M.D. is a senior lecturer on social medicine at the Harvard Medical School and former editor-in-chief of The New England Journal of Medicine.

Health Reform You Shouldn’t Believe In

What the Massachusetts experiment teaches us about incremental efforts to increase coverage by expanding private insurance.

Marcia Angell
The American Prospect
April 21, 2008

For all their promise of change, Democrats are remarkably timid about changing the health-care system. The system now costs twice as much per person as those of other advanced countries and delivers worse average outcomes. It prices tens of millions of people out of health coverage altogether and limits care for countless others. Yet leading Democrats are clinging to this system, proposing to cover more people but not changing the system itself except at the margins. The timidity extends to choice of words. No one is supposed to say “single-payer” or “national health insurance” anymore, because that is “politically unrealistic”; the most we are allowed is to talk of reforming the system incrementally so that someday it will morph into “Medicare for all.”

Thus, the proposals for reform taken most seriously by Democrats — including Barack Obama and Hillary Clinton — would retain the central role of the investor-owned private insurance industry as well as the thousands of for-profit businesses it pays to deliver medical services. This is the industry, mind you, that has brought us to the predicament we’re in now, so let’s take a quick look at it.

The U.S. health system is unique in treating health care as a commodity to be bought and sold in a marketplace. Care is distributed according to the ability to pay, not according to medical need. Private insurers compete by avoiding high-risk individuals, limiting services for those they do cover, and, whenever possible, shifting costs to other payers or to patients in the form of high deductibles and co-payments. We have the only health system in the world based on avoiding sick people. It’s a chaotic and fragmented system that requires mountains of paperwork, which is one reason premiums are so high. Employers who offer health benefits react by capping their contributions, so that workers pay more out of pocket and bear the full brunt of premium increases.

Insurers contract with hospitals, HMOs, and other health facilities to provide the care. They, too, are often for-profit businesses that promote lucrative services for well-insured patients (such as coronary catheterization for Medicare recipients), while giving short shrift to less profitable ones (such as psychiatric services for the indigent). To compete in a market environment, even not-for-profit facilities behave in much the same way as for-profit ones. Doctors often act as entrepreneurs, investing in health facilities to which they refer patients. And because they are usually paid on a fee-for-service basis, they have a strong incentive to overuse tests and procedures that have the greatest profit margins.

All of this drives up costs to the overall system, while yielding profits for the various players within it. In fact, there’s a fundamental illogic to trying to contain costs in a market-based system. Markets are about expanding, not contracting. Like all businesses, hospitals want more, not fewer customers — but only as long as they can pay. Conventional wisdom holds that we need to retain this system because many Americans are satisfied with it. But except for industry spokespeople and politicians whose campaigns they support, I’ve never met anyone who actually is. Many people like their doctors, but that is not the same as liking the system.

The reforms favored by leading Democrats vary somewhat, but all have at their heart expanding insurance coverage through public subsidies for those who can’t afford the premiums or, alternatively, permitting those without access to good, affordable insurance to enroll in a new Medicare-type program that would be set up to provide them with coverage. Some reform proposals include a mandate requiring everyone to be insured.

Many proponents hope that a parallel Medicare-like system would eventually crowd out its less efficient private competitors, that under a play-or-pay requirement, employers would gradually decide to stop providing coverage and just pay into the common pool. However, this wishful thinking overlooks the power of the private health industry, through its huge lobby, to influence the rules so that it continues to profit while the public system is undermined.

All of these variations in the Democrats’ plans run into this intractable dilemma: If the system stays essentially as it is and we try to expand coverage, costs will inevitably rise. On the other hand, attempts to control costs will inevitably reduce coverage. Without fundamental reform, coverage and costs have to move in the same direction. Yet, we don’t have the option of expanding both coverage and costs. At 16 percent of gross domestic product, our health-care system is already unaffordable. In fact, costs are the central problem; universal health care would be easy if money were no object. Furthermore, none of the proposed reforms offers any workable mechanism for controlling the unsustainable inflation in health costs. Attempts to regulate private insurers to prevent the worst abuses would probably do little more than add to the complexity and administrative costs of the system.

The proposed reforms also make the fundamental mistake of confusing /insurance/ with /health care/. As many Americans are learning, the two are not the same — not by a long shot. Health insurance can easily be too skimpy or too laden with exceptions and co-charges to be of much use. What people really want when they’re sick is medical care, not medical insurance, just as they want education for their children, not the opportunity to buy education insurance.

Despite the Democrats’ coalescence around the same approach for achieving universal care, only one such plan has been implemented — the Massachusetts health-reform plan. It is therefore worth looking at in some detail.

MASSACHUSETTS MIRACLE OR MIRAGE?

This plan, which was enacted in April 2006 amid extraordinary hoopla, set out to cover the 500,000 to 750,000 uninsured residents of the state, and to see that the coverage for everyone else met a minimum standard. To that end, the state would purchase insurance for everyone with incomes beneath the federal poverty level, and partially subsidize it for those earning up to three times the poverty level (which now comes to $31,200 per year for an individual). Everyone else — roughly 200,000 to 250,000 people — would have to purchase his or her own insurance or face stiff fines. The legislation established a new state agency, the Commonwealth Health Insurance Connector, which would try to make sure insurance was affordable and met the minimum standard and which would also determine the level of subsidies.

Financing the plan was iffy from the outset. When fully implemented, it was projected to cost the state only $125 million in new money the first year — not very much in a state with a $26 billion budget. Mostly it would be financed by diverting existing funds from two sources: Medicaid, under a two-year waiver that would permit federal money to be used for this purpose, and the state’s generous “free care pool,” which was established to provide direct services to uninsured patients in safety-net facilities and is supported by assessments on hospitals and insurers. There would also be a paltry fine on employers who didn’t offer insurance, but no one thought that would be an important source of funding. Success would depend crucially on the individual mandate requiring those with incomes more than three times the poverty level to pay for their own insurance.

What’s happened since then? While those beneath the poverty level signed up for free insurance in even greater numbers than anticipated, very few people who were required to pay for their own insurance signed up. Even those eligible for partial subsidies were slow to enroll. The deadline to purchase insurance had to be extended, and 60,000 uninsured people were exempted from the mandate because — yes, that’s right — they couldn’t afford it (so much for universality). The state modified its requirement that all insurance meet a minimum standard. Jon Kingsdale, the executive director of the Commonwealth Health Insurance Connector, told me that was because the federal Employee Retirement Income Security Act prohibits states from setting standards when employers act as their own insurers (didn’t the Massachusetts legislators know that when they crafted the law?), but he said that next year workers will be responsible for somehow upgrading their own policies, or (you guessed it) be fined.

Don’t get me wrong. Massachusetts is to be congratulated for seeking to extend health care to everyone in the state. Every decent society should ensure health care, just as it does education, clean water, and police and fire protection. Massachusetts’ plan is an ambitious and well-intentioned effort. But unfortunately, it’s extremely unlikely to work for three main reasons.

First, the individual mandate is harsh, regressive, and probably unenforceable. It requires the near-poor to pay a much higher percentage of their income on health care than their more affluent neighbors. Although insurers are prohibited from charging more for people with medical conditions, older people have to pay more. The premiums for a 57-year-old are twice as much as for a 27-year-old. According to the Connector’s Web site in March of this year, the least expensive plan for a 57-year-old had a premium of $4,700 per year, a $2,000 deductible, and substantial co-pays and co-insurance up to $4,000 per year. (That cap did not include prescription drugs.) So a hypothetical 57-year-old with a $32,000 annual income (just over three times the poverty level) could pay as much as $8,700 out of pocket — or over a quarter of his income. Family plans are, of course, different, but the effect is the same. Next year, those who haven’t purchased insurance will be fined half the premium of the lowest-priced plan. Truly this is the Squeeze Blood from a Turnip Plan.

It also lets employers off the hook. They’re supposed to pay a $295 per employee fine if they don’t provide health benefits, but they’re now considered to have met their obligation if they offer benefits to just 25 percent of their employees or contribute 33 percent of the premiums — no matter whether employees accept the offer and no matter how skimpy the coverage. And a $295 fine is no incentive to provide insurance that costs upward of $5,000. So the growing problem of underinsurance will be left to workers themselves to solve.

Second, like all such plans, the Massachusetts strategy pretends that having insurance is the same as having health care. The Connector makes much of the fact that some 300,000 people who were previously uninsured now have insurance, but most of those already had access to health care, either through the free-care pool or Medicaid. So it’s something of a shell game, with money that would have been spent directly on health care passed through insurance companies instead (which keep quite a lot of it).

The Connector offers a choice of insurance plans from four different companies for those eligible for state subsidies (called Commonwealth Care), and from six companies for those who have to purchase their own (Commonwealth Choice). There is a trade-off between premiums, on the one hand, and deductibles and other out-of-pocket costs, on the other. The plans with the lowest premiums have the highest deductibles and other costs. But those who select the cheapest plans are likely to be precisely those least able to afford high out-of-pocket costs. So they could end up with health insurance that they can’t afford to use but have to pay for anyway. The speaker of the Massachusetts House of Representatives, Salvatore DiMasi, one of the prime movers behind the plan, wasn’t worried. He told /The Boston Globe/ last year, “We’re moving to universal insurance and then toward insurance that has substantial benefits. That’s the key.” Can he really believe that after people have signed up for stripped-down coverage, and costs have continued to climb, there will be the money and political will to add to the benefit package?

Third and most important, there is no effective mechanism for containing costs. Insurance companies can set premiums as high as they like. If they’re much higher than the competition, of course, the Connector can choose not to offer those plans. But if all the companies raise their premiums at about the same rate, there’s not much the agency can do. And sure enough, premiums have continued to rise faster than the background inflation rate (10 percent for Commonwealth Care next year). The only way to hold them in check is to cut benefits or increase deductibles and co-payments. (The Connector actually favors increasing co-payments to prevent Commonwealth Care from becoming so attractive that employers will drop coverage and send workers to the state plan.) Insurance will quickly become too expensive, as well as increasingly inadequate. The state, which now faces a $1.2 billion budget shortfall and health costs of $147 million more than projected, will not be able to contribute much more from general revenues. Funding depends utterly on the Medicaid waiver being renewed in July, by no means a sure thing.

THE VERDICT: SINGLE-PAYER

Massachusetts is not the first state to come up with a plan to provide near-universal health insurance to its residents, although it is the first to rely on an individual mandate. Maine tried it in 2003, Minnesota and Tennessee in 1992, to name a few. And Massachusetts made an earlier attempt in 1988. All were greeted with great enthusiasm and fanfare in the media. And all failed and died with scarcely a whimper. More recently, California, inspired by Massachusetts, tried to pass similar legislation. Despite Gov. Schwarzenegger’s support, it died in the state Senate in January. It didn’t have resources anywhere near comparable to those in Massachusetts, mainly the Medicaid funds and free-care pool, and had to rely more on employer contributions. What all the state efforts have had in common is that they left our current dysfunctional system essentially intact and simply tried to expand it around the edges.

The only workable solution is a single-payer system (there, I said it), in which everyone is provided with whatever care he or she needs regardless of age and medical condition. There would no longer be a private insurance industry, which adds little of value yet skims a substantial fraction of the health-care dollar right off the top. Employers, too, would no longer be involved in health care. Care would be provided in nonprofit facilities. The most progressive way to fund such a system would be through an earmarked income tax, which would be more than offset by eliminating premiums and out-of-pocket expenses.

This is not the same as Medicare for all. Medicare is embedded in our market-based entrepreneurial private system, and therefore experiences many of the same inflationary forces, including having to deal with profit-maximizing hospitals and physicians’ groups. Doctors’ fees are skewed to reward highly paid specialists for doing as many expensive tests and procedures as possible. As a result, Medicare inflation is almost as high as inflation in the private sector and similarly unsustainable.

In addition, Medicare is not what it once was. For the past eight years, it has been at the mercy of an administration intent on dismantling and privatizing it. The prescription-drug benefit enacted in 2003 is an example. It’s a bonanza for the pharmaceutical industry because it forbids Medicare from using its purchasing power to get good prices. Medicare recipients have also been encouraged to enroll in private health plans, which are paid on average 12 percent more than it would cost traditional Medicare to care for the same people. Even as public funds are siphoned off to the private sector, premiums and co-payments have been increased, and there are now proposals for means testing — a superficially attractive idea but ultimately a grave threat to any public program.

Over the years there have been many independent analyses of the costs of converting to a single-payer system, either within a state or nationally. They include studies by the General Accounting Office, the Congressional Budget Office, and consulting firms, such as the Lewin group, hired by state governments and, in Massachusetts, the state medical society. Most found that a single-payer system would initially cost roughly the same as the system it replaced, while providing universal coverage, and over time would be much cheaper.

Polls have shown that most people, and most Massachusetts doctors, favor a single-payer system. The Boston Globe called for a national single-payer system last May. In an editorial about the big three automakers’ desire to transfer health costs to the autoworkers’ union, the Globe said, “It would make more sense for the federal government to oversee a national health system financed from taxes. The cost could be spread across the entire population, rather than borne by Chrysler or other companies that no longer enjoy the assured profitability of their best years.”

Nevertheless, the private insurance industry has managed to convince many political leaders, including progressives, that a single-payer system is unrealistic. But what is truly unrealistic is anything else. My greatest concern about the Massachusetts plan is that when it unravels, people will draw the wrong lesson. They will assume that universal care at a cost we can afford is impossible, and give up on it. It’s not impossible; it’s just unlikely to be achievable while leaving our dysfunctional system in place. Can we make it right? I’m tempted to say, “Yes, we can.”

Marcia Angell, M.D. is a senior lecturer on social medicine at the Harvard Medical School and former editor-in-chief of The New England Journal of Medicine.

KFF Primer on private coverage

How Private Coverage Works: A Primer

Kaiser Family Foundation
2008 Update (April 2008)

This primer provides a basic overview of private coverage for health care.

Conclusion

Health coverage is subject to significant requirements at both the state and federal level. While new laws and regulations have created important protections for consumers, they have also produced overlapping and sometimes duplicative or conflicting state and federal rules.

Continued interest by policymakers in expanding access to health care coverage may lead policymakers to revisit current regulatory standards. For example, proposals to provide federal tax credits for people purchasing individual health insurance are likely to prompt discussion of how to permit people in poorer health to have access to private individual coverage so that they can make use of the tax credit. As some state policymakers have discovered in addressing this issue, it will be a challenge to find ways to expand access to those in poorer health without undermining the stability of risk pools in this market.

As federal policy issues increasingly focus on regulation or expanded use of the private health insurance market, there will be greater need for policymakers to understand how this market functions and how state and federal rules interact.

http://www.kff.org/insurance/7766.cfm

Comment:

By Don McCanne, MD

Much of the discussion on reform that will take place in the next couple of years will be on reform of the private insurance market. Of course, that is not the discussion we need to have. We should be discussing how to replace the private insurance market with a single payer national health program.

But the discussion of the private insurance model will be taking place, whether we want it to or not. It is important that we are well informed on the details of the current status of the private insurance market so that we are able to respond with the reasons why the framing of reform must be changed from repairing the private insurance industry to replacing it with a financing system that truly would provide affordable health care for everyone.

This primer is worth reading both to update your knowledge about private insurance and to provide you with confidence in your framing of the important issues for reform.

AHIP's lessons learned

The Beginnings of Health Insurance

America’s Health Insurance Plans (AHIP)
Learning Center

In the late 19th and early 20th centuries, the business of both accident and sickness insurance grew rapidly. Many new companies were formed, and existing fire and life insurance companies entered the accident and sickness field. However, the new industry faced a number of problems:

* Competition was intense, and in response many companies cut their premium rates so low that they could not make a profit.

* Despite some progress, companies still had insufficient information and experience to accurately predict the incidence of illness and so determine how much premiums should be to cover the costs of claims. Consequently, even those companies that made every effort to charge adequate premiums often miscalculated and lost money.

* Also because of insufficient experience, many companies accepted applications for insurance that they should have refused as bad risks. As a result, these companies paid more in claims than they received in premiums.

http://www.ahiphiwire.org/LearningCenter/Feature.aspx?doc_id=163021

Comment:

By Don McCanne, MD

We can learn much from the private insurance industry’s professional organization, AHIP. In this instance, we learn its perception of the flaws of earlier insurance products.

Those of us who contend that private insurance is an obsolete method of financing health care are not the least surprised by AHIP’s statement that “many companies accepted applications for insurance that they should have refused as bad risks.” AHIP’s contemporary position is that private insurers should not cover individuals with significant health care needs because that drives premiums so high that they are priced out of the market. Instead they support taxpayer-funded programs to pay for the 80 percent of health care used by the 20 percent of people who have higher health care needs.

What is really interesting is what AHIP has to say at a time when both Republican and Democratic presidential candidates support competition between private health plans as the preferred model of reform. AHIP states that one of the major problems that the insurance industry faced in its earlier history was that “competition was intense” causing the companies to price their premiums so low that they could not make a profit. So if competition between health plans is not supposed to bring us lower premiums, then just what is it supposed to do?

It appears that the insurance industry has learned that they should insure only health and not sickness, and that they should not compete based on premium prices.

So the private health insurance plans of the 21st century have decided that should include only the healthy, ending pools that enable a transfer from the many who are healthy to those with sickness or injury. Also they realize that they should avoid competing with each other based on lower premiums, rather they should use their oligopolies to push premiums up to the maximum that the market will bear.

When what we really need are (1) the transfer made possible by a universal risk pool, and (2) an equitable financing system that is based on ability to pay rather than on medical need, is there anyone who seriously contends that the 21st century health insurers have not become obsolete? Well, yes. Apparently our presidential candidates still believe in the discredited magic of competition in the private health insurance markets.

AHIP’s lessons learned

The Beginnings of Health Insurance

America’s Health Insurance Plans (AHIP)
Learning Center

In the late 19th and early 20th centuries, the business of both accident and sickness insurance grew rapidly. Many new companies were formed, and existing fire and life insurance companies entered the accident and sickness field. However, the new industry faced a number of problems:

* Competition was intense, and in response many companies cut their premium rates so low that they could not make a profit.

* Despite some progress, companies still had insufficient information and experience to accurately predict the incidence of illness and so determine how much premiums should be to cover the costs of claims. Consequently, even those companies that made every effort to charge adequate premiums often miscalculated and lost money.

* Also because of insufficient experience, many companies accepted applications for insurance that they should have refused as bad risks. As a result, these companies paid more in claims than they received in premiums.

http://www.ahiphiwire.org/LearningCenter/Feature.aspx?doc_id=163021

Comment:

By Don McCanne, MD

We can learn much from the private insurance industry’s professional organization, AHIP. In this instance, we learn its perception of the flaws of earlier insurance products.

Those of us who contend that private insurance is an obsolete method of financing health care are not the least surprised by AHIP’s statement that “many companies accepted applications for insurance that they should have refused as bad risks.” AHIP’s contemporary position is that private insurers should not cover individuals with significant health care needs because that drives premiums so high that they are priced out of the market. Instead they support taxpayer-funded programs to pay for the 80 percent of health care used by the 20 percent of people who have higher health care needs.

What is really interesting is what AHIP has to say at a time when both Republican and Democratic presidential candidates support competition between private health plans as the preferred model of reform. AHIP states that one of the major problems that the insurance industry faced in its earlier history was that “competition was intense” causing the companies to price their premiums so low that they could not make a profit. So if competition between health plans is not supposed to bring us lower premiums, then just what is it supposed to do?

It appears that the insurance industry has learned that they should insure only health and not sickness, and that they should not compete based on premium prices.

So the private health insurance plans of the 21st century have decided that should include only the healthy, ending pools that enable a transfer from the many who are healthy to those with sickness or injury. Also they realize that they should avoid competing with each other based on lower premiums, rather they should use their oligopolies to push premiums up to the maximum that the market will bear.

When what we really need are (1) the transfer made possible by a universal risk pool, and (2) an equitable financing system that is based on ability to pay rather than on medical need, is there anyone who seriously contends that the 21st century health insurers have not become obsolete? Well, yes. Apparently our presidential candidates still believe in the discredited magic of competition in the private health insurance markets.

Public Utilities and Health Care

Greater Louisville Medical Society
President’s eVoice
April 3, 2008

What do you think would happen if the gas and electric company decided to raise rates to maximize profits for their executives and investors? What if that strategy resulted in 17 percent of the citizens not being able to afford gas/electric service or not being able to buy it because the company didn’t like how much gas and electricity you used?

How about if some people got special rates based on where they worked? What if you lost water, gas and electric service to your house if you quit your job? Except for the most hardcore libertarians or social Darwinists, I suspect the public and political response would be swift and definitive: there is something wrong about this.

Since the early 20th century, certain essential services such as power, water, waste management, transportation and communication have been considered “public utilities” that need to be governed and regulated for the good of the entire community. Some utilities are owned privately, some publicly. Utilities are governed by Public Service Commissions that regulate the rates and services of the utility and resolve disputes that arise.

Most of us are not happy when we open our gas/electric or water bill, but are generally satisfied that there isn’t overt profiteering. We generally agree that planning for future growth and development of necessary services should be based on the public good rather than just free-market economics. It is also reassuring that there is an arbiter to resolve disputes.

In this political season I cringe every time a pundit makes reference to health care reform proposals as “socialized medicine.” Do you fear “socialized gas and electric?” Although there are strong advocates for a single-party payer system, none of the major presidential candidates or political parties advocates this solution. However, any physician who has experienced the changes in health care delivery systems over the past generation has to have serious doubts about free-market solutions to the problem.

Some might argue that we already have some regulatory groups, e.g. FDA, licensure boards, state department of insurance, grievance and appeals procedures. A number of consumer and physician-led class action suits against insurance company practices have been successful, but these have required a great deal of time and effort. The “game” needs a referee to call “FOUL!” in real time.

Legislative attempts at regulation and reform have not been successful at either addressing the problem of the uninsured or containing costs. As we have seen in Kentucky, many insurers have simply moved out rather than comply with the new laws. There needs to be greater uniformity of rules and regulations, a national “level playing field.” For example, reforms such as guaranteed issue (the right to buy insurance, restriction of practice of re-underwriting by insurance companies) and benefits mandates (e.g., mental health coverage) can only be successfully implemented on a national level.

If we begin to consider health care as a public utility rather than a free market commodity or “industry,” we can move toward regulatory reforms that address the problems of the uninsured and the spiraling costs of medical care. We retain the benefits of private ownership and free market competition and innovation, as we see in the energy and other utility companies. At the same time, we acknowledge that access to affordable health care is a right of citizenship rather than a luxury item.

Sincerely,

G. Randolph Schrodt, Jr., MD
GLMS President

About Us
The Greater Louisville Medical Society is committed to helping doctors help patients.

GLMS Mission

– Promote the science, art and profession of medicine
– Protect the integrity of the physician-patient relationship
– Advocate for the health and well-being of the community
– Unite physicians to achieve these ends

An Evangelical from a Conservative Background, Dr. Rocky White is Not Your Typical Advocate for Single-Payer Healthcare

Democracy Now
NPR
April 21, 2008

Click here to listen to the interview.

While there are differences between the healthcare plans offered by Democratic presidential opponents Barack Obama and Hillary Clinton, neither of them is proposing a single-payer system of national healthcare. That’s despite the endorsement of precisely such a plan last December by the American College of Physicians, the largest medical specialty organization. We speak with Dr. Rocky White, a passionate, if unusual, advocate for a single-payer health insurance program. He describes himself as an evangelical from a conservative background and is on the Board of Directors of the nonprofit Health Care for All Colorado.

AMY GOODMAN: Democratic presidential rivals, Senators Barack Obama and Hillary Clinton, traded barbs over their healthcare proposals while campaigning in Pennsylvania this weekend. The rising cost of medical care has emerged as a key concern for voters, particularly as the economy continues to worsen. A new survey by the AFL-CIO found almost all of the respondents, most of whom were insured and employed, thought the current healthcare system is fundamentally broken and planned to vote for ways to change it in November.

This is an exchange between Clinton and Obama on healthcare from their debate in Los Angeles on January 31st that was hosted by CNN.

SEN. HILLARY CLINTON: We cannot get to universal healthcare, which I believe is both a core Democratic value and an imperative for our country, if we don’t do one of three things. Either you can have a single-payer system, or–which I know a lot of people favor, but for many reasons is difficult to achieve–or you can mandate employers–well, that’s also very controversial–or you can do what I am proposing, which is to have shared responsibility.

Now, in Barack’s plan, he very clearly says he will mandate that parents get health insurance for their children. So it’s not that he is against mandatory provisions; it’s that he doesn’t think it would be politically acceptable to require that for everyone. I just disagree with that. I think we, as Democrats, have to be willing to fight for universal healthcare.

SEN. BARACK OBAMA: What they’re struggling with is they can’t afford the healthcare. And so, I emphasize reducing costs. My belief is–is that if we make it affordable, if we provide subsidies to those who can’t afford it, they will buy it. Senator Clinton has a different approach. She believes that we have to force people who don’t have health insurance to buy it, otherwise there will be a lot of people who don’t get it. I don’t see those folks. And I think that it is important for us to recognize that if, in fact, you’re going to mandate the purchase of insurance and it’s not affordable, then there’s going to have to be some enforcement mechanism that the government uses. And they may charge people who already don’t have healthcare fines or have to take it out of their paychecks. And that, I don’t think, is helping those without health insurance. That is a genuine difference.

AMY GOODMAN: There are important differences between the healthcare plans offered by the Democratic presidential opponents, but neither of them is proposing a single-payer system of national healthcare. That’s despite the endorsement of precisely such a plan last December by the American College of Physicians, the largest medical specialty organization. The candidates’ refusal to consider such a proposal also flies in the face of the latest study indicating a majority of physicians, 59 percent, now support government legislation to establish national health insurance.

Today, I am joined by Dr. Rocky White. He is a passionate, if unusual, advocate for a single-payer health insurance program. He describes himself as an “evangelical from a conservative background.” He is on the Board of Directors of the nonprofit Health Care for All Colorado. Most recently, he revised and updated Dr. Robert LeBow’s classic book advocating single-payer healthcare. It’s called Health Care Meltdown: Confronting the Myths and Fixing Our Failing System. Dr. Rocky White joins us now here in Denver. He just came up last night from Alamosa, Colorado, where he lives.

Welcome to Democracy Now!

DR. ROCKY WHITE: Thank you, Amy.

AMY GOODMAN: It’s good to have you with us. We just drove through on our tour through New Mexico and Colorado–Alamosa yesterday morning–and were reminded of the problem with the water. Before we talk about healthcare, can you talk about what happened to Alamosa’s water?

DR. ROCKY WHITE: Well, several weeks ago, we started seeing sporadic outbreaks of salmonella in the community, and before too long, those sporadic outbreaks began to grow and grow. And it finally became clear that the salmonella was in the city water system. By the time it was all said and done, we’ve had about 300–I think I saw in the paper yesterday 385 cases now of salmonella. And just recently, we had one death. Thankfully, that’s all that we’ve had. But that’s basically what happened.

We really don’t know the source. We don’t know where the breach came from. We had a horrible winter. And so, it could have been just the freeze thaw from the exceedingly frozen ground, and then probably a breach somewhere with the high sublevels from the amount of snow that we’ve had. I suspect that’s probably where it came from, but I’m not sure we’ll ever know.

AMY GOODMAN: I had heard there was some pipe work that was being done and possibly a sewage pipe mixing with the water supply. Is that at all what could have happened?

DR. ROCKY WHITE: There’s a lot of theories out there. I’m not sure that we’ll ever know for sure. But the city was intending on chlorinating the water at some time in the future, but that future is now. So we now have chlorinated water in Alamosa.

AMY GOODMAN: And people are drinking it now?

DR. ROCKY WHITE: And people are drinking it now. You know, it was really tough, Amy, for a couple of weeks. People couldn’t take baths, couldn’t wash their dishes. And, you know, obviously the thing that happened there was the effect on the economy has been devastating. Most of the restaurants had to close down. People got laid off as a result. Then all the businesses downtown, their businesses dropped because the restaurants were closed. And I suspect by the time you think about all the money that’s been spent by the city, all the business that’s been lost and the tax revenues, it’s probably going to cost our community several million dollars by the time it’s all said and done.

AMY GOODMAN: I also understand –we stopped in at Adams State College–that the first government entity to come in when it was clear there was some kind of salmonella outbreak was the Department of Homeland Security.

DR. ROCKY WHITE: Yeah, that is correct. And I think, in some respects, well, the Department of Health is sort of tied to that. And I guess, in a way, this is sort of a homeland security issue, if you would, because the security of the people of Alamosa was in danger. And I think they’re trying to kind of tie those two together. That’s probably how that happened.

AMY GOODMAN: They weren’t concerned about al-Qaeda in Alamosa?

DR. ROCKY WHITE: No, we’re not concerned about al-Qaeda in Alamosa. But, you know, the FBI was there. You know, I think in these days, these times and days, I think people are just so paranoid that’s the first thing that comes to their mind.

AMY GOODMAN: Well, Dr. Rocky White, I want to talk to you about the Health Care Meltdown and about why you are taking on single-payer as your key issue. But first, we’re going to break, and we’re going to break back in New York: live in our studio, Sara Thomsen.

[break]

AMY GOODMAN: We’re broadcasting from Denver, Colorado. Our guest is Dr. Rocky White, an advocate for single-payer healthcare with an unusual background. Dr. White, why don’t you talk about that?

DR. ROCKY WHITE: Well, Amy, I grew up in Nebraska, and I came from a very conservative background, an evangelical background. All of my family members–you know, everyone was Republican, very conservative. And when you grow up in that environment, obviously that’s just something you just sort of adopt as you get older.

After I went through medical school, I intended on going back and practicing medicine in a rural area. And that is eventually what I did. I practiced in western Nebraska for a few years and then ended up in southern Colorado, going on thirteen years ago down in Alamosa. I joined a for-profit, fee-for-service organization down there. And, you know, of the twenty-three physicians that were my partners initially, it was a very conservative group. I mean, this was a fee-for-service group, hard-working. We had one Democrat in the whole group. So that tells you, you know, where we were at, where we stood politically.

But during the four, five years–well, actually, when I moved to the Valley, there were eleven full-time practicing internal medicine specialists at that time. That’s what I do, is practice internal medicine. Just to make a long story short, through the course–as the years went by, as we kind of entered into the new millennium, we started hitting on some very difficult times financially. And eventually we got to the point where we were just about to go broke, and we had to join forces with a hospital. Physicians came and went during those seven or eight years’ period of time. In fact, just in our group alone, there were thirty-four doctors who came and went just in about a seven-year period of time. By the time it was all said and done, when our group finally joined the hospital in 2004, just shortly thereafter, I was the only internal medicine specialist who was practicing full-time in the Valley at that point.

So if you go back to the early ’90s, as our group started to fall apart financially, I was very good at economics, I was very good at the business of medicine. I knew how to run a business, knew how to hire and fire, balance books, etc. I understood that part of the business of medicine. But I didn’t understand the bigger picture, and that is the policies that got us to where we’re at today. And as we started to fall apart, I started to study that and tried to understand what is so wrong with our group–or not just our group, but I began to see it was just the whole healthcare system as a whole, not just our group.

And as I began to study and to look at state policy and federal policy and going back–if you want to understand our healthcare system, you have to go back fifty or a hundred years to see how we evolved into this. You know, there wasn’t some mad scientist in the 1940s who devised this horrible system that we have today. It was just a matter of evolutionary process, so to speak. But as I began to study that and to try and assimilate what it was that was going on, I began to see some very disturbing trends. Part of the reasons that we got to where we’re at today are multiple. There’s not just one “this is what happened.” And as I started to weave that together, I began to say, “Jiminy Christmas! This thing is really screwed up!” And now I’m beginning to understand the healthcare system very well, not just our group, but as a whole.

And then I began to ask myself, what are we going to have to do to fix it? And so, obviously, single-payer was not even something that I would have even considered ten years ago. In fact, ten years ago I didn’t even know the word “single-payer” existed. And so, as I started to look at that and I looked at different ways that we could fix this whole thing–I mean, you talk about subsidies, expanding Medicaid, all of that–I began to realize that the only way that we’re going to fix this system is we’re going to have to put everyone on a Medicare-like system. In order to truly fix the system, we’re going to have to put everyone into one single risk pool, we’re going to have to share that risk, and the most efficient way to do that is through the tax system.

At that time, I didn’t know anything about Physicians for a National Health Program. I had never heard of Bob LeBow. In fact, the word “single-payer,” I hadn’t even heard that, you know, back in the late ’90s. And so, as I started to put all this together, I said, you know, I’m going to write a book about this. This is so important to do this.

And so, one day I was down at the emergency room, and one of my colleagues who’s sort of an old hippy from the ’60s, a very liberal individual, she knew how conservative I was, because at that time I was still a Republican. And I was very sheepish about the whole thing. I mean, here I am, a Republican, thinking about nationalizing healthcare. It just went against the grain of everything that I stood for. But you have to remember something, Amy: I didn’t come to those conclusions with lofty ideals of social justice. It was purely from an economic standpoint. This is the only way that we’re going to do–be able to fix this and do it efficiently.

So, as I started to talk to Beth, she said, “Rocky, have you ever heard of a group called Physicians for a National Health Program?” And I said, “No.” And so, she gave me the webpage, and I got on. And as I started looking at or reading the information that had been written by Steffie Woolhandler and Dave Himmelstein–I think you’ve talked to them before–looking at Bob’s book and things, I thought, “Criminelli! These people are thinking like I’m thinking!” This is–you know, I thought I was this crazy person out in the middle of nowhere coming up with this idea.

And so, that spring, there was a conference in Chicago that Ida Hellander was putting on with training people to be advocates for single-payer. And so, when I went out there, she introduced me to this book, Health Care Meltdown, that was written by Bob LeBow. And as I started going through it, it was sort of one of those Twilight Zone experiences, I guess, because it was really strange, because he had written my book. He had–I mean, even the chapters were very similar. And so–and I guess it’s not surprising, because when you start coming to these conclusions, you start thinking in the same lines. So I thought, you know, I’m not going to write my book; Bob LeBow already did this. I’m just going to get out there and start being an advocate and start speaking.

AMY GOODMAN: And Bob LeBow was president of Physicians for a National Health Program, ultimately was paralyzed in a cycling accident and died about five years ago?

DR. ROCKY WHITE: Yeah, that’s correct.

AMY GOODMAN: So you wrote the introduction to the new edition of Health Care Meltdown–

DR. ROCKY WHITE: Yeah.

AMY GOODMAN: Confronting the Myths and Fixing Our Failing System.

DR. ROCKY WHITE: Yeah, because that’s what’s so strange about that, is because I was up speaking in Idaho and got to meet his wife. And to make a long story short, Ida got a hold of Mrs. LeBow, Gail, and the two of them said, “You know, we’d really like to have Rocky write this,” because my background is so similar to Bob’s. In fact, Bob was a Republican and changed to a Democrat at about the same age that I did that. And Bob practiced rural medicine. He practiced to the underserved areas. He was very passionate about the uninsured, very similar to myself. And so, it was quite an honor when they called me and said, “Would you revise this and update this for the second edition?” And so, I did. I put an introduction in there, I updated all the numbers, brought it all up to date and then added two chapters to the book.

AMY GOODMAN: When you hear, for example, Barack Obama and Hillary Clinton debating healthcare, what are your thoughts? And explain what single-payer is.

DR. ROCKY WHITE: Well, single-payer can be a lot of things, but basically what single-payer means is that you have one organization that handles the financing of healthcare. That one organization could be a for-profit insurance company, if you only had one. It could be the government. It could be a public utility commission. So that’s all single-payer means.

The thing is, you know, you and I grew up in the same era. We have this idea about single-payer and socialized medicine sort of locked together. When I say the word “single-payer,” the first thing that comes into people’s minds is “Oh, my god! Social medicine? We get socialized medicine, and the next thing that’s going to happen is that the hammer and sickle is going to start flying from the top of the Capitol.” And so, when I explain to people that there are a lot of different types of single-payer systems–you could have purely socialized medicine. That’s kind of like what England has. The government owns the hospitals, the government owns the clinics, the government finances all the healthcare, and all the doctors work for the government. That is truly socialized medicine, as opposed to the Canadian system, where the financing comes through their Medicare program, but all the doctors are in private practice. And so, that’s kind of the spectrum, so to speak.

AMY GOODMAN: And when you hear the candidates debating healthcare, do you think that they really do differ? And why do you think they don’t go with this? Hillary Clinton started at the beginning–we heard the clip where she was talking about the options. She started by saying, well, single-payer is an option. Everyone–well, many people cheered in the audience, and she went on to say that wasn’t likely.

DR. ROCKY WHITE: Yeah. Well, I think that part of the problem is that our current healthcare system is so entrenched with the system that we have. We have this plurality of systems, where we actually have a single-payer system, which is Medicare, we have another single-payer system for Medicaid for the poor, and then we’ve got private insurance, which is a speckling of all kinds of crazy things. You know, this industry is a $2 trillion industry, and the profits in the for-profit insurance industry are so huge and it’s so deeply entrenched into Wall Street that people–this country is going to have a hard time extracting that. And I think that Barack Obama and Hillary Clinton understand that, and they don’t want to go ripping up this system for the sake of an ideal. But the fact of the matter is, is until we move to a single-payer system and get rid of the profit motive in financing of healthcare, we will not be able to fix the problems that we have. They will be impossible to fix.

AMY GOODMAN: What do you think is the single biggest misunderstanding about single-payer in this country, and what is your strategy for having it adopted? What do the polls in the United States show of how Americans feel?

DR. ROCKY WHITE: You know, it’s interesting. As you see the polls, as you’ve seen them move through from about 1999 up to the present, you’re seeing an ever-increasing number of people starting to support a national health program. And in fact there was a recent poll that came back from one of the medical associations back east and was just published in JAMA a couple of weeks ago.

AMY GOODMAN: The Journal of the American Medical Association.

DR. ROCKY WHITE: The Journal of the American Medical Association, which shows that 59 percent of practicing physicians today believe that we need to have a national health program. I mean, that’s unheard of, even ten years ago.

AMY GOODMAN: I mean, they were the biggest group opposed, because of the finances.

DR. ROCKY WHITE: Oh, I mean, that’s it. I mean, you know, physicians traditionally have been the group that has been the anchor sunk into the mud that has been dragging this whole healthcare reform process along. In fact, the AMA, the American Medical Association, launched a huge effort back in the 1960s to stop Medicaid and Medicare. And so, it’s amazing to see a new generation of physicians coming up who are disgusted with our current healthcare system. You know, we’re trained to be advocates of patients, we’re trained to save lives, we’re trained to practice medicine. And instead, what we’re doing is we’re practicing Wall Street economics. And they’re too diametrically opposed from the process.

AMY GOODMAN: So how do you inject this idea into the presidential debate?

DR. ROCKY WHITE: What it’s going to take is it’s going to take pressure from the bottom up. You know, I think that our current presidential candidates–I think both of them understand that ideally single-payer would be the best, but they don’t have the political will to move that forward. And so it’s going to take–I use it for this example. I say–you know, as the governor the State of Colorado or the president of the United States, their job is to feel which way the wind is blowing. Our job is to turn that wind.

And that happens by me coming down and speaking to you this morning. And I go out and talk to Kiwanis groups and Rotary groups. And especially the thing that I’ve been doing is going around and speaking with my fellow physicians, because it’s surprising how many doctors don’t even understand the system. I’ll have to admit that eight years ago I didn’t understand the system. And I think once people understand the system and understand what’s wrong with it, they’re going to do the same thing that I did.

AMY GOODMAN: The American College of Physicians has endorsed–this is your association?

DR. ROCKY WHITE: That’s my association of internal medicines. American College of Physicians, they gave a dual support, so to speak. They said if we’re going to fix the system, we either have to do this or this. And surprisingly, one of those was a single-payer system.

AMY GOODMAN: Well, I want to thank you very much for joining us. This is the beginning of a more extended conversation. C. Rocky White has been our guest. He has revised and updated the book by Robert LeBow, Health Care Meltdown: Confronting the Myths and Fixing Our Failing System.

The political rhetoric of "socialized medicine"

Poll Finds Americans Split by Political Party Over Whether Socialized Medicine Better or Worse Than Current System

Harvard School of Public Health
February 14, 2008

A poll by the Harvard Opinion Research Program at the Harvard School of Public Health (HSPH) and Harris Interactive:

Q. So far as you understand the phrase, do you think that if we had socialized medicine in this country that the health care system would be better or worse than what we have now?

Overall:
Better – 45%
Worse – 39%

Republicans:
Better – 17%
Worse – 70%

Democrats:
Better – 70%
Worse – 16%

Independents:
Better – 43%
Worse – 38%

Young adults (under 35):
Better – 55%
Worse – 30%

Seniors (65+):
Better – 30%
Worse – 57%

http://www.hsph.harvard.edu/news/press-releases/2008-releases/poll-americans-split-by-political-party-over-socialized-medicine.html

And…

Are We Heading toward Socialized Medicine?

By Stan Dorn and John Holahan
Urban Institute
April 2008

With health reform at the forefront of the national campaign, some charge that proposals to restructure our health care system represent dangerous steps moving the country towards government-run health care and socialized medicine. Similar rhetoric was heard last fall when President Bush vetoed legislation reauthorizing the State Children’s Health Insurance Program (SCHIP). We find this rhetoric inapplicable to both the SCHIP bill and proposals from most presidential candidates. The core issues in health reform involve, not the size of government, but proposals’ effect on the number of uninsured, access to quality care, cost growth, and consumers’ health care choices.

The U.S. Health Care System Today

Medicaid and Medicare cover 42.7 million and 42.4 million people, respectively, with some poor seniors and people with disabilities receiving coverage from both programs. The government also provides publicly funded health care to almost 9 million current and former federal employees and dependents through the Federal Employees Health Benefits Program; 3.7 million veterans who receive health care through the VA; and the country’s active-duty soldiers and their dependents. Only 5 percent of the insured population in the United States does not receive some kind of government subsidy, either directly or through a tax benefit.

Pending Proposals for SCHIP and National Reforms

Some single-payer proposals would go much further; an example is that advanced by Congressman Kucinich (HR 676). While health care providers would nominally remain private, the government’s authority would be so all-encompassing that the system would be the functional equivalent of socialized medicine.

Market-Oriented Proposals

Proponents of these market-oriented proposals agree that a strong public-sector role is appropriate if it accomplishes important objectives. That is why these proposals retain most functions served by government today and, in some cases, embrace aggressive new government interventions.

Many market-oriented proposals would create problems of quality and access to care for some people — the very problems some argue are characteristic of publicly run systems.

Conclusion

The core issue in health reform is not specifically the role of government, but what policies yield the best possible consequences for the American public. Such results include the number of people with health coverage, consumers’ quality of and access to necessary care, health care cost growth, and consumers’ ability to make choices about their health care and health coverage. Rhetoric about socialized medicine and government-run health care is a distraction from these much more fundamental concerns.

http://www.urban.org/UploadedPDF/411648_socialized_medicine.pdf

“What Is Socialized Medicine and Is It Relevant to Health Care Reform?” For a link to an audio webcast of this Urban Institute forum:
http://www.urban.org/Pressroom/otherevents/socmed.cfm

Comment:

By Don McCanne, MD

For political reasons efforts often are made to obfuscate the definition of “socialized medicine,” but it is important to understand the meaning of the term. A socialized medicine system is one in which the government is the owner of the health care delivery system, and professionals providing the health care are employees of the government.

In contrast, social insurance is a government insurance program which pays for health care provided by the private health care delivery system. Social insurance programs may be government-administered programs, such as the single payer model, or they may be contracted through private insurers. Do not confuse these private, non-profit insurers in social insurance programs with the model of for-profit private insurance in the United States. The private insurers in social insurance programs serve primarily as administrators, but the tightly-regulated financing system functions basically like the single payer model.

The Veterans Administration health system is government owned, and the professionals within the system are employees of the government. Thus it is a system of socialized medicine. Medicare is a government insurance program that pays for services in the private health care delivery system. Thus it is a program of social insurance.

Even Americans who believe they understand the term “socialized medicine” are often confused. In the Harvard/Harris poll, only 47 percent believe that the veterans health care system is a system of socialized medicine (it is). In contrast, 60 percent believe that Medicare is a system of socialized medicine (it is not).

Stan Dorn and John Holahan from the Urban Institute warn us that “rhetoric about socialized medicine and government-run health care is a distraction.” Yet they state that the single payer proposal of HR 676 “would be the functional equivalent of socialized medicine.” Well, they do have an agenda. They state that policies yielding the best consequences for the American public would include “consumers’ ability to make choices about their health care and health coverage.” Throughout their report are many other comments that make it clear that they support the Clinton/Obama model of choice of private insurance plans while rejecting the single payer model. It’s clear that they want to insulate the Democrats’ proposal against the inevitable “socialized medicine” attack of the Republicans. (It should be noted that the Republicans’ claim of private market solutions rings hollow when they propose expanding government subsidies to a population in which 95 percent of the insured are already receiving some form of public subsidies.)

We must continue to stand up against those who obfuscate the issues by abusing the political rhetoric over socialized medicine, especially so when they come from our own camp. They are correct when they say that it is the policies that count, but they are wrong when they reject policies, for political reasons, that would provide the greatest benefit for the patients.