PNHP

You Don't Want to Get Sick if You're American

You Don't Want to Get Sick if You're American

by Silver Donald Cameron
The Chronicle Herald, Halifax, Nova Scotia
June 23, 2006

I CAN’T AFFORD to Get Sick! cried the cover of Reader’s Digest. And below that line was the somber title, Fixing Our Health Crisis.

Right, I thought. Here we go again. Economists viewing medicare with alarm. Politicians defending it by dismantling it. Soaring costs, a quicksand of bureaucracy, physicians departing for the States.

But no. This article was about the States. This was not the Canadian edition of Reader’s Digest, it was the U.S. version. And the Americans were evidently having a health crisis of their very own.

Like most discussions of medicine, the article was mostly about money. Americans who have medical insurance get it from private companies, often as a benefit of employment. The poor and the elderly are sometimes covered by government plans. About 15 per cent of the population — 45.8 million Americans — don’t have any coverage at all.

As in Canada, medical costs have been rising, driving insurance premiums up by 73 per cent since 2000. But employers resist, demanding that employees “co-pay” a larger share of the cost of treatment or accept a lower level of coverage. Many employees can’t afford the co-pay, especially if there’s serious illness in the family. They postpone treatment.

When they can’t postpone it any more, they go ahead with treatments they can’t pay for. They scramble desperately to cover the costs, spending their savings, borrowing heavily, running up their credit cards. Eventually they topple into bankruptcy. Health costs are by far the leading cause of personal bankruptcy in the U.S.

But if the patient doesn’t pay, the doctors and hospitals are stuck with the costs. They recover their losses by raising their prices, and the cycle begins again.

All of which led the Reader’s Digest to ask how costs could be better controlled in the first place. Malpractice suits are common and expensive, and the average jury award is now $600,000. Doctors may pay $200,000 a year just for malpractice insurance. And the wide array of insurance companies means that the system is choking on paper and stifled by bureaucracy. A doctor needs a whole staff just to process patients’ insurance claims.

The Digest dutifully surveyed the opportunities for reducing costs, including caps on malpractice awards, tax incentives for citizens, reform of the insurance regulations, the use of generic drugs, and digitization of records and prescriptions. Good, boring stuff, and some of it would be useful in Canada, too — like digital record-keeping.

But the issues the Digest did not consider provide a textbook lesson in the way the media can shape debate. The Digest notes, but doesn’t discuss, the cost of white collar crime in the form of health insurance fraud, which drains off $100 billion a year. And it doesn’t even mention the most obvious and effective way to get better coverage at a lower cost, which is to bring in national health insurance, like every other OECD nation except Mexico.

Canada’s health-care system is demonstrably more efficient (and infinitely more democratic) than the awful Rube Goldberg contraption which is failing the U.S. so badly. In 2001, for instance, health care cost Canadians $2,163 per capita — $1,533 through medicare, $630 out of pocket. The U.S. system cost more than twice as much — $2,168 from the government and $2,719 from the individual, for a total of $4,887.

Or, to put it another way, the U.S. spent 13.6 per cent of GDP on health care — and didn’t cover 15 per cent of its people at all. Canada covered everyone at 9.5 per cent of GDP. If we’re after effectiveness and efficiency, those numbers are pretty conclusive.

But Canada’s system, of course, is “socialized medicine,” a phrase too scary for the Reader’s Digest even to mention, a concept so terrifying that it freezes thought (and even arithmetic) in its tracks. What Americans mean by this phrase is “socialist medicine,” or “government-controlled medicine,” which is ideological poison. Of course that’s not what Canada has; we simply have a publicly-operated health insurance program which covers everyone. Doctors here are as free and independent as they are anywhere else — and in Canada they always get paid, no matter how poor their patients may be.

But in a different sense, this is certainly “socialized medicine.” The word “socialize” also means “to make fit for companionship with others; make sociable,” and “to convert or adapt to the needs of society.” That’s exactly the way that medical services should be oriented. They should be integrated with the social order, and have social well-being as their objective.

The U.S. system could justly be called “unsocialized medicine,” and you would think that a major piece by a major magazine would at least have to consider the idea that the U.S. system may be fundamentally flawed. But no. And Americans will be stuck with it at least until publications like the Reader’s Digest can describe their dysfunctional medical industry as the disgrace it truly is.

Silver Donald Cameron lives in D’Escousse.

If you need insurance, you can't afford it

It’s absurd how much we all pay for so little

By WILLIAM MARVEL
Concord Monitor (NH)
June 11, 2006

I lacked health insurance until my 40th year. Until then I had declined workplace packages because of relentlessly good health and because chronically low local wages left me unable to afford my share of the premiums.

It was understood among veterans that the Veterans Administration would take care of catastrophic ailments, and all male Marvels were veterans, so I paid the small bills for my own routine care and counted on a grateful nation to stand by me in the event of a major illness.

National gratitude usually lasts only about as long as the echoes of big-mouth patriotism, though, and so renowned a patriot as Ronald Reagan eviscerated VA services in the 1980s. Even my father, with his quarter-century of naval service, suddenly found himself ineligible for most VA care, and he shifted to Medicare. I could be treated for only a couple of service-connected disabilities if they ever troubled me, but I still felt too young to worry.

At last I fell in with a company big enough for a group rate. I had begun to find my contemporaries featured in obituaries, and some of them had led lives even healthier than mine, so the group rate seemed more attractive than it might have before.

I participated for a time, but reverting to self-employment disqualified me. I had to resort to a Cobra plan, and the premium proved so expensive that I considered dropping it altogether. A friend discouraged me from that by enumerating the devious restrictions insurance companies impose on any lapse in coverage. While I pondered her advice, my gall bladder disintegrated.

I fear debt worse than death, and that close call with hospital-induced bankruptcy demonstrated that entropy had turned the odds against me. The Cobra plan expired, and I arranged for an individual plan with an inattentive agent who allowed my coverage to lapse. As I was dialing the state insurance commission, he repaired that blunder, finally restoring my continuous coverage at a price equal to one quarter of my income.
The new carrier played the common game of threatening massive premium increases for the same policy, or promising smaller increases if I agreed to significant reductions in coverage. Either way, the price always went up, and over the years my premiums more than made up for the cost of that gall bladder operation.

Eventually I married someone young enough to warrant a relatively reasonable family rate, but once that policy was in place, the scam of higher premiums for less coverage resumed almost immediately.

The latest increase has sent us looking for another carrier, and we found a company called something like Chincoteague Marine, Mollusk, and Tidewater Trust. As I understand it, its introductory premium covers us fully for any illness or injury, but with one minor proviso: Our policy will be immediately discontinued if it can be demonstrated that any family member has approached within 75 feet of a hospital, health clinic or medical office building – voluntarily or otherwise – or if a family member can be proven to have made eye contact with a surgeon, physician, physician’s assistant, nurse or emergency medical technician, or otherwise indicated a desire or need for medical treatment.

The policy is also void if any family member makes a phone call to an establishment offering medical services or advice. To ensure compliance, the insured must agree to the monitoring of all land-line and cell phones. The phone prohibition covers wrong numbers, too, on the rationale that someone worried about a potential medical problem might dial the family doctor through stress-related subconscious error.

The restrictions of the company’s continuous-risk-assessment program may give pause to the nitpicker, but the low monthly rate of $557.63 is hard to beat, and the telephone monitoring devices are all included in the premium.

Like everyone, I’ve wondered why American medicine and medical insurance have become so abominably expensive. Castigate if you will the poor suburban doctor who makes a measly five or 10 times as much as the average American, or begrudge the overworked insurance executive his few million a year, but those people are innocent.

The real culprits are our neighbors to the north: If only those stubborn Canadians would abandon their nationalized health system and migrate to the United States, the size and better health of their population could reduce our group rates for months or years to come.

More to the point, dismantling their system of health care and coverage would eliminate the embarrassing comparison that makes ours look so damn bad.

(William Marvel is an author and historian who lives in South Conway.)

Myths as Barriers

Dr. John P. Geyman, Professor Emeritus of Family Medicine at the University of Washington, served as PNHP’s President in 2005 and 2006. Dr. Geyman has written three books and contributed numerous academic papers on the failures of the U.S. health system and the need for single-payer national health insurance. In this article from the International Journal of Health Services, Dr. Geyman identifies and refutes six myths employed by the opponents of single-payer:

  1. The uninsured and underinsured get the care they need.
  2. The U.S. does not ration health care.
  3. The free market is the best way to resolve our health system problems.
  4. Incremental changes can solve our health system problems.
  5. The U.S. has the best health system in the world.
  6. National health insurance should not be given attention because it is politically unfeasible.

The references are also useful as a bibliography for those seeking evidence refuting these myths.

“Myths as Barriers to Health Care Reform in the United States” (pdf)

“Mythbusters” by the Canadian Foundation for Healthcare Improvement

The Canadian Foundation for Healthcare Improvement is dedicated to accelerating healthcare improvement and transformation for Canadians. We collaborate with governments, policy-makers, and health system leaders to convert evidence and innovative practices into actionable policies, programs, tools and leadership development. In this series of briefs, CFHI researchers refute many of the myths about the Canadian health system and publicly-financed health care in general. Especially recommended are:

To read more of CFHI’s Mythbusters, visit their website.

“Moral Hazard:” The Myth of the Need for Rationing

One of the most pervasive myths in debates over health care reform is that of “moral hazard”: the idea that when access to health care is unrestricted, patients “overutilize” health services in wasteful and inefficient ways. Opponents of single-payer say this overuse contributes to long wait times for care*. The moral hazard idea also underpins the arguments of supporters of consumer-directed health care and health savings accounts.

As these authors point out, this dogma has no clothes. Beyond the common sense argument that going to the doctor is not a leisure activity for most people, there is compelling evidence both that moral hazard is both vastly overblown and a poor basis on which to formulate health policy. Empirical research shows that erecting financial barriers to care reduces as much necessary as unnecessary care, and the expectation that patients (especially the sickest 20 percent of the population that account for 80 percent of health spending) should be able to distinguish between what care is “necessary” and what is not is fantastical.

Cost Sharing in Health Insurance — A Reexamination (pdf)
Physician and health economist Edith Rasell reviews the literature on cost sharing in a 1995 New England Journal of Medicine article and reports that increased cost sharing reduces necessary care, discourages use of preventative services and has a negative effect on health outcomes, especially among the sick and poor. She concludes that overutilization is insignificant as a cost driver: far more important are huge levels of administrative waste, inefficient delivery of services and the United States’ comparatively high level of costly, high tech procedures.

Does Comprehensive Insurance Encourage Unnecessary Use? (pdf)
Across the border, Noralou P. Roos and her colleagues from the University of Manitoba studied health spending levels by health and socioeconomic status to determine whether the province’s universal comprehensive insurance resulted in resources being inefficiently allocated to the healthy. The answer was a resounding “no.” They found that, despite being provided universal access, most people still used little health care (low-income people use fewer than might be needed / expected), and the care that was used was allocated efficiently: the healthiest 70 percent of the population used 10 percent of the care, while the sickest 10 percent received 74 percent.

The Moral Hazard Myth
Finally, in an article for the New Yorker, journalist Malcolm Gladwell provides a concise review of the case against moral hazard, an idea some of its old adherents have since abandoned.

Related information is available at the PNHP webpage on health savings accounts.

*The existence of long wait times is itself an almost entirely false assertion. Canadians have no waits for emergency care, and queues for elective tests and procedures (contrary to spurious figures reported by ideologically-oriented institutions) are quite short when measured scientifically.

Introduction: How Much Would a Single-Payer System Cost?

How Much Would a Single-Payer System Cost?
The financial viability of a single-payer system has been analyzed time and again by researchers both from the U.S. government and independent consulting firms. Each time the conclusion is the same: single-payer saves enough on wasteful paperwork to provide high quality health coverage to all and contain future health spending. This paper catalogs the analyses of proposed single-payer systems at both the federal and state levels.

Administrative costs consume 31 percent of US health spending, most of it unnecessary

PNHP Co-founders Drs. Steffie Woolhandler and David Himmelstein published this definitive study of the administrative costs of the U.S. health system in the August 21, 2003 edition of the New England Journal of Medicine. After analyzing the costs of insurers, employers, doctors, hospitals, nursing homes and home-care agencies in both the U.S. and Canada, they found that administration consumes 31.0 percent of U.S. health spending, double the proportion of Canada (16.7 percent). Average overhead among private U.S. insurers was 11.7 percent, compared with 1.3 percent for Canada’s single-payer system and 3.6 percent for Medicare. Streamlined to Canadian levels, enough administrative waste could be saved to provide comprehensive health insurance to all Americans. Read “Costs of Health Administration in the U.S. and Canada” (pdf)

Administrative Costs in U.S. Hospitals are More Than Double Canada’s

In this 1993 NEJM study, Steffie Woolhandler and David Himmelstein perform the first comprehensive analysis of administrative costs in U.S. hospitals. They find that administrative costs account for an average of 24.8 percent of hospital spending, more than double that of Canadian hospitals (~10 percent). Enrollment in HMOs and competitive bidding for managed-care contracts did not lower administrative costs. Read “Administrative Costs in U.S. Hosptials” (pdf)

60 Percent of Health Spending is Already Publicly Financed, Enough to Cover Everyone

Americans already pay for national health insurance — they just don’t get it. In this 2002 Health Affairs paper, David Himmelstein and Steffie Woolhandler point out that the standard accounting miscategorizes two major public health expenditures as private: the tax credit for private health insurance and the cost of the Federal Employees Health Benefit Program.

When these costs are accounted for, it becomes evident that Americans already pay the world’s highest health care taxes. In fact, the amount of public health spending in the U.S. is greater than the combined public and private spending of nations which provide universal comprehensive health insurance. A single-payer system could provide such coverage to all Americans with no need for additional health dollars.

Read “Paying for National Health Insurance — And Not Getting It” (pdf)

Is employer-sponsored insurance a tax problem or a structural problem?

Our Unhealthy Tax Code
By Jason Furman
Democracy: A Journal of Ideas
Issue #1, Summer 2006

American health care is beset by a well-known litany of problems.

If this were a government-run health care system, the voting public and policymakers would be up in arms. Yet, perhaps because health care is largely perceived as a private-sector concern, there is relative quiet:
while voters tell pollsters that it is a top priority, there appears not to be comparable political pressure for serious reform or any fundamental change in the government’s involvement, either in the provision or funding of health care. This is in part because much of the federal government’s involvement with the health care system is through the hidden backdoor of the tax code. An important principle for modern progressives is that when the government has to intervene in the marketplace, it should not prop up failure. Yet the federal government is, in fact, deeply involved in perpetuating the current “private” health care system and all its flaws, spending approximately $200 billion annually in subsidizing employer-provided insurance. It is the single biggest subsidy in our tax system, more than twice as costly as the mortgage interest deduction. The only government programs that cost more are Social Security, national defense, and Medicare.

The fact that the tax subsidy, which supports the employer-sponsored system, is better than nothing is a feeble excuse for resisting any changes to the status quo. This massive program of tax breaks is ineffective and regressive, wasting money on those who have health insurance while doing little for those who can barely afford it and nothing at all for those without it.

A single-payer national health care system would, by definition, remedy the problem, but it is unlikely to happen any time soon, if ever at all. Beyond the political limitations, it is also an open question whether a single-payer system would be the most efficient way to provide quality health care for all Americans. In the meantime, reforming health care will come down to a set of incremental changes that build on the current system.
But that does not mean that change cannot be ambitious. As Massachusetts has shown, achieving a plan for universal health insurance coverage need not wait for the establishment of single-payer government insurance like Medicare or a national health care system like the United Kingdom’s.

http://www.democracyjournal.org/

And…

Employment-Based Health Insurance: A Prominent Past, But Does It Have A Future?
Hosts: Brookings Institution and the New America Foundation
kaisernetwork.org
HealthCast
6/16/2006

Andrew Stern, president, Service Employees International Union:

…this is not a matter of policy. If we could solve this health care system by policy it would have been solved every single year. There’s more good policy about health care in America than I can imagine. It is the most studied, researched, you know, we have commissions and committees publicly and privately all throughout Washington and the United States. It’s really about politics and leadership.

Our choice is we could keep making incremental changes in the health care system. And I certainly appreciate that everyone would like to build a better funding stream for the health care system but the truth is we’re way past incremental change. It’s not going to work.

…so the fundamental change for me means one, you have to recognize that employer based health care is ending, it’s dying in front our very eyes. The charts say it there. It will not rebound, I believe, in the next economic upturn in America. It was a good friend. It served America well in the 20th Century. We love it dearly. Employers, to their credit, lived with it for a long time despite all of the distortions that it created. But it’s collapsing in front of our eyes. It may still be breathing but anybody who can look into the future says, “This employer based health care system is over in America.”

I’m here to also say I don’t think we need to import Canada or any other system. We’re going to build an American system because we’re Americans and we don’t like anybody else’s system.

I think the single payer issue is kind of a stocking horse for I’m not sure what, because we’re going to have a multi-payer system or some kind of system, you know, that it’s built into the cost of goods in America.

Video and Transcript:
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1768

Comment:

By Don McCanne, M.D.

The conservative policy community has long advocated for an end to employer-sponsored coverage. They believe that insurance should be an individual choice while recognizing that government has to play some role in funding care for low-income individuals.

What are we hearing from these voices in the progressive community? They agree that the regressive tax policies are highly inequitable and must be changed. Andrew Stern goes even further and states that the deterioration in employer-sponsored coverage, declining enrollment, and the financial burden placed on employers leaves no real option other than to replace it with a better system.

The progressives acknowledge that the policy issues are well understood. In fact, single payer would certainly accomplish our goals (though Furman conjectures on the well-documented and irrefutable efficiency of single payer). So what do they say? Let’s adopt any better system, except single payer.

The policy issues are well understood. Simply changing tax policy (Furman) or adopting a universal, multi-payer system (Stern) perpetuate and expand some of the crucial policy flaws that we face today.

Single payer won’t fix all of the problems in our health care system, but it will fix all of the problems with the financing of health care. And isn’t that what the debate is all about?

End health care game playing

The Daily Gazette
June 4, 2006

Editorial for Single-Payer

Ever wonder who gets stuck with the bill when the government undercompensates hospitals and doctors for services provided to Medicare and Medicaid patients? The hospitals and docs may eat part of the loss, but according to a new study, they pass a fair amount of it on to private payers, too. That’s insurers, employers, workers who buy their own insurance and people who pay for their health care out of pocket – anyone left with money in their pockets when the music stops.

The study, commissioned by a Washington state insurance company, provides yet another argument for scrapping the existing, unfair system and switching to a single-payer government-funded plan.

It’s hard to blame hospitals for shifting the burden for care they’re obligated to provide but don’t get adequately reimbursed for. Many are losing money. While the situation is somewhat different for doctors – they haven’t exactly been losing money, they’ve simply not been making as much – their sentiment is understandable: Why should they be required to work harder for less?

According to the study, reported in Thursday’s New York Times, hospitals in Washington state in 2004 charged $738 million – or 14.3 percent – more to private payers to help offset underpayments from Medicare and Medicaid. A similar study of Washington doctors found they charged private payers an additional $620 million, or 12 percent, to compensate for being undercompensated by the government.

So private payers, who already pay for Medicaid and Medicare through their tax dollars, have to pay again. Why not abandon the charade, put all the programs under one roof – the U.S. government’s – and presumably save a lot with a single bureaucracy and economies of scale?

Wrenching Changes on the Line

New York Times, editorial
June 14, 2006

The road back to prosperity will be a long and hard one for American automakers. Companies like Ford and General Motors groan under the weight of their history, manifested in the legacy costs that are a result of decades of promises to support workers and provide them with health care in their old age.

Foreign companies like Honda and Toyota have a double advantage. In the United States, their much newer manufacturing plants have hardly any retirees. Overseas, their workers can rely on national health care systems. Meanwhile, for American automakers, the costs are going only in one direction. In 1999, General Motors spent $3.6 billion to provide health benefits to 1.2 million workers, retirees and dependents. By 2005 the cost had ballooned to $5.3 billion for 1.1 million.

At the same time, vehicle production has been falling. G.M., Ford and the parts maker Delphi have all offered thousands of buyouts as part of efforts to restructure their inefficient manufacturing businesses, trimming payrolls to become more competitive. But that means fewer workers supporting armies of retirees, a demographic challenge not unlike the one facing the Social Security system.

The United Automobile Workers union has already made concessions on the superior health insurance its members receive. But slashing benefits is a short-term approach, and an insufficient answer when G.M. lost $10.6 billion in 2005.

In an ideal world, America would join the overwhelming majority of developed countries and hammer out some kind of national health care system. Failing such a sudden and unlikely onset of sanity, creative solutions are needed.

Sen. Barack Obama has proposed striking a bargain with American automakers to help them with retiree health care costs in exchange for higher fuel efficiency standards. While we have some questions about how to make such a system work, it is at least a worthy new idea — one of a very few in a field desperately in need of them.