From the Brattleboro (VT) Reformer, 10/20/00

Health insurance has been an issue of political contention – as well it should be.

The Republicans want to go back to the days of competition between insurance companies and no community rating. I remember those days well. I was working in the building trades and my company gave us health insurance as a benefit. Then the wife of one of our workers got cancer. The Prudential agent informed us that Prudential was canceling our insurance. Feeling apologetic, he bought us breakfast.

Vermont ultimately instituted community rating. Insurance companies can no longer “cherry pick” the healthiest Vermonters. They now have to insure everyone who can pay the premium. Republicans, from Ruth Dwyer down, want to put an end to this, and give the insurance companies the right to turn down potential customers with pre-existing health conditions that might cost them money.

The alternative, they suggest, is a special pool for at-risk people. The private insurers get the healthy clients (and healthy profits); the public assumes the cost of providing health care services for those who need it most. When this cost escalates, as it most surely will, the GOP will, I am sure, use that as evidence of public sector inefficiency.

Some Republicans talk about personal responsibility. Those who have unhealthy lifestyles — who smoke, over-eat, have unprotected sex, etc., ought to pay higher premiums, they say. That sounds good, especially to people who are smug and, at the moment, healthy. But many diseases involve a genetic predisposition: a tendency to obesity, heart disease, diabetes, some cancers, etc. run in families. Should fat people pay a higher premium rate? How about people who sky-dive, ski, or cross the street and risk getting hit by a car? The idea is unworkable — and it’s socially divisive. Better that the community share individual risk and pay a fair rate, common for all.

At the other end of the debate is single-payer. Many Democrats favor it and it’s the centerpiece of the Progressive platform. Every western democracy has a single-payer system in one form or another. It’s neither new nor experimental.

For a brief period, I lived part of each year in Montreal. While I was insured by Blue Cross my then partner, who taught in Montreal, was insured under Quebec’s single-payer system. Our child was born under that system. Critics of single-payer talk about government control of health care. The facts are: we chose our own doctors, chose our own hospital, and even had a private birthing room. Because Quebec emphasizes prevention, we were also able to attend free birthing classes. We never had to pay a bill for these services. In the single-payer system, the health care providers bill the government. There are no bills, no premiums, no deductibles, and no co-payments. Patients aren’t overwhelmed with confusing paperwork.

Instead of premiums, deductibles, and co-payments, Canadians pay for their health care through taxes. Because there are no marketing and sales promotion costs, no advertising costs, lower administrative costs (because there is almost no paperwork), Canadian health care is delivered at a much lower cost per capita than our health care. In Canada, health costs have been stabilized at about 9% of the national economy compared to about 14% in the United States. Single-payer mandates that all Canadians have access to health care, no matter where they live. This means flying health care providers in and out of the far North. Even with that added cost, health care delivery is cheaper than it is in our densely-populated country.

In most health categories, including infant mortality, Canada has a better record than the United States. Critics point out that some Canadians come to the United States for health care service, and this is true. Patients cross the border for elective surgery (surgery not based on medical need) which is not given priority in Canada. In some cities, there is overcrowding, but American cities have that problem too. In border areas, patients come to the U.S. for cat-scans and other high-tech procedures. This happens because in areas of low population density, it is cheaper to pay American hospitals that have the expensive technology than it is to buy the technology and use it rarely. But the Canadian patients using American facilities are still covered by their single-payer insurance.

I was jogging on Mount Royal in Montreal one day when I felt a pain in my chest. I went to the first doctor’s office I could find and, without first asking for my insurance credentials (the receptionist assumed I had a Quebec health care card), a doctor checked my heart and concluded, correctly, that I had pulled a muscle. When it came time to pay, the doctor (who had no need to employ an in-house insurance administrator) didn’t want to deal with my Blue Cross insurance because the paper work was complicated. I offered to pay cash. She waved me away. “I deal with patients, not bills,” she said tartly. To be sure, many American doctors would have given me gratis service in that situation. But American doctors do have to deal with insurance forms and billing procedures — and that is wasted money which patients subsidize by inflated premiums and higher medical costs.

Single-payer insurance eases the administrative burden for health care providers. It allows businesses, school boards, and local governments to get out of the insurance business — big savings to them. (Workers could get the insurance benefit in the form of higher pay). Every Vermonter would have a health insurance card. We’d pay higher taxes but would pay no premiums, deductibles, or co-payments. When we see a doctor or go to a hospital, we’d show our card. The health care provider would bill the single-payer entity. End of transaction. End of paperwork. End of financial worry.

Dr. Dynasaur, Medicare and Veteran’s health care are single-payer systems. They work! Why can’t single-payer work for us all?

Marty Jezer is a free-lance writer who lives in Brattleboro, Vermont. He welcomes comments at mjez@sover.net.

Copyright (c) 2000 by Marty Jezer

The American Prospect vol. 11 no. 23, November 6, 2000.

Marcia Angell

Health care is back on the political front burner. Not that anyone is talking about a major overhaul, like the ill-fated Clinton plan that banished the issue from polite political discourse for nearly six years. Instead, both George W. Bush and Al Gore are targeting isolated pieces of the health care system: prescription drug benefits for seniors, coverage for the uninsured, and a bill of rights for enrollees in managed care plans. This is the kind of incrementalism now blessed by conventional wisdom–a fix here, a fix there, and eventually it will all add up to universal, affordable coverage.

The resurrection of health care as a political issue reflects three developments. First, after a few years of slowed inflation in the mid-1990s, health insurance premiums are again rising rapidly, partly due to soaring prescription drug costs. Second, despite our booming economy, more than 40 million people are still uninsured (although the number dropped slightly last year). Third–and most important politically–two demographic groups with high voter turnouts are demanding that something be done: Medicare beneficiaries hurting from escalating drug costs and middle-class employees fed up with the tricks of managed care–truncated hospital stays, limited choice of doctors, shrinking benefit packages, seemingly arbitrary denials of coverage, and increasing deductibles and co-payments. All of this is enough to get the attention of Bush and Gore, despite the hazards of being drawn into debate about a subject as mind-numbing and eye-glazing as the American health care system.

But comprehensive reform is thought to be out of the question, given the general belief that the Clinton plan failed because it was too sweeping. (I happen to disagree with this view; see Theda Skocpol’s Boomerang for the full story.) Most have drawn the lesson–repeated like a mantra–that only incremental reforms have any chance of (a) being enacted and (b) working. Thus, the few reforms since the Clinton debacle have merely nibbled at the edges. The Kennedy-Kassebaum bill, for example, permits employees who leave their jobs to continue their health insurance, but is silent on how they can afford the stratospheric premiums that may be charged. Similarly, legislation mandating at least 24-hour hospital stays for childbirth doesn’t speak to the general problem of ever-shorter hospital stays. It is in this spirit that Gore and Bush are gingerly attempting to address a few of the more glaring inadequacies of our health care system.

I am extremely skeptical that the sort of incrementalism embodied in the Bush and Gore proposals can work, even though they are targeting bigger pieces of the system than the earlier reforms. In fact, precisely because they are more ambitious yet still piecemeal, they would likely backfire. They would exacerbate the fragmentation, make the system even less efficient, and depress access to affordable, high-quality care. That is particularly true of Bush’s proposals, which, in addition to being confused, rely far more on the private sector than Gore’s. To understand this paradox, it is necessary to review some salient features of the American health care system.

An Unhealthy System

There is more than enough money in the system now to give Americans all the health care they need or could reasonably want–if it were distributed differently. We spend over $4,000 per capita on personal health care, about twice as much as Canada and the European countries (which cover all their citizens), and the gap is growing. Why is our system such a money sink? Not because our population is older or sicker. All the Western countries have aging populations vulnerable to nearly the same illnesses at roughly the same rates, and ours is actually younger than most. Nor is the reason that we get better outcomes. By all the usual measures of health–life expectancy, infant mortality, childhood immunization rate–we do worse than most Western countries. The only plausible explanation is how health care is financed and delivered. The American health care system is staggeringly wasteful and inflationary.

The United States is unique in treating health care as a market commodity distributed according to the ability to pay instead of as a social good distributed according to medical need. The fact that the system targets market transactions, not medical need, is highly inefficient because it requires constant tinkering to deal with the inevitable result: People who cannot pay still get sick and need to be taken care of.

Although health care is treated like a commodity, it is not traded in anything like a classical market. For one thing, it is largely paid for by third parties, not consumers themselves. Government foots about half the bill for personal health care, and employers about a third. Furthermore, health care is not a discretionary desire, like VCRs and computers. Someone with a brain tumor, for example, is not disposed to shop around for a low-priced neurosurgeon or to postpone the purchase until the kids graduate from college. Patients are dependent on their doctors’ judgments as to whether and when they need care and what kind they need. The health care business, then, is highly protected from the usual market constraints, and the tug of war between doctors and insurers adds more inefficiency than it constrains costs.

Of course, third parties (mainly government) also pay for health care in other Western countries, but these countries do not pretend to have markets. Most have an overall (“global”) health budget and highly coordinated systems of providing universal care financed through a single payer. The United States has no global budget and no coordination among the parts of the system. Instead, we have a nonsystem, a chaotic hodgepodge of payers, insurers, and providers that function independently and usually at cross-purposes.

For example, insurers and managed care plans compete primarily by developing strategies to attract young and healthy enrollees and to avoid those with chronic illnesses (shunting them off to someone else). They also limit coverage of the high-risk enrollees they do insure, and resist claims so that patients themselves pay as much of the bill as possible. But while such cost-shifting may lower medical costs for each business, it adds to administrative and marketing expenses and greatly increases the costs of the system as a whole. Not surprisingly, the United States has by far the highest overhead costs in the world, in addition to having the only health care system based on dodging sick people.

Despite managed care, the providers in this market–doctors and hospitals–are still largely paid on a piecework basis, that is, fee for service. Other countries do likewise, but we are distinguished by our skewing of fees to favor high-technology services delivered by highly paid specialists. As a result, we still have a surfeit of specialists doing too many expensive tests and procedures, and too few doctors spending time talking with patients.

The Clinton Plan and Its Aftermath

The Clinton plan was billed as a way to control health care inflation while achieving universal access. At the time, it was not so much the public as the third-party payers who were asking for relief. Employers claimed they could no longer afford the escalating costs of health benefits for their workers, and government saw health costs as a budget breaker. After the demise of the Clinton plan, employers turned to managed care to control costs, and it was then that the unbridled ascendancy of market ideology in health care began in earnest. The watchword was “Let the market work.” Sure enough, health care became dominated by investor-owned managed care companies, and the market did indeed work–but not in the way most people hoped.

Managed care (of which HMOs are one form) reverses the financial incentives of fee-for-service medicine. Instead of doctors being paid on a piecework basis and thus being tempted to run up costs, managed care companies are paid a set premium for each enrollee. Note that enrollees and doctors are pretty much left out of the loop. The deal is not between them, but between employers, presumably acting as proxies for their workers, and the managed care plans for which the doctors work. But particularly in high-turnover industries, how much does your boss really care about your health? Employers have every incentive to enroll their employees in the cheapest plans consistent with reasonably good employee relations (which will matter less if unemployment rises). And managed care companies have every incentive to reduce medical services so they can keep more of the premiums as profits. Unfortunately, the surest ways to reduce services are to avoid enrolling the sick, to limit coverage, and to deny claims. Managed care under for-profit auspices contrasts radically with the original model of prepaid group health, which was nonprofit, inclusive, preventive, and physician-run.

For a few years in the mid-1990s, managed care seemed to work. That is, inflation in employers’ health care costs was greatly slowed. (It was a somewhat different matter for employees, who found themselves picking up costs for more bits and pieces of their medical care.) But even though managed care worked, it did so with extraordinary inefficiency. Managed care companies regularly skim off a substantial amount of their premiums, somewhere between 10 and 30 percent, for administrative costs, marketing, and profits. Some of the rest is diverted to other businesses only indirectly related to health care that have entered the increasingly entrepreneurial health care market. These include brokers to cut deals, physician-management companies, companies to coordinate the care of specific illnesses, billing agencies, marketing consultants, information-management firms, and on and on. They, too, skim off their overhead costs and profits. Ultimately, only about half of the health care dollar makes its way to the doctors and hospitals that actually provide care, and they, too, have high overhead costs as a result of having to deal with multiple payers with different rules. (It is hard to understand how anyone familiar with the health care system can still believe in the myth of the greater efficiency of the private sector.)

Medicare is by far the most efficient and popular part of our health care system (with overhead costs of about 2 percent). Nevertheless, its costs are rising at an unsustainable rate because of the aging of the population and problems that stem in part from the fact that the program is embedded in the larger profit-driven system. In addition, doctors are paid fee for service, and despite some efforts to correct the problem, the fee schedule still preferentially rewards high-technology care delivered by specialists.

The Incremental Reforms of Bush and Gore

An open-ended and pluralistic health care system like ours may seem best tinkered with bit by bit. Since the whole thing is virtually impossible to grasp at once, why not just target whatever sticks out as most in need of fixing? But despite the seeming incoherence of our system, everything is still connected to everything else. Any piecemeal reforms can be offset by changes in other parts of the system as players move to protect their profits. Consider the reforms on the table.

Prescription Drug Benefits. Both Bush and Gore have offered incremental proposals to help Medicare beneficiaries with drug costs and also to mollify younger voters who worry that the program will be gutted by the time they are 65. The fact that Medicare does not cover outpatient drugs is an anachronism; when the program was crafted in 1965, drugs were cheap and there weren’t as many. Now seniors are vulnerable to the rapidly escalating prices of the growing number of effective drugs on the market. Bush and Gore would have Medicare directly pay for all out-of-pocket drug costs above a certain level ($6,000 for Bush and $4,000 for Gore) and also for the drug costs of low-income seniors (Bush would begin with four-year block grants to the states for this purpose). Both candidates would pay for their proposals with a portion of the budget surplus plus increased premiums for beneficiaries, but not with an increase in the payroll tax that provides most of the funding for Medicare.

But here the similarities end. Bush would rely heavily on funneling subsidies through private insurers and managed care companies. He would encourage health plans to compete for seniors on the basis of price and choice of benefits, which would include the option of drug coverage. Medicare would pay at least 25 percent of the premiums for drug coverage, which would be set by the market, as would deductibles and co-payments. (Bush would add a drug benefit to the traditional Medicare program, but he is vague about who would be eligible for that or what the terms would be.) In contrast, Gore would rely on expanding federal programs or creating new ones. He would offer an optional drug benefit within the Medicare program for a premium starting at $25 per month. Under this benefit, seniors would receive 50 percent of their drug costs up to a ceiling of a few thousand dollars.

It is hard to take Bush’s proposal seriously. He seems blissfully unaware that the private sector that he counts on so heavily is causing many of the problems he is ostensibly trying to solve. For starters, look at the record of the managed care industry in dealing with seniors. Because managed care was thought to be the way to control costs, the government tried (largely unsuccessfully) to encourage Medicare beneficiaries to enroll in HMOs. It originally set premiums at 95 percent of the average Medicare costs in a given region, and invited HMOs to compete for enrollees. That was in fact a substantial overpayment because HMOs enrolled younger and healthier seniors, whose costs were low. In addition, many beneficiaries would enroll in HMOs while they were relatively healthy (HMOs attracted them with broader benefit packages), then return to the traditional system if they became seriously ill and needed expensive care. This revolving door approach not only enabled beneficiaries to enjoy the best of both the managed care and fee-for-service worlds, but it also doubly rewarded the HMOs: First, they were assured of not having to care for their share of sick patients, and second, their premiums were pegged to the average cost of the fee-for-service system, which was driven up by sick people leaving HMOs. By the mid-1990s, it became clear that Medicare spent about 12 percent more for beneficiaries in HMOs than if the same people had been in the traditional program.

In 1997 the reimbursement formula was changed to make premiums better reflect the actual health status of enrollees, although as reported recently by the General Accounting Office and the Health and Human Services inspector general, health plans are still being overpaid for their Medicare enrollees. Nevertheless, with their profits curbed somewhat, many of these companies are deciding to get out of the Medicare business. Nearly two million seniors have been told to find other health plans or go back to the traditional Medicare program. In view of the record, how does Bush propose to get managed care companies to re-enter this market? There is only one answer–offer them more money (the 25 percent subsidy for drug benefits would not be enough). But since they are already being overpaid, that is supremely irrational.

Because Bush’s proposals are so foolish, it is tempting to think that Gore’s are entirely sensible, but that is not the case. Like Bush, Gore has not addressed a crucial issue in his drug proposals–the drug prices themselves. He blusters a little about drug prices in his campaign speeches, but offers nothing specific. Since neither candidate has said a word about any sort of price controls, apparently both of them would permit drug companies to continue setting their own prices. Yet to offer government subsidies of drug purchases without price controls is to guarantee that already-exorbitant drug prices will rise still higher. The drug companies do not need this windfall. As discussed by Merrill Goozner in the September 11 issue of TAP [“The Price Isn’t Right”], the pharmaceutical industry is by far the most profitable in the United States (with one of the most powerful lobbies in Washington). It also already enjoys massive government subsidies, including research funded by the National Institutes of Health to develop drugs and patents to ensure noncompetition. Unlike Bush’s plan, Gore’s at least holds the potential for price controls since it would give Medicare such concentrated buying power that it could bargain for lower prices. That is why the pharmaceutical industry opposes the plan so vehemently.

Coverage for the Uninsured. Bush’s proposal for covering the uninsured would provide tax credits of up to $2,000 per family to purchase private insurance (which would be paid in cash if the family does not pay that much income tax). But $2,000 would constitute less than half the cost of insurance for a family of four, and poor people could not afford to participate. Gore’s approach to covering the uninsured is to make sure all eligible children are enrolled in Medicaid or the new state-run Children’s Health Insurance Program (CHIP) for uninsured children. Eventually he would expand CHIP to cover the parents of children enrolled in it. Gore also favors permitting adults between ages 55 and 65 to buy into Medicare and giving them a tax credit on part of the premium.

Gore’s reliance on CHIP underscores one of the most distressing aspects of our byzantine system: Even those who are eligible for coverage often don’t get it. A recent survey showed that most parents of children who may qualify for Medicaid or CHIP are not even aware of it. The states have been so desultory in enrolling children in CHIP that most eligible children are not participating, and 40 states are now facing the prospect of returning the $1.9 billion in federal funds they received for the program. (Needless to say, they’re objecting.) New York is dropping many of the children it did enroll because they should have been on Medicaid instead.

Patients’ Rights. Legislation to protect patients’ rights in managed care plans is the best example of the sort of incrementalism that is likely to be futile. Both Bush and Gore favor some sort of patients’ rights bill to restore to patients and doctors control over medical decisions–control that has increasingly been assumed by employers and health plans. A Democrat-backed bill has been approved by the House, and a Republican-backed version by the Senate. They provide for appeals mechanisms when services are denied, for treatment in hospital emergency departments when patients plausibly believe it is warranted, and for doctors and patients to make decisions about referrals. The Republican bill excludes many health plans. Gore would allow malpractice lawsuits against HMOs. Bush would not.

But to the extent that such bills have teeth, they will add to the costs of health plans, which will simply pass those expenses along to employers by raising their premiums. Employers, however, are not required by law to offer any health care benefits at all. So instead of paying higher premiums, they might drop coverage altogether–or limit it sharply by capping their contributions. Employees, for their part, might just drop health insurance if most costs are shifted to them. So patients’ rights legislation could swell the ranks of the underinsured and uninsured. At bottom, it is impossible to regulate health care in an employment-based system if employers can opt out.

A Different Incrementalism

Contrary to conventional wisdom, incremental changes of the sort proposed by both Bush and Gore will not work. What needs to be changed is the system itself. Like every other advanced country, we need a single-payer or consolidated-payer system to prevent both the widespread underinsurance and the cost-shifting.

Given the need to address the system as a whole and the uncertainties in doing so, a different brand of incrementalism could work: whole-scale reform gradually applied piecemeal. Suppose we decided that the best system would be to extend Medicare to everyone (essentially a Canadian-style system with twice the money). It could be done incrementally, at first including only the 55-65 age group. The benefit package could be made medically appropriate for various age groups, and the fee schedules could be changed to lessen the overuse of technology. After some experience, Medicare might later be extended down another decade to the 45-55 age group, and so on.

Another reasonable incremental approach would be to permit individual states to experiment with methods of achieving universal, affordable coverage. The “laboratory of the states” would essentially compete to demonstrate the best road to that goal. Democratic Representative John F. Tierney of Massachusetts has introduced a bill (HR 4412: States Right to Innovate in Health Care Act of 2000) that would authorize such demonstration projects. The bill would provide for up to 10 states to develop and implement their own plans for comprehensive health care. Those states would receive direct grants for developing their plans, and if a plan is approved, they would receive all federal funds that would otherwise flow into the state (including Medicare and Medicaid payments). They would also be granted waivers of federal statutory and administrative barriers. That seems to me to be an excellent start toward a promising kind of incremental approach: The overhaul is complete, but only within one region of the country.

Many questions would need to be answered. Should employers be among multiple payers contributing to a single pool? Or should they no longer be involved in health care at all? What should be the role, if any, of investor-owned health care businesses? How would hospitals and doctors be paid? Different states would devise different solutions. Eventually, our federal government might apply minimum national standards, as Canada’s federal government did.

The public is alienated by a wasteful, profit-driven system that offers too little care for too much money, is much too hard to navigate, and leaves millions uninsured. To deal with the problems will require fundamental reform, which can be implemented gradually by age groups or by states. But it must be “sweeping” if it is to work. That may mean taking on the insurance and pharmaceutical industries directly–no small task. But if we are to have universal and affordable health care, that is what needs to be done. The money is already there. ¤

URL: http://www.prospect.org/archives/V11-23/angell-m.html

As the U.S. presidential candidates debate reforming Medicare, similar systems in France and Italy top a U.N. survey. Apart from their cost, their most important difference is offering citizens freedom from uncertainty.

By John-Thor Dahlburg, Richard Boudreaux, LA Times Staff Writers

CLERMONT-FERRAND, France–When Mathis Pascouret recently entered the world, something was dangerously wrong. His mother had unwittingly passed on to him potentially lethal bacteria while he was in the womb, and he was near death.

With a fever of 102 and his heart, lungs and stomach malfunctioning, the gasping newborn was whisked by ambulance to a state-run hospital here in central France. In the new neonatal emergency care unit at Hotel-Dieu Hospital, Dr. Jacqueline Gaulme and others toiled to save the infant’s life.

Nine days later, Mathis opened his eyes for the first time, and he is now expected to live.

“We should go down on our knees,” said his mother, Estella Pascouret, 29, “and thank the doctors and the hospital.”

For Americans, the real marvel in this story might not seem so much medical as financial. Mathis’ treatment costs an estimated 8,000 francs, or more than $1,000, a day. But his parents pay nothing.

“Eight thousand francs–it’s what I earn in a month,” said father Thierry, 38, who makes tires for motorcycles.

Since World War II, the French have deemed their health a national resource too priceless to leave to market forces alone and have instituted a state-run health insurance system that covers everyone. As Vice President Al Gore and Texas Gov. George W. Bush make Medicare reform a leading issue of their presidential race–they exchanged several pointed remarks at this week’s debate–the health care choices in France and elsewhere in Western Europe offer a stark contrast to those in America.

The most important difference is freedom from uncertainty. Despite flaws such as high taxes or slow-moving bureaucracies, government involvement in Europe gives the ordinary citizen an enormous sense of security. In many countries on this side of the Atlantic, people never have to worry about being deprived of essential health services–or prescription drugs, a hot-button issue in the U.S.–because they can’t afford them.

What’s more, unlike customers of many U.S. health maintenance organizations and health insurers, Europeans such as Estella and Thierry Pascouret can be sure they won’t be ruined financially because their health plan is unwilling to cover a particular treatment or pays only a part of the cost.

This year, a 191-country survey by the World Health Organization ranked France’s health care system the most effective in the world, with Italy the runner-up. Those ratings are disputed, even in the winning countries, but the survey’s bottom line is this: The French and Italians spend far less than U.S. citizens on health care, and they live longer.

The United States–which lays out a bigger share of its income on health than any other country, at 14% of all generated wealth–ranked 37th in the WHO survey, barely edging out No. 39 Cuba.

“I make my students watch episodes of ‘ER,’ ” said Dr. Andre Labbe, professor of pediatrics and respiratory diseases at the University of Auvergne medical school in Clermont-Ferrand. “They’re always stunned by what they see. On the last program, there was someone diagnosed with lung cancer who told the doctors: ‘Don’t bother to treat me. I can’t afford it.’

“That,” Labbe said, “is unimaginable in France.”While admiring the expertise of their U.S. counterparts, European health professionals can be scathing about what they call America’s money-driven method of dispensing health care. In France, the government doesn’t hesitate to throw its weight around to keep costs down by pressuring physicians, nurses and other care providers.

“The state fixes the level of contribution, reimbursement, the cost of drugs and prostheses–in fact, it fixes just about everything. In terms of the state’s mentality, the French system is a lot closer to [Soviet] Russia than to your system,” said Dr. Pierre Fender, a Paris-based official in the social security system.

A doctor’s house call in France is supposed to cost the equivalent of only $14.28, not including transportation, and a night in a private room in a medical clinic costs $73. Social security, funded mainly out of payroll deductions, reimburses 65% of minor expenses and 100% of major ones.

Italy, which finances its state-run National Health Service entirely from general taxation, keeps an even tighter lid on medical costs. As a result, total public and private outlays on health care and insurance come to $1,857 for each French man or woman and $1,357 for each Italian–a fraction of the $4,178 spent by or for the average American in 1998.

Even when an ill person can pay nothing at all, the health networks in these countries are supposed to react with competence and compassion.

France’s social security program was first restricted to the gainfully employed and retirees, but a 1998 law extended it to everyone on French soil.

“It’s a fact that when you need care in France, you go into a clinic or a hospital, and they’ll take care of you–take your blood pressure and try to see what’s wrong. They don’t ask for your credit card,” said Dr. Christian Pradeyrol, president and general director of a 250-bed private clinic in Aurillac, a town in Auvergne.

While millions of Americans worry about whether they can afford health care for themselves and their families, the French and Italians swear by a social contract that makes accessible treatment as much their birthright as being able to speak their minds or vote.

Although the notion that the state should be deeply involved in something as personal as health might be anathema to many Americans, such involvement is a long and welcome tradition in Europe.

Italy Pioneering a Home Care System
While the United States has few doctors who would even consider making house calls, and Congress has cut government payments for home health care generally in recent years, Italy has been pioneering a publicly supported system of free home care.

“Go to the patient. Don’t wait for the patient to come to you,” were the marching orders to doctors from Dr. Rosi Bindi, who stepped down as Italy’s health minister after overhauling the National Health Service to make it more responsive.

In practice, this means that Dino Coltelli, 88, who hated being hospitalized so much that he screamed at everyone around him and often escaped, can now rest easy while doctors and nurses come to his home in Imola in northern Italy. Diagnosed with Alzheimer’s disease, he has been treated during the weekly house calls for pneumonia, a urinary tract infection and a nervous disorder.

“Without this care, he’d be back in the hospital at least once a month,” said Dr. Fabio Suzzi, who sees Coltelli and eight to 10 other patients at home each week, earning a $75 bonus for each visit on top of his $4,000 monthly state salary.

The home care program, organized in 17 of Italy’s 20 regions, is an acknowledgment that the country’s most reliable giver of informal care–the family–needs some help.

As Italians have fewer offspring, become more mobile and live longer, the tradition of large extended families nursing their ailing elders has come under strain, forcing many senior citizens to face their last years alone.

Liliana Coltelli, 78, cannot care for her husband by herself, and the couple have no children.

Doctors in Imola and the surrounding Emilia-Romagna region, home to 4 million people, treat more than 15,000 patients at home, including 40% of all those with cancer. Regional officials say the home care program has cut hospital costs by $180 million in three years.

Retired people in the region lobbied hard for home care, fought for a role in monitoring the program and are pushing to double the number of senior citizens served.

“If you’re treated at home, you keep some control over your own life, your own dignity,” said Germano Casanova, secretary of the regional Pensioners Union. “If you enter a nursing home, that’s all finished. Not one elderly person in 100 ever walks out of a nursing home.”

Indisputably, many French and Italians would be the first to admit that their health care systems are far from perfect. Among the prevalent gripes: a surfeit of red tape, excessively high taxes or payroll deductions to underwrite the systems, delays and inequalities despite avowed noble goals, and the heavy hand of government bureaucracy.

This summer, when personnel from France’s state-run hospitals took their usual vacations, some patients being admitted to emergency wards had to wait as much as 10 hours on stretchers before being examined.

Martine Aubry, who until this week held the ministerial portfolio for health, complains that “in big towns, it’s hard to find a pediatrician onFridays after 5 p.m.” To make sure that not all doctors vanish at night and on weekends, Aubry has asked prefects–the national government’s representatives throughout France–to force all physicians to take part in an on-call rotation for emergencies.

Chafing under official pressure, some French doctors claim that politicians on both the left and the right have cooperated since the mid-1990s to craft an ever-tightening straitjacket of regulations and price ceilings that are now suffocating private practitioners and clinics.

“The state has got a noose around our neck, and we’re one twist away from asphyxiation,” protested Pradeyrol, 55, an anesthesiologist.

This summer, a plan backed by Aubry to hold down rising health costs, in part by cutting office visit fees paid to specialists such as cardiologists, radiologists, neurologists and gynecologists, sparked numerous protests, with 100 angry doctors occupying the Eiffel Tower one morning.

Prompt Service a Goal Often Unmet
Italy’s tax-financed system falls short of its goal to provide prompt service, from dental checkups to knee surgery, to all. For every tax dollar the state spends, Italians shell out 38 cents of their own for some kinds of specialized care that are more prompt or reliable.

Franco Bornini, a taxi driver in the northern city of Bologna, found that the waiting list to get free physiotherapy for his dislocated right shoulder was six months long. The injury has partly disabled him, reducing the hours that he can work. So he has resorted to a private therapist at $15 a week over 10 weeks–a financial burden, because he, like most Italians, doesn’t have private health insurance.

But the public system offers better care to the neediest–expectant mothers, the elderly and people with life-threatening ailments.

Some of this care borders on luxury. Patients who undergo heart surgery are entitled to two weeks at a rehab center near Lake Garda or Lake Como, prime vacation spots in northern Italy. They receive three hours of physiotherapy in the morning and relax in the afternoon, with the state paying the tab.

Nobody is supposed to fall through the cracks, even foreigners living in Italy illegally.

In Bologna, a publicly funded health center with Arabic and Chinese translators on staff has catered exclusively to immigrant women and their children for the past nine years. The center doesn’t even ask to see patients’ identify papers. Dr. Giovanna Caccialupa, the director, has rebuffed so many police inquiries about her patients that the police have stopped coming around–even during periodic official sweeps to drive illegal immigrants out.

“We’re treated like anyone else,” said an immigrant Moroccan mother waiting her turn at the clinic.

This sense of inclusion and security is more than what many immigrants feel in the United States, especially those who are in the country illegally.

Many of the latter say they are afraid to avail themselves of the health care system for fear that information about them will be reported to the police and that they will be deported. In three-quarters of Italy’s regions, health officials have set up 138 public health clinics, nearly all in the past five years, especially for immigrants.

Statistics point to a clear impact on Italy’s overall health. In part because of intensive efforts to provide prenatal and postnatal care to all mothers, the country’s infant mortality rate has fallen to 5.6 deaths per 1,000 live births. The U.S. figure is 7.2 deaths.

“We in the United States do worse than our European counterparts in the area of prenatal care, both for immigrants and minorities,” said Dr. Christopher Murray, an American who heads WHO’s health policy program.

French System Tries Reconciling Aims
In France, 30 chronic and especially costly medical conditions, from Alzheimer’s disease and AIDS to diabetes and psychiatric ailments, are fully covered by a hybrid health care system that tries to reconcile a patient’s right to choose a doctor with a pledge of universal coverage.

Moreover, operations or other medical procedures costing more than about 600 francs ($77) are paid for.

“Six hundred francs–that’s the cost of a wrist fracture,” remarked orthopedic surgeon Pierre Deguillaume.

When interviewed, the perspiring Deguillaume was at work in an operating theater at the Aurillac clinic, removing a stainless steel brace from around the backbone of an anesthetized 25-year-old pharmacy clerk. The operation took two hours, plus Deguillaume had to make an earlier run to a local hardware store. The brace was U.S.-made, and he needed a non-metric wrench to undo the nuts and bolts.

“There is no cost for any of this to my patient. Everything is picked up by social organizations,” Deguillaume said.

For chronically unwell patients who face lifelong expenses, the certainties of such a health system bring enormous comfort.

Take French retiree Roger Martin, 75, whose failing kidneys can no longer purify his blood. Once every two days, the retired electrician and TV repairman who used to have a shop in the town of Montlucon in the heart of France is picked up by a taxi and driven 40 miles for a four-hour dialysis session.

Each treatment costs the equivalent of $267, not including $130 for round-trip taxi fare. Martin pays nothing. For 55 years, he made mandatory contributions to the social security system, or la Secu, as the French call it. The health program now pays for his dialysis sessions, including cab fare.

“I know there are problems over there with hospitalization and the costs,” Martin said as he rested on a bed after a dialysis session. “But when we come here, they take us in their arms and care for us. There is always a smile.”

In the United States, both leading presidential candidates have come up with proposals to change Medicare, which pays for many of the health care costs of 39 million elderly and disabled Americans. While both candidates propose increasing prescription drug coverage, only Gore would have the government pay a major part of the cost of the coverage. About 13 million elderly and disabled Americans have no coverage at all for prescriptions.

A Uniform Approach to Prescription Drugs

Italy’s National Health Service gives full coverage for about 3,000 prescription drugs, including the big-ticket categories: blood-pressure medicines, chemotherapy, drugs for diabetes and HIV/AIDS, plus a full range of antibiotics. Patients have to pay 50% of the cost of a second category of 38 drugs for such ailments as stomach disorders, aching joints and kidney stones.

In the United States, there is no uniform system of insurance for prescription drugs. While most people younger than 65 who have health insurance pay only a $10 to $20 co-payment for most prescriptions, 13 million elderly and disabled people and 44 million people younger than 65 have no insurance at all. For those who are uninsured, a common ulcer drug such as Prilosec if bought in Los Angeles costs as much as $133 for a one-month supply, according to a 1999 study by a California member of Congress. Prices, however, vary by region, as do insurance plans.

In France, the totally infirm older than 60 are entitled to medical care in nursing homes at state expense, while conditions classified as recurring and costly are fully covered for young and old alike. Drugs for such ailments are fully paid for by social security. For others, the reimbursement rate is 65%.

To reduce even further the chance that disease might have financial repercussions, almost nine French people in 10 buy private health insurance to cover minor expenses that aren’t taken care of by social security. But the bulk of the country’s doctor and hospital bill–75.5%–is paid by la Secu.

Andre Calsac, 75, a former notary in the Champagne region of eastern France, is in his fourth week of chemotherapy and radiation treatment for cancer of the lymph glands. His treatment is fully financed by social security–including the pain-dulling morphine he is given each day.

“It’s all in the hands of the health insurance and the doctors,” Calsac said. “I don’t have to do anything.”

* * *

Dahlburg reported from Clermont-Ferrand and Boudreaux from Emilia-Romagna. Times staff writer Alissa J. Rubin in Washington contributed to this report.

Copyright 2000 Los Angeles Times

Please see this article on the Washington Monthly website.

Please see this article on the Washington Monthly website.

New England Journal of Medicine Editor Calls for Single Payer

The New England Journal of Medicine
June 1, 2000 — Vol. 342, No. 22
Patients’ Rights Bills and Other Futile Gestures

Health care reform is once more at the top of the political agenda, after some six years of neglect in the wake of the failure of the Clinton plan. During those six years, the issue was generally considered one of the third rails of American politics — not to be touched. What is causing the turnabout? There are three reasons. First, after a period of stagnation during the mid-1990s, inflation in health care costs is again sharply on the increase. Second, the number of Americans without any health care insurance at all, or with inadequate coverage, continues to rise. And third — and most important politically — middle-class voters are getting fed up with the abuses of managed care. They are frustrated by shorter hospital stays, restricted choices of doctors, arbitrary denials of coverage, increasing deductibles and copayments, and all the other methods by which the industry resists actually providing services to sick people.

Since the demise of the Clinton plan in 1994, it has been generally agreed that reform of the health care system cannot be full-scale. Conventional wisdom holds that the Clinton attempt failed in large part because it was too sweeping. According to this view, reform needs to be incremental to succeed. Thus, what few reforms we have seen since 1994 have merely nibbled at the edges of the access problem. For example, the Kennedy-Kassebaum statute, which permits employees who leave their jobs to continue their health insurance (if they can afford to pay for it), and the expansion of insurance coverage for children are quite modest in their scope and effects. Similarly, attempts to deal with the abuses of managed care have been piecemeal — for example, legislation to require 24-hour hospital stays after childbirth.

It is in this spirit that a number of “patients’ rights” bills are being offered, both in the U.S. Congress and in state legislatures. The proposals differ from one another in some respects, most notably in the population to which they would apply and the extent to which patients would be permitted to sue their managed-care companies. However, all have in common efforts to restore to patients and their doctors control over medical decisions — control that has increasingly been assumed by third-party payers and managed-care plans. For example, the bills provide for appeals mechanisms when services are denied, for treatment in hospital emergency departments when patients plausibly believe it is warranted, and for decisions about referrals to be made by doctors and patients, not by health plans and employers.

I very much agree with the aims of patients’ rights bills. But I also believe these bills will not achieve their ends. Rather, I am afraid they will have effects opposite from those intended. Patients’ rights bills will simply swell the ranks of the uninsured. Why such a perverse effect? The reason is that employers are not required by law to offer any health care benefits at all, and they will not do so if they believe the disadvantages to them outweigh the advantages. Patients’ rights bills will tend to tip that balance. Insofar as they have teeth, they will inevitably increase the costs of managed-care companies, which will simply pass their increased costs along to employers. Employers may then decide to drop health care coverage altogether, or to limit it sharply through stratagems such as “defined contributions,” rather than pay the higher premiums for standard benefits. Workers, for their part, may elect not to accept health care insurance, because of the growing direct costs to them. Thus, patients’ rights legislation will very probably increase the number of uninsured and underinsured people. The tougher the regulations, the more likely this outcome. The fundamental problem is that it is impossible to regulate health care in an employment-based system if employers can opt out.

The threat that patients’ rights legislation will increase the number of the uninsured and underinsured may not be fully realized in our present economy, when we have nearly full employment and many employers have a strong incentive to offer good benefits to attract workers. However, we need to remember that even in this booming economy, the ranks of the uninsured and underinsured are steadily increasing. Most of the newcomers to these ranks are employed. With a downturn in the job market, bargaining power would probably begin to shift from employees to employers. In that case, a very large number of employers might be quite willing to drop or reduce health care benefits, especially if premiums were rapidly increasing.

That is exactly what the managed-care industry and many of its allies in Congress argue in opposition to patients’ rights bills. I believe they are correct about the probable effects of such bills on the number of the uninsured and underinsured, but they are wrong in concluding that the present managed-care insurance system is essentially sound. (The only change the industry advocates from time to time is an expansion of coverage by managed care, but with premiums, of course, set by the private market and subsidized by government.) What we should instead conclude is that the private managed-care market has been a miserable failure at delivering health care. It has creamed off ever larger percentages of health care premiums in bloated administrative and marketing costs and profits, it has rewarded health plans that cherry-pick the healthy and avoid the sick, and it has resisted at every turn providing adequate services to those unfortunate enough to need them.

There is no question that patients’ rights — and doctors’ rights — are essential in any decent health care system. But they cannot be legislated in isolation in a system whose every incentive works against these rights and where the provision of health care insurance is purely voluntary. What needs to be changed is the system itself. Contrary to conventional wisdom, incremental changes, such as patients’ rights legislation, will not work. In a competitive private market, they simply provoke reactions that nullify the social objectives of the legislation.

This is not the place to present in detail a plan to overhaul our health care system. But there are three major changes that would address the difficulties in ensuring patients’ rights that I have discussed here.

First, employers should get out of the health care business altogether. There is no reason to believe they are good proxies for their workers when it comes to health care decisions. Indeed, they have a clear conflict of interest, since they have a strong incentive to keep premiums as low as possible.

Second, just as employers are not good proxies for their workers, so investor-owned managed-care companies are not good proxies for doctors. They, too, have a conflict of interest. They have obligations to their investors as well as to their enrollees. That the former often take precedence is evident from all the ways in which the industry limits medical services even while maintaining high profits and executive salaries. In my view, there is no place for these businesses in a good health care system.

Finally, health care insurance should not be optional, as it is in our employment-based system. Just as everyone over the age of 65 is covered by Medicare, so should everyone under that age be covered. In a 1993 editorial in these pages, I called for a universal, single-payer system and suggested that we could attain that goal by extending Medicare to all Americans. The need is even greater now. Those who worry that such a reform would increase taxes should remember that we all pay for health care anyway — through our paychecks, deductibles and copayments, and the prices of goods and services — and that Medicare is far more efficient than the market-based part of our health care system.

Election year 2000 is the time to look again at our health care system in its entirety, not just in bits and pieces. The insurance industry will once again mount a campaign to prevent that from happening. Harry and Louise will be back, perhaps with aliases. But can they convince the American public once again that government is the bogeyman and that the private sector will take care of their health care needs? I doubt it. We’ve had six years of hard experience, and we know better.

Marcia Angell, M.D.