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Study: More money will go to health care

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Study: More money will go to health care

MarketWatch
Wednesday, February 21, 2007

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National health-care spending will double in the next 10 years, a study says. One out of every five dollars we spend will be for health care, and Uncle Sam will be footing more of the bill. Amy Scott reports.

KAI RYSSDAL: Check your economic calendars and you’ll see today’s the day we get one of those A-list indicators. The consumer price index came out this morning. Inflation by another name.

It’s not so bad. The core rate was up three-tenths of 1 percent last month. Mostly in a drop in energy prices. But get a load of some of the other details. Airline ticket prices were up. Hotels and rents were up. Tobacco was up. And medical care prices had their biggest jump in more than 15 years.

Knowing that, this next number shouldn’t come as too much of a shock. A study out today in the journal Health Affairs predicts national health care spending will double in the next 10 years. To more than $4 trillion. One out of every $5 we’ll spend will be for health care. And Marketplace’s Amy Scott reports Uncle Sam will be footing more of that bill.

AMY SCOTT: It’s no surprise that health care costs are rising. But the Health Affairs report suggests there’s another reason Americans are spending more.

John Poisal is the study’s co-author, and a deputy director with the Centers for Medicare and Medicaid Services. He says lately, people are earning more money.

JOHN POISAL: As incomes increase by 1 percentage point, typically expenditures for health care increase by 1.4 percentage points.

By 2016, Poisal says the federal and state governments will cover nearly half of all national medical expenses. That’s partly because Medicare began offering a prescription drug benefit last year, so the program’s costs have jumped. And the first wave of Baby Boomers will soon be eligible for Medicare.

Paul Ginsburg heads the nonprofit Center for Studying Health System Change.

PAUL GINSBURG: The government’s obligations for health care are growing faster than the revenue base. So ultimately, it’s going to mean higher taxes.

As the government covers more of the country’s medical bill, the kind of single-payer system some Democrats have been pushing doesn’t seem far off.

Don McCanne with Physicians for a National Health Program says when you include public employee health plans and tax subsidies, the government is already paying two-thirds of the nation’s health costs.

DON MCCANNE: And that’s about what most nations pay for their government-sponsored health care programs. So we’re paying for national health insurance, we’re just not receiving it.

If we were, McCanne says the government would save on the order of $350 billion a year in administrative costs. And a single payer could use its clout to negotiate lower prices.

In New York, I’m Amy Scott for Marketplace.

Commentary: Government can cure U.S. health crisis by halting pursuit of profit

The Northwestern
February 22, 2007

I was having lunch a few years ago with a long-time friend. He had worked many years for a small company in Oshkosh. That day he had some momentous news. He had been laid off. We talked about what employment options he had at the age of 54, but the most immediate concern was his health. My friend suffers from diabetes. He would get COBRA coverage for a while, but after that he absolutely had to have a job with health insurance. No way could he afford to buy the medications he needed on his own, and with his pre-condition he was uninsurable. He needed to find a job with a group plan, and at 54 that wasn’t going to be easy. I looked across the table and asked what he was planning to do if he couldn’t find a job with health benefits. His eyes caught mine as he said dryly, “Die, I guess.”

Today some companies no longer offer health benefits. A neighbor came down with the Norwalk virus and was forced to take vacation days. Others companies play hardball. A brother of a friend came down with a debilitating, incurable illness and was informed by his Oshkosh employer that he had to return to work within six months or lose his job and his health insurance.

There’s been a lot of talk lately about restructuring health care in America. Several states, most 2008 presidential candidates, even Bush have offered new plans. They are all flawed because they all include for-profit, private insurance companies as part of the solution. For-profit companies maximize profits by recruiting low-risk people and eliminating high-risk people from their coverage. They eliminate more effective, but more expensive medications from their formulary. They eliminate better, but more expensive doctors and hospitals from their preferred providers list. But mostly they support a bloated corporate bureaucracy where CEOs get $40-50 million annual salaries. That’s $40-50 million that you and your employer pay into the health care system that buys not one pill, not one doctor’s visit, not one vaccination, just CEOs who say you can’t have the care you need because they and their major stockholders need bigger houses, fancier cars, better pools. For-profit, private health insurance companies can’t be part of any solution to our health care crisis, because they are the problem.

One possible solution to the problem is government sponsored, universal health care. No government official I know of makes $40 million a year. But whenever government health care is suggested, highly paid, right-wing propagandists bring up Canada. They offer us a fool’s choice, either the mess we have, or Canada. Most counties with national health insurance, even Canada, have longer life expectancies and lower infant mortality rates, and spend thousands of dollars less per person than the USA. Where does the dollar difference go? Into those obscene CEO salaries and profits for wealthy stockholders.

One way to make health care available to all Americans would be to make it a benefit of the Social Security Insurance program. The infrastructure is already in place. It could be funded by removing the $90,000 cap on taxable income, and by increasing the SSI “payroll tax.” Further savings would come from eliminating Medicare and Medicaid, and by wringing the profit out of our current health care system. We should be able to match the cost of other nations, but even if ours costs $1000 more, we would still be paying less than we are now. And everyone would be insured, even our hard working friends who have been laid off, or work without benefits.

Northwestern Community Columnist John Lemberger is a fifth generation Oshkosh resident. His great-great grandparents, John and Francesca Lemberger, arrived in Oshkosh from a part of Austria that was once Bohemia, in 1888. He has a Ph.D. in science education and has been an associate professor in the College of Education and Human Services with UWO since 1995.

Why Obama, Edwards, Hillary, Romney, Schwarzenegger Don’t Support Single Payer?

Why Obama, Edwards, Hillary, Romney, Schwarzenegger Don’t Support Single Payer?

CORPORATE CRIME REPORTER
February 21, 2007

The majority of the American people want a single-payer health care system — Medicare for all.

The majority of doctors want it.

A good chunk of hospital CEOs want it.

But what they want doesn’t appear to matter.

Why?

Because a single-payer health care plan would mean the death of the private health insurance industry and reduced profits for the pharmaceutical industry.

Presidential candidates John Edwards, Barack Obama, Hillary Clinton, and Mitt Romney and California Governor Arnold Schwarzenegger talk a lot about universal health care.

But not one of them advocates for single-payer — because single-payer too directly confronts the big corporate interests profiting off the miserable health care system we are currently saddled with.

“Currently, we are spending almost a third of every health care dollar on administration and paperwork generated by the private health insurance industry,” said Dr. Stephanie Woolhandler, an Associate Professor of Medicine at Harvard Medical School and co-founder of Physicians for a National Health Program. “Countries like Canada spend about half that much on the billing and paperwork side of medicine. If we go to a single-payer system and are able to cut the billing and paperwork costs of health care, that frees up about $300 billion per year. That’s the money we need to cover the uninsured and then improve the coverage for those who have private insurance but are under-insured.”

“The idea behind single-payer is you don’t have to increase total health care spending,” Woolhandler said in an interview with Corporate Crime Reporter. “You take the money we are now spending but cut the administrative fat and use that money to cover people.”

None of the declared Presidential candidates — with the exception of Congressman Dennis Kucinich (D-Ohio) — is supporting single-payer.

Last year, Kucinich and Congressman John Conyers (D-Michigan), introduced a single-payer bill, HR 676, which garnered support of more than 75 members of the House.

Woolhandler expects that number to grow substantially this year.

And Woolhandler says grassroots activists have been mobilizing at the state level.

“State single-payer organizations have been very active,” she said. “Early in the process, you can get a lot of politicians interested — they want to show up at your rallies to show support for national health insurance. But as you get closer and closer to actual passage of a law, it is harder to keep the politicians on board.”

“The legislature in California passed a single-payer bill last year, but everybody knew that Governor Arnold Schwarzenegger was going to veto it. So, it was very easy for the politicians to say — yes, I’m going to support it. The insurance industry did not come in and throw their millions against it. But every time there is a real possibility of a bill coming through, the insurance industry has weighed in very heavily against.”

Woolhandler called the universal health care law passed in Massachusetts by Governor Mitt Romney “a hoax.”

“The core idea is the individual mandate — forcing uninsured people to go out and buy insurance,” Woolhandler said. “And if they don’t buy insurance, we are going to fine them. The first year it is an $80 fine. The second year, it’s half the value of the lowest priced policy — we’re talking about a $2,000 fine. So, they are saying anyone who earns more than three times poverty has to bear the entire price of a private insurance policy.”

“Romney’s bill was written by Blue Cross,” Woolhandler said. “Romney was saying he was going to offer health insurance starting at $200 a month. And of course, that was a hoax. No insurance policy in Massachusetts comes in at $200 a month. When Blue Cross was asked to produce the policy, it turned out the policy was going to cost $380 a month for a policy that had a $2000 deductible. So, you are going to tell this poor bloke who is earning $29,400 a year that he has to go out and spend $4,000 a year on an insurance policy. And if he gets sick, he doesn’t even have any coverage until he has spent $2,000. And that’s not family coverage. That’s individual coverage.”

Schwarzenegger would do the same — fine individuals for not having insurance.

Former Senator John Edwards would have a Medicare-like system compete with private insurance.

“Edwards plan is not going to work,” Woolhandler says flatly. “We know there is not going to be fair competition between Medicare and the private plans. You have to take on the private health insurance industry and tell them — you are out of here. This is an entitlement program like traditional Medicare or Social Security. We are going to get the administrative efficiencies you get from running it as a single program and use that to expand coverage. That’s what you have to do.”

Senator Hillary Clinton (D-New York) doesn’t want to get specific.

“She is nowhere on this issue,” Woolhandler says.

Ditto Senator Barack Obama (D-Illinois).

But Woolhandler sees an opening.

“We are at the cusp of a new single-payer movement,” she said. “Things have been quiet over the last eight years of so. Nobody was talking about health care. But now, everyone is talking about health care. And it’s obvious that politicians are realizing that health care can be a ticket to higher office. So, we are about to see a real blossoming of the health care debate and it will present an opening for us to get the single-payer idea out there.”

[For a complete transcript of the question/answer format “Interview with Stephanie Woolhandler,” see 21 Corporate Crime Reporter 9(12), February 26, 2007, print edition only.]

Health care spending for 2007

Health Spending Projections Through 2016

By John A. Poisal, Christopher Truffer, Sheila Smith, Andrea Sisko, Cathy Cowan, Sean Keehan, Bridget Dickensheets, and the National Health Expenditure Accounts Projections Team (Centers for Medicare and Medicaid Services)
Health Affairs
February 21, 2007

Projected spending for 2007

$2,262.3 billion – NHE (National Health Expenditures)

$7,498.0 – NHE per capita

16.2% – NHE as percent of GDP

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.2.w242v1

Comment:

By Don McCanne, MD

Updated statement on spending:

“This year, 2007, we are spending over $2.2 trillion on health care, which is 16.2 percent of our gross domestic product. That amounts to $7,500 per each person in the United States.”

Also, out-of-pocket payments are increasing 6.1 percent, and private health insurance costs are increasing 6.7 percent, and both are expected to continue to increase at about the same rate for the next decade. Since these rates are well in excess of inflation, the financial burden on patients will continue to grow significantly worse.

Single-Payer, Health Savings Accounts, or Managed Care?

Minnesota Physicians' Perspectives

CLINICAL & HEALTH AFFAIRS Minnesota Medicine February 2007, Volume 90 Published monthly by the Minnesota Medical Association By By Joel M. Albers, Pharm.D., Ph.D., Breanna Peterson Lathrop, Kirk C. Allison, Ph.D., Charles N. Oberg, M.D., and James F. Hart, M.D.

Abstract The United States is facing a health care crisis with the number of uninsured Americans exceeding 46 million and health care premiums and overall costs increasing at 3 to 4 times the rate of inflation. Proposed solutions include continuing managed care, moving to a single-payer financing system with universal coverage, and replacing traditional health plans with high-deductible policies that allow patients to draw from health savings accounts (HSAs) to pay out-of-pocket costs. Despite physicians’ vital role in health care, few studies have assessed their preferences regarding health care financing systems. We surveyed a random sample of licensed Minnesota physicians to determine their preferences regarding health care financing systems. Of 390 physicians, 64% favored a single-payer system, 25% HSAs, and 12% managed care. The majority of physicians (86%) also agreed that it is the responsibility of society, through the government, to ensure that everyone has access to good medical care. Less than half (41%) said that the private insurance industry should continue to play a major role in financing health care. The accumulating knowledge about physicians’ preferences for various health care financing mechanisms merits widespread inclusion in policy debates.

In 2001, the Institute of Medicine reported that the U.S. health care system is failing both clinicians and patients, that their frustration levels have never been higher, and that fundamental changes are needed.1 By 2005, more than 46 million Americans, including 400,000 Minnesotans, were uninsured, and health insurance premiums and overall costs were rising at a rate 3 to 4 times that of general inflation and wages.2-4 Employers have been forced to eliminate or cut back on health benefits, often increasing employee out-of-pocket costs beyond many households’ ability to pay. In 2004, the average Minnesota household spent $11,000 on health insurance premiums and out-of-pocket costs; that figure is projected to reach $22,000 by 2010 if current trends continue.4 For those reasons, the consensus among most observers is that urgent reform is needed. Proposed solutions to the health care financing crisis include continuing with the current managed care system, moving to a single-payer system, or moving toward one in which individuals rely on high-deductible health plans with health savings accounts (HSAs). Minnesota has one of the most established managed care systems in the United States, with 4 managed care companies insuring or handling administrative duties associated with insuring more than 90 percent of Minnesotans who have health coverage. These organizations often group physicians into price-tiered, competitive networks. Recent physician surveys document significant concerns about managed care including concern about ethical issues, physician satisfaction, effects on the physician/patient relationship and on the profession itself, quality of care, and cost-effectiveness.5-10 A Medline search produced 4 randomized studies published between 1993 and 2005 that examined physicians’ health care financing preferences. They indicate growing support for a single-payer model that is publicly financed and administered by a single, public payer.11-14 Such systems lower costs through economies and efficiencies of scale and streamlined administration yet still allow physicians to work in private practices and preserve quality care. State and national studies comparing financing models increasingly suggest the potential for a single-payer system to achieve universal, comprehensive coverage without increasing total health care spending.15-17 Health savings accounts, enacted by the 2003 Medicare Part D drug law, are tax-free savings accounts to which individuals and employers contribute. The money can be drawn out to pay for approved medical expenses. Individuals and families with high-deductible health insurance plans are eligible to open HSAs. Proponents of HSAs argue that patients with health insurance policies that require little or no deductible or co-pay perceive health care as being “free” and become insensitive to price. The belief is that these individuals overuse health care and drive up costs. The idea behind what is being called “consumer-directed health care” is that having a high-deductible health plan with an HSA forces consumers to spend their own money, prompting them to cut back on frivolous health care usage. This type of financing system is also designed to encourage physicians and hospitals to compete on price, theoretically lowering costs. Despite health care over-utilization by consumers being greatly overstated and the lack of evidence that consumer-directed health care actually lowers costs or improves quality, high-deductible plans with HSAs have been heavily marketed across the United States and in Minnesota.18,19 To date, no one has compared Minnesota physicians’ attitudes toward single-payer, consumer-directed, and managed care systems. Thus, we developed and conducted a survey to probe which financing system physicians believe will provide the best care to the most people for a given amount of money.

Methodology

Study Sample and Data Collection Following approval by the University of Minnesota’s Institutional Review Board, a list of all 17,766 physicians licensed in Minnesota was obtained from the Minnesota Board of Medical Practice; the number was reduced to 13,770 after eliminating those with out-of-state addresses. A random sample of 1,061 physicians was then generated using M initab Statistical Software. Surveys accompanied by a cover letter inviting participation and a consent form were mailed on December 6, 2005. Twenty-seven were returned undeliverable and randomly replaced. Physicians could fill out a paper survey or complete an online version. Those who did not respond were sent a second mailing in January of 2006. Altogether, 408 physicians responded by the February 13, 2006, cut-off. Those respondents closely approximate population parameters by sex (within 0.6%), by rural/metropolitan practice (within 1.3%), and across 4 practice categories (within 0.4% to 2.6%). Those categories were primary medicine (internal medicine and family medicine, pediatrics, general practice, and geriatrics), all other medical specialties, general surgery, and surgical specialty (anesthesiology, orthopedics, obstetrics, gynecology, pediatric surgery, and neurosurgery). Survey Design We updated an 11-item survey by McCormick et al. and expanded it to 16 questions in order to reflect current trends and maintain state-to-state comparability.11 Questions assessed physicians’ opinions about various health care financing structures (single payer, HSAs, and managed care) and gathered information about participants’ demographics, primary specialty, and geographic and primary practice settings. To elicit physicians’ preferences regarding health care financing structures, we asked, “Which of the following 3 structures would offer the best health care to the greatest number of people for a given amount of money?” Respondents could select “current competitive multi-payer managed care systems,” “single payer with universal coverage,” or “individualized insurance coverage utilizing health savings accounts” as answers. We defined those financing mechanisms as follows: Multi-payer managed care. The current market-based system in which individuals are enrolled in 1 of a variety of private insurance plans. Plans offer certain health care benefits and use utilization review to control costs and improve quality. Single-payer system. A single insurance plan administered by a government
al body or publicly accountable commission, guaranteeing coverage and access to necessary medical treatment. Under such a system, hospitals would remain privately owned and physicians would be employed by private groups and practices. Individualized coverage utilizing health savings accounts. Individuals with high-deductible health insurance plans can use pretax money from a health savings account to pay for current and future health expenses. Statistical Analysis We performed chi-square analysis to identify the demographic variables significantly associated with physician financing system preference (2-tailed, alpha .05) including sex, geographic location, primary specialty, and primary practice setting. To determine the influence of nonresponse bias, we performed a sensitivity analysis recalculating response proportions for managed care, single-payer, and HSA preference relative to Minnesota physician population parameters for specialty, sex, and geography (rural versus metropolitan). Using binary logistic regression models, we assessed the relationship between preferred system and chi-square significant variables (including general attitude, working environment, rural or urban setting, sex, salary system, and other demographic variables). The Likert scale responses “strongly agree” and “somewhat agree” were combined as were “strongly disagree” and “somewhat disagree.” Statistical analysis was performed using Minitab Statistical Software (Release 14) (chi-square, logistic regression) and Microsoft Excel 2000 (sensitivity analysis, binomials). Findings A majority of respondents (72%) were male with a median medical school graduation year of 1979. Nearly half (46%) practiced primary medicine, followed by medical specialty (35%), surgical specialty (12%), and general surgery (6%). More than three-quarters (79%) worked in a metropolitan setting, and nearly two-thirds (65%) practiced in a clinic. Of the 390 respondents who answered the question about which financing system would offer the best health care to the greatest number of people for a fixed amount of money, 64% said they favor a single-payer financing system, 25% preferred HSAs, and only 12% preferred managed care (Figure 1). Figures 2 through 4 offer a closer look at who prefers those financing structures by sex, geographic location, specialty, and type of practice. A single-payer system was favored by women physicians over men (female, 76%; male, 59%; p=.003); more male physicians than female preferred HSAs (male, 30%; female, 16%; p=.004). The percentage of male respondents who favored the current managed care system slightly exceeded that of female physicians (12% versus 9%; p=.553). Geographic setting was also significantly associated across the 3 choices. Urban physicians favored a single-payer system over their rural and suburban colleagues (71%, 60%, and 54%, respectively; p=.009). Rural physicians preferred HSAs over suburban and urban physicians (34%, 32%, 17%; p=.002). Managed care garnered less than 15% support overall, with 14% of suburban physicians, 12% of urban doctors, and 6% of rural respondents favoring it; p=.217). Thus, urban physicians had the most support for a single-payer system and the least for managed care. Rural physicians were relatively enthusiastic for HSAs but least supportive of managed care. When looking at physicians’ responses across medical specialty, those practicing primary medicine most favored a single-payer system (74%); general surgeons least favored such a system (36%). Conversely, general surgeons most favored HSAs (55%), and primary medicine physicians least favored them (20%). Managed care found greatest support among physicians who practiced a medical or surgical specialty (17% each) and the least among those who practiced primary medicine (6%). Of those who favored managed care, the significant split was specialists over generalists (17% and 7%; p=.001). Physicians also were asked who should be responsible for providing access to health care. Nearly all (86%) believed it is the responsibility of society through government to ensure access to good medical care for all, regardless of ability to pay. Only 41% held that the private insurance industry should continue to play a major role in medical care financing and delivery. Using a regression model, we found that physicians who agreed that it is the government’s responsibility to ensure access to medical care were significantly more likely to favor a single-payer financing system (OR 13.51; CI 2.85, 64.15; p=.001). Those who believed the private insurance industry should continue to play a major role in financing medical care were significantly less likely to favor a government-run system (OR 3.45; CI 1.35, 8.33; p=.009). Corroborating Results In order to corroborate our results about physicians’ preferences for various financing systems, we asked separate questions about their opinions of each of the 3 structures. We found 56% held a generally favorable view of single-payer systems, 46% of HSAs, and 20% of managed care systems in which physician groups compete for placement in cost-tiered networks. (The total exceeds 100% as some physicians were generally favorable toward more than 1 system.) Thus, more respondents said they preferred a single-payer system than held a favorable view of such a system. Among those with a favorable opinion of single-payer health care, 96% actually selected single payer as their preference for the way our health care system should be financed in the future; among those with a favorable view of HSAs, only 49% selected HSAs as their preferred model for a health care financing system. However, those who had a generally favorable opinion of competition based on price tiers split between their preference for a system based on managed care and one based on HSAs (36% and 39%); only 25% of those respondents said they preferred a single-payer system. Among those opposed to price-tier competition, 78% preferred a single-payer system and 18% preferred HSAs. Only 4% preferred managed care: Rejecting price-tier competition was largely co-extensive with rejecting managed care. Discussion Despite the prevalence of managed care in Minnesota, our study finds only 12% of sampled physicians favor such systems as a way to finance health care; 25% prefer HSAs, and 64% support a single-payer system. Eighty-six percent believe it is the responsibility of society through government to ensure access to good medical care for all. Only 41% say the private insurance industry should continue to play a major role in the financing and delivery of medical care, suggesting support for comprehensive public-sector initiatives rather than private-sector approaches. Stand-alone survey questions about various financing systems showed that nearly 56% of respondents had a generally favorable opinion of single-payer health care systems. Of all specialties, general surgeons had the lowest percentage of respondents who had a favorable view of such a system (36%). Forty-six percent thought favorably of HSAs, and 20% had a positive view of price-tiered competition. This suggests an unwillingness among physician groups to compete directly under managed competition. Yet 118,000 Minnesota state employees and as many as 150,000 employees whose coverage is obtained by a large, multiple-employer group purchaser are enrolled in such managed competition programs.20 Our findings are consistent with those of others who have seen a growing trend toward U.S. physicians saying they favor a single-payer health care system. In 1993, Millard et al. found only 25% of surveyed North Carolina physicians supported a single-payer system over managed competition.13 In 1996, Scanlan et al. compared the opinions of U.S. and Canadian physicians
and concluded that U.S. physicians might not easily accept a Canadian-style system because of reticence toward a central government role or centralized planning.12 By 1999, a national survey of medical school residents and faculty by Simon et al. found 56% favored a single-payer system over managed care.14 A 2004 survey by McCormick et al. concluded that 64% of surveyed Massachusetts physicians believed single-payer financing would provide the best care for the most people.11 In our study, we found that physicians’ views on health care financing reflect their experience with Minnesota’s concentrated oligopoly of 4 managed care insurers that either enroll or administer benefits for more than 90% of insured Minnesotans.21 In a 1997 report, Borowsky et al. found fewer than 20% of physicians in the Minneapolis-St. Paul metro area rated 3 managed care plans as either excellent or very good on 7 quality-of-care items.9 Such findings are consistent with less favorable views of managed care and more favorable views of other systems, including those that haven’t been tried. Study limitations must be considered. First, it is possible that only physicians who feel strongly about health care financing responded to our survey. However, differences between respondent characteristics and physician population are minimal and the results are robust under sensitivity analysis. Lack of response is unlikely to have affected validity. Second, it may not be possible to generalize the findings of our study to all U.S. physicians. However, as noted, results from a recent survey of physicians in Massachusetts, a state that also has high managed-care penetration, and a national survey of university physicians are similar to ours. Such studies should be replicated in other regions of the United States to get a more complete picture of U.S. physicians’ views on this important public policy matter. Conclusion Our survey suggests that the majority of Minnesota physicians have grown weary of the current managed care health system that places a huge administrative layer between them and their patients. Because physicians play a central role in health care, their experience with and views on system financing have the potential to significantly inform those heading reform initiatives. With more than 46 million Americans lacking health insurance and premiums and health care costs rising at 3 to 4 times the rate of inflation, reform is inevitable and necessary. Our survey shows that nearly two-thirds of Minnesota physicians favor a single-payer health care financing system. Such a majority view could be influential in public debate and in the movement of practitioners and patients toward implementing a universal health care system in Minnesota and the United States. MM Joel Albers is a clinical pharmacist and a health economics researcher with the Minnesota Universal Health Care Action Network. Breanna Peterson Lathrop is a graduate student in health care policy at Emory University. Kirk Allison is director of the program in human rights and health, Charles Oberg is an associate professor in and chair of Maternal and Child Health, and James Hart is director of the executive program in public health practice at the University of Minnesota. Funding and administrative support for this study was provided by the Department of Epidemiology, School of Public Health, University of Minnesota; Center for Integrative Research, St. Olaf College; and Jan Pearson, Research Assistant, University of Minnesota. References 1. Institute of Medicine. Crossing the quality chasm: a new health system for the 21st century. 2001. Washington D.C.: National Academy Press. 2. U.S. Census Bureau. Health insurance coverage. Available at http://www.census.gov/hhes/www/hlthins/hlthin05.html. Accessed January 9, 2007. 3. Minnesota Department of Health. Health insurance coverage in Minnesota: Trends from 2001 to 2004. Available at www.health.state.mn.us/healtheconomics. Accessed January 9, 2007. 4. Durenberger D. Listening to Minnesotans: Transforming Minnesota’s Health Care System. Report of the Minnesota Citizens Forum on Health Care Costs. 2004. Available at www.mncitizensforum.org. Accessed January 8, 2007. 5. Sulmasy DP, Blumen HE, Wellikson LD, Holm RP. Four views of managed care ethics. Panel discussion. Manag Care. 2001;10(8):41-5. 6. Lammers JC, Duggan A. Bringing the physician back in: communication predictors of physicians’ satisfaction with managed care. Health Commun. 2002;14(4):493-513; discussion 515-8. 7. Burdi M, Baker LC. Market-level health maintenance organization activity and physician autonomy and satisfaction. Am J Manag Care. 1997;3(9):1357-66. 8. Donelan K, Blendon RJ, Lundberg GD, et al. The new medical marketplace: physicians’ views. Health Aff (Millwood). 1997;16(5):139-48. 9. Borowsky SJ, Davis MK, Goertz C, Lurie N. Are all health plans created equal? The physician’s view. JAMA. 1997;278(11):917-21. 10. Skootsky SA., Slavin S, Wilkes MS. Attitudes toward managed care and cost containment among primary care trainees at 3 training sites. Am J Managed Care. 1999;5(11):1397-1404. 11. McCormick D, Himmelstein DU, Woolhandler S, Bor D. Single-payer national health insurance: physicians’ views. Arch Intern Med. 2004;164(3):300-4. 12. Scanlan A, Zyzanski SJ, Flocke SA, Stange KC, Grava-Gubins I. A comparison of U.S. and Canadian family physician attitudes toward their respective health-care systems. Med Care. 1996;34(8):837-44. 13. Millard PS, Konrad TR, Goldstein A, Stein J. Primary care physicians’ views on access and health care reform: the situation in North Carolina. J Fam Pract. 1993;37(5):439-44. 14. Simon SR, Pan RJ, Sullivan A, et. al. Views of managed care: a survey of students, residents, faculty and deans at medical schools in the United States. N Engl J Med. 1999;340(12):928-36. 15. Sheils J, Haught R. Analysis of the costs and impact of universal health care models for the state of Maryland: the single-payer and multi-payer models. May 2000. Available at http://www.lewin.com. Accessed January 8, 2007. 16. The Lewin Group. Cost and coverage analysis of nine proposals to expand health unsurance coverage in California. April 2002; California Health and Human Services. Available at 222.statecoverage.net/statereports/ca71.pdf. Accessed January 8, 2007. 17. Christensen S. Single-payer and all-payer health insurance systems using Medicare’s payment rates. April 1993;Washington, D.C.: Congressional Budget Office. Available at www.cbo.gov/showdoc.cfm?index=64428sequence=0. Accessed January 8, 2007. 18. Nyman J. Is “moral hazard” inefficient? The policy implications of a new theory. Health Aff (Millwood). 2004:23(5);194-9. 19. Covington S, Moore Jr. T. Hazardous Health Care: The impact of health savings accounts on Minnesota health care. A report to SEIU Local 113 by the Project for Strategic Health Purchasing, March 2005. 20. The Office of Legislative Auditor, State of Minnesota. Report: State Employee Health Insurance. 2002. 21. Minnesota Health Insurance Network 2006. MN Health Insurance Network, Inc. Available at: www.mnhealthnetwork.com/index.html. Accessed January 8, 2007.

Important links to Mayes and Berenson's "Medicare Prospective Payment"

By Don McCanne, MD

A recent Quote of the Day message discussed the new book, “Medicare Prospective Payment and the Shaping of U.S. Health Care,” by Rick Mayes, Ph.D. and Robert Berenson, M.D. The authors have demonstrated that Medicare has not only slowed the excess growth in health care costs, but has actually improved quality and efficiency and has an even greater potential to further expand on health care value.

That qotd message is available at:
https://pnhp.org/news/2007/january/mayes_and_berenson_o.php

The authors have made available to us the Introduction, which provides a brief summary of the book, and the Conclusion, “How Medicare Does and Should Shape U.S. Health Care.” They are available at the following links:

Table of Contents:
http://www.richmond.edu/~bmayes/pdf/Mayes_Berenson_Title_Page.pdf

Introduction:
http://www.richmond.edu/~bmayes/Introduction.pdf

Conclusion:
http://www.richmond.edu/~bmayes/pdf/Mayes_Berenson_Conclusion.pdf

These chapters are an important contribution to our current national dialogue on reform. Everyone agrees that reform must address the costs of health care, yet few proposed reforms really do. Expanding private insurance programs actually increases administrative costs while failing to control wasteful spending. The cost sharing of consumer directed approaches may slow spending increases but at the terrible cost of making access to beneficial health care services much less affordable. Information technology systems and liability reform are important topics, but they are often presented as measures to control costs when it is more likely that such reforms will actually increase costs.

Our uniquely high health care costs are due to many factors, but one of the more important is quite simply our health care prices. This was described in a classic Health Affairs article by Gerard Anderson and others, “It’s the Prices, Stupid.” Last month, McKinsey & Company released a report, “Accounting for the Cost of Health Care in the United States,” which also demonstrated that our high costs were due to input costs (prices, etc.), delivery processes (overcapacity, etc.) and intermediation (multi-payer system administration, etc.).

We have identified the wasteful excesses in health care spending. We now have many decades of experience that have proven that our fragmented system of private plans and public programs has been incapable of eliminating most of this waste. Mandates to purchase even more competing private plans can never succeed in bringing us the mechanisms we need to improve health care value.

On the other hand, Mayes and Berenson have shown us that Medicare has been somewhat effective even though it covers less than 15 percent of our population. Imagine the power of a social insurance program that adds in the other 85 percent of us. Through our own public insurance program we would be in a position to demand fair prices, demand improved allocation of our spending, and demand elimination of private bureaucratic administrative waste.

Anderson, et al, “It’s the Prices, Stupid,” Health Affairs, 22, no. 3 (2003): 89-105
http://www.healthaffairs.org/

McKinsey & Company, “Accounting for the Cost of Health Care in the United States”
http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp

But if you have time to access only one of the links listed above, be sure that it is the “Conclusion” from Mayes and Berenson. We really can shape our health care system to make it work much better for all of us.
http://www.richmond.edu/~bmayes/pdf/Mayes_Berenson_Conclusion.pdf

Beware of ill-thought-out solutions to health care crisis

By Malinda Markowitz, RN
Mercury News, 2/16/07

As the hearings on the governor’s health proposal begin this week, many politicians and interest groups want us to believe there’s a public consensus in favor of an insurance-based reform model.

But Californians may recall another time when many of the same experts united behind a sweeping change.

In 1996, Gov. Pete Wilson and legislators from both parties enthusiastically pushed through a plan to deregulate energy in California. They promised huge savings for consumers in reduced rates. As everyone knows, it didn’t quite work out.

Instead, there were huge increases in prices and reduced supplies, followed by blackouts affecting millions of Californians. There was a near-bankruptcy for the state and a recall election. Enron and others made millions, until the roof caved in.

Then, as now in health care, the private market was touted as the solution, a fool’s gold that became a nightmare. Let’s not let it happen again. Instead, we should examine proposed legislation that will achieve universal care through a simple, single-payer system.

Gov. Schwarzenegger’s proposal, as well as versions by the leaders of the state Assembly and Senate, also see the private market as the cure for our health care meltdown. All three plans are premised on a massive expansion of the role of HMOs and insurance companies. Schwarzenegger even wants to deregulate what few requirements health insurers have now.

But like energy deregulation before it, we’re being promised snake oil. Just consider a little reported comment from one HMO chief executive, Stephen Hemsley of UnitedHealth. He called the Schwarzenegger plan “an interesting set of proposals that represent real opportunities for our business.”

Schwarzenegger’s plan would force all individuals to buy health insurance if they don’t already have it, and tax businesses to purchase insurance for employees who aren’t covered. There’s even a tax on doctors and hospitals, also to pay for more insurance.

But there’s no limit on premium increases that rose by 87 percent the past six years. Most individuals and families will likely opt for cheaper plans with bare-bones benefits and huge out-of-pocket costs for medical care they actually use, in addition to the premiums the state would force them to pay. And that’s at a time when medical bills account for half of personal bankruptcies and a third of credit card debt.

For anyone opting out, the proposed penalties are severe, from withheld wages to tax penalties to an inability to enroll children in school. What’s next, debtor’s prison?

Similarly, since the proposed payroll tax is less than half of what most businesses now pay for benefits, there’s an obvious enticement for employers to reduce coverage. Californians could lose what they have now, or pay a lot more for fewer services and less care.

As with the energy marketers before them, the insurers stand to make a killing. HMOs, which hardly need the help, are expected to reap hundreds of millions more dollars from the additional 4 million to 5 million new customers marched into their offices. It was just such profiteering that created our current health care crisis by sacrificing quality, access and affordability for higher revenues and profit.

Rather than trying to stampede everyone into accepting a plan that could make the present mess worse, our legislators should support a more universal, comprehensive solution that bypasses wasteful insurers.

State Sen. Sheila Kuehl will introduce the California Universal Health Care Act this month. This legislation sets up a single-payer system with one public entity that pays all the bills, with health care delivered by our present system of doctors, hospitals and clinics. It’s genuinely universal, controls costs, guarantees choice of physician, ends insurance industry waste and denial of care, and assures a single standard of quality care for all. It does nothing to increase insurance profits, but works a whole lot better for the rest of us.

MALINDA MARKOWITZ is a registered nurse at Good Samaritan Medical Center in San Jose and secretary of the California Nurses Association. She wrote this article for the Mercury News.

Protect patients not health insurers

JACK E. LOHMAN
Capital Times, Madison, WI
February 16, 2007

Of all of our health care needs, government protection of insurance company mega-profits should not be on the list of needed reforms.

But that apparently won’t stop President Bush, who is now proposing an annual $7,500 single and $15,000 family tax credit for citizens who are either unemployed or whose employer has dumped their health insurance. This would enable them to purchase directly from the insurance company to help them retain their profits.

Bush also made his usual plug for health savings accounts, for which Wall Street, the credit card industry and bankruptcy attorneys will forever be in his debt.

Tax credits are not the answer. We should be providing health care directly to the patient, not through third-party insurance companies.

Follow the money. These are taxpayer assets being given to the insurance industry for non-health care services – when the insurance industry shouldn’t be getting a penny of our health care dollars. Much of their services are an unnecessary part of the process and are largely dispensable. They consume 20 percent of health care dollars yet provide absolutely zero health care benefits to the patient.

That’s a shameful waste.

We need administration; not insurance. We should totally eliminate the unnecessary costs that are consumed by marketing, broker commissions, huge executive salaries, and high corporate profits.

None of these would exist under a single-payer system like Canada’s. With a strong political will we could mimic Canada’s system and extend health care to 100 percent of the public, and we’d spend the same amount of dollars we are spending today to cover only 85 percent of the people.

To boot, we can do it without Canada’s wait times! The money saved would be spent on more doctors and more nurses to serve more patients.

The state must implement a universal health care system, and the proposal by Sen. Mark Miller, D-Monona, and Rep. Chuck Benedict, D- Beloit, provides the mechanism to bring health care to all residents by July 1, 2008.

The logical approach would be to contract with an administrative service, like Medicare does with WPS in Madison, and any of the current insurance companies would be candidates to serve the state in that capacity.

But whenever waste is trimmed people are displaced, and some of those people can be used in administering the new program and others retrained for more critical jobs like nursing, medical technologists, and even by moving some into higher paying programming positions that will be needed to convert our massive paper-based medical records system to an electronic patient database.

There are other health care proposals, but none are as extensive and none are as simple.

With added complexity comes costly administration, the very thing we must eliminate if we are to afford the system. With single-payer, the patient receives services and the administrator writes the check. It’s that simple.

We’d incorporate BadgerCare and Medicaid patients and funds, and we’d cut worker compensation and auto insurance rates in half because the medical portions of those are handled by the universal system. And we’d not be hampered by federal laws that prohibit negotiating for lower drug prices, so our single-risk pool would enable us to maximize the economies of scale.

The Miller-Benedict proposal is not just the best system for the public, it is also the most business friendly proposal on the table. It will attract more companies and more jobs to the state than the others, and fewer businesses and jobs will be lost. Initially it would be funded by a payroll tax and the transfer of funds from the other systems it replaces.

What’s not to like about that?

Our current problem is not funding, it is political.

Some politicians claim that the government can’t do anything right and they will fight to privatize the system. I’d probably buy that argument were it not for the fact that government-run entities cannot give campaign contributions and private corporations and their executives can. And they do, because the last thing in the world they want to see is our health care system made more efficient.

But it is time for politicians to put politics aside and do what’s right for the people.

Important links to Mayes and Berenson’s “Medicare Prospective Payment”

By Don McCanne, MD

A recent Quote of the Day message discussed the new book, “Medicare Prospective Payment and the Shaping of U.S. Health Care,” by Rick Mayes, Ph.D. and Robert Berenson, M.D. The authors have demonstrated that Medicare has not only slowed the excess growth in health care costs, but has actually improved quality and efficiency and has an even greater potential to further expand on health care value.

That qotd message is available at:
https://www.pnhp.org/news/2007/january/mayes_and_berenson_o.php

The authors have made available to us the Introduction, which provides a brief summary of the book, and the Conclusion, “How Medicare Does and Should Shape U.S. Health Care.” They are available at the following links:

Table of Contents:
http://www.richmond.edu/~bmayes/pdf/Mayes_Berenson_Title_Page.pdf

Introduction:
http://www.richmond.edu/~bmayes/Introduction.pdf

Conclusion:
http://www.richmond.edu/~bmayes/pdf/Mayes_Berenson_Conclusion.pdf

These chapters are an important contribution to our current national dialogue on reform. Everyone agrees that reform must address the costs of health care, yet few proposed reforms really do. Expanding private insurance programs actually increases administrative costs while failing to control wasteful spending. The cost sharing of consumer directed approaches may slow spending increases but at the terrible cost of making access to beneficial health care services much less affordable. Information technology systems and liability reform are important topics, but they are often presented as measures to control costs when it is more likely that such reforms will actually increase costs.

Our uniquely high health care costs are due to many factors, but one of the more important is quite simply our health care prices. This was described in a classic Health Affairs article by Gerard Anderson and others, “It’s the Prices, Stupid.” Last month, McKinsey & Company released a report, “Accounting for the Cost of Health Care in the United States,” which also demonstrated that our high costs were due to input costs (prices, etc.), delivery processes (overcapacity, etc.) and intermediation (multi-payer system administration, etc.).

We have identified the wasteful excesses in health care spending. We now have many decades of experience that have proven that our fragmented system of private plans and public programs has been incapable of eliminating most of this waste. Mandates to purchase even more competing private plans can never succeed in bringing us the mechanisms we need to improve health care value.

On the other hand, Mayes and Berenson have shown us that Medicare has been somewhat effective even though it covers less than 15 percent of our population. Imagine the power of a social insurance program that adds in the other 85 percent of us. Through our own public insurance program we would be in a position to demand fair prices, demand improved allocation of our spending, and demand elimination of private bureaucratic administrative waste.

Anderson, et al, “It’s the Prices, Stupid,” Health Affairs, 22, no. 3 (2003): 89-105
http://www.healthaffairs.org/

McKinsey & Company, “Accounting for the Cost of Health Care in the United States”
http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp

But if you have time to access only one of the links listed above, be sure that it is the “Conclusion” from Mayes and Berenson. We really can shape our health care system to make it work much better for all of us.
http://www.richmond.edu/~bmayes/pdf/Mayes_Berenson_Conclusion.pdf

Bernanke on health care reform

Hearing on the Economy, the Labor Market and Monetary Policy

Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System
U.S. House of Representatives
Committee on Financial Services
February 15, 2007

Rep. Deborah Pryce, R-Ohio: (excerpt) … the greatest problem is that people just can’t find health insurance that they afford. Therefore, they don’t get the medical treatment that they need.

And it occurs to me and many others that one of the reasons for this is because there’s really no consumer factor in health care in this country. We don’t shop for our benefits; we take what our insurance companies provide for us.

Market forces seem to work very well in all other aspects of our society. And is this what is wrong with our health care delivery system, this lack of market forces, so to speak, in it?

Chairman Ben Bernanke: Congresswoman, you’re correct in pointing out a very, very serious problem.

And I think you’re also correct that one of the main reasons why health care is so expensive in the United States has to do with the fact that we’re always buying with somebody’s money and not with our on money.

We have a system where technology is advancing rapidly, where our ability to do new and sophisticated tests, to provide new and sophisticated drugs through procedures is advancing rapidly

In most industries, new technologies save costs in medicine because — again, because of third-party payment. And the doctor and the patient are not making a cost-based decision. The cost-efficiency is not perhaps what it should be.

Now, one approach to this is to increase market forces in determination of what tests to order and what costs and how much to shop and so on. There are ways to do that. The health savings accounts, for example, create a catastrophic coverage — ask for a catastrophic coverage and ask people to save money within this account to buy coverage — to buy, sorry, medical care below the catastrophic level.

Some people may be uncomfortable with having to make those kinds of decisions. And so an alternative is to have competition between, say, HSA catastrophic plans and other types of medical management: HMOs, PPOs, traditional insurance and the like.

By creating more competition, I think there would be some benefits. But, again, it’s a complex subject.

There’s a lot of other things we could do. I think we could increase the transparency in terms, you know, of hospitals and doctors letting us know what they charge, what their quality is; improving information technology in health care, which would, I think, reduce errors and create more consistency across parts of the country.

We currently have very big differences in the costs of managing a certain kind of condition in different parts of the country. More uniformity and more best practice would help reduce costs as well.

So I think markets could have a useful role to help reduce and control — at least control costs.

Portability is a difficult question. One approach to portability is to have insurance companies insure workers rather than insure employers, so to speak. That would require somehow creating different kinds of pools, rather than employer-based pools, because you need pools in order to share risk. And there are some issues associated with that.

The main alternative would be to have people have the ability to take their policy from their current employer and then move over to another employer with the same policy.

These are all things we should be looking at, but none of them is a completely simple problem, because in each case you want to make sure that people are buying as part of a pool — a risk pool, rather than buying on an individual basis, where they might be, if they’re ill or a pre-existing condition, they won’t be able to afford insurance.

http://www.washingtonpost.com/wp-srv/content/article/2007/02/15/bernanke_021507.html

Comment:

By Don McCanne, MD

It is unfortunate that Federal Reserve Chairman Ben Bernanke used the framing of the conservatives to define the problems with our health care system, as he seemed to stumble through an explanation of why we need more market competition in health care. He might have been more convincing had he used the framing of his Princeton colleague, Paul Krugman.

There is a reassuring tone to his response. It is quite clear that he believes that the problems are much more complex than a mere lack of adequate market competition. His bottom line is that risk pooling is essential.

Markets dodge risk. Public policies distribute risk. If asked again, hopefully he will have prepared his answer better and start from the position of pooling risk. Paul Krugman could help him.

Excess administration of administrative excesses

Fights Over Health Claims Spawn a New Arms Race

By Vanessa Fuhrmans
The Wall Street Journal
February 14, 2007

Doctors increasingly complain that the insurance industry uses complex, opaque claims systems to confound their efforts to get paid fairly for their work. Insurers say their systems are designed to counter unnecessary charges and help keep down soaring health-care costs. Like many tug-of-wars over the health-care money pot, the tension has spawned a booming industry of intermediaries.

It’s called “denial management.” Doctors, clinics and hospitals are investing in software systems costing them each hundreds of thousands of dollars to help them navigate insurers’ systems and head off denials. They’re also hiring legions of firms that dig through past claims in search of shortchanged payments and tussle with insurers over rejected charges. “Turn denials into dollars,” promises one consultant’s online advertisement.

The imbroglio is costing medical providers and insurers around $20 billion — about $10 billion for each side — in unnecessary administrative expenses, according to a 2004 report by the Center for Information Technology Leadership, a nonprofit health-technology research group based in Boston.

Some companies are profiting from arming both sides. Ingenix, a unit of UnitedHealth Group Inc., the country’s second-biggest health insurer, sells insurers systems to screen doctor’s claims while promising doctors its software for them will “help you take a more assertive stance on fair and accurate payment.”

The denial-management industry’s rise shows how much of medical spending is consumed by propping up and doing battle over an arcane patchwork of claims systems. Roughly 30% of physicians’ claims are denied the first time around. Sales of physician-billing and practice-
management technology grew 25% to more than $7.5 billion last year, estimates Jewson Enterprises, a health information-technology research firm in Austin, Texas.

Some doctors say they see insurers stepping up efforts to keep a lid on reimbursements. One increasingly popular tactic among health insurers is to hire “health-care claims recovery” teams or software to dig through claims, some as old as two years, to see if they overpaid and seek redress. That’s partly because more states have been adopting “prompt pay” laws that require health insurers to reimburse claims within 30 or 60 days, says UnitedHealth spokesman Tyler Mason, which sometimes doesn’t leave enough time to review them first. “We need to have a way to still thoroughly review whether a claim’s paid correctly or not,” Mr. Mason says. Some insurers demand the money back. More, though, simply deduct it from future claim payments. That forces doctors to appeal the claim all over again.

http://online.wsj.com/article/SB117141549626107896.html

Comment:

By Don McCanne, MD

Let’s see. Our health care system is plagued with highly burdensome, expensive, inefficient, wasteful administrative excesses due to our ineffective, fragmented system of financing health care.

So what is the response from the industry? They provide highly burdensome, expensive, inefficient, wasteful administrative services to administer the highly burdensome, expensive, inefficient, wasteful administrative services that they are already providing.

And our policymakers want to reform health care by mandating more of this? Get real!

The Health Care Racket

By PAUL KRUGMAN
Op-Ed Columnist
New York Times
Published: February 16, 2007

Is the health insurance business a racket? Yes, literally — or so say two New York hospitals, which have filed a racketeering lawsuit against UnitedHealth Group and several of its affiliates.

I don’t know how the case will turn out. But whatever happens in court, the lawsuit illustrates perfectly the dysfunctional nature of our health insurance system, a system in which resources that could have been used to pay for medical care are instead wasted in a zero-sum struggle over who ends up with the bill.

The two hospitals accuse UnitedHealth of operating a “rogue business plan” designed to avoid paying clients’ medical bills. For example, the suit alleges that patients were falsely told that Flushing Hospital was “not a network provider” so UnitedHealth did not pay the full network rate. UnitedHealth has already settled charges of misleading clients about providers’ status brought by New York’s attorney general: the company paid restitution to plan members, while attributing the problem to computer errors.

The legal outcome will presumably turn on whether there was deception as well as denial — on whether it can be proved that UnitedHealth deliberately misled plan members. But it’s a fact that insurers spend a lot of money looking for ways to reject insurance claims. And health care providers, in turn, spend billions on “denial management,” employing specialist firms — including Ingenix, a subsidiary of, yes, UnitedHealth — to fight the insurers.

So it’s an arms race between insurers, who deploy software and manpower trying to find claims they can reject, and doctors and hospitals, who deploy their own forces in an effort to outsmart or challenge the insurers. And the cost of this arms race ends up being borne by the public, in the form of higher health care prices and higher insurance premiums.

Of course, rejecting claims is a clumsy way to deny coverage. The best way for an insurer to avoid paying medical bills is to avoid selling insurance to people who really need it. An insurance company can accomplish this in two ways, through marketing that targets the healthy, and through underwriting: rejecting the sick or charging them higher premiums.

Like denial management, however, marketing and underwriting cost a lot of money. McKinsey & Company, the consulting firm, recently released an important report dissecting the reasons America spends so much more on health care than other wealthy nations. One major factor is that we spend $98 billion a year in excess administrative costs, with more than half of the total accounted for by marketing and underwriting — costs that don’t exist in single-payer systems.

And this is just part of the story. McKinsey’s estimate of excess administrative costs counts only the costs of insurers. It doesn’t, as the report concedes, include other “important consequences of the multipayor system,” like the extra costs imposed on providers. The sums doctors pay to denial management specialists are just one example.

Incidentally, while insurers are very good at saying no to doctors, hospitals and patients, they’re not very good at saying no to more powerful players. Drug companies, in particular, charge much higher prices in the United States than they do in countries like Canada, where the government health care system does the bargaining. McKinsey estimates that the United States pays $66 billion a year in excess drug costs, and overpays for medical devices like knee and hip implants, too.

To put these numbers in perspective: McKinsey estimates the cost of providing full medical care to all of America’s uninsured at $77 billion a year. Either eliminating the excess administrative costs of private health insurers, or paying what the rest of the world pays for drugs and medical devices, would by itself more or less pay the cost of covering all the uninsured. And that doesn’t count the many other costs imposed by the fragmentation of our health care system.

Which brings us back to the racketeering lawsuit. If UnitedHealth can be shown to have broken the law — and let’s just say that this company, which is America’s second-largest health insurer, has a reputation for playing even rougher than its competitors — by all means, let’s see justice done. But the larger problem isn’t the behavior of any individual company. It’s the ugly incentives provided by a system in which giving care is punished, while denying it is rewarded.