PNHP

Federal outsourcing increases uninsured

Federal outsourcing increases uninsured

How Government Adds To Ranks of Uninsured

By Jane Zhang
The Wall Street Journal
March 25, 2008

Covering the uninsured is a central issue in this year’s political campaign. Yet while politicians debate how best to cover the growing ranks of the uninsured, the federal government — by outsourcing service jobs — quietly is adding to those numbers. “As federal employees, we get great insurance,” says (Dr. William Rogers, a medical officer at the Department of Health and Human Services). “People who work as contractors often don’t enjoy those benefits.”

Federal contract employees, including cafeteria workers, security guards and cleaning crews, work on Capitol Hill and in federal agencies across the country. Under a 1965 law, called the McNamara-O’Hara Service Contract Act, most contractors with service contracts of more than $2,500 are required to pay locally prevailing wages, plus fringe benefits or the cash equivalent — $3.16 an hour this year, under a government formula.

Yet some contract employees don’t get either the health insurance or the extra cash. Under the law, employers in industries where health insurance typically isn’t offered are exempt. Other employers don’t comply with the law because they don’t understand it or assume they won’t get caught, say lawyers and consultants who work in the field.

Some contract workers who get the $3.16 in extra cash use it for rent, food or other things rather than health insurance. Federal contract workers — even if they wanted to pay for it — aren’t eligible for coverage offered to regular federal employees.

Outsourcing of federal-government jobs reflects the same cost-cutting imperatives that drive private businesses to outsource. The U.S. government keeps tabs on how much it pays contractors, but no government agency keeps a tally of the workers who are employed or how many have health insurance. Paul Light, a political scientist at New York University’s Wagner School of Public Service and a specialist on government employees, estimates that in 2005, there were 5.4 million federal service-contract workers, double the number in 1990.

About 80% of those, he says, are lower-wage workers, the ones less likely to be offered or to obtain health insurance. “A substantial number of lower-level white-collar and blue-collar contract workers do not have health insurance,” Mr. Light says. “Either they don’t purchase it or aren’t provided it through their employer,” he says.

http://online.wsj.com/article/SB120640675912461079.html

Comment:

By Don McCanne, MD

We won’t get it right until we’re ready to automatically enroll absolutely everyone in a single national health program. Until then, even the government will game the system.

More on wages and health care costs

Rising Health Costs Cut Into Wages

By Michael A. Fletcher
The Washington Post
March 24, 2008

Recent history has not been kind to working-class Americans, who were down on the economy long before the word recession was uttered.

The main reason: spiraling health-care costs have been whacking away at their wages. Even though workers are producing more, inflation-adjusted median family income has dipped 2.6 percent — or nearly $1,000 annually since 2000.

Employees and employers are getting squeezed by the price of health care. The struggle to control health costs is viewed as crucial to improving wages and living standards for working Americans. Employers are paying more for health care and other benefits, leaving less money for pay increases. Benefits now devour 30.2 percent of employers’ compensation costs, with the remaining money going to wages, the Labor Department reported this month. That is up from 27.4 percent in 2000.

“It is clear that benefits have been the biggest issue on collective bargaining tables and in company compensation calculations,” said Thomas A. Kochan, an economist at the Massachusetts Institute of Technology. “They eat up scarce dollars, and that limits the amount of money firms feel they can put on the table for wage increases.”

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/23/AR2008032301770.html

Comment:

By Don McCanne, MD

This report is further confirmation that increases in health care costs are not being absorbed by employers but are being passed on to employees in the form of forgone wage or salary increases. Since the percentage of compensation in the form of health insurance is inversely related to the income of the employees, this is a regressive method financing health care. Furthermore, higher-income individuals also receive a greater tax subsidy for employer-sponsored coverage than do lower-income individuals. Thus employer-sponsored health care financing is doubly regressive. Lower-income individuals pay a much higher percentage of income for their health care benefits than do higher-income individuals.

The employer role in most current proposals for reform ranges from a mandate for employers to provide private coverage for their employees, to removing the employer from any role while shifting the responsibility for obtaining coverage to the individual. These proposals are flawed for many reasons, but one of the most important is that the premium for private plans is determined by the benefits provided and not by the income of the beneficiaries. Whether paid directly by the employee or nominally by the employer, health care financing remains regressive.

Some proposals would attempt to correct this by providing refundable tax credits on a sliding scale based on income. But this would produce an administrative nightmare. The tax credit eligibility for each individual and family would be in a constant state of flux because of changes in employment status, income, family size, plan availability, eligibility for public programs such as Medicare, and numerous other potential factors that might be considered to improve equity. Adding more administrative complexity to a system already overburdened with profound administrative excesses doesn’t make sense from a policy perspective.

Rather than assigning a fee (insurance premium) to an individual or family based on an insurance product, it would be much simpler and much more equitable to assign a tax or combination of taxes, based on ability to pay, that is contributed to a universal risk pool that covers everyone. Plus the administrative savings would go a long way toward financing care for those currently left out of our system. And isn’t it really our goal to provide affordable care for everyone?

Why Not Health Care?

by Jeff Crosby
AFL-CIO Weblog
Feb 22, 2008

Andy, an IUE-CWA Local 201 member, looked at his pension check from General Electric as he sat in my office at the union hall. The local vice president and the president of the retirees association usually respond to benefit questions like this. But they were both on vacation, and I was struggling to catch up and be of some help.

“I got the $40 raise you told us about in December” he told me. “Then in January, I lost it again, plus another $6. What good was it? What happened?”

A conference call or two later, and we both knew three things had happened. In December, his pension went up $40. In January, his health care went up $46. So when the dust settled, his pension check dropped by $6. And keep in mind that he is one of the lucky ones: The share of employees offering any group health insurance at all to their retired workers dropped from 66 percent in 1988 to 33 percent in 2007.

We fight and fight, but health care costs are killing us. And you can’t bargain your way out of this mess. Understandably, getting the labor movement on the same page on a specific plan to fix health care is no easy task. I can’t even get all the local unions in my labor council to support the same person for school committee!

Still, we hope for another chance for health care reform in January 2009 if we do well in the elections this fall. The buzzwords are flying for health care reform: “Secure,” “Affordable,” “Universal” and “Quality.”

The “universal” part will peel off a Republican or two. They just think that people make bad health care choices; it’s their fault if have lousy health care. As some mainstream economists would have it, bad choices in the health care market by uneducated consumers are the root of the problem. (Check out a “solution” that targets consumers and providers–and not coincidentally leaves the drug companies and insurers off the hook–as offered by the former head of GE’s medical center in Lynn, Mass., and Newt Gingrich.)

There are winners and losers, right? Someone explain that to Andy the next time he drops by the union hall.

The problem is this: Practically everyone uses the same words when they talk about reforming health care. What elected official is against “secure, affordable, quality” health care? If you use buzzwords that are that broad, or a list of good principles 70 words long, you leave a lot of wiggle room for the next president and Congress to provide lousy answers under the same umbrella. Principles and buzzwords can mean a lot of things to a lot of people.

We have to be very sharp to make an impact.

First, we have to identify what we are for–specifically. The best laws, like Kennedy-Dingle that would expand Medicare to those between ages 55-65 and children under 20, and the Conyers single payer bill (H.R. 676) that would overhaul health insurance completely, are included in our AFL-CIO campaign. Even the proposal to expand Medicare has problems, since in its current, increasingly privatized form, Medicare costs themselves are increasing rapidly. The single-payer approach should be upfront–anything short of that we can deal with later, if necessary, as a compromise.

Second, we have to take head-on the issue of “government” control of health care. We can expect the right wing and health care profiteers to fund a zillion ads suggesting that some government apparatchik will be snuffling through our medicine cabinet and yanking IV’s from our aunt Ethel–even if we say we are talking about government in a “watchdog” role and not “in control”.

The right wing is not moved by fine distinctions, and being on the defensive won’t help us. It’s either the government or the insurance companies and drug companies that make the rules and run health care. And the latter have to get out.

I know, people are wary of big government. The problem of rebuilding support for the public sector in general as a campaign for the public good is more than I can go into here, but it’s arguably the key task of the labor movement today. Sure, building trades folks have problems with the city inspectors when they do side jobs. A buddy of mine got screwed by the zoning board when he tried to remodel his garage. It has taken my brother months to figure out the “Aid and Attendance” benefit from the VA for my dad. Nobody wants to pay taxes, and everybody thinks the governor and the mayor (apparently all of the mayors, everywhere) and his buddies are ripping us off. On the other hand, we know that 82 percent of union members want government to do more on health care. So we think conflicting things, side by side. It’s called confusion. The answer to confusion is clarity, even if it takes a while to get there. It is suggested that if we are asked if we support something like the Canadian health care system, we denounce the question as “scare tactics.” Yet even an article by Stanley Greenberg in the American Prospect last June, which is sometimes circulated as a cautionary note on why we have to soft-pedal government’s role in health care reform, says: “A majority goes so far as to say it’s time to establish a Canadian-style health care system.” If a majority of the American people already support it, why should those of us fighting for health care reform not defend it?

According to our own research, three times as many people think health care in Sweden is better than ours, as compared to those who think we have a better system than Sweden. Sounds like a rejection of the market-driven health care flop in favor of those Volvo-driving socialists.

Give me a chance to argue the guv’mint against the insurance companies and drug companies, and I’ll deliver you the majority every time.

In a catastrophic illness, the insurance companies are appreciated. But I fought my insurance company for five months to get them to pay for treatment of my son’s broken collarbone when he fell snow-boarding at Sunday River in Vermont–the last two months because they would not pay for $5 worth of ibuprofen. I fought my insurance company again when they wanted me to pay for my wife’s mammogram out of my own pocket. The hospital gave the insurance company the wrong Social Security number for my wife (even though she used to work there!), and by the time they corrected it, the insurance company said the bill was submitted too late. So the hospital put collection agencies on me. These were high-level negotiations. As in, “Hey, have you ever broken your collarbone? Well, IT HURTS!”

People like Andy get a little cranky when William Van Faasen, CEO of Blue Cross Blue Shield of Massachusetts, walks off with $16.4 million in retirement benefits–and then, oops, doesn’t quite retire after all and continues to pull down $3 million a year in salary and bonuses as chairman. And we call BC/BS a “nonprofit”.

Quality health care? The American Academy of Dermatology reported you can get an appointment for Botox to get rid of those pesky wrinkles on your face in eight days–but it takes more than three times as long to find someone to evaluate a potentially cancerous mold on the third wrinkle from the left. Free-market health care follows the money. And the insurance companies only want to offer health care to people who don’t need it. Is this some kind of a revelation?

The next time your prescription drug “co-pay” creeps up, remember that the drug companies are making three times the profit rate of the average corporation. Still want your co-pay to foot the bill for the 80,000 full-time salesmen who knock on doctors’ doors to offer “incentives” to push the latest pill?

Medical “free-market efficiency” has one hand in my pocket and the other on my throat. I don’t need another focus group; I need a Louisville slugger.

We’re trying to break out of the “neo-liberal box” of privatization, deregulation and free trade that has been choking us for the last several decades. There is no ducking the argument of government control vs. market-based health care. There’s no shortcut. Health care is not just another commodity.

This is a street fight. We can win, even if it’s not in January. And sooner or later, we have to win this one.

Jeff Crosby is president of IUE-CWA Local 201 in Lynn, Mass., where he also heads up the AFL-CIO’s North Shore Labor Council.

Universal Insurance Could Lift New Mexico

By Winthrop Quigley
Journal Staff Writer
Albuquerque Journal
Friday, June 22, 2007

SANTA FE — Any of three universal health coverage proposals would improve the state’s economy, raise taxes and cause a modest improvement in health, policy analysts said Thursday.

Testifying before the Health Coverage for New Mexicans Committee, a team of consultants said a state-funded single-payer system would be the least expensive way to cover all of the state’s 400,000 uninsured residents. However, a system of state-subsidized vouchers allowing people to buy insurance plans screened by the government would do the most to improve the economy.

The single-payer and voucher systems would require new payroll taxes of between 4 percent and 8 percent, but the taxes would be less than employers pay now because, as publicly funded programs began, their private health insurance premiums would decline or disappear entirely, said University of New Mexico Bureau of Business and Economic Research director Lee A. Reynis.

Deborah Chollet, an economist with Mathematica Policy Research Inc., said total spending on health care is about $6.24 billion in New Mexico today. All proposals offered would increase medical spending as more people received coverage.

Using computer simulations and assumptions provided by supporters of different approaches, Chollet estimated:

Spending would decline to as little as $6.03 billion under a single-payer plan because nonmedical costs would be reduced even while medical spending increased.

Spending would increase to as much as $6.7 billion under a voucher system because administrative overhead would increase along with medical spending.

Expanding eligibility for existing public programs would cost $6.43 billion.

Reynis estimated that any of the three approaches would add as few as 2,500 jobs and as many as 11,400 jobs and increase residents’ total annual income by anywhere between $84 million and $408 million, depending on the approach the state adopted.

More demand for health care would allow the health care industry to increase staffing, generating more wages and economic activity, she said.

Any universal coverage plan, including expansion of existing programs, will depend on increased federal funding, Reynis said.

Bill Wiese of the UNM Institute for Public Health cautioned the panel not to expect too much from finance changes. “The bottom line is universal coverage will probably help (improve people’s health) but the improvement will be modest,” Wiese said.

The health care system will remain stretched even if funding improves, and interventions that make a big difference in people’s health, like improved lifestyles, “are beyond the scope of universal coverage,” Wiese said.

State tax analysts estimated a single-payer or voucher system would raise taxes for some households.

The committee, appointed by the governor and legislative leaders, will discuss the findings today at the State Capitol.

Debate: Is Health Care a Right?

Justice Talking
National Public Radio
3/17/2008

Original Link: http://www.justicetalking.org/viewprogram.asp?progID=653#Segment2

Host Margot Adler speaks with professors Russell Roberts and Dr. Quentin Young about whether or not Americans have a right to health care.

Russell Roberts is a professor of economics at George Mason University, the J. Fish and Lillian F. Smith Distinguished Scholar at the Mercatus Center, and a research fellow at Stanford University’s Hoover Institution. Professor Roberts’ latest book is “The Price of Everything: A Parable of Possibility and Prosperity,” and he also runs the podcast EconTalk.

Dr. Quentin Young is a practicing internist and clinical professor of preventive medicine and community health at the University of Illinois Medical Center. He is the founder and chairman of Health & Medicine Policy Research Group, and co-founder of Physicians for a National Health Program.

Listen to Audio:
MP3 version

Universal health care or universal nightmare?

by Claudia Chaufan
IndyBay Media
Saturday Mar 15th, 2008 9:21 PM

When compared to health care systems of other wealthy economies, the American one comes out as the most expensive, the most unfair, and the worst in relevant health indices (http://www.who.int/whr/2000/en/index.html). While in other countries most health care costs are financed by individuals contributing to a system that guarantees everybody some amount of medical care, in the United States most individuals purchase a commodity in a market, a liability insurance policy (White 1995). This article explains key differences between the two systems, each based on two types of insurance, and the implications of choosing either type for achieving universal coverage.

As the public outcry over our broken health care system gets louder, individual insurance mandates are being hailed as the solution. Individual mandates legally obligate individuals (as opposed to, say, employers) to purchase health insurance for themselves and their families. They are central to Sen. Hillary Clinton’s health care plan, as they were to the (stillborn) Schwarzenegger/Nunez plan for California. But will mandating health insurance guarantee universal access to medical care?

For starters, the numbers don’t add up. As legislative analyst Elizabeth G. Hill noted, there was reason to believe that Schwarzenegger’s plan would have run out of money by the fifth year of operation. And while Sen. Clinton has claimed that with her plan those who are “satisfied” with their current policies can keep them, this promise presuposes that keeping such policies will be possible. But that is precisely the problem: there is no evidence that they will be — quite the contrary. In fact, as the prices of services and premiums continue to rise, employers are increasingly offering policies that are either more expensive or shift costs to the employee, in the form of higher deductibles, co-pays, or coinsurance, when not dropping benefits altogether (Gould 2007).

The deepest problem is confusing universal health insurance with universal access to comprehensive medical care. Clearly, in both cases universal means “everybody”, but a “universal” social health insurance, such as single payer health care reform, and a “universal” health insurance mandate, based on liability insurance, differ in fundamental ways, and the implications of this difference for health reform are enormous.

In a social insurance system, everybody contributes to a system. Because contributions are compulsory and proportional to income — usually a mix of taxes and payroll deductions — and because many individuals participate (a locality, a state or province, or a nation), the system is financially sustainable. Because risk is spread widely, there is no need to separate people into different “pools”, which saves everybody time and money. And because the system consolidates the purchasing power of many individuals, it has the capacity to negotiate prices with providers of medical care. For these reasons, a social insurance system has the greatest capacity to control costs and to provide a guaranteed amount of medical care to all participants.

In contrast, with individual mandates, everybody is compelled by law to buy liability insurance in the “health insurance market”, with policies priced according to individual or group risk (the latter is currently the case with employer provided insurance). The social problem of meeting a people’s medical needs is transformed into a “problem” of millions of individuals and families, “empowered consumers”, who have no choice but to comparison-shop for policies, while weighing their current and future medical needs against other basic needs, like housing or groceries — a “universal” nightmare.

The assumption underlying the idea of mandates is that as “customers” flood the “marketplace”, competition will bring prices down. Which of course may apply to the price of insurance policies, but not necessarily of medical services. Yet the real “disease” in American health care is rising prices of medical care (which is why the price of policies keeps going up). As economists Gerard Anderson, Uwe Reinhardt and collaborators noted, “It is the price, stupid” (Anderson, Reinhardt et al. 2003).

Spiraling, out-of-control prices are a product of a dysfunctional system built upon perverse incentives, among others, an incentive to “cut costs” not by buying in bulk, or eliminating waste, administrative or otherwise, but by denying payment for care and cherry-picking “good” customers (least likely to need health care). This is because those who are in charge of controlling costs are those whose interest in providing health care is only instrumental to the fundamental goal of making profit by selling a commodity: insurance policies. So whenever underwriting helps private insurers deny payments for care, even as it increases administrative waste and leaves people in the cold with their medical needs, insurers are happy to “invest” in it, so long as it contributes to their profit-maximizing goal.

Another key assumption underlying the idea that the solution lies with individual mandates is that shopping for health insurance policies is functionally equivalent to shopping for designer shoes: faced with an offer, a customer is free to take it or leave it. If the price is too high, customers wait for a sale. But, of course, the demand for medical care cannot be likened to the demand for designer shoes. A critical operation cannot be put off until prices come down.

Now proponents of individual mandates claim that insurers will be legally bound to sell policies to everybody regardless of “pre-existing conditions”, and to not rate policies according to “individual risk” (although they can still do so on the basis of “group risk”). But how are we to know, assuming insurers comply, that they won’t “spread” their “losses”, or rather, their foregone profits, to everybody else, and raise the price of everybody else’s policies? Scandal after scandal give us little reason to believe that private insurers will stop selling policies that meet their profit-maximization goals, and will suddenly begin to deliver what they have failed to do for decades.

A system heavily reliant on for-profit health insurance is fundamentally flawed: its ultimate goal is profit, not meeting the health care needs of the American people. Only a system based on the principle of social insurance can meet this fundamental human need because that is precisely its goal. Only such a system constitutes meaningful universal health care reform.

And sound legislation towards this system exists: they are single-payer plans, SB840, the California Universal Healthcare Act, recently vetoed by Schwarzenegger, and HR676, the expanded and improved Medicare for All Act, dismissed over and again by the mass media, by health policy “experts”, and by most politicians as “politically unfeasible”.

But they forget that if health care reform is about anything at all, it is about meeting a fundamental need of the American people, who have shown their collective political power at important crossroads in American history, especially when they are fed up. And because people are fed up, there is in our day hope for meaningful health care reform. Nothing can stand in its way, if the American people demand it.

References
Anderson, G. F., U. E. Reinhardt, et al. (2003). “It’s The Price, Stupid: Why The United States Is So Different From Other Countries.” Health Affairs 22(3): 89-105.
Gould, E. (2007). The Erosion of Employment-Based Insurance: More working families left uninsured. Washington, DC, Economic Policy Institute: 1-24.
White, J. (1995). Competing solutions: American health care proposals and international experience. Washington D. C, The Brookings Institution.

Claudia Chaufan teaches sociology of health and medicine, public health, and health policy at the University of California at Santa Cruz. She is the Vice President of California Physicians Alliance, the Californa Chapter of Physicians for a National Health Program, an organization that supports single-payer health care reform.

Doctor to prescribe cure for health care ills

By BENNETT HALL Gazette-Times reporter

After more than 30 years of practicing medicine, Dr. Don McCanne has devoted himself to prescribing a cure for the nation’s ailing health care system: national health insurance.

“I really have one big message, and that is private health plans are an obsolete model of financing health care,” said McCanne, a retired California family practitioner and former president of Physicians for a National Health Program.

He’ll bring that message to Corvallis this week. At 7 p.m. Thursday, McCanne will deliver a free talk titled “Will Health Care Ever Be Affordable Again?” at Oregon State University’s Milam Auditorium, Northwest 26th Street at Campus Way.

McCanne believes the answer to the affordability question is national health insurance. By bringing all Americans under a single government-controlled plan, he argues, administrative costs can be consolidated, trimming much of the waste from the system.

Another cost driver in the private-payer approach is that it pays for procedures, rather than prevention, although early intervention is cheaper and often more effective. Another problem, McCanne said, is that Americans are far too enamored of costly high-tech diagnostic equipment such as MRIs, even when they can provide only limited help.

“Where it’s of benefit, it’s great,” he said. “But there’s a lot of data that show we overuse health care services for those individuals where there’s no benefit.”

McCanne sees little hope for improvement in the reform plans being offered by any of the leading presidential contenders, all of which he says boil down to variations on the current market-based approach of private coverage.

“Market costs are too high. You can’t just tell the public to start shopping better,” he said. “The private insurance industry can no longer provide us with products that are reasonably comprehensive … and have a premium that’s affordable to average-income households.”

Ultimately, McCanne thinks that things will have to get worse — both economically and medically — before Americans demand real health care reform from their government.

“It’s going to take a grass-roots effort.”

McCanne plans to speak to health care professionals at Good Samaritan Regional Medical Center on Friday before traveling to Portland, where he’ll give another talk to medical providers next Monday.

“Action to bring change depends on education, and a lot of the public and physicians as well are simply unaware of the deep crisis we’re in,” said Dr. Mike Huntington of Corvallis, a former radiation oncologist who helped launch the Oregon chapter of Physicians for a National Health Program, which is sponsoring McCanne’s talk.

“This is a chance to educate providers and the public on what can be done and to give our legislators courage — because they’ll need it.” McCanne’s appearance is co-sponsored by the OSU Public Health Club, Mid-Valley Health Care Advocates and the local chapter of the Archimedes Movement.

screen the Video

The Darkside Cinema, 215 S.W. Fourth St., will hold a benefit screening of “Health, Money and Fear” at 7 p.m. today and Tuesday. The video, a critique of the U.S. health care system, was produced by Corvallis emergency room physician Paul Hochfeld. Tickets are $5, with half the proceeds going to the Oregon chapter of Physicians for a National Health Program.

Yes, We Can! Can We?

The Next Failure of Health Care Reform

By VINCENT NAVARRO
Counterpunch
March 6, 2008

A major problem–if not the major problem–for many people living in the U.S. is the difficulty of accessing and paying for medical care when they are sick. For this reason, candidates in the presidential primaries of 2008–the Democrats more often than the Republicans–have been recounting stories about the health-related tragedies they have encountered in meetings with ordinary people around the country (an exercise conducted in the U.S. every four years, at presidential election time). These stories tell of the enormous difficulties and suffering faced by many people in their attempts to get the medical care they need. I have been around long enough–I was senior health advisor to Jesse Jackson in the Democratic primaries of 1984 and 1988–to know how frequently Democratic candidates, over the years, have referred to such cases. The only things that change are the names and faces in these human tragedies. Otherwise, the stories, year after year, are almost the same.

In the Democratic Party primaries of 1988, for example, candidate Michael Dukakis talked about a young single mother who had two jobs and still could not afford medical insurance for herself and her children. In 1992, Bill Clinton did the same, changing the story only slightly. This time it was the case of a woman with diabetes who could not get health insurance because of her chronic condition. And now, in the 2008 primaries, Hillary Rodham Clinton (whom I worked with on the White House Health Care Reform Task Force in 1993) describes a similar case. This time it is a single woman, with two daughters, who cannot pay her medical bills because her congenital heart defect makes it impossible for her to get medical insurance coverage. And Barack Obama describes similar cases, with the eloquence that characterizes all of his speeches. He frequently refers to his own mother, who had cancer and had to worry not only about her illness but about paying her medical bills.

All these cases are tragic and are representative of a situation faced by millions of people in the U.S. every year. But, I am afraid that unless the winning Democratic candidate, once elected president (and I hope he or she will be), develops a more comprehensive health care proposal than any of those put forward in the primaries so far, we will see the same situation continue. Democratic candidates in the 2012 primaries, and in the 2016 primaries, will still be referring to single mothers with chronic health conditions who cannot pay their medical bills. The proposals put forward by Obama and Clinton underestimate the gravity of the problem in the U.S. medical care sector. The situation is bad and is getting worse: the number of people who are uninsured and underinsured has been growing since 1978.

Let’s start with the uninsured, those people who do not have any form of health benefits coverage. There were 21 million uninsured people in the U.S. in 1972. By 2006, that number had more than doubled to 47 million. And this increase has been independent of economic cycles. The number of uninsured grew by 3.4 million from 2004 to 2006, even as a resurgent economy raised incomes and lowered poverty rates. Meanwhile, during those years, the Democratic Party establishment distanced itself from any commitment to resolving these problems. Even though the 1976, 1980, 1984, 1988, and 1992 Democratic Party platforms included calls for health care benefits coverage for everyone (what is usually referred to as “universal health care”), that call was usually made without much conviction. In the primaries of 1988, when I was involved in preparing the Democratic platform, Dukakis (the winner of the primaries) resisted including universal health care in the party platform. He was afraid of being perceived as “too radical.” He had to accept it, however, because Jesse Jackson agreed to support Dukakis (Jackson had 40% of the Democratic delegates at the Atlanta convention) only if the platform included this call for universal care.

Then, in 1992, Bill Clinton (who borrowed extensively from Jackson’s 1988 proposals) put the call for universal health care at the center of his program. But, once president, his closeness to Wall Street and his intellectual dependence on Robert Rubin of Wall Street (who became his Secretary of the Treasury) made him leery of antagonizing the insurance industry. It was President Clinton’s unwillingness to confront the insurance companies that led to his failure to honor his commitment to work toward a universal health care program (see my article “Why HillaryCare Failed” unch, November 12, 2007). The type of reform President Clinton called for was a health insurance­ based model called “managed care,” in which insurance companies remain at the center of health care. An alternative approach could have been to establish a publicly funded health care program (which was favored by the majority of the population) that would cover everyone, providing medical care as an entitlement for all citizens and residents. This could have been achieved, such as by expanding the federal Medicare program to cover everyone. To do so, however, would have required neutralizing the enormous power of the insurance companies with a massive mobilization of the population against them and in favor of a comprehensive and universal health care program.

But President Clinton’s loyalty to Wall Street prevailed. His administration’s top priorities were reduction of the federal deficit (at the cost of reduced public social expenditures) and approval of NAFTA (without amending President George H. W. Bush’s proposal, which Clinton had inherited, and refusing to address the concerns of the labor and environmental movements). These actions antagonized and demoralized the grassroots of the Democratic Party. Clinton lost any power to mobilize people for the establishment of a universal health care program. This frustration of the grassroots, and especially the working class, also led to the huge abstention by the Democratic Party base in the 1994 congressional elections and the consequent loss of the Democratic majority in the House, the Senate, and many state legislatures. At the root of this disenchantment with the Clinton administration was its unwillingness to confront the insurance companies and Wall Street. Could that happen again?

The health care mess (Nixon dixit)
Before addressing this question, let’s look at the problems people face in the U.S. But first, I should stress that the country has sufficient resources to provide comprehensive, high-quality medical care to everyone who needs it. The U.S. spends 16% of its GNP on medical care, almost double the percentage spent by Canada and most countries of the European Union (E.U.) on providing universal, comprehensive health care coverage to their populations. We in the U.S. spend $2.1 trillion on medical care, making the medical care sector one of the largest economies in the world (if the medical care sector were a country, rather than a massive sector within a country). And it has been estimated that this spending will reach 20% of GNP in a few years (7 years according to some, 12 years according to others). Lack of money is not the root of the medical care problem in the U.S. We spend far, far more than any other developed country, and far more than what we would need to provide comprehensive health care coverage for everyone. The frequently heard argument that the U.S. cannot afford universal, comprehensive care has no credibility. It is a poor rationale for keeping the situation as it is.

Despite the huge amount of money spent on medical care, the situation of the U.S. medical care sector is a disgrace. Even Richard Nixon, in an unguarded moment, defined it as a mess. And as noted above, it has gotten much worse since Nixon was president: in 2006, 47 million Americans did not have any form of health benefits coverage, and 108 million had insufficient coverage. And people die because of this. Estimates of the number of preventable deaths vary, from 18,000 per year (estimated by the conservative Institute of Medicine) to a more realistic level of more than 100,000 (calculated by Professor David Himmelstein of Harvard University). The number depends on how one defines “preventable deaths.” But even the conservative figure of 18,000 deaths per year is six times the number of people killed in the World Trade Center on 9/11. That event outraged people (as it should), but the deaths resulting from lack of health care seem to go unnoticed; these deaths are not reported on the front pages, or even on the back pages, of the New York Times, Washington Post, Los Angeles Times, or any other U.S. newspaper. These deaths are so much a part of our reality that they are not news. How can this be tolerated in a country that claims to be a civilized nation?

The Democratic candidates’ proposals
The proposals put forward by the current Democratic candidates for president, Barack Obama and Hillary Clinton, will improve the situation. They will diminish somewhat the number of those not covered by health insurance and will reduce the level of undercoverage. But the major problems will remain unresolved, including the problems the candidates have referred to during their campaigns. People will still experience incomplete coverage, and many millions will continue to be uninsured and underinsured. Not even the mandatory health insurance called for by Hillary Clinton will resolve these problems. Her plan proposes that, just as a car driver in the U.S. must have car insurance, so a citizen or resident will have to have health insurance. The problem with this mandate is not only–as Obama has pointed out–the matter of enforcement (note that according to some estimates, up to 20% of car owners drive without car insurance), but the assumption behind the policy. The assumption is that most people who are not insured are “free-riders,” people who could afford to buy insurance but choose not to, and choose to let someone else pay for their care when they get sick. But the vast majority of people who are uninsured are people who cannot afford to pay for it. It’s as simple as that. Massachusetts passed a mandate of this sort (under Governor Mitt Romney), but 198,000 people still remain uninsured. The subsidies and tax incentives proposed to help the uninsured pay for health insurance premiums under plans of this type are insufficient.

Another proposed mandate (put forward by Clinton more strongly than by Obama) is that all employers must provide insurance coverage to their employees–a policy proposed by President Nixon back in the 1970s. But with this proposal, unless you force employers to provide comprehensive coverage at an affordable cost to everyone, the problem will still not be resolved. An even greater problem with the employer mandate, however, is that it continues to tie health benefits to employment, which is a perverse system and a nasty one. The reason employers, in 1948, pushed to make health care benefits dependent on employment (in the nefarious Taft-Hartley Act) was that this was a way of controlling workers. The Taft-Hartley Act forced the labor force to get health care benefits through collective bargaining agreements that are highly decentralized and are negotiated at the place of employment. In the U.S., workers who lose their jobs lose not only wages, but also health benefits coverage for themselves and their family. And if these workers want to keep their insurance, they have to pay prohibitive premiums. So, a worker will think twice before striking. This is one reason why the U.S. has fewer working days lost to strikes than other developed countries. Until recently, employers have been the major force–besides the insurance companies–for keeping the current system of funding and managing health care. This system, then, is based on an alliance between employers and the insurance industry.

It is this alliance that is responsible for the biggest problem of health care benefits: undercoverage. Most people believe that because they have health insurance, they will never face the problem of being unable to pay their medical bills. They eventually find out the truth–that their insurance is dramatically insufficient. Even for families with the best health benefits coverage available, the benefits are much less comprehensive than those provided as entitlements in Canada and in most E.U. countries. And paying medical bills in the U.S. is a serious difficulty for many people. In fact, inability to pay medical bills is the primary cause of family bankruptcy, and most of these families have insurance. Furthermore, 20% of families spend more than 10% of their disposable income on insurance and medical bills (the percentage is even higher for those with individual insurance: 53%). In 2006, one of every four Americans lived in families that had problems in paying medical bills. And most of them had health insurance.

The inhumanity of this situation is made evident by the fact that nearly 40% of people in the U.S. who are dying because of terminal illness are worrying about paying for care–how their families are going to pay the medical bills, now and after they die. No other developed country comes close to these levels of insensitivity and inhumanity. Meanwhile, the federal government parades around the world as the great defender of human rights, ignoring the fact that among the developed democratic nations, the U.S. is the most deficient in human rights. The basic right of access to health care in time of need does not exist in the U.S. The United Nations Human Rights Declaration includes this right in a prominent position, but this is a declaration that the U.S. Congress has never signed. It should come as no surprise that the world’s people do not believe the U.S. government is a great defender of human rights abroad, since it does not guarantee even basic rights at home.

And here again, things are getting worse. The percentage of uninsured and underinsured has been increasing. The proportion of people with employer-based health benefits coverage declined from 67.8% among the non-elderly in 2000 to 63% in 2006–even though the economy was booming during those years. In the same period, the number of adults without coverage increased by 8.7 million, and from 2004 to 2006 the number of children without coverage increased by 1 million.

Why does this situation persist in the U.S.?
For any society, medicine is a mirror of the power relations in that society. And nowhere is the lack of human rights more evident than in the house of medicine. In the U.S., insensitivity toward human needs goes hand-in-hand with enormous profits made from that suffering. The root of the problem, as noted earlier, is not lack of money but the channels through which that money is managed and spent. The problem is the privatization of the funding of medicine that allows profits to boom. The insurance and pharmaceutical industries enjoy the highest rates of profit in the U.S. Just last year, insurance industry profits reached $12 billion, and pharmaceutical industry profits $49 billion, the highest in the U.S. and in the world. According to Fortune Magazine, health-related industries are among the most profitable industries in the country. A lot of money is being made from people’s suffering. This scandalous situation is easy to document. For example, lanzoprasol, a gastric secretion ­reducing medicine widely used in the U.S., costs $329 in Baltimore, U.S.A.; the same medicine (same number of doses) costs $9 in Barcelona, Spain! And the current Bush administration signed legislation for a program that, in theory, covers drug costs for elderly people, but in practice this is an enormous rip-off. It forbids the government to negotiate with the drug industry on the cost of drugs–that is, the price of their products. What this means is that the federal government pays the prices dictated by pharmaceutical companies.

Now, one might well ask, Why does this continue? Why hasn’t our government done something about it? Is it that the government could not provide comprehensive health benefits coverage? It certainly could. All E.U. governments do so. All provide publicly funded, comprehensive health care coverage to their entire population. And on this side of the Atlantic, Canada (which once had a system identical to ours, health insurers included) also provides this entitlement to all its citizens. In Canada in the 1960s, a social democratic government in Saskatchewan did a very logical thing. My good friend, Dr. Samuel Wolfe, who was then Chief Health Officer of Saskatchewan, proposed to the province’s social democratic government that rather than paying premiums to insurance companies, people would pay earmarked taxes to a public trust fund, controlled by their representatives. This trust fund would negotiate with doctors and hospitals for the payments they would receive for the care they provided. This saved a lot of money by bypassing the insurance companies. The Saskatchewan Health Plan provided comprehensive care to everyone in the province at a much lower cost than before. Soon, the other provinces adopted similar plans, establishing Canada’s nationwide health plan that now covers everyone. The overhead for the public system in Canada is only 4%, compared with 30% in the U.S. insurance industry–30% that goes to marketing, administration (a lot of paper shuffling goes on in U.S. health care), and the salaries of extremely well-paid executives and insurance lobbyists. One of the best-paid individuals in this country is William McGuire, CEO of an insurance company–United. He makes $37 million a year, plus $1.7 billion in stock options. And all of this money comes from premiums paid by people, many of whom have insufficient coverage.

The insurance companies have enormous power, both in Washington and in most state legislatures. In Maryland, for example, a former governor arranged for candidates for Insurance Commissioner to be interviewed by the insurance associations before he made his final selection. But, insurance industry influence is strongest in Washington. In the U.S., money is the milk of politics. The electoral process is also privatized. And the insurance companies pay a lot of money to candidates. According to the Center for Responsive Politics, the insurance industry has contributed $525,188 to Hillary Clinton, $414,863 to Barack Obama, and $274,724 to John McCain. As a consequence, not one of the candidates is asking for a publicly funded system. The major players in medical care in the U.S.–insurance companies, drug companies, professional associations, etc. (the list is long)–have given a lot of money to the candidates. The splendid document called the U.S. Constitution, which begins “We the people ” should have a footnote “and the insurance companies, the drug companies, ” The U.S. Congress is indeed the best Congress money can buy (for a further discussion of how money corrupts the electoral system, see my article “How to Read the U.S. Primaries: Guide for Europeans,” unch, February 13, 2008). The privatization of the electoral process (with most of the money that pays for campaigns coming from economic, financial, and professional interests, and from 30% of the nation’s highest-income earners) corrupts the democratic process. I am not implying that politicians are corrupt (although some are). I am willing to admit that most are honorable persons. But the need to constantly raise funds for their campaigns (election and re-election) corrupts the democratic system. And the unwillingness of most members of Congress to change this situation makes them accomplices in that corruption. Such practices are illegal in most democratic countries.

And people know all about this. In surveys, 68% of people believe the U.S. Congress does not represent their interests, but the interests of the financial and economic groups that fund political campaigns. But the establishments, including the political, media, and academic establishments, want everyone to believe that the reason we don’t have a universal health program is that people don’t want it. They would like people to believe that Congress legislates what people actually want. Meanwhile, the long list of public policies that people want but do not get from their government is growing: 65% of people want a publicly funded health care system similar to that in Canada, a system that in academic language is called single-payer. In a single-payer system, the government, rather than the insurance companies, negotiates with providers–doctors, hospitals, nurses, etc.–for the provision of medical care. We already have a system of this type in Medicare (with an administrative overhead of only 4%, compared with the 30% in the insurance system). By eliminating the huge administrative expenses, we could provide comprehensive health care coverage for everyone without spending an extra penny.

The possibilities for major change

Obama and Clinton are ready to admit that single-payer may be better than any other alternatives. Obama spoke out in favor of it at one time:

“So the challenge is, how do we get federal government to take care of this business? I happen to be a proponent of a single payer health care program. I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14% of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out.”

“A single payer health care plan, a universal health care plan. And that’s what I’d like to see. And as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, we have to take back the House.” (Barack Obama in 2003 before the Illinois AFL-CIO)

But, something happened on the way to Washington. The train derailed. Now Obama claims that his declaration was taken out of context. And Hillary Clinton, in 1993, told me that while single-payer might be the most logical model, it was politically infeasible.

I hope both candidates will reconsider. At this time, neither candidate’s proposal will resolve the health care crisis we are facing. And in 2012, candidates will still be talking about single mothers who cannot pay for medical care for themselves or their children. The candidates of 2008 should be asking for government mandates rather than individual mandates. It is not people who should be mandated to get insurance. It is the government that should be mandated to provide insurance for everyone as an entitlement.

The need to mobilize
Obama has been able to capitalize on the anti-establishment mood in the country. And he has inspired many. While I believe that large numbers of people–the grassroots of the Democratic Party who support him–do want change and are firmly anti-establishment, I am concerned that they are putting too much faith in one individual. Without diminishing what candidate Obama has achieved, the fact is that he has already shown himself to be adaptable to the political context. He was once against the war in Iraq. But, in Congress, his votes on Iraq have been indistinguishable from those of Hillary Clinton. And in health care, his rather disappointing proposal will not resolve the problems. I am very worried that once in power, he will not have the courage to confront the extremely powerful lobbies primarily responsible for the lack of health care coverage and the undercoverage of the American people. It happened with Bill Clinton’s administration and it may happen again. Contrary to what Obama and others have said, the main problem with Hillary Clinton’s Task Force in 1993 was not its secrecy (although secrecy was indeed a problem) but a conceptual framework based on an insurance model–managed care–that was pushed on the political, media, and academic establishments by the insurance companies. The ideologues of managed care were clearly in charge of the Task Force. It could happen again.

To prevent this, there is a need to mobilize. History is not made by extraordinary figures but by ordinary people who can move mountains when they believe in a cause and get organized. It has happened all over the world, and it has happened in the U.S. We saw it in the establishment of the New Deal, Social Security, unemployment insurance, job creation, minimum wage, and subsidized housing, among other programs. These were not just the outcome of President Roosevelt’s position, but the result of huge social agitation and mobilization. As usually happens in historical moments of societal change, government leaders were not so much leading as trying to catch up with what millions of people were demanding. Similarly, the Great Society Programs–Medicare, Medicaid, Environmental Protection Agency, NIOSH, OSHA, and many other examples of progressive legislation–were the outcome of massive mobilizations. Candidate John Kennedy’s proposals for change were rather moderate, and his domestic policies, once he was elected, were also disappointing. But the mobilization triggered by his election was followed by many more, such as Appalachian coal miners’ strikes against their working conditions, the splendid civil rights movement led by Martin Luther King, and the ant­Vietnam War movement led by student groups. They all established a political climate in which progressive legislation could occur. History, indeed, does not repeat itself. But it offers us pointers on where to go. And it should be obvious that change will not occur unless there is a huge mobilization to complete the unfinished agenda of civil rights: a full development of social rights, with the human right to access to health care at the center.

To achieve that right, we need reforms more substantial than those put forth by either Democratic candidate. The splendid slogan first used by the great trade union leader Cesar Chavez, founder of the United Farm Workers of America, was Yes, We Can! This should guide the call for establishing the right to health care. But, for that to happen, the current holders of the slogan must heighten their expectations and become more ambitious in their proposals. This is what the electorate expects from them in their promises of change

Dr. Vicente Navarro is Professor of Health Policy, Public Policy, and Policy Studies at the Johns Hopkins University. He has written extensively on economics, health, and social policy, and has been advisor to many governments and international agencies. His books have been translated into many languages. He was the founder and president of the International Association of Health Policy, and for almost forty years has been Editor-in-Chief of the International Journal of Health Services. He is also a founding member of Physicians for a National Health Program. The views expressed in this article are his own, but are shared by millions across the United States

Some 241 thousand Dutch have no medical insurance

(Health reform was passed in the Netherlands in 2006. Hundreds of thousands of Dutch are now uninsured (see below). More recent reports also note that another 240,000 people have defaulted on paying their premiums, for a total of about 3 percent of the population with no or defaulted coverage).

Mnistry of Health Welfare and Sport, The Netherlands
Newsitem, 10 May 2007

On 1 May 2006, some 241 thousand people in the Netherlands were not insured for the costs of medical care. This 1.5 percent of the Dutch population.

People with a foreign background are relatively more likely not to be insured than native Dutch people. Many families with children are also not insured for medical costs. The percentage of uninsured among benefit claimants on the other hand was relatively low, according to figures form Statistics Netherlands. The new figure of 241 thousand is higher than previously published estimate of 182 thousand on 5 July 2006. This is because a more accurate method was used.

More than 4 percent of people in the Netherlands with a foreign background did not have medial insurance, compared with less than 1 percent of native Dutch people. People from countries other than Turkey, Morocco, Suriname, the Netherlands Antilles and Aruba were more likely not to be insured. Moreover, the percentage of uninsured among first generation immigrants is four times as high as that among the second generation.

Many children not insured

Around 40 thousand children do not have medical insurance. This is surprising, as no premium has to be paid for underage children. These uninsured children are members of families in which the parents are not insured for medical costs. Nearly 60 percent of uninsured children have a native Dutch background.

On 1 May 2006, 0.7 percent of benefit claimants did not have medical insurance. This is less than half the average for the total population. The percentage among people on income support is also lower than average for the total population, namely 1.0 percent.

About half of people without medical insurance are in their twenties and thirties. Men are slightly more likely not to be insured than women. Of all people without medical insurance, 57 percent are men.

Single payer supporters advance their plan

By MARIA BRANDECKER
Legislative Gazette Staff Writer
Mon, Mar 3, 2008

Citing the recent Democratic upset victory in a special Senate election and the theme of change that is central to the candidacies of the same party’s presidential primary candidates, at least one supporter of a single payer health care system sees now as an opportune time to advocate for health care reform in New York.

It was Albany County Legislator Phillip G. Steck who pointed to the Senate race and the primary season, though he doesn’t necessarily agree with the presidential candidates’ health care proposals, as reasons why now is a fitting time to call on the state’s political leaders to make a change.

Steck was among advocates for a single payer health care system who held a press conference last Wednesday in Albany to voice their support for making the change in how people in New York and the rest of the country pay for their medical care. They say a single-payer system would achieve exactly as the name implies, providing health care for the entire population by centralizing funding under one source, for example the government.

The advocates said that having a centralized system for health care would ensure that all citizens receive coverage of all medical services by eliminating eligibility limitations for private and public health insurance. The advocates argued that health care should be a right of all citizens not a commodity for insurance companies to profit from and that establishing a single payer system is the way to achieve this goal.

Also speaking at the press conference were Hunger Action Network of New York State Executive Director Mark Dunlea, New York State Academy of Family Physicians Executive Vice President Vito F. Grasso and Dr. Tony Mason, vice chairman of the Capital District Chapter of Physicians for National Heath Program.

The advocates are urging the state Legislature and New York’s representatives in Washington to support the U.S. National Health Insurance Act, a federal universal health care bill (H.R.676) introduced in Congress and Assemblyman Felix Ortiz’s, D-Brooklyn, proposed resolution, (K.779) in the Assembly, in support of H.R.676.

The legislation would enact a single payer system that supporters say would decrease the control private insurance companies have over the health care system. According to the advocates, having one source that controls health care would create an equal opportunity for all citizens throughout the state and country to receive the type of health care they desire and need. The advocates would like to see the single payer system instituted on a state and national level.

Dunlea said the single payer system is one of the methods being studied by the Task Force on Universal Health Care that was established by the governor in 2007. The task force is conducting a cost-benefit analysis of a state single payer system, Dunlea said.

The advocates say a single payer system would benefit consumers and the economy by centrally regulating insurance costs and therefore lowering costs for patients. Patients would also be guaranteed a greater variety of options in choosing service providers and physicians and would no longer be limited to the type of insurance they are eligible for based on income, they said.

Businesses and medical institutions would also save money on taxes, Steck said. Steck said the high expense of providing health insurance is stifling many businesses.

Grasso said the Academy of Family Physicians recently re-evaluated its view on health care reform in response to the escalating costs of health insurance. “Tampering with the existing system is no longer an option because this approach has consistently failed in the past,” Grasso said.

Grasso said a single payer system would provide comprehensive reform and decrease systematic problems in the present “fragmented” health care system. Centralizing health care would make systematic problems easier to control and address when they do occur, Grasso said.

One of the main reasons the academy supports single payer system is its belive that it could lead to a reduction in the amount of staff needed to complete extra paper work, such as confirming patients’ eligibility for enrollment and authorization for receiving certain services, which Grasso says is not cost efficient for businesses. On average doctors must hire 2.5 staff people just to fill out paper work, Dunlea said. Grasso argued the extra paper work is unnecessary because it has “nothing to do with the quality of care patients are provided.”

“The [existing] system impedes the ability of patients to advocate for themselves and to obtain the quality of care the consistency of care that they deserve and believe they are getting,” Grasso said.

Mason added that a single payer health care system would strength the working relationship between patients and doctors. Often when patients switch jobs under the current system, Mason explained, they are forced to also switch providers and physicians placing both parties at a disadvantage. This is also a problem when physicians drop out of a particular service provider.

“Patients are restrained by income or by limits imposed by the insurance company,” Mason said. He said patients should have more freedom in choosing service providers and physicians. The single payer system would eliminate preferred physician lists, out-of-area limitations and other restrictions on choosing a doctor, as well as co-payments, Mason said.

“The only real question is not whether single payer makes the most sense for taxpayers, for business, for consumers and for doctors, it’s whether the politicians are willing to put the interests of those groups ahead of the interests of the insurance companies,” Dunlea said.

The advocates said changing the system is a difficult task due to the fact that a substantial amount of capital that is available in the health care system is under the control of private insurance companies and that this capital is an essential part of the health care system. Steck said that are ways to incorporate this capital, as well as employees of private insurance companies into a new system.

Absent from the press conference was Assembly Health Committee Chairman Richard Gottfried, D,WF-Manhattan, who sponsoring bill A.07354, a piece of legislation that calls for a universal health care system in New York and currently has 85 co-sponsors in the Assembly. Sen. Eric Schneiderman, D,WF-Manhattan, a member of the Senate’s Health Committee is sponsoring a same-as bill (S.3107).

Do health benefits reduce wages?

The Mandate Wars, In California And Beyond

By Rick Kronick
Health Affairs Blog
March 6, 2008

Unfortunately, analysis of purchasing behavior provides two diametrically opposed views of affordability. On the one hand, most moderate-income workers (people in families between 300 percent and 400 percent of FPL) have employer-sponsored insurance. On the other hand, hardly anyone without employer-sponsored insurance at 300 percent to 400 percent of FPL chooses to purchase non-group coverage.

There are many reasons that most moderate-income workers are covered by insurance, while hardly any moderate-income who are not covered by employer-sponsored insurance choose to purchase coverage on their own. These reasons include: the fact that non-group insurance is a much less good buy than group coverage; the fact that people with health problems often cannot buy non-group coverage at any price; differences in tax treatment (although premiums are fully deductible for the self-employed, and relatively few self-employed purchase coverage, so tax treatment is far from the whole story); and the possibility of self-selection in which people who most value insurance manage to find jobs that offer coverage. Part of the difference is no doubt due to confusion about who is really paying the bill — although most economists would swear that employer contributions to insurance are really paid for by workers in the form of foregone wages, the very high coverage rates for moderate income workers suggests that many economists swear too much. Regardless of the reasons for the difference, the very high coverage rates for moderate-income workers and the very low purchase rates among moderate-income workers who do not have employer sponsored insurance provide diametrically opposed views of affordability, and complicate the discussion about the level of income at which a person can fully afford insurance.

http://healthaffairs.org/blog/2008/03/06/the-mandate-wars-in-california-and-beyond/

And…

Who Really Pays for Health Care?

The Myth of “Shared Responsibility”

By Ezekiel J. Emanuel, MD, PhD; Victor R. Fuchs, PhD
JAMA
March 5, 2008

When asked who pays for health care in the United States, the usual answer is “employers, government, and individuals.” Most Americans believe that employers pay the bulk of workers’ premiums and that governments pay for Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), and other programs.

However, this is incorrect. Employers do not bear the cost of employment-based insurance; workers and households pay for health insurance through lower wages and higher prices. Moreover, government has no source of funds other than taxes or borrowing to pay for health care.

With prominent politicians, business leaders, and experts supporting shared responsibility, it is hardly surprising that most Americans believe that employers really bear most of the cost of health insurance.

Shared responsibility is a myth.

This is not a point merely of economic theory but of historical fact. Consider changes in health insurance premiums, wages, and corporate profits over the last 30 years. Premiums have increased by about 300% after adjustment for inflation. Corporate profits per employee have flourished, with inflation-adjusted increases of 150% before taxes and 200% after taxes. By contrast, average hourly earnings of workers in private nonagricultural industries have been stagnant, actually decreasing by 4% after adjustment for inflation. Rather than coming out of corporate profits, the increasing cost of health care has resulted in relatively flat real wages for 30 years. That is the health care cost–wage trade-off.

http://jama.ama-assn.org/cgi/content/full/299/9/1057

Comment:

By Don McCanne, MD

Everyone agrees that health benefits provided by the employer are part of the employee compensation package. And there is considerable evidence that employees do accept lower wages in order to be able to participate in the employer’s health benefits program.

Yet when employees are left on their own to secure their health insurance, they do not purchase it. Rick Kronick lists several reasons for this, but the most important is that the premiums for private insurance coverage siphon off too much out of the family budget, creating problems for funding other essentials such as food, housing, and transportation. Those receiving employer-sponsored coverage do not have to include a decision about potential health care costs in their budgeting decisions.

Should all employees be granted higher wages in return for accepting the responsibility of purchasing their own health coverage? Perhaps we should ask that question in a somewhat analogous situation. Should retirees be allowed to decline Medicare coverage in order to increase their very modest Social Security benefits?

No. Everyone should have affordable access to reasonably comprehensive health care services, regardless of income.

There is a very important reason to acknowledge that health benefits are a part of the employee’s compensation. Most policy analysts believe that health care costs over 10 percent of an individual’s total income constitute a financial hardship. The premium for employer-sponsored family coverage now averages over $12,000. That means that the family income needs to be $120,000, just to pay the premium. If the family also has medical needs, the out-of-pocket expenses would require an even larger income.

Both the Republican and Democratic proposals call for making health insurance affordable through a system of tax subsidies. But all proposals fall far short on the estimates of the amount of tax funds that would be required, for two reasons. The first is that the subsidies will have to be much larger if financial hardship is to be avoided. The second is that the target population that would need to receive graduated subsidies is much larger; it includes not only low-income individuals, but also the entire middle-income population, extending into the higher-income sector.

It is simply not rational to build reform on the obsolete model of private health plans. At $2.4 trillion, we already have enough funds to pay for comprehensive care for everyone. We simply need to establish a single risk pool that is equitably funded through the tax system, and then use that to pay for care for everyone.

(Because of other commitments, there will be no qotd messages for the next two weeks.)