PNHP

Economic equality is best medicine

Economic equality is best medicine

Health of societies mostly relies on political and economic policies, not the individual treatment of disease

By STEPHEN BEZRUCHKA
GUEST COLUMNIST – Seattle PI
Sunday, June 25, 2006

http://seattlepi.nwsource.com/opinion/275142_focus25.html

The headlines read that rich Americans aren’t as healthy as poor Brits, despite our spending twice as much money on health care as they do. Our newborns die at the highest rates of any rich country, even with our ever-advancing medical technologies. The feds report our mortality rates have never been lower. The United Kingdom study director suggests it is the nature of an unequal society in the United States that affects everybody, while experts over here are puzzled. What is going on?

Thomas Pynchon wrote in “Gravity’s Rainbow” that “if they can get you asking the wrong question, they don’t have to worry about the answers.” Which medical care drug plan to choose is the wrong question. Instead let’s ask, “What makes a society healthy?”

An MDeity can’t answer that, nor can most people working in public health departments. One reason for their ignorance: It is very difficult to get people to understand something when their salary depends on their not understanding it. Medical doctors are paid to treat diseases, so everyone has a disease if we do enough tests. Public health workers ply a trade, make sure enough kids get their shots, tell people to say no or wear a condom and check the water for arsenic. They consider efforts to understand basic conditions that produce health in society to be outside their job description.

Who can tell us the answer to what makes a population healthy? Few in this country know, because we don’t ask that question. Anyone who does is marginalized for acting stupid. I was told “Medical care, of course, that’s why we are teaching you to be a good doctor.” Our federal government, in its Institute of Medicine 2003 report “The Future of the Public’s Health in the 21st Century,” states on page 59: “more egalitarian societies (i.e. those with a less steep differential between the richest and the poorest) have better average health.” This remarkable finding has emerged from research carried out over the last 25 years, and the science is as good as that linking smoking and poor health.

Why aren’t the media broadcasting this news? For the last quarter century it has become unpatriotic to believe in economic justice. Instead we give ever more to the rich through tax cuts and subsidies and demand that the poor accept having less, in the hopes of some trickling down. Egalitarianism is not a treatment taught in U.S. medical and public health schools, nor in any school except kindergarten.

What is it about a bigger differential between the richest and poorest that leads to worse average health? Intuitively, we can see that not everyone shares the same stress in a bigger-gap society and those lower down suffer more of the slings and arrows of misfortune rained down from above. There is less caring and sharing in society when the gap is in our face.

Other research findings demonstrate that individual behaviors are not as important for our health as political policies that impact the gap between the rich and the poor. These behaviors are those we have learned since about toddlerdom: diet, exercise and not smoking. They are good ideas but when compared with economic justice, these individual practices are relatively unimportant. For example, the healthiest country in the world, Japan, has the highest proportion of men smoking among all rich countries. Obviously smoking is not good for your health but compared with the less steep differential, it is not as important a factor. As a doctor who used to badger people about this habit, it was very difficult for me to reconcile this finding. Studies demonstrate the individual behaviors are not that important for our health. Health care, even universal health care, has been shown to have little or no overall impact on a nation’s health.

The spending on health care in the United States makes up nearly one half of all monies paid for health care worldwide. Despite that, we who live in the USA, the richest country in world history (with half of the globe’s billionaires), die younger than we should. To understand this conundrum, the first step we must take is to recognize that health and health care are two very different concepts — despite sounding so similar. Health of societies is mostly determined by political and economic policies while health care can only prevent and treat individual diseases.

The United States used to be one of the healthiest countries in the world when egalitarian principles were near the horizon. President Kennedy told us not to ask what our country can do for us but to ask what we can do for our country. His request came after a decade of policies in which the poor made relatively more economic gains than the rich, something Robin Hood might have admired. For example, in the United States the general population shared its income growth with returning World War II veterans and subsidized their re-entry into society. Back then we were one of the healthiest countries in the world — but not for long. The rich and powerful interpreted the president’s remarks to mean, “What can ordinary people do for us?” During the last 30 years the rich have gotten much richer, and we have strayed far from egalitarian ideals

The increasingly steep differential between the richest and poorest is the reason why we are as healthy as Cuba, the country we have been strangling for almost 47 years. While our health as a nation has been improving, other countries are seeing better and faster results. People in more than 25 countries, including nearly all the rich nations and a few poor ones as well, live longer and healthier lives than we do.

There is currently no federal agency, or any other body, whose goal it is to make us healthier compared with other nations. Our Centers for Disease Control and Prevention have put forth Healthy People 2000 and 2010 initiatives, with disease and behavior oriented national goals, but we did not achieve these goals in 2000, and have no chance of coming close to fulfilling them in the next four years. They do not address our standing compared with other nations. This is like giving the Olympic Gold Medal not to the winner, but to the contestant who said they tried the hardest!

The illiterate of the 21st century will not be those who can’t read or write but those who cannot learn, unlearn and relearn. Much of what I learned in medical school is not acceptable practice today. Some of what we think we know today will be folly tomorrow. What the Institute of Medicine reports will, I think, stand the test of time. If we want healthy grandchildren, we must seriously consider what the feds have said.

Economic justice is the medicine we need. In today’s situation, this requires overturning all the recent federal legislation that gives ever more to the rich. The work of the Hood Robins (who take from the poor and give to the rich) is bad for our health, as our own Institute of Medicine acknowledges. Perhaps we should demand a Health Impact Assessment like other countries, to track the toll in human lives sacrificed by political policies that favor the rich over the poor.

This state’s Washington Health Foundation is unique in the nation for trying to make Washington state the healthiest in the country. According to a composite indicator used to rank the health of states, we have fallen to 15th place while Minnesota is first and Louisiana is last. To effect real change and improve health through this country, I suggest we strive to make Louisiana first in the nation. That state has among the highest infant death rates, the shortest length of life, the highest homicide rates, the highest teen birth rates and the biggest gap between rich and poor. Katrina’s aftermath was no accident. By concentrating on improving health in this country’s worst off state, everyone will do better.

The last 40 years have seen an unbridled giveaway to the minority of the wealthy and powerful, as politicians distorted Kennedy’s words and did what they could for the rich of America. It is now time for the majority, who make up the bottom 80 percent of this nation, to ask what our country can do for us. Everyone’s health, both rich and poor, will benefit from this old-fashioned idea: economic justice.

Stephen Bezruchka, M.D., MPH, is with the Department of Health Services, School of Public Health and Community Medicine, at the University of Washington.

© 1998-2006 Seattle Post-Intelligencer

OECD Health Data 2006 for the United States

Organization for Economic Cooperation and Development (OECD) OECD Health Data 2006
How Does the United States Compare

Total health spending accounted for 15.3% of GDP in the United States in 2004, the highest share in the OECD and more than six percentage points higher than the average of 8.9% in OECD countries.

The United States also ranks far ahead of other OECD countries in terms of total health spending per capita, with spending of 6,100 USD (adjusted for purchasing power parity), more than twice the OECD average of 2,550 USD in 2004.

Between 1999 and 2004, health spending per capita in the United States increased in real terms by 5.9% per year on average, a growth rate exceeding the OECD average of 5.2% per year.

The public sector is the main source of health funding in all OECD countries, except for the United States and Mexico. In the United States, only 45% of health spending is funded by government revenues, well below the average of 73% in OECD countries. The public share of total health spending remains the lowest among OECD countries. On the other hand, private insurance accounts for 37% of total health spending in the United States, by far the largest share among OECD countries.

Despite the relatively high level of health expenditure in the United States, there are fewer physicians per capita than in most other OECD countries.

The number of acute care hospital beds in the United States in 2004 was 2.8 per 1000 population, also lower than the OECD average of 4.1 beds per 1000 population.

http://www.oecd.org/dataoecd/29/52/36960035.pdf

Comment:

By Don McCanne, M.D.

These numbers confirm once again that the United States has the highest spending on health care per capita, and as a percentage of its GDP. The rate of growth in spending also continues to exceed that of OECD averages.

We should take a closer look at the reported health spending that is funded by the government (45 percent), and that funded by private insurance (37 percent). Steffie Woolhandler and David Himmelstein, in a 2002 Health Affairs article, have demonstrated that those numbers should be adjusted to improve our understanding of the spending.

The OECD calculations do not include two important sources of government funding of health care: (1) the funding of private insurance for government employees, an undisputed government expense, and (2) the tax subsidy received by employers providing insurance for their employees, since employer-sponsored coverage is deductible to the employer but is not taxable income to the employee. When these are included, the United States government funds 60 percent of health care.

Since the number of individuals covered by employer-sponsored plans is much larger than individual plans, employers have had a major influence on health policy. Although a great many individuals are covered through their employment (about 60 percent of those under age 65), these are working individuals and their families who are comparatively healthy and thus have lower health care costs. If we exclude government employees and look at those covered by private employers, then only 19 percent of health care costs are paid by employer-sponsored plans (or only 11 percent if you were to assume that the tax subsidy accrues to the employer rather than the employee).

What is the lesson? Since we already pay so much through the tax system, policies need to be directed to providing greater health care value for our public dollars. Perpetuating a highly dysfunctional system of funding health care merely to cater to the private insurance industry should be abandoned as irrational and irresponsible public policy.

Steffie Woolhandler and David Himmelstein, Paying for national health insurance–and not getting it:
http://www.healthaffairs.org (Use Quick Search for abstract)

Health Savings Accounts: Why They Won't Cure What Ails U.S. Health Care

by S.R.Collins, Commonwealth Fund

Executive Summary

Invited Testimony before the Committee on Ways and Means U.S. House of Representatives Hearing on “Health Savings Accounts,” June 28, 2006

Thank you, Mr. Chairman, for this invitation to testify on health savings accounts (HSAs). The Committee is to be commended for focusing attention on the manifold problems currently confronting the U.S. health care system: steady growth in the number of uninsured Americans, rising health care costs and premiums, wide variation in the quality and cost of care, and inefficiencies in the delivery and administration of care.

Some maintain that HSAs, coupled with high-deductible health plans (HDHPs), are an important part of the solution for the cost, quality, and insurance problems that plague the U.S. health care system. Asking families to pay more out-of-pocket, the reasoning goes, will create more prudent consumers of health care, driving down growth in health care costs and improving the quality of care as providers compete for patients. And the tax incentives of HSAs will lure previously uninsured people into the individual market, reducing the numbers of families without health insurance.

But while it is comforting to believe that such a simple idea could help solve our health care problems, nearly all evidence gathered to date about HSAs and HDHPs points to the contrary. Indeed, there is evidence that encouraging people to join such health plans might act as salt on a wound, exacerbating some of the very maladies that undermine our health care system’s ability to perform at its highest level.

Higher Patient Cost-Sharing Is the Wrong Prescription

  • Americans already pay far more out-of-pocket for their health care than citizens in any other industrialized country.
  • Real per capita out-of-pocket spending has been steadily rising since the late 1990s. Combined with sluggish growth in real incomes, families are spending increasingly more of their incomes on medical costs.
  • There is considerable evidence that high out-of-pocket costs lead patients to decide against getting the health care they need.
  • Rising out-of-pocket costs reduce people’s ability to save for the future.

Early Experience with HSA-Eligible HDHPs Reveals Low Enrollment, Low Satisfaction, High Out-of-Pocket Costs, and Cost-Related Access Problems

  • Few people are currently enrolled in HSA-eligible HDHPs; those who are enrolled are much less satisfied with many aspects of their health care than adults in more comprehensive plans.
  • People in these plans allocate substantial amounts of income to their health care, especially those who have poorer health or lower incomes.
  • People in HDHPs are far more likely to delay, avoid, or skip health care because of cost. Problems are particularly pronounced among those with poorer health or lower incomes.
  • People in these plans are more cost-conscious consumers of health care: they are more likely to ask for lower-priced drugs and more likely to discuss with their doctors different treatment options and the cost of care.
  • Few Americans in any health plan have the information they need to make decisions. Just 12 to 16 percent of insured adults have information from their health plan on the quality or cost of care provided by their doctors and hospitals.

Patients’ Use of Information Alone Is Not Likely to Dramatically Reduce Health Care Costs or Improve Quality

  • It is unrealistic to expect that even with adequate information and patient financial incentives, the transformation of health care system will be driven by patients’ choice of provider. Patients are in the weakest position to demand greater quality and efficiency.
  • Most health care costs are incurred by very sick patients, often under emergency conditions. Shopping for the best physician or hospital is impractical in such circumstances.
  • Payers, federal and state governments, accrediting organizations, and professional societies are much better positioned to insist on high performance.

HSAs Will Not Solve Our Uninsured Problem

  • Economists Sherry Glied and Dahlia Remler estimate that under current law, fewer than 1 million currently uninsured people are expected to gain coverage as a result of HSAs. This is primarily because 71 percent of uninsured Americans are in a 10-percent-or-lower income tax bracket and would thus benefit little from the tax savings associated with HSAs.

New Proposals to Expand HSAs May Fragment Group Insurance Markets, Increasing the Number of Uninsured

  • Additional tax incentives proposed by the Administration’s 2007 fiscal year budget aim to equalize the tax treatment of HSAs in the individual market to those in the employer market, with premium tax deductibility and tax credits. Economist Jonathan Gruber estimates that the Adminstration’s proposals would actually increase the number of uninsured Americans by 600,000. While 3.8 million previously uninsured people would become newly insured through HSA-eligible HDHPs in the individual market, many employers, especially small employers, would drop coverage. Some 8.9 million people would lose their employer-based health insurance.

What Needs to Be Done
We as a nation should focus on more promising strategies for expanding coverage, improving affordability, and lowering costs. These strategies include:

  • Expanding group insurance coverage, with costs shared among individuals, employers, and government. This could be done by expanding employer-based coverage, eliminating Medicare’s two-year waiting period for coverage of the disabled, letting older adults “buy in” to Medicare, and building on Medicaid and the State Children’s Health Insurance Program (SCHIP) to cover low-income parents, young adults, and single adults.
  • Ensuring affordable coverage for families by placing limits on family premium and out-of-pocket costs as a percentage of income (e.g., 5% of income for low-income families).
  • Greater transparency with regard to provider quality and the total costs of care.
  • Pay-for-performance incentives to reward health care providers that deliver high quality and high efficiency.
  • Development of “value networks” of high performing providers under Medicare, Medicaid, and private insurance.
  • High cost care management and disease management.
  • Improved access to primary care and preventive services.
  • Investment in health information technology.

Citation: S. R. Collins, Health Savings Accounts: Why They Won’t Cure What Ails U.S. Health Care, Invited Testimony Committee on Ways and Means U.S. House of Representatives Hearing on “Health Savings Accounts,” June 28, 2006

Fragmented system of coverage vulnerable to budget

Budget Writers Nix Children’s Coverage Expansion
Health Access Alert
June 26, 2006

Legislative leadership and Governor Arnold Schwarzenegger, announced earlier today that they had come to a deal on a state budget. Eager to pass a budget on time this year, they gave up on the fight to expand children’s coverage, one of the sticking points with Republican legislators. Since a budget requires a two-thirds vote, Republican legislators were able to hold up the budget on this issue.

Republicans from both houses had been fuming over $23 million, which had been added by Gov. Arnold Schwarzenegger in his May Revise, to cover about 24,000 children who were awaiting coverage through their local county “Healthy Kids” initiatives. This money is no longer in the budget.

Last week, Republicans had succeeded in getting Democrats to abandon a plan that would have expanded Healthy Families (SCHIP) to all children living in families with incomes below 300 percent FPL ($60,000 for a family of four) beginning in 2008. Also opposed by Governor Schwarzenegger, that plan was slated to cost $1.8 million this year and expand over the next few years.

Both efforts included covering all children, including undocumented children, which make up around 12% of the uninsured children in the state.

http://www.health-access.org/

Kids’ health hooks voters
By Soraya Sarhaddi Nelson
The Orange County Register
June 25, 2006

The two leading gubernatorial candidates say ensuring that basic health care is available to all of the state’s children will be a top priority for them if they’re in the Governor’s Office next year. The issue is important enough to Gov. Arnold Schwarzenegger that he parted company with fellow Republicans in his proposed budget this year, earmarking $23 million to provide coverage for youngsters in 18 counties who don’t qualify for programs like Medi-Cal or Healthy Families (SCHIP) because they aren’t poor enough or are here illegally.

“As you have heard me say many times, we should not politicize the children and drag them into this,” Schwarzenegger told reporters in mid-June. “Children need to get all the attention, if they are here legally or illegally.”

http://www.ocregister.com/ocregister/news/state/stateelections/article_1192707.php

Comment:

By Don McCanne, M.D.

There is almost universal support for providing all children with health care coverage. Although employer-sponsored coverage has continued to decline, efforts to cover children have offset much of this decline, slowing the rate at which the numbers of uninsured are increasing.

Instead of a universal program of health care coverage, we depend on a fragmented system of providing coverage. Special efforts have been made to cover low-income children though Medicaid, SCHIP (Healthy Families in California), and county programs such as California’s Healthy Kids. Theoretically, all low-income children should be covered through these programs. But what is the reality?

Because of greater state revenues than anticipated, in his May Revise of the budget Gov. Schwarzenegger was able to include funding for the county Healthy Kids program. These funds were not to expand eligibility, but rather they were to fund care for children that were already qualified for this program but were excluded merely for lack of budgeted funds. But in the legislative budget battles, these funds were once again cut, leaving 24,000 children on the waiting list (eligible but unfunded).

SCHIP (State Children’s Health Insurance Program) has been the most successful program of the past decade in expanding coverage for children. Many support its expansion to include all uninsured children. Yet partisanship has prevented a modest expansion of the program in California that would have been accomplished by setting the threshold for eligibility at 300 percent of the federal poverty level.

As long as we have a fragmented system of providing health care coverage, the political debates will center not simply over how much we can “afford” to budget for health care, but also about which citizens we will exclude from any coverage whatsoever.

(I used “citizens” deliberately to separate immigration issues from health insurance issues. Fragmented systems of funding health care result in profound inequities in coverage and access. The fact that 12 percent of uninsured children in California are also undocumented does not change that fundamental premise. We can agree on covering the other 88 percent of uninsured children, and then many of us can continue the battle to see that every person living in the United States receives affordable health care regardless of what documents they possess.)

Consumer Directed Health Care and Health Savings Accounts

“Consumer-directed health care” (CDHC) is a euphemism for shifting health care costs onto patients with skimpy insurance policies that offer virtually no coverage. Popular with conservatives, CDHC plans are based on the idea that Americans currently have too much insurance coverage, and would be more prudent purchasers if forced to pay more of their own health care costs. CDHC plans have very high deductibles (e.g. $10,000 for a family), and some come with an attached health savings account (HSA), a private bank account that can be used to pay health expenses (although half of all employees have nothing in their HSA).

But this concept is fundamentally flawed. Americans are not “overinsured,” illness and medical bills currently contribute to half of all U.S. bankruptcies (pdf). These plans simply shift costs from insurers and businesses onto families. Moreover, they offer no hope of controlling health costs, as the sickest 20 percent of the population responsible for 80 percent of health spending (people with tens or hundreds of thousands of dollars in health costs annually) has no incentive to change their spending. In reality, these plans add another complex layer of administration which will exacerbate wasteful health spending.

This fact sheet provides background on consumer directed health care and outlines the arguments against it.

Click here to read the fact sheet (pdf)

Read the testimony of Senior Health Policy Fellow Dr. Don McCanne on HSAs. Submitted to the Committee on Ways and Means, United States House of Representatives.

For additonal information, read an exchange between Dr. Don McCanne and Dr. James Knight on Health Savings Accounts.

Tax Credits for Private Insurance

It is often suggested that the best way to cover the uninsured would be to provide them tax credits to buy private insurance. But tax credits simply launder public money through wasteful private insurance system that takes a one-third cut of every dollar. With the cost of private insurance policies skyrocketing ($10,000+ for family coverage), the size of tax credits would have to be substantial to help the uninsured get coverage. Moreover, studies have shown that offering these credits barely makes a dent in the number of uninsured because it gives employers the incentive to drop coverage for their employees.

In this brief, PNHP Senior Health Policy Fellow Dr. Don McCanne details the case against using tax credits to cover the uninsured.

Click here to read the brief (pdf)

A Survey of the Canadian Health System

In this excerpt from “Universal Health Care: What the United States can Learn from the Canadian Experience,” the authors (including PNHP Past President Dr. Claudia Fegan) provide a realistic survey of the strengths and weaknesses of the Canadian health system, debunking many of the common myths.

Click here to read the excerpt (pdf)

The Canadian Supreme Court Decision

In June 2005 the Supreme Court of Canada ruled in a close (4-3) opinion that Quebec’s ban on private insurance duplicating services covered by the public system violates that province’s Charter of Rights and Freedoms. The case (Chaoulli v. Quebec) was brought by Dr. Jacques Chaoulli, an extreme right-wing physician with close ties to pro-privatization political organizations. In an unusually strongly-worded dissenting opinion, the minority criticized the questionable basis for the case, its overtly political motivation and the phony “experts” brought to testify.

Click here to read PNHP’s statement on the Canadian Supreme Court Decision

Click here to read a backgrounder on the case (pdf)

A Proposal for Financing National Health Insurance

In this 1999 article, physician economist Dr. Edith Rasell outlines a possible system for financing national health insurance. Savings on administration (currently 31 percent of health spending) would be combined with current sources of public funding (Medicare, Medicaid, SCHIP, etc). A modest 2 percent personal income tax would replace insurance premiums and out-of-pocket costs currently paid by individuals (the average individual health insurance premium alone is today more than $3,500), and a 7 percent payroll tax would replace employer contributions and relieve them of the costly burden of administering their own health benefits (industrialized sectors currently pay as much as 14 percent of payroll for health care).

Although Dr. Rasell’s is the most often cited financing structure, any number of different arrangements could possibly be used. Since the financing of public programs is more a matter of tax policy than health policy, PNHP does not endorse any single financing proposal.

Read “An Equitable Way to Pay for Universal Coverage” (pdf)

For-Profit Hospitals Cost More and Have Higher Death Rates

In this pair of studies from the Canadian Medical Association Journal, a distinguished team of researchers led by Dr. P.J. Devereaux at McMaster University (Ontario) performed large scale meta-analyses on the existing research concerning mortality rates and payments for care at private for-profit vs. nonprofit hospitals. Since private for-profit hospitals are virtually nonexistent in Canada, the research examined U.S. for-profit hospitals. Taken together, the studies reviewed 23 academic papers (15 on mortality rates, 8 on payments) examining more than 26,000 hospitals.

After all the research was reviewed, the evidence against for-profit hospitals was conclusive: for-profits had 19 percent higher costs and 2 percent higher death rates. The authors attribute these defects directly to the for-profit nature of the hospitals: The necessity to generate revenues to satisfy investors, the significantly higher administrative costs and the large executive bonuses, they say, “result in limitations of care that adversely affect patient outcomes.”

Read “Payments at For-Profit and Non-Profit Hospitals” (pdf)

Read “Mortality Rates of For-Profit and Non-Profit Hospitals” (pdf)

For-Profit Hospitals Cost More and Have Higher Administration Expenses

In this 1997 NEJM study, Drs. Steffie Woolhandler and David Himmelstein examine costs of care and administration at for-profit, nonprofit and public hospitals in the U.S. They found that administration consumes 34.0 percent of total costs at for-profit hospitals, 24.5 percent at nonprofit hospitals, and 22.9 percent at public hospitals. Compared with public hospitals, nonprofit hospitals were 23 percent costlier and for-profits were 34 percent costlier. Among acute care hospitals, for-profits had higher adjusted costs per discharge ($8,115) than did nonprofit ($7,490) or public ($6,507) hospitals. Much of this difference was due to higher administrative costs.

Read “Costs of Care and Administration At For-Profit and Other Hospitals in the U.S.” (pdf)