by Donna Smith

WASHINGTON, DC – It seems everyone in the healthcare reform movement is hitching up his or her britches and feeling mighty proud of the prospects for action under President Obama and the adoring Democrats in his Congressional arsenal. Even some prominent Republicans are inching ever closer to supporting change to the broken health system. But I’m feeling significant dissonance between the words spoken and the policy offered to move forward.

So listening to the speakers here at the Families USA Health Action meeting this week has been upsetting – OK, it is outrageous to watch these folks being self-congratulatory while also promoting those purporting the overhaul of the health system with the biggest bailout we’ve yet given any industry in recent months. The proposed mandates for all Americans to purchase private, for-profit health-insurance (or buy into a public pool that will be weakened by the insurance interests) is being sold to us as reform and it simply is not. And my brain hurts from the disconnect.

I cannot reconcile Princeton’s Uwe Reinhardt’s message that we’ve become an aristocracy – not a middle-class society or even a democracy – with his embrace of the insurance industry and expansion of the broken healthcare system that clearly provides better healthcare protection for our American royalty and not the peasants among us. He carefully charts for us the rising debt of American families – including crushing medical debt assumed under the for-profit health insurance based system-and the lack of savings by Americans in recent years. But there is little acknowledgement that some of the debt and lack of savings directly relates to the increased costs American families and workers must shoulder for health coverage – health coverage that doesn’t adequately protect financial standing.

Sen . Charles Grassley of Iowa assured the crowd that there’s a big difference between the Hillary Clinton plans of years gone by and the Obama plan now – “He (Obama) will stick to his guns on a private-public mix (for insurance).” Grassley goes on to say everyone knows you get over-utilization when you have “gold-plated” plans. The implication is always that if you give access to care then millions of us will clamor to sit in doctors’ offices and get procedures and tests done simply because we have the means to do so. I actually think the gold-plated stuff will be reserved for Sen. Grassley and his cohorts – the rest of us will work hard to even get a plan that can assure minimal coverage or care. Grassley said they’d remind the Democrats that they said they’d adhere to a “pay as you go” with healthcare reform and other programs. Here’s the nod to the “bi-partisan” efforts we hear will guide the day for us all – the new agenda, the cooperation that will bring us all to the promised land of expansion of the insurance industry.

Then the Dems. I hear Rep. Steny Hoyer rightfully site his outrage about a Maryland child dying for want of a tooth extraction, yet stay safely and clearly away from angering the insurance industry. I listen as Sen. Debbie Stabenow of Michigan talk about her compassion for families struggling for care yet quickly adding when she talks about providing healthcare for immigrants that we should reward with healthcare those doing “the right thing.” I have a hard time reconciling the disconnect between the suffering unfolding every day – death by death by denial by denial – as the dance continues.

We want a “uniquely American” answer to the healthcare nightmare, they all say. I’ve heard that until my brain hurts just considering it. Oh, we’re unique all right. We’re the only industrialized nation on earth that tolerates the killing of its citizens on our own soil at the hands of this healthcare system and then wants to fix it all by handing more business, more money and more power to the same industry committing the murders. That’s unique enough.

None of this sounds like the language of basic human rights. And I think I heard our new President say that he clearly understood healthcare to be a human right in response to a debate question just a few months ago. That was such a gift just to hear the words spoken. I just know he knows that this basic human right is not going to be protected by hoodwinking the American people into bailing out the insurance industry.

The heavily funded activists (come on folks, that alone should send up big, red flags – heavily funded activists for human rights?) pushing for a private-public national healthcare policy are in and of themselves a conundrum to me. I hear on the one hand the message that the private, for-profit health insurance industry is very bad indeed – blocking healthcare through denials and high premiums and all the practices the American people have had to endure for years. But then I also see the activists and the industry folks co-mingling ever so deftly in a dance of political theater aimed at convincing us all that in response to demands for insurance regulation and restriction the industry will put up a fight but then capitulate to the demands or risk being left behind.

Look at the list of bedfellows and trust your instincts America. Like our moms and dads taught us, if it walks like a duck and quacks like a duck, guess what? It’s a duck. A bailout called healthcare reform is still a bailout even if we’re told otherwise. If AARP and UnitedHealth Care and Wal-Mart and SEIU and the others in the HCAN coalition are joining hands and forces, is there anyone among us who doesn’t know that’s about money and power and influence still? That’s a duck. And that’s going to be a very well treated duck.

So, let me get this straight… the insurance industry has been a big part of the problem. Worse. The industry has allowed the deaths of tens of thousands of Americans every year in order to protect profits.

I think of dead — 2-year-old Mychelle Keyes and dead 17-year-old Nataline Sarkisyan and dead 38-year-old Tracy Pierce, and that dead little boy with an infected tooth in Maryland — and I don’t wonder at all what the new for-profit insurance-friendly political coalitions are fighting to protect. And it isn’t the future Mychelle’s or Nataline’s or Tracy’s. They are fighting to protect the folks who killed them.

All of these dead were killed at the hands of the industry now being simultaneously chastised and coveted. This same greedy industry can be trusted to roll over just a little while helping craft their own industry’s regulations going forward? Oh, yes, that seat at the table is firmly fixed and being kept ever so warm for the insurance folks. In exchange for setting some of their own regulation, the insurance industry will be rewarded with the business of millions more of us who have had absolutely no say in the matter. None.

Those Americans not acting as political operatives for the quasi-activists organizing the reform transition for the insurance industry are not exactly anxious to hear from you and me. No, they have well-heeled and well-connected leaders who rub elbows and move easily within all of the halls of power where we can never go.

And unless we rise up and say we know what is going on and we smell a lot of big, fat rats, reform that expands the broken system and enriches the already elite of the healthcare profit-mongers will be sold to us by bipartisan bluffing and insurance company operatives slip-sliding us forward.

As for me, I will keep listening to Rep. John Conyers talk about human rights and healthcare for all and the long arc of history leaning towards justice. Oh, and his talk about how the automakers just barely across the river in Canada can build cars much more cheaply than in his native Michigan because they don’t suffer the health-insurance nightmare. Huh? Human rights and good business. I do like the quack of that. And my dissonance subsides…

Donna Smith is a community organizer for the California Nurses Association and National Co-Chair for the Progressive Democrats of America Healthcare Not Warfare campaign.

by John R. Battista, M.D.
Prepared for Grand Rounds, Department of Medicine, Stamford Hospital, Stamford, CT
October 8, 2008

The United States is the only industrialized country without universal health insurance. The United States consistently ranks in the lower third of industrialized nations in terms of the two universally accepted measures of health care system efficacy: infant mortality and life expectancy. In addition, because the United States spends about twice as much per capita on health care than other industrialized countries it ranks at the very bottom of the industrialized world in terms of health care efficiency, that is efficacy per dollar spent. Furthermore, health care expenses are the leading cause of bankruptcy in the United States, a phenomena which is absent in other industrialized countries. Finally, the US ranks at the very bottom of the industrialized world in preventable deaths and satisfaction with the health care system. When the World Health Organization ranked world health care systems in 2000, the United States ranked 37th, the worst in the industrialized world.

It is generally accepted that universal health care systems improve the efficacy of a health care system by improving access to health care. This is consistent with the finding that the United States health care system provides less outpatient and inpatient care per capita than the health care systems of other industrialized countries.

Thus, our ability to evaluate proposals for US health care reform would be furthered by an understanding of how other industrialized countries succeed in providing universal, comprehensive coverage with more health care and better outcomes at about half our per capita costs. Interestingly, the major factor in understanding this capacity of other industrialized countries relative to the US is not to be found in pay differentials, or the differential use of surgery, lab tests or high tech procedures; but rather, in the nature of the health insurance funded as well as how that insurance is paid for and administered.

First, other industrialized countries guarantee or mandate universal health insurance thereby avoiding both the poorer health care outcomes and the increased health care expenses associated with the uninsured. The uninsured, by avoiding medical care early in the course of illness become more ill than the insured population and die younger. Furthermore, because they seek more emergency care and end up being treated later in the course of an illness, when it is both more difficult and expensive to treat, they end up spending more for health care than the insured. For example, hundreds of thousands of avoidable hospitalizations are incurred each year in the United States due to lack of health insurance.

Second, other industrialized countries insist on comprehensive health insurance covering preventive care, outpatient care, inpatient care, medications, long term care and dental care. By covering all health care expenses they lower the cost of insurance for these expenses by making sure there are no uninsured in any aspect of the health care system. In addition, they lower the cost of insurance for each aspect of the health care system by spreading the expenses across the entire population even when some aspects of health care, such as long term care, are utilized by only a small percent of the population at any given time. Finally, comprehensive insurance saves money by avoiding the additional administrative expenses of having multiple insurance programs to cover the full spectrum of medical care as is characteristic of the United States.

Third, other industrialized countries insist insurers operate not-for-profit and without managed care. For-profits pay higher salaries than not for profits, and on top of that they currently consume about 13 percent of health care premiums in profit, as well as having additional expenses associated with managing care. Repeated studies have shown the same services delivered by for profit Medicare, for-profit nursing homes, or for-profit hospitals would cost about 19% less if delivered through non-profit means. In addition, unmanaged care has been shown to result in a higher quality of care on all recognized quality of care indicators and to be associated with a lower risk of death, thus improving efficacy.

Fourth, other industrialized countries minimize the number of insurers. The number of insurers is directly related to administrative costs. Countries with a single, comprehensive insurance plan, so called single payer countries, such as Canada, have the least insurance overhead. Countries with multiple, comprehensive insurer plans, such as France, with three, and Germany, with about two hundred, have higher insurance administrative costs.

The United States with over 1400 insurance companies and multiple insurance plans within each insurer, almost none of which are comprehensive, and almost all of which operate for-profit, reveals the vast savings power of these first four insurance principles utilized by other industrialized countries. In the United States at least 25% of total health care expenses are consumed by insurance billing costs, about the same percent used to reimburse health care providers. This contrasts with less than 3% in other industrialized nations. Since 1970 billing administrators have increased 2500% relative to physicians in the US while this ratio has not changed significantly in other industrialized countries.

Fifth, other industrialized countries have lowered their cost of health insurance by negotiating the price of prescription drugs and bulk purchasing prescription medications and durable medical equipment, thereby saving about 50%. This approach has been utilized by the VA, Medicaid and HMO sectors of our health care system, but has been prohibited by law from traditional Medicare. Savings of up to 5% of total health care expenditures could result from the full adoption of these practices.

Sixth, some industrialized countries have lowered the cost of health insurance by capitating the expenses of hospitals and physician services, thereby eliminating the cost of billing for these services. This practice runs contrary to the fee for service values of American culture and has little support among American health care reform advocates.

Seventh, other industrialized countries have lowered health insurance costs by funding these costs in relation to income rather than risk. In other industrialized countries the total cost of health care for the entire population is determined and divided among the population so that each person, or employer, pays the same percent of their income, or payroll, for insurance to cover all these expenses. In the United States the private insurance population is fractionated into groups and the cost of the insurance is calculated by assessing the health risk of the group or a particular individual within such a group for the specific medical services the insurance will cover. The factors typically involve age and illness history. As a consequence, health insurance is more expensive the older and sicker you are. Additionally, because the cost is not modified by income, risk based pricing makes health insurance unaffordable to most hourly workers.

This method of making health insurance more affordable is at the heart of the health care reform dilemma for the United States. The only way health insurance can become affordable for a substantial proportion of the uninsured population of the United States is to adopt community financing of insurance and pay for that financing as a percent of income earned. To do so requires financing health insurance through a public tax mechanism rather than a private billing mechanism. Yet, this solution is opposed by a wealthy and powerful minority of people in our country who falsely consider such a solution to be socialism and believe that any socialized health insurance funding mechanism would be inherently inefficient and ineffective, despite consistent evidence to the contrary.

A fuller understanding of these seven means of saving cost and improving outcomes can be furthered by examining the three distinct ways they have been utilized by other industrialized countries: the socialized medical system of Great Britain and Spain; the single payer system of Canada, Taiwan and Scandinavian countries; and the not-for-profit multi-payer system of Germany and France.

In socialized medical systems the population is insured through public funds obtained through an income tax and a value added tax. The government owns the health care facilities. Physicians are paid a salary to work in hospitals, and a capitated rate to treat outpatients. Hospitals operate on a global budget. There is no billing for services. Both Great Britain and Spain allow individuals to opt out of this public system by paying for private health care. Such systems tend to be underfunded and have waiting lines for non-acute services. They are much less costly than the US system while delivering generally comparable outcomes. There is little or no support for such a system for the United States where there is a strong belief that physicians should be paid fee for service and there should be free choice of health care providers, which is not characteristic of socialized health care systems.

In single payer medical systems the entire population is covered by comprehensive health insurance administered by a single organization. Funding is accomplished through public funds for the unemployed, poor, disabled and retired in combination with an income based health care tax on working families and a payroll tax on employers. These funds go into a health care fund, not general revenue, which is administered by a regional public office in accord with national policy. Rates and coverage are set by regional administrators in negotiation with health care providers. Health care workers are paid fee for service. There is no managed care. There is free choice of health care providers.

This is the system most health care reformers advocate for the United States. However, they suggest the single-payer system be administered by a not-for-profit trust controlled by a board of health care providers, health care advocates, taxpayers reportable to government, rather than being operated by the government itself. Prospective studies suggest this system could deliver comprehensive health care, without co-pays, for all Americans with a 6.5% income tax and a 6.5% payroll tax while maintaining the current funding for the Medicaid, Medicare and CHIP’s programs which would be upgraded into comprehensive insurance without additional funding. This system would improve health care outcomes for the United States while constraining costs and making health insurance much more affordable for the entire population.

This single-payer model is supported by about 60% of the population and physicians, but has limited support among politicians who wish to maintain the private insurance industry. In the current presidential race, single payer health care reform is supported only by former US Congresswoman Cynthia McKinney, the Green Party Candidate, and Ralph Nader, who is running as an independent.

The third form of universal health insurance in other industrialized countries involves using the tax mechanism to fund large, quasi-public, not-for-profit insurance pools. These not-for-profit insurance pools are highly regulated, quasi-public institutions which share profits and losses, and offer only one comprehensive health insurance plan. They are funded through a health care tax, an employer payroll tax, and public funds for the unemployed, disabled and retired. They have little or no resemblance to American for-profit insurers. They are not publicly traded companies with a fiduciary responsibility to stockholders. Instead, they are not-for-profit, quasi-public institutions with a responsibility to the people they insure which negotiates on their behalf with health care providers for fees and services. Such a system has co-pays, but utilizes a mandated cap to insure there is no medical bankruptcy There is no managed care. There is free choice of health care providers.

American politicians, who support universal health insurance but wish to maintain private insurance companies have been interested in altering the multi-payer system of Germany and France by mandating health insurance coverage while leaving the private, for-profit, health insurance system intact. This individual mandate is commonly combined with a mandate on employers to provide health insurance for their workers or pay into a public fund to assist workers in obtaining health insurance. This was the position of Hillary Clinton and Mitt Romney in their campaigns for President. A mandate on health insurance for children is advocated by Barak Obama, although he does not support a mandate on health insurance for adults.

Mandate systems can result in universal coverage. However, international experience suggests this can only be accomplished when the payments for a mandate are collected through payroll and income taxes with the government taking up responsibility for the non-employed population. In addition, a mandate system would need to require comprehensive health insurance coverage and caps on out of pocket expenses to solve the efficacy and bankruptcy problems of the United States health care system. Bare bones, major medical insurance with payment limits would do little to solve the efficacy problem for the United States because such coverage would continue to result in inadequate health care access while doing little to stop the problem of medical bankruptcy. In fact, the vast majority of people bankrupted by health care bills had health insurance at the time they developed a major medical illness. The simple truth is you can not make private health insurance affordable for the hourly, sick and near elderly worker unless you make it inadequate or substantially subsidize its cost with public funds. That is because the overhead on private for profit insurance companies is much higher and their use of risk based accounting practices commonly makes it unaffordable for those segments of the population who are most likely to be uninsured: the sick, the near elderly and the hourly workers. Thus, a mandate on health insurance will most likely result in a decrease in the number of uninsured coupled with an increase of publicly subsidized, non-comprehensive health insurance with payment limits in order to lower the cost of the insurance to both the individual and the state, as has occurred in Massachusetts. This kind of increased coverage will do little or nothing to solve the efficacy or bankruptcy problems of the United States. None the less, this is one direction health care reform in this country may be headed despite clear evidence that more effective and more efficient universal health insurance could be obtained through a publicly funded comprehensive insurance program.

John McCain, the Republican Presidential nominee, does not support health care mandates. Instead he would offer incentives to private health insurance coverage by making employer health insurance taxable, combined with a $5,000 tax deduction for private health insurance and the deregulation of state health insurance requirements to make private insurance plans cheaper. This plan, if enacted, would further erode employer-based health insurance by increasing the cost of such insurance through providing an incentive for young, healthy workers to reject it. Furthermore, it is anticipated to result in an increased numbers of Americans who would be covered by inadequate health insurance thereby worsening the health care efficacy and medical bankruptcy problems in our health care system. It might decrease the number of uninsured in the short run by making private health insurance more affordable, but increase the number of uninsured in the long run as privately insured people would find they no longer can afford private health insurance as they become older or ill.

Barack Obama, the Democratic Presidential nominee, supports allowing individuals to purchase health insurance through the Federal Health Benefits Program in addition to a mandate on health insurance for children. Opening the Federal Health Benefits Program to all Americans would lower the cost of health insurance for older Americans and sick individuals who are unable to afford private health insurance. It would not solve the problem of making health insurance affordable to the hourly workers. He thus proposes to subsidize the cost of purchasing health insurance for such individuals. Such a program would substantially decrease the number of uninsured but would not address the higher administrative cost of health insurance of the private sector and the poor efficacy that results from their use of managed care. In addition, it would not solve the problem of bankruptcy which results from the lack of comprehensive insurance coverage and the existence of limits on insurance payments.

In summary, although publicly funded health insurance administered through a single payer option is empirically the most cost effective means of lowering the cost of health insurance and improving the efficacy of the American health care system, the two major parties have rejected this approach because of their support for the private insurance system and the pharmaceutical industry, coupled with an irrational belief that for-profit, free market health care reform will solve the problems of our current health care system. In addition, single payer has been grossly misrepresented as a government run, socialized medical system that would cost more and result in waiting lines. The main hope for passage of a publicly funded comprehensive and universal health care system for our country lies in its passage at the state level and having such a system spread to the national level, much as occurred in Canada. In addition, the public funding of elections, the inhibition of politicians from receiving financial benefits from corporations and lobbyists while in office, and the development of multi-party politics in the United States would all benefit the possibility of publicly funded, comprehensive health care reform for the United States. For now, advocates of a single payer health reform can be heartened by its increasing support among physicians and the general population and can take solace in the belief that its passage in the United States is inevitable as other health care reform options, such as individual mandates, are tried and fail, and the health care crisis in this country continues to worsen. The current health care reform situation is very much as Winston Churchill described it: “You can count on Americans to do the right thing- after they’ve tried everything else.”

Bruce Dixon, Managing Editor
Black Agenda Report
Wednesday, 28 January 2009

What does it mean when leading House Democrats, and apparently the White House repudiate their own campaign promises to enact a universal-coverage national health care plan only days into the new Congress and new administration, even though they have a popular president and the biggest Congressional majority in two generations? What does it mean when this doesn’t even make the evening news? It means the awesome power of corporate media decides the topic of our political conversation. It’s not about health care, or campaign promises, or hypocrisy. It’s about Blago. Or Britney. Or whatever they tell us it is.

In the bubble of false reality that passes for corporate journalism, the week’s biggest story was, and still is of this writing, the antics of governor Rod Blagojevich, who showed on Larry King, the View and other places comparing himself to Mandela, Gandhi and Jesus while the Illinois legislature debates his impeachment in absentia.

If, on the other hand, the purpose of journalism were to inform rather than entertain the public, the news cycle would be dominated by quite another, and a vastly more important story. In a C-SPAN interview broadcast Sunday, House Democratic Whip James Clyburn of South Carolina declared that even with the biggest majority in a generation, Democrats will not even try to put a universal health care bill on the president’s desk this year, or maybe the next either.

As recounted by Bob Cusack Monday in The Hill,

During an interview on C-SPAN’s “Newsmakers” program that aired on Sunday, Clyburn said he doesn’t anticipate that comprehensive healthcare legislation will be approved in 2009.

While noting he does not know exactly when President Obama want to move forward with a universal healthcare measure, Clyburn said, “If you take what we’ve done with [the State Children’s Health Insurance Program bill] and then you follow with [more spending] on community health centers, you would have gone a long way to building a foundation upon which to build a universal access healthcare program.

“I would much rather see it done that way, incrementally, than to go out and just bite something you can’t chew. We’ve been down that road. I still remember 1994.”

This troubling statement by the number three Democrat in the House of Representatives is unquestionably more consequential than the clownish Illinois governor and his traveling circus, and profoundly troubling on multiple levels.

To begin with, Democrats in Congress, and the Democrat in the White House clearly ran promising the American people a national health care plan. A public repudiation of that promise by a key member of the president’s team in the House less than three weeks into the new Congress and two weeks into the new administration should be big news. But for some reason it’s not.

Secondarily, in the powerful position of House Democratic Whip, Clyburn is a key member of President Obama’s team, and consults with the White House on legislation and legislative priorities multiple times a day. Clyburn undoubtedly has the cell numbers of Rahm Emanuel and other White House officials on his speed dial. The notion that Clyburn is not privy to the Obama administration’s decision of whether or not to push a universal health care plan this year is something you have to be dumber than a fifth grader to believe. There’s only one president at a time, and one leader of the Democratic party at a time. When Clyburn’s lips move, the Obama administration is talking.

You haven’t heard the White House press spokespeople disown Clyburn’s backtracking on Democratic campaign promises to enact universal health care, and you won’t. It’s hard to avoid the conclusion that the rollback of Democratic promises to enact a national health care plan is just a Democratic congressional leadership thing. It’s clearly the decision of the Obama White House too.

Third, Clyburn is a longtime member of the Congressional Black Caucus, and back in April of last year signed on as a co-sponsor of HR 676, the Medicare-For-All single payer health care proposal advanced by Rep. John Conyers (D- MI) and endorsed by Physicians For A National Health Care Plan. Is Clyburn being forced to toe the White House line and violate Democratic campaign promises and his personal commitments? Or are he and the House leadership taking initiative on their own to violate those promises and commitments? Again, the silence from the White House makes the former the most likely. How many other co-sponsors of HR 676 just signed it because it made a good press release, but have no intention of seeing it ever brought to a vote?

Finally, Democrats at this moment have a popular and newly elected president, along with the biggest majority in the House and Senate they have enjoyed in a generation. If Democratic leaders are reluctant even to try to put a national health care plan on the president’s desk under these favorable circumstances, when will they ever try? Mid-term elections almost invariably shrink Congressional majorities as large as these.

It is estimated that 18,000 premature deaths occur in the US each year because of lack of medical coverage. Fifty or sixty million Americans have no health coverage at all, and another hundred fifty million are grossly underinsured. Democrats were able to pass SCHIP with a smaller majority under the Bush administration. They did not run on promises of “incremental reform”. They ran promising to deliver national, comprehensive, universal health care. Clyburn himself is a co-sponsor of the single payer bill. So why are the expectations of House Democrats and the White House, with a popular wind at their backs, so unconscionably low now?

Despite the Obama administration’s open phone lines and email boxes at www.change.gov, and its hypocritical encouragement of supporters to hold health care house meetings to voice their opinions, the Obama White House, and House Democrats – just like their Republican counterparts — are hip deep in campaign contributions private health insurance companies. These private insurers, according to Physicians For a National Health Care Plan, rake off thirty cents of every health care dollar under the present broken health care system, so they have an enormous financial stake in preventing universal health care, especially single payer health care. Their dollars apparently speak louder than our votes.

The deep and multilayered hypocrisy around the issue of whether Democrats, with huge majorities in the House and Senate, will even try to produce national health care legislation is only exceeded by that of the corporate news establishment, who won’t tell the story, and instead dangle the clownish Illinois governor before us. One supposes that in a week when Britney Spears has remained sober and Paris Hilton has avoided a public breakdown, this is the best and most important news they can find.

For Black Agenda Report, I wish to recognize CD at www.correntewire.com for drawing our attention to this story.

Bruce Dixon is managing editor at Black Agenda Report, and based in Atlanta. He can be reached at bruce.dixon(at)blackagendareport.com

World Focus
January 28, 2009

The Worldfocus signature story Canada’s hospitals cut the paperwork, emphasize care explores Canada’s health care system.

In this extended interview, Uwe Reinhardt, a leading adviser on health care economics and professor of political economy at Princeton University, compares the Canadian and American health care systems. Reinhardt criticizes the U.S. health care culture and expresses his optimism about the Obama administration.

As part of Worldfocus’ Health of Nations signature series, correspondent Edie Magnus conducted this half-hour interview with Uwe Reinhardt on January 20, 2008, the day of President Barack Obama’s inauguration.

Reinhardt blogs at The New York Times’ “Economix” blog. A transcript of the interview is below the video.

Edie Magnus: What do you think of Canada’s national health care system?

Uwe Reinhardt: I think it’s a high performer in the following sense: Canadians spend half as much per capita on health care as we do in the U.S., and yet if you go up there, sure you have to wait for some MRI image or for some heart procedures, but overall the system produces very good health outcomes. People are more satisfied there with their care than Americans are with theirs. So if you diagnosed it like a physician, you’d give that system an A and you’d have a hard time giving more than a B to ours.

Edie Magnus: Why do you think it is that most Americans don’t see it that way?

Uwe Reinhardt: Most Americans, first of all, are bombarded with propaganda. You don’t know how many think tanks are paid by certain industry — insurance, drug, organized medicine — to feed out negative stories about the Canadian health system. They do of course have mishaps, as do we, but there is a whole industry collecting them and beaming them out here. That is one.

Secondly, people are always more comfortable culturally with whatever they have than with some other system.

Third, people imagine having the worst illness, and if you are really very sick in the U.S., you generally do have more hope than in any other country if you are very sick, particularly if you are well insured. But if you sort of live the average life of Americans and have a Canadian system, they have better primary care, easier access to it. They would never go bankrupt over health care, because they don’t do that up there. They would realize what they are missing here.

Edie Magnus: We were in a hospital that was affiliated with McGill University, and it was a regional system that had six hospitals that were affiliated with one another, and they annually have some 39,000 inpatients, and they do about 34,000 surgeries and they deliver about 3,000 babies. And managing all of this is a staff of 12 people doing the billing, the administration. What would an equivalent hospital in the U.S. take to run administratively?

Uwe Reinhardt: You’d be talking 800, 900 people, just for the billing, with that many hospitals and being an academic health center. We were recently at a conference at Duke University and the president of Duke University, Bill Brody, said they are dealing with 700 distinct managed care contracts. Now think about this. When you deal with that many insurers you have to negotiate rates with each of them. In Baltimore, they are lucky. They have rate regulations, so they don’t have to do it. But take Duke University, for example, has more than 500,000 and I believe it’s 900 billing clerks for their system.

Edie Magnus: What are 800, 900 people doing?

Uwe Reinhardt: Well first of all there’s a contract. With each different managed care contract you have different rates. You have different things that need pre-authorization, not depending on the contract. You haggle over every bill. You submit the bill, the insurer rejects it, you haggle, and it may take 90 days to settle one bill. They don’t have that in Canada. You see, we spend in this country an enormous amount of money just administering claims. It’s a huge wrestling match over the payment.

Edie Magnus: When we pay a medical bill, how much of that bill goes to these kinds of administrative costs?

Uwe Reinhardt: Well, in general what you’ll find in our official statistics, we’re spending 7 percent on administration, but that only accounts for the insurers’ administrative costs and that includes Medicaid, which burns only two percent of its money throughput on administration. On the other hand, Medicare and Medicaid both cost the hospitals administrative costs that are booked as medical care, but it’s really administrative costs.

Steffie Woolhandler and David Himmelstein of Harvard did a study comparing Canada and the U.S. looking at what it costs employers, providers, doctors and hospitals and the insurance mechanism and compared Canada and the US, and they found that we in 1999, spent $300 billion on administration for all these three functions, and that was about 24 percent of national health spending there, but they say it was actually 31 percent because of the fraction of spending that they could actually identify and link to administrative costs. So they came to 31. So it’s somewhere between 25 and 30 percent that goes for administration and it doesn’t even include the patients’ time of billing. Anyone who has had anyone really sick in their family knows how much time you spend haggling over the bills and they have none of that in these systems.

Edie Magnus: I know that there’s some dispute about all those numbers, about what percentage of our spending the administrative costs represent, but you have said that with what America could be saving in administrative costs, that it could completely fund universal health care for all Americans.

Uwe Reinhardt: Oh yes, I’m totally convinced of that.

Edie Magnus: How is that possible?

Uwe Reinhardt: Well for one, many insurance companies have a nomenclature that when they issue a bill, when the hospital issues a bill, the insurance company can’t understand it. So there are entities, enterprises that translate that from the insurance companies’ nomenclature into the hospitals’ nomenclature and vice versa.

Edie Magnus: Alright, but tell us, I’m not sure my mother would understand this explanation…

Well I mean, just imagine a hospital sees a horse and it says I code that as H-O-R-S-E, and the insurance company uses French for that, C-H-E-V-A-L, and now the computers, they can’t mesh this unless there is a translator in between who says “Oh, horse for that insurance company means cheval.”

Edie Magnus: And this goes on every day between hospitals and insurers?

Uwe Reinhardt: This goes on every day. They don’t understand the way that they “code” things. So I hope Obama will come and say, “You guys had 30 years to figure it out and obviously you couldn’t. I’ll figure it out for you. Here’s a nomenclature. You must use it, and if you don’t, you don’t get paid, period.”

Edie Magnus: Can you talk about that and how it contributes to our administrative headaches?

Uwe Reinhardt: Well, I once did a dumb thing: I asked an insurance executive “What do you pay in New Jersey for a colonoscopy?”

And he just laughed at me and said, “What a silly question. There is no price for a colonoscopy. We have a different price for every hospital. And for the same hospital, we might have six prices depending on the insurance product, is it an HMO, etc.”

So I said, “This is mad. How many could there be?”

He says, “There could be 30, 40 for us, but then with Aetna, they could have another 30, and everyone has a different contract, so a hospital might receive 60, 80,100 different prices for a colonoscopy, depending on which insurance company and what contract it is. So when you say ‘What are the private market prices?’ there is no price.”

And I said, “Well how, when you have consumer-directed health care, where people are supposed to shop around, what are you going to tell them?”

And he said, “We can’t, really. What would you tell them?”

There is no real price, and every price has been negotiated and haggled over. So imagine what it costs compared to a system where a government negotiates with a physician association. Here’s the fee schedule, and that’s it, and everyone uses the same fee schedule. You can put that into a computer. You have a little card like an American Express card. The price list is already there. You swipe it through, the doctor keys what he or she did and here’s your bill. Well here you have to look at what contract was it and the coding turns out to be wrong, and the bill isn’t clean.

I know an entrepreneur who is a multi-zillionaire, and I said, “What did you do before to be so rich?”

And he said, “I can write clean bills for doctors.”

And I said, “What is your product?”

He said, “My computer knows every managed care contract in this area, hundreds and hundreds of them, and if the doctor tells me the product, the insurance contract, and I know what the doctor did, my machine can type a bill that the doctor never could get right, and submit it to insurance, and we get paid 30, 40 days faster and more accurately, and we split — the doctor doesn’t pay me — we just split the extra money and make the doctor.

I have another friend in Princeton. He gets all of these bills, his wife was ill and he says, “I don’t do the claiming, there is a company that specializes in claiming for you. You just turn over all your stuff and they submit the bills.” So you now have companies that help doctors bill, and then you have companies that help patients pay these bills.

There was a company, I think it was a subsidiary of United, that wrote software to help hospitals bill better and get every dime they could from insurance companies and sold other software to help insurance companies that helps them defend themselves against the doctors’ billing. It’s laughable. It’s hard to explain it without laughing, but we do.

I tell you, if you gave a keg or two of beer to six Princeton undergraduates and said “Drink till you fall over, and then design something really mischievous,” they couldn’t come up with what we adults have come up with being sober, or seeming to be sober. This is a totally insane system.

Edie Magnus: And if we could save those administrative dollars, is there an amount that you think we would save?

Uwe Reinhardt: I think we should be able to cut it in half, what we spend. That would still be more than most other nations spend, but we should use other nations as a benchmark and say, “They can do it for this, so let’s at least cut ours in half.” We would still be spending more than these other nations, but Obama should simply set a goal. Like Kennedy said we’ll go to the moon in so many years, Obama said in so many years we’re going to save that much on administration and I’m going to put someone in charge of it and we’re going to keep books.

Edie Magnus: And to the person who hears that and thinks, “Yeah, but you know, sometime I’m going to be in a jam, I’m going to want some care, and if we go to this other system it might not be available to me…”

Uwe Reinhardt: Mind you, I’m not advocating the Canadian system. It works well for them. I’m not saying we need to have this, but I’m saying whatever we have, if you have government saying there is going to be one computer system, that doesn’t mean one manufacturer, but whatever they make has to interoperable. Whatever language they use has to be the same. We’re going to speak English, so to speak. One nomenclature. You have to call this operation by one code, no matter who it is. There have to be common billing forms. Not every company has its own incomprehensible explanation of benefits, you know. Every hospital bill is just a living insult, when you actually get one as a patient. There has to be something people understand.

And it turns out that after giving it to the industry for 30 years to straighten out and they didn’t, it will have to be the Obama government that says, “Guys we’re going to rig this for you. You can have all the machines you want, all the software. You can buy it from whomever, but it has to obey these rules.”

Just like electric plugs. No matter who makes the stuff, there has to be one plug. But for some reason, the electric industry has been able to settle on one plug. The Cell phone industry has still not settled on one charger. You have to have chargers that vary by thing. The earplugs for the cell phones are different depending on the model. This is nonsense. You give the industry time and if you can’t figure it out, kids, we’ll figure it out for you.

Edie Magnus: Why do you think it is that Canadians are, in large percentages, so much more satisfied with their health care system?

Uwe Reinhardt: I think, for one, you don’t have this constant fear when you go to bed, if whether tomorrow you have health insurance. You know you will. You almost feel it when you go to the airport and you ask these people. That’s not something they worry about. Here you ask any waitress “Are you insured?” Half the time they’re not even insured. If they have it, they don’t know if they have it tomorrow.

One of the interesting things is 250 finance people have been laid off. That industry is going to be small in the future. They’re not going to have health insurance. I think a lot of those people who hated the Canadian system and socialized medicine and so on will discover it might not be a bad idea to have a safety net for some things — education for your kids, health care when you get sick, justice when you are in the courts — and for some reason to think that rugged individualism can cope with this is nonsense.

Edie Magnus: Would national health care work in the United States?

Uwe Reinhardt: Yes.

Edie Magnus: Would Canada’s plan work in the United States?

Uwe Reinhardt: Well, it works. We have a Canadian health plan in America. It’s called Medicare. It works. Don’t tell me medicare doesn’t work. Tell that to the elderly. One way to test it is to say “Let’s take it away.”

Edie Magnus: But it is running out of money.

Uwe Reinhardt: No, it’s not, no way. It’s not running out of money. I mean we still have a surplus in that account. At some point in the future it will run out of money unless we raise premiums, that is, payroll contributions. We’ll have to do this. But the idea that that it runs out of money and General Motors, which is almost bankrupt, doesn’t, tell me about who is running out of money. GM is living on taxpayers’ blood transfusions. Why? Over health care. They ran out of money, not Medicare. I think this is a myth.

Of course, if you keep payroll tax where it is, it will run out money. But the elderly could contribute more to it and they will. Payroll taxes can be raised a little bit. Higher income recipients probably have to contribute more to it. These are really solvable problems, but Medicare is a Canadian style heath care system.

Edie Magnus: If it seems such long odds that we will ever have a single payer system for all of the United States, what’s the point of comparing us to Canada?

Uwe Reinhardt: You have to have benchmarks. You can’t just say, “We’re unique therefore we can simply spend the whole GDP on health care.” You do have to ask how does Canada do it. How does Germany do it? How does Taiwan do it? How do other nations do it? And if you think you are way out of line, if you’re spending twice as much as the people who are culturally similar to us — their income is somewhat lower but not that much lower than ours, we’re really one North America — you’d really have to ask yourself. Now mind you, you could also look within the US. Utah and Oregon are much, much cheaper than Massachusetts or Miami. So you could look at Canada, but you could also look within the U.S. where you have these variations. But why should you not be able to learn from other countries, particularly when you run a huge single payer system, and Obama is going to put in another single payer system, this public “Medicare light” plan for people under 65? So yeah, we can learn something from Canada. They can learn a lot from us.

Edie Magnus: If you don’t have all the free market forces in health care, would you have as much competition, innovation?

Uwe Reinhardt: Innovation, in the pharmaceutical products and devices, maybe not, because the money wouldn’t be as generous. I mean, we’ve had an unbelievable generous… I mean, if you spend twice as much, you will fund a lot of innovation with it and you’ll fund a lot of waste with it, both. We’ve had both, waste galore and innovation galore. You might have less innovation, but I think a good science policy could contravene that.

In other words, you could fund and support drug companies, not through the price of the drugs, but by giving them grants, government grants. We need a drug for Alzheimer’s, and like the defense contractors — we need a jet that can do these missions — we need a drug that does Alzheimers. And the government is going to lend research contracts to the pharma. industry, and you get your cost reimbursed, but the winner who has the best product — you have a fly by like you do with jets — and the winner gets the contract. So there are other ways of funding devices and of funding drugs and other innovations than just through the price, you know? We have to think of other ways to do this. There is no reason why we couldn’t have a flourishing innovative high tech industry, even if we stepped down on prices, which the private sector will too.

You look at what the Bush administration has done with drugs, turning the Medicare Part D to private industry, and what did they do? They persuaded millions of the elderly to switch out of brand name drugs into generics, totally devastating the drug industry. This wasn’t done by the government. It was done by private enterprise, by private, competitive enterprise.

Edie Magnus: You’ve sort of alluded to this, but are you optimistic that America, starting today with a new president, can get it right with health care?

Uwe Reinhardt: Well, “get it right…” that’s partly an ideological thing, but get it done in this sense… You could say there are certain requirements we have of our health system. An American family where a member is stricken with cancer shouldn’t go broke. That’s easy to achieve. Do you have to do it the Canadian way? No. We can do it our way, even if it’s a little pricier.

A requirement that when somebody thinks they have major illness they should able to get access and not have to worry about whether they can pay the bill. There are certain things you can write down that health systems should achieve, and you say “We’re going to go there our own way. We’re not going to copy Germany, we’re not going to copy Canada, but we want to end at the same point,” and that is that you can go to bed and not worry about losing your health insurance when you lose your job. And those things are achievable, and the Obama plan, if you look at it, has all that in it. It says we keep the system we have, but we put some new things in, like this government program for the people under 65 such that when you lose your job, you don’t lose your family’s insurance, and we can do this. I’m optimistic.

Now a year ago I would have said we’ll never do it, because we’re a bunch of spoiled children.

Edie Magnus: Now we’ve been slapped upside the head…

Uwe Reinhardt: We’ve been slapped upside the head, and in fact people are talking about it, T-shirts, “Grow up America.” I’ve always told my wife “I never understood Americans till our kids became teenagers, and then I understood this whole culture.” It’s a teenage culture. That’s all I really know about Americans, people who want the best health care, they don’t want to pay high premiums, don’t want to pay taxes — this is juvenile. And I think Obama’s inauguration speech was basically very serious, saying, “You know, we have to grow up. We now have to grow up.” I’m much more hopeful now that children in distress will rediscover the virtue of mothers.

In fact I wrote a piece, “I hate Mom and the Government Too,” and I say that it’s amazing, given how teenagers curse mothers, that mothers somehow, that evolution didn’t do away with them, that the reason evolution kept them there is that when the kids get in trouble they run to Mom. And look at what happens now. GM driving overnight, begging mom, that is, government, to help them. The bankers of New York, you know, who used to sit in their golf carts cursing government regulation, running to Washington, to Mom, “Please help us.” And I think, like teenagers at some point discover the virtue of moms who can give them help, the American people will discover, “You know what, there are good things about government, like there are about moms. When you get in trouble they’re really cool to have around.” And I think we’re at that moment, and that is why I believe health reform has a hope. We could literally get this done this year.

Edie Magnus: And just to be clear, Obama’s plan is not national health care, right? It’s not a single payer system…

Uwe Reinhardt: If you mean a nationalized health care with a single…

Edie Magnus: Yes. Government funded, government run, the taxpayers pay, everyone gets it…

Uwe Reinhardt: No. It’s not that. It says you keep whatever you have as long as they’ll give it to you, but if they don’t give it to you anymore, Mom is here for you. You can go out there. You can ride your bike, but if you get hurt you can come here. If the private sector has not sold you a private health insurance policy, we will.

I can’t see what could be fairer that to say to everyone you can play all these games, but there are certain rules. You have to, in the end, cover people. And if you, the private health insurance agency, are not able to do it, we can do it. The government can do it.

And we’ll discover this more and more. Our banking system, you’d be surprised what that’ll look like. It will be highly regulated, like a utility. It’ll be small. It’ll do what it was supposed to do rather than being a gambling casino, which is what it became. You know, they too behaved like teenagers. In fact, this piece I just wrote, it’s actually only for the student newspaper, “I Hate Mom and the Government Too,” the Financial Times printed it, the German Zeit printed it, because everyone understood that that’s what it really was. We had all become teenagers, irresponsible, naughty, and so on, and I think we will become a much better nation because of this calamity.

http://worldfocus.org/blog/2009/01/28/how-the-us-measures-up-to-canadas-health-care-system/3783/