PNHP

Cracks in the moral hazard foundation

Cracks in the moral hazard foundation

American Health Policy: Cracks in the Foundation

By John A. Nyman
Journal of Health Policy, Politics and Law
October 2007

Abstract

Much American health policy over the past thirty-five years has focused on reducing the additional health care that is consumed when a person becomes insured, that is, reducing moral hazard. According to conventional theory, all of moral hazard represents a welfare loss to society because its cost exceeds its value. Empirical support for this theory has been provided by the RAND Health Insurance Experiment, which found that moral hazard — even moral hazard in the form of effective and appropriate hospital procedures — could be reduced substantially using cost-sharing policies with little or no measurable effect on health.

This article critically analyzes these two cornerstones of American health policy. It holds that a large portion of moral hazard actually represents health care that ill consumers would not otherwise have access to without the income that is transferred to them through insurance. This portion of moral hazard is efficient and generates a welfare gain. Further, it holds that the RAND experiment’s finding (that health care could be reduced substantially with little or no effect on health) may actually be caused by the large number of participants who voluntarily dropped out of the cost-sharing arms of the experiment. Indeed, almost all of the reduction in hospital use in the cost-sharing plans could be attributed to this voluntary attrition. If so, the RAND finding that cost sharing could reduce health care utilization, especially utilization in the form of effective and appropriate hospital procedures, with no appreciable effect on health is spurious.

The article concludes by observing that the preoccupation with moral hazard is misplaced and has worked to obscure policies that would better reduce health care expenditures. It has also led us away from policies that would extend insurance coverage to the uninsured.

Introduction

The direction of health policy in the United States over the past thirty-five years is well known: increased cost sharing in the form of higher deductibles and coinsurance rates; the “management” of care by utilization reviews, exclusive contracting with certain providers, capitation, and bundling of services; and most recently health savings accounts (HSAs) and “consumer-driven” health care. Less well understood, however, are the foundations of these policies, especially among those who see such policies as mainly restricting access to care.

Two of these foundational studies are (1) the theoretical analysis of the welfare implications of moral hazard (Pauly 1968; Feldstein 1973) and (2) the RAND Health Insurance Experiment (HIE) findings concerning the health consequences of reducing moral hazard (Manning et al. 1987; Newhouse and the Insurance Experiment Group 1993).

This article presents a critical view of these two foundational studies. First, it suggests that much of the additional health care that consumers purchase when they are insured — that is, much of moral hazard — is actually efficient and welfare increasing: its value to patients exceeds (and often far exceeds, in the case of expensive, life-saving, hospital procedures that patients would not be able to afford without insurance) the cost of providing that care. Second, it suggests that the RAND HIE did not really capture consumers’ willingness to substitute other goods and services for medical care in response to increases in the price of medical care, but instead the study largely captured participants who became ill, dropped out of the experiment, and received the needed medical care under their original insurance policies outside the experiment. Because these participants received treatment outside the RAND experiment, their health care utilization was not recorded. Thus, the finding that moral hazard, especially the portion of moral hazard represented by additional hospital procedures, could be reduced dramatically by cost sharing with only a negligible health effect is spurious.

New Theory

The fundamental error in conventional theory is that it did not recognize that, while the price of medical care might drop to zero for all those who are insured, for most medical care — especially the expensive, hospital-based procedures and associated care that comprise the bulk of medical care expenditures in the United States — it is really only those who are ill who respond to that price reduction. For example, what healthy person would purchase a coronary bypass procedure, a leg amputation, or a liver transplant just because the price has fallen to zero? This means that only those who become ill are responsive to the insurance price reduction. If so, the price reduction becomes the vehicle by which income is transferred from those who purchase insurance and remain healthy to those who purchase insurance and become ill. This is an important distinction because it changes the welfare implications of moral hazard dramatically and implies that much, if not most, of moral hazard is efficient and generates a welfare gain (Nyman 1999, 2003).

New Interpretation

Of the various responses to cost sharing that were observed in the participants of the RAND HIE, by far the strongest and most dramatic was in the relative number of RAND participants who voluntarily dropped out of the study over the course of the experiment. Of the 1,294 adult participants who were randomly assigned to the free plan, 5 participants (0.4 percent) left the experiment voluntarily during the observation period, while of the 2,664 who were assigned to any of the cost-sharing plans, 179 participants (6.7 percent) voluntarily left the experiment. This represented a greater than sixteenfold increase in the percentage of dropouts, a difference that was highly significant and a magnitude of response that was nowhere else duplicated in the experiment.

The explanation that makes the most sense is that the dropouts were participants who had just been diagnosed with an illness that would require a costly hospital procedure. If they dropped out, their coverage would automatically revert to their original insurance policies, which were likely to cover major medical expenses (such as hospitalizations) with no co-payments. This is because HIE participants had agreed to relinquish their existing policies to RAND as a condition of participation, but they could revert back to their existing policies whenever they wanted if they dropped out of the experiment. Thus, when faced with a large hospital expense, the participants could have simply dropped out of the experiment but received the inpatient care outside the experiment.

As a result of dropping out, these participants’ inpatient stays (and associated health care spending) did not register in the experiment, and it appeared as if participants in the cost-sharing group had a lower rate of inpatient use. In reality, however, this finding would have been because participants who remained in the cost-sharing group simply had fewer diagnoses that required hospitalization.

Conclusion

The conventional theory of the moral-hazard welfare loss and the conventional interpretation of the RAND HIE results have created a policy environment in which health insurance is viewed as more of a problem than a solution (Gladwell 2005). We must recognize, however, that much of moral hazard generates a welfare gain that society should encourage rather than discourage. Because of this reevaluation of moral hazard, we must also realize that health insurance is much more valuable than has been recognized. Indeed, there is probably no other investment that we can make as a society that would generate as great a net return on welfare as finding a politically acceptable mechanism for insuring the large portion of U.S. citizens who are currently uninsured.

Abstract:
http://jhppl.dukejournals.org/cgi/content/abstract/32/5/759

Full article (25 pages):
http://jhppl.dukejournals.org/cgi/reprint/32/5/759

Comment:

By Don McCanne, MD

This landmark report turns upside down the policy basis of moral hazard. The entire article should be downloaded so that it can be used to refute those who insist that patients who decline health care when they have to pay for it out-of-pocket will not adversely affect their own health because they will decline only that care that has no measurable benefit on their health outcomes.

These two cornerstones of American health policy, the moral hazard theory and the RAND Health Insurance Experiment, have crumbled, taking down with them the rationale of the cost-sharing basis of the consumer-directed health care movement.

Professor Nyman has shown us that the new interpretation of the moral hazard of insurance insulation against health care costs does not produce a welfare loss, but, in fact, produces a welfare gain. That is why we need a national health program that covers all of us and that eliminates financial barriers to beneficial services.

We really don’t have to worry, after all, about unleashing a stampede for free leg amputations or free liver transplants.

The Battle Over Health Care

New York Times
Editorial
September 23, 2007

One of the enduring frustrations of presidential elections is that candidates and their parties sound like Tweedledum and Tweedledee on many issues. In 2008, when it comes to health care, which is emerging as a defining domestic issue, voters will find stark differences in philosophy and commitment between Democrats and Republicans.

The three leading Democratic candidates all want to achieve universal or near universal health insurance coverage. The four leading Republican candidates espouse no such goal and barely mention the uninsured. The Democrats are willing to put substantial federal money into health care reform. The Republicans are not. The Democrats would expand government health insurance programs and give the federal government a greater role in regulating the insurance industry. The Republicans generally want to shrink federal programs and free the insurance industry from what they consider regulatory shackles.

Compared with these sharp differences between the two parties, the distinctions between leading candidates within each party are small, mostly a matter of tactics to achieve comparable goals. We far prefer the Democrats’ approach to health insurance, since at least they want to address an issue that must be resolved for reasons of economics, public health and fairness. Sadly, none of the leading candidates, in either party, has the vision or the political courage to propose radical solutions for the big underlying problem behind America’s health care crisis: the inexorably rising costs.

The Republican Candidates

Two Republican candidates have yet to grapple seriously with health care reform. John McCain, running largely on Iraq and national security, has not said anything substantial about health care, nor has he even included it among issues listed on his campaign Web site. Fred Thompson has only a brief paragraph on his Web site in which he opposes new mandates, higher taxes or a Washington-controlled program, and calls for free-market solutions. He has also called for reduced spending on entitlements and says he would have opposed the new Medicare prescription drug benefit.

Rudolph Giuliani, who leads the Republican field in national polls, has only sketchy plans but has made it clear that he favors free-market approaches and is strongly opposed to what he mislabels as the Democrats’ push for socialized medicine. Borrowing from President Bush, he proposes a tax deduction of up to $15,000 to help families buy private health insurance instead of getting it through their employers. He believes millions of people might choose that option, creating a market in which insurance companies would rush in with affordable policies to cover them, and the nation would begin to move away from the employer-based system that the Democrats are trying to bolster. For the poor, he envisions some combination of vouchers and tax refunds to help buy policies but has given no indication of how much that program would cost or how he would pay for it.

His proposals are not likely to make much of a dent in the ranks of the uninsured. Tax deductions are of little use to low-income people who pay little or no income tax, and insurers are notorious for refusing individual policies to high-risk or chronically ill people. Given Mr. Giuliani’s eagerness to ease regulation of insurance companies it is hard to see how he could make that market work better.

Mitt Romney has the most developed health plan among the Republicans, as one might expect given his prominent role in spurring health care reform in Massachusetts. As governor of that left-leaning state, he helped make Massachusetts a leader in providing universal coverage, mostly by mandating that everyone must buy health insurance or pay a financial penalty. But as a candidate in the Republican primaries he has changed course, disavowing any need for mandates and contending that what was right for Massachusetts would not be right for the country.

Instead of a national reform effort, he wants the 50 states to devise their own plans, but without much financial help from the federal government. He promises federal incentives to help states deregulate their health insurance markets to encourage cheaper policies.

His key proposal at the national level centers on tax deductions to help people pay for health care. He would allow individuals to deduct their out-of-pocket expenditures — and any premiums paid for insurance policies they bought on their own rather than through their employer — from their taxable income. For those who still cannot afford coverage, he would encourage states to redirect money now used for charity care to help low-income people buy private health insurance. There would be no new federal money for this purpose. His advisers estimate the proposals would cost a modest $10 billion a year in reduced revenues to the United States Treasury.

The problem of relying on tax deductions to increase insurance coverage is that they mostly favor the better off. The problem with relying on the states to enact the needed reforms is that the plight of the uninsured would be left to the whims of geography. Few states have the financial resources that allowed Massachusetts to move to universal coverage, and many states lack the expertise to mount a sophisticated program.

The Democratic Candidates

Although Republicans routinely lambaste the Democrats for supporting socialized medicine or government programs in which bureaucrats would dictate your health coverage, the plans put forth by the three leading Democratic candidates — Hillary Clinton, Barack Obama and John Edwards — are all very careful to build on the existing system of employer-based coverage supplemented by government programs like Medicare, Medicaid and the State Children’s Health Insurance Program.

None of them is proposing a “single payer” system run by the government. And all bend over backward to reassure people that they can maintain their current coverage if they like it. Their political goal is to head off opposition from those who fear that their own coverage might suffer in the course of covering some 47 million uninsured people.

The Democratic plans have far more similarities than differences. All three would move toward universal coverage and would rely heavily on mandates to do so. Mrs. Clinton and Mr. Edwards would require everyone to take out health insurance. That would bring young and healthy people into the system to help subsidize coverage for the more sickly, and would eliminate the problem of “free riders,” who show up uninsured at the emergency room and get very expensive care without paying. Mr. Obama would require parents to get insurance for their children but has no mandate for adults.

All three would require big employers to provide health insurance or contribute to the cost of covering their employees outside the workplace. But they differ in the treatment of small businesses, whose opposition helped derail the last big reform effort in 1993. Mr. Edwards is the toughest. He would require small businesses to provide insurance coverage or help pay for coverage elsewhere. Mr. Obama would exempt them from any mandate. Mrs. Clinton, in what looks suspiciously like a bribe to buy small business support, promises them a tax credit for providing coverage.

The Clinton plan would cost an estimated $110 billion a year, the Edwards plan $90 billion to $120 billion, the Obama plan $50 billion to $65 billion. All three would finance their programs partly by rolling back Bush-era tax cuts for those making more than $250,000 a year and partly with debatable savings they would get through cost-cutting.

All three would require insurers to accept everyone without regard to pre-existing conditions, would provide tax subsidies to low-income people, and would establish purchasing pools to help individuals get low group rates.

There would be a menu of options for people dissatisfied with their current policies because of high costs or limited benefits, including both private health plans and a public program that would compete alongside them. That would provide an interesting test of whether government or private plans are more effective and popular, a matchup that critics of “government-run” programs seem determined to avoid.

The Clinton plan has an innovative proposal to limit the premiums that families have to pay to a certain percentage of their income, as yet undefined. That is a welcome protection for consumers but could cause problems if medical costs continue to rise far faster than wages.

WHAT’S MISSING

All of the plans, both Republican and Democratic, fail to provide a plausible solution to the problem that has driven health care reform to the fore as a political issue: the inexorably rising costs that drive up insurance rates and force employers to cut back on coverage or charge higher premiums. All of the plans acknowledge the need to restrain costs, but most of the remedies they offer are not likely to do much.

Electronic medical records to eliminate errors and increase efficiency, more preventive care to head off serious diseases, and better coordination of patients suffering multiple, chronic illnesses are all worthy proposals, but there is scant evidence they will reduce costs. Proposals to import drugs from abroad, allow Medicare to negotiate drug prices, restrain malpractice expenses, increase competition among health plans, and empower consumers to shop more wisely for medical care might help a bit. But many experts doubt that any of this will truly put the brakes on escalating health care costs.

No top candidate in either party has broached more drastic remedies, like limiting the use of expensive new technologies, cutting reimbursements to doctors and hospitals, or forcing people to use health maintenance organizations. And no one has suggested imposing higher taxes on everyone, not just the wealthy, to finance universal coverage. These solutions are not even discussed on the campaign trail lest they alienate voters and interest groups.

At this stage, the various plans should be considered as broad outlines of where the candidates want to go, with details to be worked out later. Voters who put a high priority on covering all or most of the uninsured will prefer the Democrats’ approach, as we do. The chief danger is that the Democrats have a tendency to imply that everyone can be covered with good benefit packages without inconveniencing anyone but the wealthy. Their cost and savings assumptions will need thorough analysis when more detailed plans emerge.

Voters who put a higher priority on reshaping the health care system along free-market lines than on achieving universal coverage will prefer the Republican plans. Those plans’ likely impact on costs will also need to be analyzed when more details emerge. The “magic of the market” may be less than magical.

Given the wide split between Republican and Democratic approaches, the polarized politics in Washington, and the overriding need to find a way out of the morass in Iraq, it will be an uphill battle to achieve consensus on health care any time soon. But at least voters will have a clear choice of which way the candidates are headed.

Single-Payer, or Medicare for All, Only Way To Go

by Alison Landes
Palm Beach Post
Sep 23, 2007

Excerpt

Dr. Richard Rodman’s Aug. 26 commentary, “Universal coverage, but rationed care,” misses the pivotal distinction between universal and single-payer health care. Universal care, the catch-all reference touted in political debates, glosses over the major element that sets the two apart.

Single-payer, detailed in HR 676, The United States National Health Insurance Act pending in Congress, highlights the difference. Single-payer, based on expanded and improved Medicare for All (not socialized medicine) eliminates for-profit health insurance companies. Universal care retains them through convoluted means, including subsidizing to reduce costs and premiums and providing incentives to employers to lower costs. But it all boils down to this: Keeping insurance companies in the equation means more profits for the companies, bigger campaign contributions for politicians and less care for patients.

U.S. health care is already rationed; note the exclusion of 45 million to 75 million uninsured and 50 million underinsured for myriad reasons: inability to pay as costs rise, loss of job, preexisting conditions, chronic diseases and employers hiring part-timers, circumventing benefits entirely. HR 676 ensures that all Americans and all residents living in the U.S. territories are covered.

Coauthored and introduced by Reps. John Conyers, D-Mich., and Dennis Kucinich, D-Ohio, HR 676 is cosponsored by 78 representatives and endorsed by Physicians for a National Health Program, the California Nurses Association, the National Nurses Organizing Committee, the Alliance for Retired Americans and hundreds of labor unions nationwide.

Under HR 676, all medically necessary services are covered – primary care, inpatient care, outpatient care, emergency care, prescription drugs, durable medical equipment, long-term care, mental-health services, dentistry, eye care, chiropractic and substance-abuse treatment. Patients get to choose their physicians, providers, hospitals, clinics and practices with no co-pays or deductibles, and private health insurers are prohibited from selling coverage duplicating these benefits.

Transition to not-for-profit health care would take place over a 15-year period through the sale of U.S. Treasury bonds. The hallmark is fairness for the greatest number of people. Displaced employees are the first hired and retrained for employment, reimbursement rates are set annually for physicians, and pharmaceutical companies, no longer given free rein, will negotiate prescription-drug prices….

Proposed financing includes a modest payroll tax on employers and employees of 3.3 percent each, added to the 1.45”percent payroll tax each pays now, totaling 4.75 percent each. There is a 5 percent health tax on the top 5 percent of income earners; 10 percent tax on the richest 1 percent and a small tax on stock and bond transactions amounting to one-third of 1 percent. Closing corporate tax loopholes and repealing the Bush tax cut for the highest income-earners add up to an estimated savings of $56 billion.

For-profit health insurance and pharmaceutical companies’ prosperity is enhanced by each dollar saved in treating or in denying treatment. Medicare’s 3 percent administrative costs are far less than the for-profits’ 20 percent to 30 percent. And, not surprising is opposition to HR 676 from the 20 largest HMOs ($10.8 billion in profits in 2005) or the 12 top HMO executives (combined $222.6 million in compensation).

The top seven insurers together earned $10 billion in 2006. In 2004, top executives of the 11 largest health insurers made $85 million in combined income; the world’s 13 largest drug companies had $62 billion in profits; and the top 12 drug companies’ executives collected $192.7 million. At the close of 2005, Dr. William McGuire, United Healthcare’s former CEO, had an $8 million salary and $1.6 billion in stock options. What’s wrong with this picture when one person’s salary could cover health-care costs for 34,000 people?

Health care is or should be a basic human right. It is incumbent upon the government to ensure accessibility to all Americans and that it is not rationed according to ability to pay.

The press needs to tell us more about Canada's single-payer health-care system

By Morton Mintz
mintzm@earthlink.net

Nieman Watchdog
COMMENTARY | September 21, 2007
http://www.niemanwatchdog.org/index.cfm?s=0440erl1clzons1f

Substantial mainstream reporting on single-payer health insurance should have been triggered–or so one might think–by a succession of studies over the years that establish that Canada’s health-care system saves or improves large numbers of lives while not wasting money on administrative expenses and fat executive-pay packages. Almost without fail, Canada gets higher ratings than the U.S.

In 2000, for example, the World Health Organization examined and rated the health systems of 191 nations. The United States ranked 37th. Canada scored significantly better although it was not outstanding–it placed 30th. But this study was only one of many that had Canada topping the U.S. (Click here and go to pages 152 to 155 in a PDF file for the rankings of all 191 countries.)

Between November 2002 and March 2003, the official statistics agencies of the United States and Canada did their first-ever joint survey of the health status, rates of illness, behavioral risk factors, use of health care, and access to health care. The survey included 3,505 Canadians and 5,183 U.S. residents. The results were analyzed by two associate professors of medicine at Harvard Medical School.

“A single-payer national health insurance system would avoid thousands of needless deaths and hundreds of thousands of medical bankruptcies each year,” Drs. Steffie Woolhandler and David Himmelstein concluded in the July 2006 issue of the American Journal of Public Health. In addition, U.S. residents turned out to be less healthy than Canadians, with higher rates of nearly every serious chronic disease examined in the survey, including diabetes, arthritis, and chronic lung disease. And more than seven times as many U.S. residents as Canadians reported that cost kept them from getting needed care.

Some other examples:

* In April 2007, the Canadian online medical journal Open Medicine examined the results of 38 major studies that compared health outcomes of patients in Canada and the United States with “diverse problems…including cancer, coronary artery disease, chronic medical illnesses and surgical procedures.” The key finding: “Available studies suggest that health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent.” Yet Canada spends only about 10 percent of its gross domestic product on health care while the U.S. spends approximately 15 percent of its GDP, or 50 percent more, the journal noted. And in 2003 Canadians were spending only 53 percent as much per capita for health care as were Americans: US$3,003 per Canadian v. US$5,635 per American.

* In May, the Commonwealth Fund compared the quality of care, access to it, and other key issues in six countries: the U.S, Australia, Canada, Germany, New Zealand and the United Kingdom on such key issues. The U.S. ranked last.

* In July, New York Times columnist Paul Krugman pointed out that the U.S. health care system does worse than others that cost far less, including Britain’s, “which spends only about 40 percent as much per person as we do.”

And in August, Associated Press Writer Stephen Ohlemacher wrote:

Americans are living longer than ever, but not as long as people in 41 other countries.

For decades, the United States has been slipping in international rankings of life expectancy, as other countries improve health care, nutrition and lifestyles. Countries that surpass the U.S. include Japan and most of Europe, as well as Jordan, Guam and the Cayman Islands.

“Something’s wrong here when one of the richest countries in the world, the one that spends the most on health care, is not able to keep up with other countries,” said Dr. Christopher Murray, head of the Institute for Health Metrics and Evaluation at the University of Washington.

“A baby born in the United States in 2004 will live an average of 77.9 years. That life expectancy ranks 42nd, down from 11th two decades earlier, according to international numbers provided by the Census Bureau and domestic numbers from the National Center for Health Statistics.”

Also in August, a thoroughly researched lead editorial in the Times called it a “delusion that we have ‘the best health care system in the world,’ as President Bush sees it, or provide the ‘best medical care in the world,’ as Rudolph Giuliani declared.”

Single-payer is government-financed, not government-run, and it is therefore not “socialized,” as are some other universal-care systems. Private physicians, private hospitals, and other private caregivers are paid by the government of Canada, just as their U.S. counterparts are paid under Medicare.

These are simple, instantly-available facts. Yet Americans are deluged by uninformed and false and misleading commentary, ideologically-driven denunciations of “socialized medicine,” and bad-mouthing of Michael Moore and “Sicko.” Here are some examples from a compilation by Caroline Kao in the August “Extra! Update”:

Single-payer healthcare…is frequently described as ‘government-run’ or ‘socialized’ health care or medicine (e.g., US Today, 6/13/07; CNN, 6/25/07; O’Reilly Factor, 6/27/07…

On CNBC (Kudlow & Co., 6/20/07), right-wing filmmaker Stuart Browning mourned the loss of personal choice, saying Moore and HR 676 (a U.S. single-payer bill] supporters “advocate systems in which we would not be able to spend our own money on our own bodies.”

Fox’s Morton Kondracke (Beltway Boys, 6/24/07) warned of a slippery slope from single-payer care to a socialist dictatorship, saying that “Moore basically wants socialized everything…”

The same network’s Sean Hannity called Michael Moore “‘a pathetic propagandist'” who is “‘not even any good at it’ (Hannity and Colmes, 6-19/07).

On Sept. 14, during an hour-long report on “America’s health-care system,” ABC’s 20/20 co-host John Stossel, MediaMatters reported, “interviewed five advocates of free-market approaches to health care but only one advocate of increased government-mandated health coverage. The five free-market advocates were interviewed on air for a total of 6 minutes, 24 seconds, while the lone advocate of a public health system, filmmaker Michael Moore, was interviewed on air for a total of 1:40.”

A few days earlier, New York Times op-ed columnist David Brooks wrote three sentences indicating that he shares the dedication of President Bush to the preservation of private insurers no matter what.The first sentence: “Some liberals, believing that government should step in as employers withdraw, support a European-style, single-payer health care system.”

Europe has several different systems of universal health care; Canada has long had single-payer in its purest form. Yet Brooks somehow found it necessary to cross the Atlantic, in a manner of speaking. Of course, associating single-payer with Europe, not to mention liberals, is much more likely to turn off readers on it than would be associating it with our next-door neighbor.

Brooks’s second sentence: “That would be fine if we were Europeans.” Leading readers to imagine themselves as Europeans is confusing and vague (who are these Europeans? Belgians? Dutch? French? Germans? Italians?) and consequently also a more likely turn-off than would be leading readers to imagine themselves as our familiar northern neighbors.

And the third sentence: “But Americans, who are more individualistic and pluralistic, will not likely embrace a system that forces them to defer to the central government when it comes to making fundamental health care choices.”

Really? Since 1965, Medicare has been, as Brooks would have it, forcing all elderly Americans “to defer to the central government.” In the ensuing 42 years, has anyone noticed signs of a rebellion among the “more individualistic and pluralistic” Americans who happen to be Golden-Oldies?

Most importantly: Single-payer is, at bottom, Medicare for all. What evidence would Brooks offer that Medicare for all would not be embraced by, say, the 47 million Americans who have no health insurance? Or by the 40 of 100 Americans found in a Consumer Reports survey to be inadequately insured? Or by the 44 out of 100 Americans, who, in a Wall Street Journal/NBC News poll, identified “health care costs” as their top economic worry?

The lack of mainstream in-depth coverage of universal health-care systems–established long ago by every industrialized nation except our own–has given a pass to sloppy, biased reporting and deceptive, misleading punditry. The impoverishment of our politics and governance–and health-care and pocketbooks–were natural consequences.

Morton Mintz (Nieman ’64) is a senior adviser to the Nieman Watchdog project.

State health reform a charade

BY ROSE ANN DEMORO
LA Daily News
09/22/2007

ANYONE wondering why so many voters distrust politicians might want to take a look at the charade on health care reform being performed in Sacramento.

Under the whip of California Assembly Speaker Fabian NuƱez and Senate President Don Perata, with the active prodding of some labor and interest groups desperate to settle for any health care legislation no matter how bad it is, the California Legislature last week passed a fundamentally flawed bill that just might set back real reform for years.

To make matters worse, they passed a bill they know will be vetoed by Gov. Arnold Schwarzenegger as a starting point for negotiations to pass an even worse bill in a special legislative session now under way.

Ironically, the Democratic leadership passed the weak bill, AB 8, after refusing to unite behind a single-payer, Medicare-for-all approach, SB 840, as they did last year, because they said SB 840 would be vetoed.

For careful observers of the California political scene, this united front might have a familiar ring. The same consensus produced the hurried passage a decade ago of energy deregulation. That was followed by blackouts, skyrocketing energy costs for consumers, and open thievery by Enron and other energy corporations.

Second was the demolition of workers’ compensation in California by the same coalition. That call to slash business costs – backed by the same folks now touting AB 8 – led to a rushed “reform” that, according to a employer/worker state commission, ended up cutting average benefits by 50 percent for workers on permanent disability due to work-related job injuries.

Following that history of failure, we now have the framework for the latest debacle. The bill passed by the legislature has:

No controls on runaway costs of premiums, deductibles, co-pays, co-insurance, drug prices, or annual fees imposed by doctors.

No minimum standard of health benefits for middle-income employees who don’t qualify for state subsidies. The likely result is those people would end up with junk insurance – high-deductible plans with low standards of covered benefits, and costs that will continually rise.

New taxes on employers who don’t provide health coverage for workers that is substantially less than what the average California business offering health plans now pay. That’s a huge incentive for employers to reduce health coverage, shifting more of the financial burden to California families, or drop benefits entirely and just pay the tax.

A false promise of requiring insurance companies to cover everyone. In fact, the bill has a huge loophole that will allow insurance companies to dump people with “serious medical conditions” into a public pool that will probably be bankrupted by having to pay for the sickest patients – while the insurance companies make hundreds of millions more in profits by only covering the healthiest people.

The final package is also expected to include a tax on hospitals that could further jeopardize the survival of public hospitals. The formula, which includes a match of federal funds for the poor, is written in a way that it would return $1.7 billion to private hospital corporations, while California counties would lose about $600 million statewide.

Big California hospitals agreed to the tax as a little-noticed separate bill was being passed by the Legislature that delays until 2020 the requirement that unsafe hospital buildings meet seismic safety guidelines. So you’ll have to pay more for health care coverage, and if you can afford to get into a hospital, it just might fall down on you in an earthquake.

Perhaps most importantly, AB 8, and the final weaker version that will come from the special session, reinforces the existing dysfunctional system, throwing millions of more people into the insurance-industry meat grinder, while giving the newly “insured” policies they may find will cover immunizations but not cancer.

This is not reform, it’s an insurance-industry heist. Rather than completing this fiasco in the special session, it would be better to call it off and start over.

Rose Ann DeMoro is executive director of the California Nurses Association/National Nurses Organizing Committee.

The press needs to tell us more about Canada’s single-payer health-care system

By Morton Mintz
mintzm@earthlink.net

Nieman Watchdog
COMMENTARY | September 21, 2007
http://www.niemanwatchdog.org/index.cfm?s=0440erl1clzons1f

Substantial mainstream reporting on single-payer health insurance should have been triggered–or so one might think–by a succession of studies over the years that establish that Canada’s health-care system saves or improves large numbers of lives while not wasting money on administrative expenses and fat executive-pay packages. Almost without fail, Canada gets higher ratings than the U.S.

In 2000, for example, the World Health Organization examined and rated the health systems of 191 nations. The United States ranked 37th. Canada scored significantly better although it was not outstanding–it placed 30th. But this study was only one of many that had Canada topping the U.S. (Click here and go to pages 152 to 155 in a PDF file for the rankings of all 191 countries.)

Between November 2002 and March 2003, the official statistics agencies of the United States and Canada did their first-ever joint survey of the health status, rates of illness, behavioral risk factors, use of health care, and access to health care. The survey included 3,505 Canadians and 5,183 U.S. residents. The results were analyzed by two associate professors of medicine at Harvard Medical School.

“A single-payer national health insurance system would avoid thousands of needless deaths and hundreds of thousands of medical bankruptcies each year,” Drs. Steffie Woolhandler and David Himmelstein concluded in the July 2006 issue of the American Journal of Public Health. In addition, U.S. residents turned out to be less healthy than Canadians, with higher rates of nearly every serious chronic disease examined in the survey, including diabetes, arthritis, and chronic lung disease. And more than seven times as many U.S. residents as Canadians reported that cost kept them from getting needed care.

Some other examples:

* In April 2007, the Canadian online medical journal Open Medicine examined the results of 38 major studies that compared health outcomes of patients in Canada and the United States with “diverse problems…including cancer, coronary artery disease, chronic medical illnesses and surgical procedures.” The key finding: “Available studies suggest that health outcomes may be superior in patients cared for in Canada versus the United States, but differences are not consistent.” Yet Canada spends only about 10 percent of its gross domestic product on health care while the U.S. spends approximately 15 percent of its GDP, or 50 percent more, the journal noted. And in 2003 Canadians were spending only 53 percent as much per capita for health care as were Americans: US$3,003 per Canadian v. US$5,635 per American.

* In May, the Commonwealth Fund compared the quality of care, access to it, and other key issues in six countries: the U.S, Australia, Canada, Germany, New Zealand and the United Kingdom on such key issues. The U.S. ranked last.

* In July, New York Times columnist Paul Krugman pointed out that the U.S. health care system does worse than others that cost far less, including Britain’s, “which spends only about 40 percent as much per person as we do.”

And in August, Associated Press Writer Stephen Ohlemacher wrote:

Americans are living longer than ever, but not as long as people in 41 other countries.

For decades, the United States has been slipping in international rankings of life expectancy, as other countries improve health care, nutrition and lifestyles. Countries that surpass the U.S. include Japan and most of Europe, as well as Jordan, Guam and the Cayman Islands.

“Something’s wrong here when one of the richest countries in the world, the one that spends the most on health care, is not able to keep up with other countries,” said Dr. Christopher Murray, head of the Institute for Health Metrics and Evaluation at the University of Washington.

“A baby born in the United States in 2004 will live an average of 77.9 years. That life expectancy ranks 42nd, down from 11th two decades earlier, according to international numbers provided by the Census Bureau and domestic numbers from the National Center for Health Statistics.”

Also in August, a thoroughly researched lead editorial in the Times called it a “delusion that we have ‘the best health care system in the world,’ as President Bush sees it, or provide the ‘best medical care in the world,’ as Rudolph Giuliani declared.”

Single-payer is government-financed, not government-run, and it is therefore not “socialized,” as are some other universal-care systems. Private physicians, private hospitals, and other private caregivers are paid by the government of Canada, just as their U.S. counterparts are paid under Medicare.

These are simple, instantly-available facts. Yet Americans are deluged by uninformed and false and misleading commentary, ideologically-driven denunciations of “socialized medicine,” and bad-mouthing of Michael Moore and “Sicko.” Here are some examples from a compilation by Caroline Kao in the August “Extra! Update”:

Single-payer healthcare…is frequently described as ‘government-run’ or ‘socialized’ health care or medicine (e.g., US Today, 6/13/07; CNN, 6/25/07; O’Reilly Factor, 6/27/07…

On CNBC (Kudlow & Co., 6/20/07), right-wing filmmaker Stuart Browning mourned the loss of personal choice, saying Moore and HR 676 (a U.S. single-payer bill] supporters “advocate systems in which we would not be able to spend our own money on our own bodies.”

Fox’s Morton Kondracke (Beltway Boys, 6/24/07) warned of a slippery slope from single-payer care to a socialist dictatorship, saying that “Moore basically wants socialized everything…”

The same network’s Sean Hannity called Michael Moore “‘a pathetic propagandist'” who is “‘not even any good at it’ (Hannity and Colmes, 6-19/07).

On Sept. 14, during an hour-long report on “America’s health-care system,” ABC’s 20/20 co-host John Stossel, MediaMatters reported, “interviewed five advocates of free-market approaches to health care but only one advocate of increased government-mandated health coverage. The five free-market advocates were interviewed on air for a total of 6 minutes, 24 seconds, while the lone advocate of a public health system, filmmaker Michael Moore, was interviewed on air for a total of 1:40.”

A few days earlier, New York Times op-ed columnist David Brooks wrote three sentences indicating that he shares the dedication of President Bush to the preservation of private insurers no matter what.The first sentence: “Some liberals, believing that government should step in as employers withdraw, support a European-style, single-payer health care system.”

Europe has several different systems of universal health care; Canada has long had single-payer in its purest form. Yet Brooks somehow found it necessary to cross the Atlantic, in a manner of speaking. Of course, associating single-payer with Europe, not to mention liberals, is much more likely to turn off readers on it than would be associating it with our next-door neighbor.

Brooks’s second sentence: “That would be fine if we were Europeans.” Leading readers to imagine themselves as Europeans is confusing and vague (who are these Europeans? Belgians? Dutch? French? Germans? Italians?) and consequently also a more likely turn-off than would be leading readers to imagine themselves as our familiar northern neighbors.

And the third sentence: “But Americans, who are more individualistic and pluralistic, will not likely embrace a system that forces them to defer to the central government when it comes to making fundamental health care choices.”

Really? Since 1965, Medicare has been, as Brooks would have it, forcing all elderly Americans “to defer to the central government.” In the ensuing 42 years, has anyone noticed signs of a rebellion among the “more individualistic and pluralistic” Americans who happen to be Golden-Oldies?

Most importantly: Single-payer is, at bottom, Medicare for all. What evidence would Brooks offer that Medicare for all would not be embraced by, say, the 47 million Americans who have no health insurance? Or by the 40 of 100 Americans found in a Consumer Reports survey to be inadequately insured? Or by the 44 out of 100 Americans, who, in a Wall Street Journal/NBC News poll, identified “health care costs” as their top economic worry?

The lack of mainstream in-depth coverage of universal health-care systems–established long ago by every industrialized nation except our own–has given a pass to sloppy, biased reporting and deceptive, misleading punditry. The impoverishment of our politics and governance–and health-care and pocketbooks–were natural consequences.

Morton Mintz (Nieman ’64) is a senior adviser to the Nieman Watchdog project.

We Have Seen the Enemy — And Surrendered

By Barbara Ehrenreich
The Huffington Post
Posted September 20, 2007

Bow your heads and raise the white flags. After facing down the Third Reich, the Japanese Empire, the U.S.S.R., Manuel Noriega and Saddam Hussein, the United States has met an enemy it dares not confront — the American private health insurance industry.

With the courageous exception of Dennis Kucinich, the Democratic candidates have all rolled out health “reform” plans that represent total, Chamberlain-like, appeasement. Edwards and Obama propose universal health insurance plans that would in no way ease the death grip of Aetna, Unicare, MetLife, and the rest of the evil-doers. Clinton — why are we not surprised? — has gone even further, borrowing the Republican idea of actually feeding the private insurers by making it mandatory to buy their product. Will I be arrested if I resist paying $10,000 a year for a private policy laden with killer co-pays and deductibles?

It’s not only the Democratic candidates who are capitulating. The surrender-buzz is everywhere. I heard it from a notable liberal political scientist on a panel in August: We can’t just leap to a single payer system, he said in so many words, because it would be too disruptive, given the size of the private health insurance industry. Then I heard it yesterday from a Chicago woman who leads a nonprofit agency serving the poor: How can we go to a Canadian-style system when the private industry has gotten so “big”?

Yes, it is big. Leighton Ku, at the Center for Budget and Policy Priorities, gave me the figure of $776 billion in expenditures on private health insurance for this year. It’s also a big-time employer, paying what economist Paul Krugman has estimated two to three million people just turn down claims.

This in turn generates ever more employment in doctors’ offices to battle the insurance companies. Dr. Atul Gawande, a practicing physician, wrote in The New Yorker that ”a well-run office can get the insurer’s rejection rate down from 30 percent to, say, 15 percent. That’s how a doctor makes money. It’s a war with insurance, every step of the way.” And that’s another thing your insurance premium has to pay for: the ongoing “war” between doctors and insurers.

Note: The private health insurance industry is not big because it relentlessly seeks out new customers. Unlike any other industry, this one grows by rejecting customers. No matter how shabby you look, Cartier, Lexus, or Nordstrom’s will happily take your money. Not Aetna. If you have a prior conviction — excuse me, a pre-existing condition — it doesn’t want your business. Private health insurance is only for people who aren’t likely to ever get sick. In fact, why call it “insurance,” which normally embodies the notion of risk-sharing? This is extortion.

Think of the damage. An estimated 18,000 Americans die every year because they can’t afford or can’t qualify for health insurance. That’s the 9/11 carnage multiplied by three — every year. Not to mention all the people who are stuck in jobs they hate because they don’t dare lose their current insurance.

Saddam Hussein never killed 18,000 Americans or anything close; nor did the U.S.S.R. Yet we faced down those “enemies” with huge patriotic bluster, vast military expenditures, and, in the case of Saddam, armed intervention. So why does the U.S. soil its pants and cower in fear when confronted with the insurance industry?

Here’s a plan: First, locate the major companies. No major intelligence effort will be required, since Google should suffice. Second, estimate their armed strength. No doubt there are legions of security guards involved in protecting the company headquarters from irate consumers, but these should be manageable with a few brigades. Next, consider an air strike, followed by an infantry assault.

And what about the two to three million insurance industry employees whose sole job it is to turn down claims? Well, I have a plan for them: It’s called unemployment. What country in its right mind would pay millions of people to deny other people health care?

I’m not mean, though. If we had the kind of universal, single-payer, health insurance Kucinich is advocating, private health insurance workers would continue to be covered even after they are laid off. As for the health insurance company executives, there should be an adequate job training program for them — perhaps as home health aides.

Fellow citizens, where is the old macho spirit that has sustained us through countless conflicts against enemies both real and imagined? In the case of health care, we have identified the enemy, and the time has come to crush it.

Major health care proposals ignore the 'Big Leak,' says health insurance expert

Contacts:
Merton Bernstein
Founding Member, National Academy of Social Insurance
Coles Professor of Law Emeritus at Washington University in St. Louis
bernstein@wulaw.wustl.edu
508-896-8383

By Jessica Martin
Washington University in St. Louis News & Information

Sept. 18, 2007 — “Universal health care is getting the attention it deserves, but unfortunately the proposals receiving the most attention ignore the ‘Big Leak,'” which is the enormous non-benefit costs incurred by health care providers who must match their billions of billings with thousands of differing private health care plans,” says Merton C. Bernstein, a founding member of the National Academy of Social Insurance and the Coles Professor of Law Emeritus at Washington University in St. Louis. “Putting everyone under the Medicare umbrella would eliminate that leak,” he says.

“Medicare’s single-payer system would reduce non-benefit spending by doctors, hospitals, clinics, laboratories and health care insurers by about $300 billion a year, providing funds to insure everyone without additional outlays.”

Bernstein is available to discuss current universal health care proposals as well as the Medicare-for-all option. His current comments on health insurance follow:

Health insurance companies, unlike Medicare, deal with vast administrative costs:

“Hundreds of private insurers offer innumerable differing plans,” Bernstein says.

“Those differences usually reflect marketing considerations rather than medical goals. In contrast, Medicare has one set of charges in a region. That helps explain Medicare’s low administrative costs — about 2 percent of benefit outlays. In addition, Medicare does not have the marketing and advertising costs that add significantly to private insurer outlays. In dealing with Medicare, medical care providers need master only one set of rules and schedule of charges — a clear gain in efficiency.”

Giving patients a choice:

“Some contend that their proposals offer patients a choice,” he says. “To start, patients don’t choose their coverage, their employers do. Even when there are several plans on offer, the employer chooses which ones to include. Further, the employer chooses who administers the plans. That’s where much of insurance competition occurs — who can offer the lowest cost to the employer/chooser; that turns on who can produce lowest benefit payout.

“The choice patients cherish most is who will be their doctor and which hospital will provide care. Many private insurance arrangements limit those choices. Under Medicare, the patient chooses.”

Proposed plans rely on tax breaks and other subsidies:

“The major proposals depend upon tax breaks and other subsidies to make coverage appear more affordable,” Bernstein says. “This merely shifts costs to other plan participants or taxpayers. This increase total costs and thereby make the programs themselves less affordable.”

Major health care proposals ignore the ‘Big Leak,’ says health insurance expert

Contacts:
Merton Bernstein
Founding Member, National Academy of Social Insurance
Coles Professor of Law Emeritus at Washington University in St. Louis
bernstein@wulaw.wustl.edu
508-896-8383

By Jessica Martin
Washington University in St. Louis News & Information

Sept. 18, 2007 — “Universal health care is getting the attention it deserves, but unfortunately the proposals receiving the most attention ignore the ‘Big Leak,'” which is the enormous non-benefit costs incurred by health care providers who must match their billions of billings with thousands of differing private health care plans,” says Merton C. Bernstein, a founding member of the National Academy of Social Insurance and the Coles Professor of Law Emeritus at Washington University in St. Louis. “Putting everyone under the Medicare umbrella would eliminate that leak,” he says.

“Medicare’s single-payer system would reduce non-benefit spending by doctors, hospitals, clinics, laboratories and health care insurers by about $300 billion a year, providing funds to insure everyone without additional outlays.”

Bernstein is available to discuss current universal health care proposals as well as the Medicare-for-all option. His current comments on health insurance follow:

Health insurance companies, unlike Medicare, deal with vast administrative costs:

“Hundreds of private insurers offer innumerable differing plans,” Bernstein says.

“Those differences usually reflect marketing considerations rather than medical goals. In contrast, Medicare has one set of charges in a region. That helps explain Medicare’s low administrative costs — about 2 percent of benefit outlays. In addition, Medicare does not have the marketing and advertising costs that add significantly to private insurer outlays. In dealing with Medicare, medical care providers need master only one set of rules and schedule of charges — a clear gain in efficiency.”

Giving patients a choice:

“Some contend that their proposals offer patients a choice,” he says. “To start, patients don’t choose their coverage, their employers do. Even when there are several plans on offer, the employer chooses which ones to include. Further, the employer chooses who administers the plans. That’s where much of insurance competition occurs — who can offer the lowest cost to the employer/chooser; that turns on who can produce lowest benefit payout.

“The choice patients cherish most is who will be their doctor and which hospital will provide care. Many private insurance arrangements limit those choices. Under Medicare, the patient chooses.”

Proposed plans rely on tax breaks and other subsidies:

“The major proposals depend upon tax breaks and other subsidies to make coverage appear more affordable,” Bernstein says. “This merely shifts costs to other plan participants or taxpayers. This increase total costs and thereby make the programs themselves less affordable.”

Our Health-Care System Needs Intensive Care

Wall Street Journal
Letter to the Editor
September 19, 2007; Page A19

In regard to John Stossel’s Sept. 13 editorial-page commentary “Sick Sob Stories:” By focusing on the narrow subject of bone marrow transplantation, Mr. Stossel is missing the big picture of the major problems in health care in the U.S.

He fails to comment on the fact that there are 47 million people in the U.S. who do not have any health care. While promoting health care for profit, he neglects to mention that 31% of health-care costs in this country are for administrative salaries and advertising. Salaries of HMO executives (along with their lawyers and lobbyists) are obscene. The previous CEO of United Health Care made $1.6 billion (including back dated stock options) last year. This is not where health-care dollars should go. The current for-profit health-care system is not working.

The only solution is to eliminate the HMOs and go to a single-payer system that does not have to be administered by the government. The savings would increase reimbursements to health-care providers (and, it is hoped, stem the annual loss of primary care physicians) so that there would be greater access to care for more patients with fewer hassles.

J. David Gaines, M.D., FACP
Associate Clinical Professor of Medicine
Yale University School of Medicine
New Haven, Conn.

PNHP Experts who can speak on individual mandates for health insurance and the Clinton health plan

Physicians for a National Health Program (PNHP) has physicians available for comment on Sen. Hillary Clinton’s and other Democratic presidential candidates’ health care proposals.

The leading Democratic presidential candidates’ (Clinton, Edwards, and Obama) health care proposals would require everyone (or every child, in the case of Obama) to carry health insurance and offer federal subsidies to help reduce the cost of private health insurance. The centerpiece of their plans is an “individual mandate,” requiring everyone to buy health insurance, and an “employer mandate,” mandating that employers help cover workers. The following experts can comment:

DON MCCANNE, M.D., is senior health policy fellow of Physicians for a National Health Program. He said: “The administrative complexities of refundable tax credits and means-tested premium caps would still leave many without coverage. Coverage will never be universal unless it is truly automatic for everyone. If we are going to use the tax system to pay for health care anyway then why should we waste funds on the profoundly inefficient system of segregated private health plans? A universal risk pool that is equitably funded through the tax system is the most efficient and least expensive method of ensuring comprehensive coverage for everyone.”

Dr. McCanne continues: “Neither Clinton’s nor Obama’s plans get us to universal coverage. Clinton claims that her plan is going to get universal coverage because it has an individual mandate, but that’s been tried and failed in several states. … Obama claims his plan gets universal coverage by making coverage affordable for people, but if you look at his proposals, there’s very little substance to it.”

(949) 493-3714, don@mccanne.org, https://pnhp.org

DAVID HIMMELSTEIN, M.D., is associate professor of medicine at Harvard Medical School. He said today: “Hillary Clinton is combining two failed Massachusetts plans: the [former Gov. Michael] Dukakis plan, which fell apart 20 years ago, and the [Gov. Mitt] Romney plan, which is in the process of falling apart. Clinton is advocating the Marie Antoinette approach to health care: ‘Let them buy their own coverage.’ She is attempting to force middle class families to buy coverage without making it affordable. Clinton wants to keep the private insurance industry in the middle of the system.” Himmelstein is co-founder of Physicians for a National Health Program. (617) 665-1032, info@pnhp.org, https://pnhp.org

QUENTIN YOUNG, M.D., is national coordinator of Physicians for a National Health Program. He said: “It’s always ironic to hear Clinton talk about standing up to the insurance companies. She’d tried to work them into her plan [in the mid-’90s], which is a large part of why it failed. The biggest insurance companies actually backed her plan for a time while the smaller ones opposed it.” (312) 782-6006, info@pnhp.org, https://pnhp.org

DONALD FREY, M.D., is Roland L. Kleeberger Chair in the Department of Family Medicine at the Creighton University School of Medicine in Omaha, and is a member of Physicians for a National Health Program. He has written and spoken extensively about wasted overhead in American insurance companies, and says other countries spend less money to get far better, measurable health care outcomes. He said: “Though well intended, the Clinton plan leaves an enormously wasteful private insurance system intact, ensuring that increased coverage will only come at extremely high cost. Federal dollars will be funneled through high-overhead private companies, ensuring that millions of tax dollars that could be going to pay for health care will actually wind up as enhanced corporate bottom lines. In many ways, the plan is far more a corporate welfare program than a social welfare plan.” News Contact: Kathryn Clark, kathrynclark@creighton.edu, (402) 280-2864 (9/19/07, digital50.com)

Full Comment on Sen. Clinton’s Health Care Refrom Proposal By Don McCanne, MD, PNHP Senior Health Policy Fellow

Hillary Clinton’s proposal “preserves existing health insurance,” and includes the responsibility of individuals “to get and keep insurance” through the current private insurance market, or through a “Health Choices Menu” of private FEHBP-type plans, or through a Medicare-type public program.

Thus her proposal is an individual mandate to purchase private insurance that is no longer affordable for average-income individuals, or to purchase a public plan that will be even more expensive because of adverse selection.

To make the plans affordable for individuals, she would use a combination of refundable tax credits and a cap on premiums at a percentage of income. Assuming that the plans would provide adequate benefits and adequate protection against financial hardship, the increased spending through the tax system would be exponentially more than the estimates in her plan. And most of the proposed savings to pay for these increases are largely nebulous, and some of those measures would actually increase costs.

Further, the administrative complexities of refundable tax credits and means-tested premium caps would still leave many without coverage. Coverage will never be universal unless it is truly automatic for everyone.

If we are going to use the tax system to pay for health care anyway then why should we waste funds on the profoundly inefficient system of segregated private health plans? A universal risk pool that is equitably funded through the tax system is the most efficient and least expensive method of ensuring comprehensive coverage for everyone.

Many will try to contrast the differences in the Clinton, Obama and Edwards proposals, but they are all basically the same. In spite of their rhetoric, they have each made the protection and enhancement of the private insurance plans a higher priority than patients.

###

Physicians for a National Health Program is an organization of 15,000 American physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For local or national contacts, call (312) 782-6006.

What's wrong with nationalized health care?

By Annette Fuentes
USA Today
September 19, 2007

When it comes to protecting our children’s health, where does the federal government’s role end and the responsibility of families begin?

Both houses of Congress want to expand health care coverage of low-income children under the State Children’s Health Insurance Program (SCHIP), which expires at the end of this month. Most members of Congress are concerned that more and more low-income children are falling into the growing pool of the USA’s uninsured, most recently estimated to be 47 million.

But President Bush says expanding the program could encourage families whose children are covered by private health insurance to opt for the government-paid program. Bush says he will veto any bill that would increase the number of children eligible because it would be another step toward a nationalized health care system.

But what’s wrong with such a system?

While the president and his supporters try to scare voters away from the idea of a national health care system, calling it “socialized medicine,” why shouldn’t all ideas be on the table for discussion?

The political skirmish over SCHIP is a microcosm of a larger debate this country needs to have over the direction of national health care reform as we head into the 2008 presidential election.

Put aside politics

Any discussion should begin by acknowledging that the USA already has a national health system: Medicare. The program has been an unqualified success as a government-subsidized and -administered health insurance system.

Ida Hellander, executive director of Physicians for a National Health Program, a non-profit that supports a single-payer approach, notes that Germany was the first to have a national health system early in the 20th century. U.S. conservatives in the post-World War I era attacked proposals for a U.S. national plan by linking it to the former enemy. “The way conservatives scared people off was to call national health ‘the Kaiser’s plan,’ ” Hellander says.

But two “allies” with national health care plans are worth noting:

* Great Britain guarantees all its citizens coverage, paid for by taxes and delivered by doctors employed by the health care system. According to the World Health Organization, the United Kingdom spends 6% of its economy on health care and ranks 18th out of 191 countries in health system performance. The United States spends 16% of its economy on ours, but we rank 37th, a step ahead of Cuba.

* Canada has a single-payer system that guarantees every Canadian coverage. It’s paid for by tax dollars. The government pays all claims, so there is no private insurance industry acting as middleman to administer the system. That’s where the big savings come. In Canada, administrative costs are less than 17% of all health spending, compared with 31% in the USA.

Longer waits

But the Canadian system does have one drawback: Its citizens face somewhat longer waits for some care — such as seeing specialists, receiving MRIs and non-emergency surgeries — than Americans.

In recognition of the high priority Americans place on health care reform, the leading U.S. presidential candidates have at least paid lip service to addressing their concerns, with the Democrats articulating more developed ideas.

On the Democratic side, only long-shot Rep. Dennis Kucinich of Ohio supports a single-payer system. Many use the term “universal health care,” which means that everyone would be covered in some fashion, including through public programs such as Medicare and SCHIP or private insurance plans. John Edwards would require employers to provide coverage or financial assistance, and he would expand public programs such as Medicaid and SCHIP. He also would create regional purchasing pools to make health insurance more affordable. Sen. Barack Obama, D-Ill., calls for a “new national health plan” with guaranteed eligibility and a federal subsidy for those who can’t afford to buy into the new plan. Sen. Hillary Clinton, D-N.Y., proposes a universal health care system that would cover all the uninsured, in part by expanding SCHIP, and that would make health insurance more affordable and protect coverage of those with chronic illness.

Of the Republican candidates, Rudy Giuliani proposes up to $15,000 in tax deductions for families to buy health insurance. Sen. John McCain, R-Ariz., has no plan other than to create “affordable” health insurance without added government spending. And Mitt Romney, who as Massachusetts governor implemented a mandatory universal health insurance plan, now opposes the same approach for the nation. Instead, he supports tax incentives and market reforms to lower costs.

There could be drawbacks to a single-payer system, but there are more good reasons to consider just such a system. We need an open, honest discussion of all possibilities without fearing the bogeyman of nationalized health care. With broad popular support for reform, maybe the debate will yield actual change when a new administration moves into the White House.

Annette Fuentes is an adjunct professor at the Columbia University Graduate School of Journalism and a member of USA TODAY’S board of contributors.