By Paul Heise
Lebanon Daily News
The only part of the American health-care system that seems to be working is Medicare and Medicaid. Our employment-based, managed-care system is clearly collapsing from inefficiency, rising costs and loss of the industrial base that paid for it. Now, when we don’t have enough health coverage as it is, President George W. Bush proposes fiddling with the tax code to set up tax incentives for workers to buy less insurance. Not to worry. Bush is simply making political noises. He only means to look responsive to health-care complaints, to make sure he reframes the later debate and, more importantly, to distract us from his Iraq surge. Nothing is going to happen to your health care until after the presidential election of 2008. However, that election could well be decided by the health-care issue.
Until then, everyone will lament the lack of progress; the states will tinker with patchwork solutions; and Bush will muddy the waters with the tax code fiddling we heard about in the State of the Union address.
In the interim, it is important to make sure we properly identify the problem and frame the question so we can address it in a national election.
The health-care crisis is real. As a nation, we spend twice as much as others and get worse outcomes. The U.S. spends $2 trillion per year, or 15 percent of our total output, on health care while other industrialized countries spend only six to 10 percent. Using an outcomes-based test, our infant mortality is higher than even some Latin American countries, our life expectancy is less than other rich countries, 15 percent of our people lack insurance, lawyers are undermining physicians, and medical bills are bankrupting even insured workers.
How bad is it? The U.S. spent $6,102 per person on health care in 2004 while Canada spent $3,165, France $3,159 and Australia $3,120, and 47 million people are not covered at all. We have a broken system.
When we round up the usual suspects, we blame soaring health-care costs on new and expensive technology, an aging population, rising expectations, lawyers and soaring drug costs in an ever-more-drug-focused therapy. The problem, aside from our peculiarly litigious nature, is that the rest of the industrialized world shares these “causes” but does not share anything near America’s cost problems.
To begin an intelligent debate, we have to isolate what is different about the American system that makes it the world’s highest-cost system with some of the world’s worst outcomes.
Two things pop up: the administrative costs of our multi-payer system and the control of prices by our suppliers. According to the New England Journal of Medicine, 30 percent, or $600 billion, of that $2 trillion we spend per year on health care goes for the administration, marketing and profits associated with a multiplicity of insurance collectors and payers. Medicare, a single-payer system, and much of the rest of the world pays as little as two percent in administrative costs.
The provision that forbids Medicare to negotiate prices is probably the most absurd thing in these last six years of this government of the absurd. Maybe even worse, the U.S. government pays for the research then gives the patents to the drug companies and research firms and lets them charge monopoly prices.
Medicare, at least Part AĆ¢ā¬āHospitalization, is the quintessential single-payer system: you choose your own doctor while medical practices, hospitals and pharmaceutical companies remain privately owned and compete. The government acts only as the payer. Part BĆ¢ā¬āMedical, with its confusion of firms and forms, is an unnecessary concession to the insurance companies.
The point of putting health care into the State of the Union message is to reframe the debate away from the real problem, which is affordable health care, and put the focus on affordable insurance. The president has to get hold of this. If the Congress ever started looking at the sources of the increased health-care costs, the dysfunctional insurance industry could lose billions in profit.
The question has to be framed in terms of an affordable health-care system and not availability of insurance. The best way to do that is simply to take the age provisions and Part B firms out of Medicare and apply to all that single-payer system that we know and love.
I’m over 65; it works for me.
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A resident of Mt. Gretna, Heise holds a Ph.D. in economics and is professor emeritus of economics at Lebanon Valley College. His column appears every other Thursday. He maintains a web log at weboped.com, and he can also be reached at:
heise@lvc.edu