PNHP

Health care system needs doctoring

Health care system needs doctoring

Atlanta Journal Constitution
Editorial
Health care system needs doctoring
Published on: 04/24/04

The American health care system is in some ways like the Titanic. It is big and luxurious and a showplace for the last word in technology. It is committed to its clientele, especially those in the upper decks. Many of the people bidding the ocean liner farewell from the shore wish that they could come aboard, but even though they work hard, sometimes holding down two jobs at a time, they just can’t afford it.

Our titanic medical delivery system is the envy of the world, embraced and patronized by kings and potentates. Surely its future is guaranteed.

Or is it?

Critics of our $1.6 trillion health care industry warn of real trouble ahead. We spend more per capita than any nation in the world, yet the CIA World Fact Book rates us 48th in life expectancy, compared to 11th for neighboring Canada. We annually squander some $135 billion in lost productivity due to illness, much of it preventable, and an estimated 15 percent of our population — some 43.6 million people — lived without health insurance for all of 2002. According to Census Bureau figures, 25.6 million of those without insurance worked either part time or full time.

But the truly big iceberg looming dead ahead is the rising cost of health care, including prescription drugs and hospital care. That is driving some employers to drop job-related health insurance, and is putting others at a serious disadvantage with foreign competitors that do not have to cover health insurance costs for their employees.

In the fierce, globally competitive auto industry, for instance, accountants estimate that health insurance costs for U.S. manufacturers add $1,300 to the price of each vehicle, even more than the cost of steel. European manufacturers, in contrast, often benefit from government health insurance plans that keep companies off the hook. The lure of avoiding health insurance costs also helps account for the outsourcing of jobs overseas.

Technology also poses a threat to the current U.S. health care system. Genetic research, for example, may soon identify which of us are prone to certain diseases, thereby making preventive care possible. But it will also help insurance companies identify which of us are at higher risk of illnesses that threaten to be chronic and even catastrophic, allowing the companies to deny coverage for those people. After all, as one traditional insurance source put it, “We are not in the habit of insuring burning houses.”

A decade ago, the Clinton administration made a well-intended but poorly handled bid to introduce universal, single-payer coverage, an effort that ended in political disaster for Democrats and took the issue off the national agenda. The passage of time, however, has only confirmed the initial attractions of that approach. In a lengthy piece in the April 18 New York Times Sunday Magazine, former first lady Hillary Clinton, now a U.S. senator from New York, argues for an overall system that pools risk and directs funds to a comprehensive plan that takes care of health needs and focuses on health maintenance.

Such a plan could focus on efficiencies of delivery and mandate research on illnesses that are neglected because the numbers of the sick are small” for instance, serious diseases such as epilepsy and killers such as scleroderma. A managed health care program could also guide and finance research into overarching health problems such as asthma and other pulmonary diseases.

Inevitably, a single-payer system would create challenges of its own, and may not be the ultimate answer. But the business community that bitterly opposed the concept a decade ago is now beginning to see financial merits in the approach. Doctors, hospitals and patients struggling to deal with an ever-more complex private insurance scheme may prove more open to the idea as well. And the inescapable truth is that for all of its technology and know-how, the United States gets less cure for its health care buck than any other highly advanced nation.

Surely that’s sufficient cause to rethink what we’ve been doing.

LIFE EXPECTANCY

The United States ranks 48th out of 225 countries surveyed.

National health care to be discussed

National health care to be discussed
Herald Staff Report
April 21, 2004

A free public teach-in on a single-payer national health-care system will be presented from 6:30 to 9 p.m. Wednesday, May 5, in 130 Noble Hall at Fort Lewis College.

“Recent polls have revealed that most Americans favor a system of national nonprofit insurance to finance care by doctors in private practice for every man, woman and child in the country,” said Ray Parker, a local supporter of a single-payer health system, in a news release.

The teach-in is part of a nationwide observance of “Cover the Uninsured Week, May 10-16, designed to draw attention to the nearly 44 million Americans who have no health insurance. Former presidents Jimmy Carter and Gerald Ford are honorary co-chairmen.

Dr. Donald Bader, head of Mercy Medical Center’s emergency staff, will be the featured speaker. He will present a slide show explaining how the system would work and why it has been adopted in various forms by other industrialized nations.

A panel of experts will then join Bader onstage with volunteer moderator Marsha Porter-Norton. Audience members will be invited to ask questions and offer comments.

The experts from various health organizations include:

• Betty Lyerle, professor emeritus of sociology and human services at Fort Lewis College.

• Lynn Westberg, director of San Juan Basin Health.

• Jim Tatten, director of state advocacy for Catholic Health Initiatives, which operates 17 hospitals nationwide, including Mercy.

• Bern Heath, president/chief executive officer of Southwest Colorado Mental Health Center, which serves Archuleta, Dolores, La Plata, Montezuma and San Juan counties.

The teach-in will be co-sponsored by the local Citizens for Single Payer Health Care and the League of Women Voters of La Plata County.

Click here to read the article at DurangoHerald.com.

EEOC approves age discrimination in health care

U.S. Equal Employment Opportunity Commission
April 22, 2004
EEOC Approves Proposal to Exempt Retiree Health Plans from Age Discrimination in Employment Act

During a public meeting today, the U.S. Equal Employment Opportunity Commission (EEOC) voted to approve a proposed final rule that would permit employers, under the Age Discrimination in Employment Act (ADEA), to lawfully coordinate retiree health benefit plans with eligibility for Medicare or a comparable state-sponsored health benefit. This common and long-standing employer practice was called into question in 2000, when the U.S. Court of Appeals for the Third Circuit (Erie County Retirees Association v. County of Erie) held that the federal statute requires employers to assure that pre- and post- Medicare eligible retirees receive health benefits of equal type and value.

http://www.eeoc.gov/press/4-22-04a.html

The New York Times
April 23, 2004
Commission to Allow Insurance Cuts for Retired Employees
By Robert Pear

The Equal Employment Opportunity Commission voted Thursday to allow employers to reduce or eliminate health benefits for retirees when they become eligible for Medicare at age 65.

The agency approved a final rule saying that such cuts do not violate the civil rights law banning age discrimination.

“This rule will allow employers to reduce or eliminate retiree health benefits for anyone over the age of 65,” (Michele Pollak, a lawyer at AARP) said. “More than 12 million Medicare beneficiaries currently receive retiree health benefits from employers and could potentially be affected.”

Alfred Campos, a lobbyist for the National Education Association, praised the rule, saying, “It will encourage school districts to continue providing health insurance to retired teachers under 65.”

http://www.nytimes.com/2004/04/23/politics/23RETI.html?hp

Comment: Relaxing the age discrimination rules for retirement health plans threatens programs that expand benefits for retirees on Medicare. On the other hand, relaxation of the rules provides financial relief for employers who provide benefits to retired employees not yet eligible for Medicare, by eliminating the age discrimination rules once they are eligible for Medicare. Are we really reduced to choices in deciding who gets the shaft?

What we do need is better benefits for Medicare beneficiaries, and for everyone else as well. The 15.5% of our GDP that we are spending on health care would fund comprehensive benefits for everyone. Instead of moving backwards by enabling age discrimination in health care, let’s move forward by adopting an equitable, comprehensive program for everyone.

Note: If the above New York Times link does not take you straight to the article, you may view the text under ‘Recent Articles of Interest’.

Commission to Allow Insurance Cuts for Retired Employees

By ROBERT PEAR
Published: April 23, 2004
The New York Times

WASHINGTON, April 22 — The Equal Employment Opportunity Commission voted Thursday to allow employers to reduce or eliminate health benefits for retirees when they become eligible for Medicare at age 65.

The agency approved a final rule saying that such cuts do not violate the civil rights law banning age discrimination. The vote was 3 to 1, with Republicans lining up in favor of the rule and a Democrat opposing it.

Employers and some labor unions supported the change, saying it would help preserve coverage for early retirees. But AARP, which represents millions of Americans age 50 and older, strenuously objected.

The new rule creates a potentially explosive political issue, because it will create anxiety for many of the 12 million Medicare beneficiaries who also receive health benefits from their former employers.

“We are aware of the anxieties and misperceptions that have taken root,” said Cari M. Dominguez, chairwoman of the commission, which was deluged with letters opposing the rule from more than 50,000 AARP members.

Employer-sponsored health plans help retirees pay medical expenses not covered by Medicare. Those expenses could include co-payments and deductibles, the catastrophic costs of severe illness and the cost of preventive care and prescription drugs, beyond what Medicare might pay.

Debate over the rule highlights the tradeoffs employers make as they decide what benefits, if any, to provide workers and retirees at a time when health care is gobbling up a growing share of total compensation.

The rule creates an explicit exemption to the Age Discrimination in Employment Act of 1967. In practice, it allows employers to reduce health benefits for retirees when they become eligible for Medicare at the age of 65.

A federal appeals court ruled in 2000 that such age-based distinctions were unlawful.

No law requires employers to provide health benefits to workers or retirees. Employers can legally provide benefits to active workers and not to retirees. Courts have said that if an employer provides benefits, it cannot discriminate among retirees on the basis of age.

But the commission said that under the age discrimination act it had authority to make “reasonable exemptions” to the law in the public interest. The law does not define “reasonable.”

Leslie E. Silverman, a member of the commission, said the appeals court decision had confronted employers with an all-or-nothing choice: “Give all of your retirees the exact same benefits, which is incredibly difficult, or eliminate your retiree health benefits altogether.”

Several commission members said that employers were more likely to continue providing health benefits to retirees under 65 if they were allowed to reduce or eliminate benefits for those 65 and older.

A preamble to the final rule says it “is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.”

But Michele Pollak, a lawyer at AARP, said that might well occur.

“This rule will allow employers to reduce or eliminate retiree health benefits for anyone over the age of 65,” Ms. Pollak said. “More than 12 million Medicare beneficiaries currently receive retiree health benefits from employers and could potentially be affected.”

Ms. Pollak said the commission did not have authority to create such an exemption. Ms. Dominguez insisted that it did, though she said the power was rarely used.

Paul W. Dennett, vice president of the American Benefits Council, a trade group for large employers, welcomed the rule, saying, “It removes a cloud that has been hanging over retiree health coverage since the court decision in 2000.”

The American Federation of Teachers and the National Education Association also supported the rule. School employees often retire early and rely on employer-provided health benefits until they become eligible for Medicare.

Alfred Campos, a lobbyist for the National Education Association, praised the rule, saying, “It will encourage school districts to continue providing health insurance to retired teachers under 65.”

Stuart J. Ishimaru, who cast the only no vote, said: “I came to the commission as a civil rights lawyer. Before making an exemption to a major civil rights law, you need a compelling reason, which I have not seen.”

The proper role of the commission, Mr. Ishimaru said, is not to make health policy, but to protect people from discrimination.

The rule is subject to comment by other federal agencies, and it will be reviewed by the Office of Management and Budget. But it is within the jurisdiction of the employment commission and is expected to stand.

The rule reverses a position that the commission took in the court case and in a national policy statement issued in October 2000.

Under the rule, employers can coordinate retiree health benefits with Medicare.

“For example,” the commission said, “in order to ensure that all retirees have access to some health care coverage, employers and unions may provide retiree health coverage to only those retirees who are not yet eligible for Medicare. They also may supplement a retiree’s Medicare coverage without having to demonstrate that the coverage is identical to that of non-Medicare eligible retirees.”

Opponents could challenge the rule in court. AARP said it would “explore a range of different steps, including litigation,” to block the rule if it is not changed.

Congress considered the issue in debating Medicare legislation last year. The Senate version of the Medicare bill included a provision similar to the commission’s rule, but it was dropped from the measure ultimately signed by President Bush.

AARP insisted on elimination of that provision before it announced its support for the bill in November. That endorsement played a critical role in passage of the measure.

In recent years, many employers have reduced health benefits for retirees, in part because of soaring health costs.

Employers said that uncertainty caused by the court decision, involving retired government workers in Erie County, Pa., would accelerate the erosion of retiree health benefits if the commission did not take action.

HCA's epiphany?

HCA (Hospital Corporation of America)
Press Release
April 14, 2004
HCA Previews First Quarter Results

Jack O. Bovender, Jr., HCA Chairman and CEO:

“As I have commented on many occasions over the past two years, the most significant challenge the hospital industry faces is the growing numbers of uninsured and under-insured in this country. Hospitals have become the ultimate safety net for health care services for the vast majority of America’s more than 44 million uninsured. Unfortunately, this is a cost the hospital industry is increasingly bearing alone. It is time for all sectors of society, both public and private, health care and non-health care, to participate in solving this societal issue, by providing affordable health insurance for all Americans and more equitably sharing this growing cost to society.”

http://ir.thomsonfn.com/InvestorRelations/PubNewsStory.aspx?partner=8847&storyId=111472

Comment: Some may question the motivation behind this comment by the CEO of the nation’s largest hospital company. Supporting an equitable system of health insurance for all Americans is certainly self-serving for the hospital industry. But wouldn’t it also be self-serving for all of us?

As founders and major shareholders in HCA, hopefully Sen. Frist’s family will listen to their CEO. Enacting a program of health insurance that is universal, equitable, and affordable certainly limits the possibilities for reform. Sen. Frist should discard some of his bad ideas and begin working on reform that benefits us all.

HCA’s epiphany?

HCA (Hospital Corporation of America)
Press Release
April 14, 2004
HCA Previews First Quarter Results

Jack O. Bovender, Jr., HCA Chairman and CEO:

“As I have commented on many occasions over the past two years, the most significant challenge the hospital industry faces is the growing numbers of uninsured and under-insured in this country. Hospitals have become the ultimate safety net for health care services for the vast majority of America’s more than 44 million uninsured. Unfortunately, this is a cost the hospital industry is increasingly bearing alone. It is time for all sectors of society, both public and private, health care and non-health care, to participate in solving this societal issue, by providing affordable health insurance for all Americans and more equitably sharing this growing cost to society.”

http://ir.thomsonfn.com/InvestorRelations/PubNewsStory.aspx?partner=8847&storyId=111472

Comment: Some may question the motivation behind this comment by the CEO of the nation’s largest hospital company. Supporting an equitable system of health insurance for all Americans is certainly self-serving for the hospital industry. But wouldn’t it also be self-serving for all of us?

As founders and major shareholders in HCA, hopefully Sen. Frist’s family will listen to their CEO. Enacting a program of health insurance that is universal, equitable, and affordable certainly limits the possibilities for reform. Sen. Frist should discard some of his bad ideas and begin working on reform that benefits us all.

Government-funded stop-loss?

Southwest Nebraska News
4/14/2004
Nelson Unveils Proposal to Expand Insurance Coverage, Lower Health Care Premiums

With health care costs spiraling and the number of uninsured expanding, Nebraska’s Senator Ben Nelson today unveiled a plan to reduce health care premiums so that more Americans can purchase and retain health insurance.

The Nelson plan would:

Create a federal “backstop” to provide coverage for catastrophic claims, with the insurer paying noncatastrophic claims up to a certain cost. This is known as “stop-loss coverage” and provides a dollar limit to the insurer’s exposure to either an individual claim or aggregate multiple claims.

Require the insurer to reduce premiums if they want to participate in the program.

Create a certification process by which insurance companies could be reimbursed for these catastrophic costs. The proposal allows for flexibility as insurees would continue to work through their insurance companies, but also requires accountability from the insurance companies.

The benefit of only having to pay premiums for noncatastrophic coverage is that it is predictable-the insurer knows in advance what the maximum claim amount per person will be.

http://www.swnebr.net/newspaper/cgi-bin/articles/articlearchiver.pl?155723

John Kerry for President
John Kerry’s Plan to Make Health Care Affordable to Every American

(1) Creating a new approach to control spiraling health care costs – and passing the savings on to workers

John Kerry believes that health care is becoming too expensive. He has a proposal for a new ‘premium rebate’ pool that will make health care more affordable for all employers and employees by helping out with certain high cost health cases. Under this proposal the pool would reimburse employee health plans for 75 percent of the catastrophic costs they incur above $50,000 as long as they guarantee such savings are used to reduce the cost of workers’ premiums. Helping out with catastrophic costs would strengthen the employer-based market by making health care more affordable for purchasers.

http://www.johnkerry.com/pdf/kerry_health_plan.pdf

Comment: There is bipartisan support for providing government subsidies for stop-loss coverage of catastrophic medical events. The intent is to keep health insurance premiums affordable, thereby protecting our current system heavily dependent on private employer-sponsored and individual health insurance plans. Since almost everyone is concerned about affordability of health care, this seems like a very reasonable approach. But there are serious problems with it.

This solution addresses only insurance premium prices. It does absolutely nothing to control the actual health care costs, which would continue to escalate well beyond the rate of inflation. In fact, by turning attention to premium prices, there is significant risk that true cost escalation will continue to be ignored. We’ll all be paying much more, but the catastrophic subsidies will make these increases less visible.

This program also will compound the problems of the administrative waste which currently plagues our system. We would have a new layer of complex accounting which would be required to establish eligibility for the catastrophic funding. Each insurer currently establishes their own reimbursement rules based on provider lists, allowed services, fee schedules, tiering of coverage and other specifications. A national stop-loss program would have a different set of criteria for establishing when the catastrophic deductible kicks in. Obviously this will add further to the costs and wastes of our current administrative nightmare.

And surely the national catastrophic insurance would have its own version of allowed charges. The disallowed charges would not be paid by patients, norby the health plans, but the losses would be absorbed by the health care providers. We do need cost containment in health care, but through sound policies. This guillotine approach could threaten the solvency of the providers.

We also need to ask who this is really protecting. It’s not protecting the patient-consumer because we’ll have to bear the additional costs in the form of higher taxes. The insurance industry has been trying to escape exposureto risk as they sell us more and more administrative services. This proposal dramatically reduces their exposure by essentially eliminating the costs of catastrophic care. Routine costs are much more predictable and easily factored into the premiums. Why should we be supporting policies that protect this industry that has been a source of much of the waste and inefficiency in our current system of funding health care, while allowing them to abandon much of their traditional role of risk pooling? Instead of adopting policies that support this industry, we need policies that eliminate it.

This deceptively attractive proposal will increase administrative waste, fail to control cost escalation, and protect the insurance industry, at a greater financial cost to all of us. Let’s reject this highly flawed concept and, instead, base reform on truly sound health policy.

Cure for health woes: National Insurance

USA Today, April 16, 2004
Letters
Cure for health woes: National insurance

USA TODAY’s article, ‘Hospital bills spin out of control,’ raises the question: What control? America doesn’t have a health care system; it has a non-system with no public accountability (Cover story, News, Tuesday).

The hospital-funding system is a jobs program for an army of paper pushers. Some hospitals report that they employ more administrative staff than caregivers. Most of these bureaucrats chase the money needed to keep hospitals open. This unstable financing system is unfair to the 43 million Americans with no insurance. Health care bills, often disguised as credit card debt, are the top reason for personal bankruptcy, according to a 2000 study. Still, these bills are paid. It’s the main job of the health bureaucracy: shifting costs to those with insurance.

Our nation suffers a higher rate of death, disability and lost productivity because we fail to provide national health insurance. Every other industrial democracy manages to cover all of its citizens at half the cost with comparable or better quality. Each has accountability within the programs, unlike our byzantine mess of private insurers.

Improved Medicare for all Americans, not just those over age 65, could replace our inefficient system of multiple private insurers. The administrative savings and simplicity of a single-payer system would allow comprehensive coverage for all, with no new spending. National health insurance will save lives and money. It is the right thing to do.

Johnathon S. Ross, MD
Past President
Physicians for a National Health Program
Toledo, Ohio

Enhancing economic growth through higher taxes

The New York Times
April 15, 2004
Economic Scene
By Jeff Madrick

In widely reported comments before a Congressional committee in February, Alan Greenspan, the Federal Reserve chairman, suggested that President Bush’s tax cuts should not be even partly rescinded. Rather, Mr. Greenspan said, the nation should cut future domestic spending, including Social Security benefits, to balance the budget. Higher spending or higher taxes would deter economic growth, he warned.

The committee should have asked the statistically oriented chairman for the evidence. A comprehensive analysis by the economic historian Peter H. Lindert, published in a new book, “Growing Public” (Cambridge University Press), contends that there simply is none.

Mr. Lindert is a professor at the University of California, Davis; former president of the Economic History Association; and an associate of the National Bureau of Economic Research. He has examined levels of taxes, public investment in education, transportation and health care, and social transfers like Social Security, and finds a stark contradiction between conventional wisdom and the evidence. “It is well known that higher taxes and transfers reduce productivity,” he writes. “Well known – but unsupported by statistics and history.”

He compares the level of social spending over nine decades up to 2000 in 19 developed nations, including most of Western Europe, Japan, Australia, the United States and Canada. His analysis differs from many studies in part because he focuses on social programs, not overall government spending.

He finds that high spending on such programs creates no statistically measurable deterrent to the growth of productivity or per capita gross domestic product. As many nations in Europe built welfare states after World War II, they continued to grow faster than the United States, a nation with low social spending.

For many people, this defies common sense. Higher taxes to support social programs surely deter investment or the willingness to work to some degree. As Mr. Lindert points out, estimates by some economists, like Martin Feldstein, a Harvard professor and president of the National Bureau of Economic Research, find that extra government spending leads to a large reduction in gross domestic product.

In fact, taken literally, these studies suggest that the gross domestic product of Sweden, to take an example of a nation with heavy social spending, should have been reduced by up to 50 percent. But nothing remotely like that has happened.

The principal problem with such studies, Mr. Lindert writes, is that they are simulations of a highly simplified world. The economists recreate an economy where almost all incentives lead to slower growth, Mr. Lindert said, but that world does not exist.

Why, then, have high levels of social spending proved no deterrent to growth in the real world? Mr. Lindert has several explanations, some of them
surprising.

First, he says, the tax systems of countries with high social spending are less antigrowth than is realized because nations in Scandinavia and Continental Europe typically derive so much tax revenue from regressive consumption taxes. In fact, these nations do not penalize profits and capital investment any more than the United States or Japan does, and possibly even less.

Mr. Lindert cannot be pigeonholed as a conservative or a liberal. He says he believes that less tax on capital will promote growth. But nations with high social spending typically tax alcohol, tobacco and gasoline highly, he notes, which contributes to better health and environmental quality. Healthier workers are more productive, and cleaner air requires fewer expensive environmental regulations.

Second, he finds that social programs in nations with high welfare levels usually include everyone. Because benefits are generally not cut off as incomes grow, the disincentive to get jobs or invest is reduced.

But third, he finds, much of the public spending in these nations is also conducive to economic growth. Among such spending is that for education and health. Mr. Lindert argues firmly that under comprehensive public health programs, people are healthier and live longer, which also makes them more productive. He cites a study by the economist Zeynep Or for the Organization for Economic Cooperation and Development that finds that in nations where a higher proportion of all health outlays are public, life spans are significantly increased.

This summary does not do justice to Mr. Lindert’s book. He also, for example, provides a valuable history of social spending and proposes a theory about why some nations spend more than others that is closely related to how well democracy works. This is a piece of research that is rich in insight and grounded in empirical evidence. There will be challenges. But the upshot is unmistakable. Government spending, if administered wisely, can have great value for everyone, including but not limited to the especially disadvantaged.

http://www.nytimes.com/2004/04/15/business/15scene.html

Comment: One of the arguments made against the adoption of a national health insurance program is that the increase in taxes required would deter economic growth. Implicit in that argument is that fact that our health care system, currently 15.5% of our Gross Domestic Product, somehow is not part of our economy. Tax spending on health care might deter economic growth in the private health insurance industry, but it would stimulate growth in the health care delivery system and in the health technology industries that support it. Also considerable evidence indicates that tax dollars spent on health care provide a significantly greater value in our health care purchases than when those dollars are spent through our current wasteful, fragmented system of funding care.

An equitable tax that funds equitable access to an efficient, comprehensive system of health care is a good tax, and is not a deterrent but is a stimulant to economic growth in the health care service industry. If the private sector sources of those tax revenues cannot survive in the marketplace because of the tax burden (shared by all), then perhaps it is because their product or service is not providing adequate value. Marketplaces have little sympathy for products or services without value.

Tax policies that favor health care over mediocre products and services are tax policies that we should support.

Note: If the above link does not take you straight to the article, you may view the text under “Recent Articles of Interest”.

Medicare for the young?

Workers today face the same problem the elderly did when Medicare was established.

By Register Editorial Board
04/12/2004

If you’re under 65, read this editorial.

Granted, the subject is Medicare, something that might normally make you turn the page. You might not think the program matters to you because it’s the health-care program for those 65 years old and older. Yet Medicare isn’t just about seniors. In fact, this program is really very much about you.

It’s you paying for it.

Already, the bill for Medicare is largely footed by working Americans. Payroll taxes cover Part A of Medicare, the hospital insurance. Today’s seniors’ past contributions only pay about 32 percent of the current cost of their hospital care. Seniors’ monthly premiums cover one-fourth of the cost of Medicare Part B for other health services like office visits. The rest is paid for almost entirely by general revenue dollars – dollars taken from the paychecks of working Americans.

Now the new Medicare law will result in younger Americans paying even more.

That means if you’re working, you’re paying your own health-insurance premium and subsidizing the care of those born before 1939. If you’re making minimum wage, you’re helping to subsidize Warren Buffet’s health care.

That might not seem right, but Medicare was established in 1965 because elderly Americans, who lost their employer-provided insurance on retirement, were struggling to pay for increasingly expensive health care. The only way to cover them was to spread part of the cost to everyone through taxes.

Today, it’s not just the elderly who struggle with rising health-care costs. Some 44 million have no insurance, and workers who are insured face rapidly rising premiums, deductibles and copays.

A lot of those Americans would probably opt for Medicare coverage if it were offered for the current price of about $65 a month. In fact, Medicare is similar to what most industrialized countries offer to their entire population: single-payer, government-run, taxpayer-subsidized health care.

Younger Americans should care about Medicare not just because they’re paying for it, but because it’s a potential model for a system that could benefit them.

Does Big Government Hurt Economic Growth?

By JEFF MADRICK
Published: April 15, 2004

In widely reported comments before a Congressional committee in February, Alan Greenspan, the Federal Reserve chairman, suggested that President Bush’s tax cuts should not be even partly rescinded. Rather, Mr. Greenspan said, the nation should cut future domestic spending, including Social Security benefits, to balance the budget. Higher spending or higher taxes would deter economic growth, he warned.

The committee should have asked the statistically oriented chairman for the evidence. A comprehensive analysis by the economic historian Peter H. Lindert, published in a new book, “Growing Public” (Cambridge University Press), contends that there simply is none. His analysis is partly a broad extension of other studies by economists like Joel B. Slemrod of the University of Michigan, but he adds considerably to the argument.

Mr. Lindert is a professor at the University of California, Davis; former president of the Economic History Association; and an associate of the National Bureau of Economic Research. He has examined levels of taxes, public investment in education, transportation and health care, and social transfers like Social Security, and finds a stark contradiction between conventional wisdom and the evidence. “It is well known that higher taxes and transfers reduce productivity,” he writes. “Well known – but unsupported by statistics and history.”

He compares the level of social spending over nine decades up to 2000 in 19 developed nations, including most of Western Europe, Japan, Australia, the United States and Canada. His analysis differs from many studies in part because he focuses on social programs, not overall government spending.

He finds that high spending on such programs creates no statistically measurable deterrent to the growth of productivity or per capita gross domestic product. As many nations in Europe built welfare states after World War II, they continued to grow faster than the United States, a nation with low social spending.

For many people, this defies common sense. Higher taxes to support social programs surely deter investment or the willingness to work to some degree. As Mr. Lindert points out, estimates by some economists, like Martin Feldstein, a Harvard professor and president of the National Bureau of Economic Research, find that extra government spending leads to a large reduction in gross domestic product.

In fact, taken literally, these studies suggest that the gross domestic product of Sweden, to take an example of a nation with heavy social spending, should have been reduced by up to 50 percent. But nothing remotely like that has happened.

The principal problem with such studies, Mr. Lindert writes, is that they are simulations of a highly simplified world. The economists recreate an economy where almost all incentives lead to slower growth, Mr. Lindert said, but that world does not exist.

Why, then, have high levels of social spending proved no deterrent to growth in the real world? Mr. Lindert has several explanations, some of them surprising.

First, he says, the tax systems of countries with high social spending are less antigrowth than is realized because nations in Scandinavia and Continental Europe typically derive so much tax revenue from regressive consumption taxes. In fact, these nations do not penalize profits and capital investment any more than the United States or Japan does, and possibly even less.

Mr. Lindert cannot be pigeonholed as a conservative or a liberal. He says he believes that less tax on capital will promote growth. But nations with high social spending typically tax alcohol, tobacco and gasoline highly, he notes, which contributes to better health and environmental quality. Healthier workers are more productive, and cleaner air requires fewer expensive environmental regulations.

Second, he finds that social programs in nations with high welfare levels usually include everyone. Because benefits are generally not cut off as incomes grow, the disincentive to get jobs or invest is reduced.

But third, he finds, much of the public spending in these nations is also conducive to economic growth. Among such spending is that for education and health. Mr. Lindert argues firmly that under comprehensive public health programs, people are healthier and live longer, which also makes them more productive. He cites a study by the economist Zeynep Or for the Organization for Economic Cooperation and Development that finds that in nations where a higher proportion of all health outlays are public, life spans are significantly increased.

Mr. Lindert also contends that higher levels of government support for child care and requirements to re-employ women after maternity leave at the same job can enhance economic growth. Business considers such workers long-term employees and is likely to invest more in their training and place them on a faster track. Workers probably expend more time and effort on their long-term careers.

The statistical probability that some women will leave work creates a bias against all women. Ample government support apparently reduces this bias. The difference between pay for men and women is higher in the United States than in most of Europe, and is especially narrow in Sweden, which provides generous child support.

This summary does not do justice to Mr. Lindert’s book. He also, for example, provides a valuable history of social spending and proposes a theory about why some nations spend more than others that is closely related to how well democracy works. This is a piece of research that is rich in insight and grounded in empirical evidence. There will be challenges. But the upshot is unmistakable. Government spending, if administered wisely, can have great value for everyone, including but not limited to the especially disadvantaged.

Jeff Madrick is the editor of Challenge Magazine, and he teaches at Cooper Union and New School University.E-mail: challenge@mesharpe.com.

Uncivilized responses to medical debt

Borneo Bulletin
April 14, 2004
Woman unable to pay medical bill locked up in hospital

NAIROBI (dpa) – A mother of seven has been kept locked up in a Kenyan hospital for a year because she cannot pay her medical bill, local media reported Tuesday.

The woman was admitted to a hospital in the town of Meru last April after adomestic quarrel, and shortly after gave birth to twins. As she was not able to pay the bill of 6,000 Kenyan Shillings (US$77), the hospital kept her locked up, wrote the East African Standard newspaper. A year in hospital confinement has escalated the bill to 103,000 Kenyan Shillings (US$1,300 USD), but the hospital proprietor insists the woman will not be released until the bill is cleared.

It is common in Kenya for hospitals to keep patients because they cannot pay their bills.

The government has promised to introduce a social health insurance system under which the poorest people would get free medical care, but it is unclear how the government plans to finance the scheme.

http://www.brunei-online.com/bb/wed/apr14w39.htm

Comment: Our approach to medical debt is to force many individuals intopersonal bankruptcy. Considering our great national wealth, maybe we should be almost as ashamed as should this hospital proprietor.