Please see this article on the Washington Monthly website.

New England Journal of Medicine Editor Calls for Single Payer

The New England Journal of Medicine
June 1, 2000 — Vol. 342, No. 22
Patients’ Rights Bills and Other Futile Gestures

Health care reform is once more at the top of the political agenda, after some six years of neglect in the wake of the failure of the Clinton plan. During those six years, the issue was generally considered one of the third rails of American politics — not to be touched. What is causing the turnabout? There are three reasons. First, after a period of stagnation during the mid-1990s, inflation in health care costs is again sharply on the increase. Second, the number of Americans without any health care insurance at all, or with inadequate coverage, continues to rise. And third — and most important politically — middle-class voters are getting fed up with the abuses of managed care. They are frustrated by shorter hospital stays, restricted choices of doctors, arbitrary denials of coverage, increasing deductibles and copayments, and all the other methods by which the industry resists actually providing services to sick people.

Since the demise of the Clinton plan in 1994, it has been generally agreed that reform of the health care system cannot be full-scale. Conventional wisdom holds that the Clinton attempt failed in large part because it was too sweeping. According to this view, reform needs to be incremental to succeed. Thus, what few reforms we have seen since 1994 have merely nibbled at the edges of the access problem. For example, the Kennedy-Kassebaum statute, which permits employees who leave their jobs to continue their health insurance (if they can afford to pay for it), and the expansion of insurance coverage for children are quite modest in their scope and effects. Similarly, attempts to deal with the abuses of managed care have been piecemeal — for example, legislation to require 24-hour hospital stays after childbirth.

It is in this spirit that a number of “patients’ rights” bills are being offered, both in the U.S. Congress and in state legislatures. The proposals differ from one another in some respects, most notably in the population to which they would apply and the extent to which patients would be permitted to sue their managed-care companies. However, all have in common efforts to restore to patients and their doctors control over medical decisions — control that has increasingly been assumed by third-party payers and managed-care plans. For example, the bills provide for appeals mechanisms when services are denied, for treatment in hospital emergency departments when patients plausibly believe it is warranted, and for decisions about referrals to be made by doctors and patients, not by health plans and employers.

I very much agree with the aims of patients’ rights bills. But I also believe these bills will not achieve their ends. Rather, I am afraid they will have effects opposite from those intended. Patients’ rights bills will simply swell the ranks of the uninsured. Why such a perverse effect? The reason is that employers are not required by law to offer any health care benefits at all, and they will not do so if they believe the disadvantages to them outweigh the advantages. Patients’ rights bills will tend to tip that balance. Insofar as they have teeth, they will inevitably increase the costs of managed-care companies, which will simply pass their increased costs along to employers. Employers may then decide to drop health care coverage altogether, or to limit it sharply through stratagems such as “defined contributions,” rather than pay the higher premiums for standard benefits. Workers, for their part, may elect not to accept health care insurance, because of the growing direct costs to them. Thus, patients’ rights legislation will very probably increase the number of uninsured and underinsured people. The tougher the regulations, the more likely this outcome. The fundamental problem is that it is impossible to regulate health care in an employment-based system if employers can opt out.

The threat that patients’ rights legislation will increase the number of the uninsured and underinsured may not be fully realized in our present economy, when we have nearly full employment and many employers have a strong incentive to offer good benefits to attract workers. However, we need to remember that even in this booming economy, the ranks of the uninsured and underinsured are steadily increasing. Most of the newcomers to these ranks are employed. With a downturn in the job market, bargaining power would probably begin to shift from employees to employers. In that case, a very large number of employers might be quite willing to drop or reduce health care benefits, especially if premiums were rapidly increasing.

That is exactly what the managed-care industry and many of its allies in Congress argue in opposition to patients’ rights bills. I believe they are correct about the probable effects of such bills on the number of the uninsured and underinsured, but they are wrong in concluding that the present managed-care insurance system is essentially sound. (The only change the industry advocates from time to time is an expansion of coverage by managed care, but with premiums, of course, set by the private market and subsidized by government.) What we should instead conclude is that the private managed-care market has been a miserable failure at delivering health care. It has creamed off ever larger percentages of health care premiums in bloated administrative and marketing costs and profits, it has rewarded health plans that cherry-pick the healthy and avoid the sick, and it has resisted at every turn providing adequate services to those unfortunate enough to need them.

There is no question that patients’ rights — and doctors’ rights — are essential in any decent health care system. But they cannot be legislated in isolation in a system whose every incentive works against these rights and where the provision of health care insurance is purely voluntary. What needs to be changed is the system itself. Contrary to conventional wisdom, incremental changes, such as patients’ rights legislation, will not work. In a competitive private market, they simply provoke reactions that nullify the social objectives of the legislation.

This is not the place to present in detail a plan to overhaul our health care system. But there are three major changes that would address the difficulties in ensuring patients’ rights that I have discussed here.

First, employers should get out of the health care business altogether. There is no reason to believe they are good proxies for their workers when it comes to health care decisions. Indeed, they have a clear conflict of interest, since they have a strong incentive to keep premiums as low as possible.

Second, just as employers are not good proxies for their workers, so investor-owned managed-care companies are not good proxies for doctors. They, too, have a conflict of interest. They have obligations to their investors as well as to their enrollees. That the former often take precedence is evident from all the ways in which the industry limits medical services even while maintaining high profits and executive salaries. In my view, there is no place for these businesses in a good health care system.

Finally, health care insurance should not be optional, as it is in our employment-based system. Just as everyone over the age of 65 is covered by Medicare, so should everyone under that age be covered. In a 1993 editorial in these pages, I called for a universal, single-payer system and suggested that we could attain that goal by extending Medicare to all Americans. The need is even greater now. Those who worry that such a reform would increase taxes should remember that we all pay for health care anyway — through our paychecks, deductibles and copayments, and the prices of goods and services — and that Medicare is far more efficient than the market-based part of our health care system.

Election year 2000 is the time to look again at our health care system in its entirety, not just in bits and pieces. The insurance industry will once again mount a campaign to prevent that from happening. Harry and Louise will be back, perhaps with aliases. But can they convince the American public once again that government is the bogeyman and that the private sector will take care of their health care needs? I doubt it. We’ve had six years of hard experience, and we know better.

Marcia Angell, M.D.

New York City — While immigrants are credited with helping to fuel the nation’s long economic expansion, they aren’t sharing in all the benefits, particularly health benefits.

Among full-time workers who are non-citizens, fully half (51%) lack health insurance, according to a study in today’s American Journal of Public Health. Over 1/3 (34.3%) of the 26.2 million immigrants (citizens and non-citizens) residing in the U.S. are uninsured — 9 million people — including one million children, compared with 14.2% of U.S. born residents who are uninsured.

“The crisis in the U.S. health system — with 44.3 million people uninsured — is affecting everyone. However, that 10% of our population that is foreign-born has been particularly hard hit ” says study co-author Dr. Olveen Carasquillo, an internist at Columbia University.

“Almost half (43%) of all immigrants who are not citizens are uninsured, ” noted Carasquillo. “They are much less likely to receive health benefits at work and are also less likely to receive safety-net government-sponsored insurance programs such as Medicaid and the Children’s Health Insurance Program.”

Major findings of the study include:

* Immigrants have low-rates of employer-sponsored health coverage. Half (51%) of all non-citizen immigrants who work full-time are uninsured – 3.34 million people.

* Immigrants make up a small percentage (less than 5%) of people with government-sponsored health insurance.
43.3% of non-citizen immigrant children are uninsured – one million children. In addition, under current federal laws if these children entered the country after 1996 they are not eligible for Medicaid or the Children’s Health Insurance Program (CHIP).

* Country of origin makes a big difference. Immigrants are more like to be insured if they are from countries like Russia or Cuba (hence eligible for citizenship) or Europe or Canada. Immigrants from Central America, Haiti, Vietnam, and Korea are most likely to lack coverage. In fact, over 50% of all immigrants from Mexico and Central America did not have health insurance.

* Immigrants who are not citizens (62.9% of all immigrants) and their children are more likely to be uninsured. 43.6% of non-citizen immigrants are uninsured, compared with 18.5% of immigrants who have become US citizens. (The study used data from the 1998 Current Population Survey conducted by the Census Bureau. The CPS does not ask respondents if they are legal immigrants).

“The billions of dollars that the federal government is spending to eliminate racial and ethnic disparities in health care will only succeed when every person in this country, including all immigrants, has equal access to our health care system,” said Dr. Elena Rios, President of the National Hispanic Medical Association.

“Expecting people to work productively when they have no access to care for themselves or their children is not just inhumane, it’s bad economics,” said Dr. Quentin Young, National Coordinator of PNHP. “We need a not-for-profit, national health system that covers all residents, regardless of age, immigration status, employment, race, and ethnicity.

Copies of “Health Insurance Coverage of Immigrants Living in the United States: Differences by Citizenship Status and Country of Origin,” O. Carasquillo, A. Carasquillo and Steven Shea, American Journal of Public Health, June, 2000 are available from PNHP at (312) 554-0382.

PHYSICIANS URGE INSURERS TO “KICK THE HABIT”

Despite calls to divest, insurers continue to be major shareholders in tobacco firms. Prudential has actually increased its stock holdings in tobacco nearly 400% — to $892 million — in the last 4 years, according to findings published in today’s Journal of the American Medical Association. “Insurance Firms’ and Mutual Funds’ Tobacco Habit,” by three researchers at Harvard, also finds that the popular mutual fund Fidelity has major stock holdings in tobacco, including over $6.6 billion of Philip Morris stock — 8% of the entire company.

“A health insurer that buys tobacco stocks cares more about profits than the health of its patients,” said lead author Dr. Wesley Boyd. “Teachers, physicians, and those who invest their savings in mutual funds are unwitting accomplices in causing 400,000 tobacco deaths a year.”

Insurers’ tobacco holdings include:

Cigna, the giant HMO firm, owns over $38 million in Philip Morris stocks and $4 million in Loews stocks.

MetLife’s stockholdings total $55 million in Philip Morris and almost $7 million in Loews.

Prudential Insurance owns $435 million of Philip Morris, nearly $320 million of Loews stock, and $137 million of RJ Reynolds.

Mutual funds’ tobacco holdings include:

Fidelity owns $6.6 billion of Philip Morris stock and $23 million of RJ Reynolds.
Vanguard owns stock in all 4 major tobacco companies, including over $1.1 billion in Philip Morris and over $100 million in Loews.

TIAA-CREF also owns stock in all 4 companies, holding $732 million worth of Philip Morris stock and over $37 million worth of Loews stock.

Sanford Bernstein stockholdings amounted to $912 million of Philip Morris and over $137.3 million of RJ Reynolds.
“It’s time to push insurers and mutual funds to kick their deadly habit,” said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. “Stronger physician and public protest and yes, government action against tobacco in the form of higher taxes and bans on marketing and exports, is needed.”