By Don McCanne, M.D., PNHP Senior Health Policy Fellow
Huffington Post
October 10, 2008

John McCain and Barack Obama both recognize that there are serious problems with our health care system, and that the voters want something done about it. They would both use public policies to modify the private health insurance market to accomplish their goals. Although it would seem that their goals are similar, the specifics are quite different because they have started from very dissimilar perceptions of the primary flaws in health care financing.

John McCain believes that employer-sponsored plans and government health programs insulate individuals from the costs of health care, creating an excessive demand for health care. He believes that our financing problems would be solved if we put individuals in charge of purchasing their own health care and health care coverage in a marketplace that controls costs through competition. He does understand that coverage is now too expensive for the majority of us, so he would use government tax credits to help pay for private plans. He would also have the states establish “guarantee access plans” that would insure those who cannot otherwise obtain coverage because of preexisting conditions, though these high-risk pools would be exorbitantly expensive.

Barack Obama believes that the high costs of health care and health care coverage have created a financial burden for individuals and small businesses. He also recognizes that many health plans no longer prevent those with health care needs from facing financial hardship, because of inadequate benefits and excessive cost sharing. He would provide a regulated market of plans of a quality similar to those that federal employees have. Although both Sen. Obama and Sen. McCain recommend systemic reform measures designed to reduce costs, Sen. Obama understands that health plans would still be too expensive, so he would not require everyone to purchase them.

Under Sen. McCain’s proposal, greater numbers would go without insurance simply because health plans would still remain unaffordable even with the tax credits. In a deregulated insurance market, those who obtain coverage and have health care needs would find that affordable plans would no longer provide adequate protection against financial loss. It has been estimated that about 65 million people would be uninsured ten years into his program.

Under Sen. Obama’s proposal, ten years out about 33 million individuals would be without insurance simply because their incomes would be too high to qualify for welfare programs, but too low to be able to pay for private plans.

The problem with both proposals is that they depend on the obsolete model of private health plans. The costs of health care in the United States are much higher than in any other nation. They are so high that the private insurance industry is no longer capable of providing us with insurance products that cover all reasonable essential health care services at a premium that we can afford. Our national health expenditures are now $7900 per person. For a family of four, that’s over $31,000. With a median household income of $50,000, we could never expect to pay the health care tab through private health plans. (An employer-sponsored family plan currently averages $12,600, but we pay much of the difference in direct and indirect taxes for high-cost individuals in Medicare, Medicaid, the VA system, safety-net institutions, and other public programs.)

Our dysfunctional, fragmented system of financing health care through a multitude of private plans and public programs is highly inefficient, inequitable, wasteful, and ineffective in slowing the twin epidemics of uninsurance and underinsurance, while health care costs continue to spiral out of control.

Replacing our current financing system with a single, universal risk pool that is publicly-administered and equitably-funded through public financing would create an administratively-efficient system in which everyone is automatically included, for life.

The $2.4 trillion that we are already spending is more than enough to provide comprehensive services for everyone, providing that we adopt the efficiencies of a single payer system. With our own public, single payer monopsony, we would be able to demand much greater value in our health care purchasing by realigning incentives to improve our primary care infrastructure and to reduce administrative waste and the overuse of non-beneficial high-tech services, leaving more funds for high-tech care that does improve our health outcomes.

Sen. McCain wants each of us to go out and shop for our own health care and health insurance coverage, even if we can’t pay for it. His “you’re on your own” approach rejects the notion of social solidarity, even though all other wealthy nations accept solidarity as a fundamental foundation of a just society.

Sen. Obama has said that if we were starting from scratch, he would recommend adopting a single payer system. He’s right. The current financing system is such a disaster that we really should jettison it and start over with single payer system: a new and improved Medicare that covers every single one of us, at a price that we can afford.

By Jane Bryant Quinn
Newsweek
October 13, 2008

If you think that “The Market” — whatever market — always works for the best, you’ll love John McCain’s version of health insurance reform. It uses the tax code to shove you toward individual policies (more “choice!”) and away from comprehensive, employer supported plans. The nonpartisan Tax Policy Center puts the cost of his proposed subsidies at $1.3 trillion over 10 years.

But a funny thing happens on the way to spending that much money. Almost all of the subsidy goes to people who have health insurance already, says Sherry Glied, a professor of health policy at Columbia University. The Tax Policy Center figures that, after 10 years, the plan cuts the number of uninsured by only 1 million, out of 45.7 million now. Barack Obama’s $1.6 trillion plan would take 34 million off the rolls of the uninsured.

McCain’s idea is pretty simple. Tax the value of employer-paid health insurance as part of your regular income (62 percent of the nonelderly are in these plans). In return, he’d give everyone a refundable tax credit–$2,500 for individuals, $5,000 for family coverage–to offset the cost of any health policy they choose. Here’s how the McCain plan falls out:

* Initially, most of the people in employer plans would get a bonus from the government. Their new tax credit would exceed the amount of extra taxes they owed. For the young and healthy, the bonus could be quite large. Older workers with health problems might get a minimal bonus but still do OK. Over the years, however, the value of the credit would be eroded by health care inflation, and your tax cost would rise.

* If you already buy your own health insurance, the tax credit would chop your premium cost by $2,500 or $5,000. The self-employed lose the deduction they get for health-insurance premiums but would generally still come out ahead (again, until inflation intervened).

* If you’re uninsured, the tax credit helps you purchase coverage. The only hitch–a big one–is that you have to be able to afford the premiums up front. The tax credit comes later. The government will send it to the insurance company, which will apply it to your account.

To see how much the McCain plan helps, I asked Scott Leavitt, president of the National Association of Health Underwriters, to price typical policies for healthy singles, couples and families in the Chicago area. It appears that the credit could pretty much cover the premium in your 20s and 30s, even early 40s, making it a good deal. At 55, however, a couple might pay more than $12,000–difficult for older people with modest incomes.

* The Tax Policy Center estimates that 20 million workers will leave the employer-based system, not always voluntarily. Midsize and smaller companies are likely to drop their plans and tell you to use the credit to buy a policy yourself.

* It’s a shock to move from group plans into the harsh world of individual insurance. You get “choices” (rah, rah). But the policies cost more and cover less than company plans do–especially for women, older people and those whose health is less than perfect.

That is, if you can find coverage at all. In 2006, the Commonwealth Fund studied working-age adults hunting for individual policies. One-fifth were charged more or rejected for health reasons. More than half found it hard or impossible to secure a policy they could afford.

Conservatives love health plans that throw more of the costs on you. When it’s hard to pay the bills, you see the doctor less. Through the “magic of the marketplace,” that’s supposed to slow the rate of increase in medical costs.

Friends, there’s zero evidence that that works. In the long run, tax credits will raise your costs without changing the game. And we still won’t have helped most of the uninsured.

---

With Reporter Associate: Temma Ehrenfeld

URL: http://www.newsweek.com/id/162335

Tax credits would move people out of group plans and into individual policies where the benefits aren’t as good

By Jane Bryant Quinn
Newsweek
October 13, 2008

If you think that “The Market” — whatever market — always works for the best, you’ll love John McCain’s version of health insurance reform. It uses the tax code to shove you toward individual policies (more “choice!”) and away from comprehensive, employer supported plans. The nonpartisan Tax Policy Center puts the cost of his proposed subsidies at $1.3 trillion over 10 years.

But a funny thing happens on the way to spending that much money. Almost all of the subsidy goes to people who have health insurance already, says Sherry Glied, a professor of health policy at Columbia University. The Tax Policy Center figures that, after 10 years, the plan cuts the number of uninsured by only 1 million, out of 45.7 million now. Barack Obama’s $1.6 trillion plan would take 34 million off the rolls of the uninsured.

McCain’s idea is pretty simple. Tax the value of employer-paid health insurance as part of your regular income (62 percent of the nonelderly are in these plans). In return, he’d give everyone a refundable tax credit–$2,500 for individuals, $5,000 for family coverage–to offset the cost of any health policy they choose. Here’s how the McCain plan falls out:

* Initially, most of the people in employer plans would get a bonus from the government. Their new tax credit would exceed the amount of extra taxes they owed. For the young and healthy, the bonus could be quite large. Older workers with health problems might get a minimal bonus but still do OK. Over the years, however, the value of the credit would be eroded by health care inflation, and your tax cost would rise.

* If you already buy your own health insurance, the tax credit would chop your premium cost by $2,500 or $5,000. The self-employed lose the deduction they get for health-insurance premiums but would generally still come out ahead (again, until inflation intervened).

* If you’re uninsured, the tax credit helps you purchase coverage. The only hitch–a big one–is that you have to be able to afford the premiums up front. The tax credit comes later. The government will send it to the insurance company, which will apply it to your account.

To see how much the McCain plan helps, I asked Scott Leavitt, president of the National Association of Health Underwriters, to price typical policies for healthy singles, couples and families in the Chicago area. It appears that the credit could pretty much cover the premium in your 20s and 30s, even early 40s, making it a good deal. At 55, however, a couple might pay more than $12,000–difficult for older people with modest incomes.

* The Tax Policy Center estimates that 20 million workers will leave the employer-based system, not always voluntarily. Midsize and smaller companies are likely to drop their plans and tell you to use the credit to buy a policy yourself.

* It’s a shock to move from group plans into the harsh world of individual insurance. You get “choices” (rah, rah). But the policies cost more and cover less than company plans do–especially for women, older people and those whose health is less than perfect.

That is, if you can find coverage at all. In 2006, the Commonwealth Fund studied working-age adults hunting for individual policies. One-fifth were charged more or rejected for health reasons. More than half found it hard or impossible to secure a policy they could afford.

Conservatives love health plans that throw more of the costs on you. When it’s hard to pay the bills, you see the doctor less. Through the “magic of the marketplace,” that’s supposed to slow the rate of increase in medical costs.

Friends, there’s zero evidence that that works. In the long run, tax credits will raise your costs without changing the game. And we still won’t have helped most of the uninsured.

---

With Reporter Associate: Temma Ehrenfeld

URL: http://www.newsweek.com/id/162335

by Harry S. Jacob, MD
HemOnc Today
Posted October 7, 2008

http://www.hemonctoday.com/article.aspx?rid=31827

Fall 2008

T.R. Reid is a veteran foreign correspondent for The Washington Post, a commentator for National Public Radio and the author of nine books, including three in Japanese. He is currently working on his 10th book, titled “We’re Number 37!,” in which he compares America’s health care system to others around the world. It is scheduled to be published by Penguin Press in early 2009.

How did you choose the five countries featured in this report?

Two of our choices, Britain and Japan, were pretty obvious. I had lived in both countries, I had doctors there and knew the systems. I could speak the language, sort of, in both places.

Beyond that, we were looking for examples of each of the established models of health care systems. The U.K. uses the Beveridge model; Taiwan has chosen the Canadian-style National Health Insurance [NHI] model; Germany, Japan and Switzerland use the Bismarck model. We went to three Bismarck countries on the theory that these private-sector systems are more relevant to America than a British-style National Health Service.

I got interested in Taiwan because Taiwan’s Health Ministry did what our film does; it traveled the world studying health care systems. In the end, Taiwan chose the Canadian model. We went to Switzerland because it is a ferociously free-market economy with politically powerful insurance and drug companies. But still, the Swiss managed to revamp their system, making it cheaper and fairer. We thought that might inspire Americans to believe that change is possible here, too.

You and your family lived in London and Tokyo; what was your experience with the health care systems there?

Our American family used the health care systems in Japan and Britain with considerable satisfaction. Fortunately, we never had a heart attack or cancer, but for the normal family medical problems — flu, measles, broken bones, earache, etc. — we got excellent care, with little or no waiting. During a trip to South Asia, I contracted a mysterious tropical disease that left me sick as a dog. When I got back to London, our family doctor diagnosed the problem precisely and found a fast cure.

In Japan, the prices were low; in Britain, there was no price at all. There was no bill! I loved that part of British health care.

In Japan my local government, Shibuya-ku — it’s a part of Tokyo — sent me a card every year on my birthday, urging me to get a comprehensive physical. I could go to any doctor or hospital in Shibuya, and the whole thing was free. When I did it, they checked everything — and I mean everything — that a man my age might have to worry about. This was a terrific example of preventive medicine.

In your upcoming book about health care you write about the five countries in this FRONTLINE report, as well as a few others. What are some of the good ideas America could learn from other countries?

As we say in the film, the World Health Organization studied every health care system on earth and rated the world’s richest country 37th in terms of quality and fairness. The top ranking in that survey went to France, so I went there to see what they are doing right.

The French private insurance system covers all 61 million residents of France, with excellent health results. There’s no “in-network” or “pre-authorization”; you can pick any doctor or hospital in France, and insurance has to pay the bill. Doctors are required to post their prices on the wall of the waiting room, so the mystery of American-style medical billing is removed.

Everyone in France has a green plastic card, the carte d’assurance maladie. That card has completely replaced paper billing and medical records. The result: administrative costs of 3 percent, compared to 25 percent in the U.S.

While France has achieved 100 percent digital record keeping, the U.S. is years behind on this technology. President Bush has made it a national goal to have 50 percent of American health records in digital form by the year 2014. Who would have thought that France would clean our clock when it comes to high-tech innovation?

The Austrians, who seem to do everything with a clockwork precision, have a precise, modern health care system that is a model of careful organization and cost control. But I think Austria may be too small and not diverse enough to be a model for the U.S.

Canada’s system is also pretty good. It has some notorious problems, including waiting lists, but I was impressed by Canada’s relentlessly egalitarian approach to health care.

Yes, Canada is one country in particular that many Americans think about when they think of health care. Can you talk a bit about their system: how it’s paid for, what works well, what needs fixing, and what we Americans get right and wrong when we talk about it.

Canada uses a National Health Insurance model; that means private providers but public financing. Everybody pays a premium to a single health insurer, run by the government. The Canadians call their system “Medicare,” and in fact our system of Medicare for the elderly is a good example of the Canadian-style National Health Insurance model.

Canada’s system started in a single province, Saskatchewan. The other provinces saw that it was working, and people demanded that it be expanded to the whole country. This suggests that if one American state set up a sort of Medicare-for-all system and it worked, then other states might demand the same kind of plan, and eventually we’d get a national system.

As we said in the film, the Taiwanese hired a professor at Harvard to study health care systems around the world and choose a model for Taiwan. In the end, they picked the Canadian model, on the grounds that it is cheaper and fairer than the for-profit insurance system used in the U.S.

Canada is fairly stingy in paying for health care; it spends about half of what we do, on a per capita basis. This leads to scrimping. That’s why Canadians often have to wait to see a specialist or have elective surgery. Some Canadians respond by crossing the border to buy treatment in the U.S. But most Canadians accept the delays, because they are roughly equal for everybody. A scholar there put it this way: “Canadians don’t mind waiting lines, as long as the rich Canadian and the poor Canadian have to wait about the same amount of time.”

There was another recent documentary about health care around the world: Michael Moore’s Sicko. Did you have that film in mind when you set out to make this report?

I thought Michael Moore did a good job in describing the shortcomings of the U.S. system. He didn’t pay much attention to our strengths: the best medical education in the world, the most innovative research, the best equipped hospitals. He is an advocate and had a point to make.

But Sicko was disappointing when Moore went overseas. He seemed to feel that all foreign health care systems are the same, that they are all “socialized” and that they all work great for low cost. I’d say that’s simplistic and wrong. We set out to take a more careful look at the different models in different countries. We saw their problems as well as their successes.

All five of these countries have achieved universal coverage for their citizens, but all five are grappling with rising costs as well. Is this simply a worldwide problem, or is there a fundamental difference between America’s rising health care costs and those in other countries? Which countries may be better able to keep a lid on them, and why?

Health care costs are rising everywhere, largely because health care is getting better. Doctors routinely save lives now that would have been lost a decade ago. A lot of this is due to new technology, and new technologies cost money. We shouldn’t complain about this. It’s hard to imagine anything more worth our money than good health and longer, happier lives. But this is the reason all the countries we visited are struggling with rising costs for health care.

In countries where there is a single health care system — and thus a single pool of money to pay for it — it is somewhat easier to control costs. Britain’s NHS often decides, for example, that it won’t pay for kidney dialysis for a 90-year-old. That means somebody’s grandmother will die, but at least Grandma and her relatives know that the money saved is going to be used to help some sick baby or some accident victim.

Limits like that are harder to impose in the U.S. because the money saved here doesn’t necessarily help another sick person. If Aetna or United Health declines to pay for somebody’s dialysis, the money saved is likely used for dividends to the stockholders or bonuses for the executives. That’s a little harder to swallow for the relatives of the sick patient.

It was interesting to learn in the report that some of Switzerland’s drug companies make one-third of their profits in the U.S. market. Are we subsidizing these other nations’ prescription drugs, and what would happen if America clamps down on prices?

Yes, we subsidize the whole world. Americans pay more for pills than people in any other country. Sometimes, the same tablet made in the same factory costs $1 in the U.S. and 20 cents in Britain. If we could negotiate lower prices in the U.S., the drug companies would then try to raise prices overseas to make up for the lost revenues.

The pharmaceutical industry spends billions on research. Drug companies say they would have to reduce R&D if Americans paid less for their drugs, but the companies spend more on marketing than they do on research. In Switzerland, when the government started negotiating lower prices for drugs, the companies cut their marketing budgets and maintained the level of R&D.

For the first time since 1992, health care is, according to a Kaiser Foundation poll, a top-three concern for voters, after the economy and Iraq. Do you think that reform is going to happen this time?

Yes. I am confident that we’re going to do it. I think Americans are ready for fundamental change, for two reasons.

First, our system is so expensive and inefficient that we can’t afford it anymore. It’s a big competitive disadvantage for U.S. industry. Second, Americans are too decent and too generous to accept a system that leaves tens of millions of our fellow citizens without access to health care. [According to the Institute of Medicine,] about 18,000 Americans die each year because they can’t get the medical treatment that would save their lives. That’s morally unacceptable.

So I think both the fiscal and the moral imperative will drive us to major change in 2009.

You note at the end of the report that none of the 2008 presidential candidates’ plans really encompass the ideas you found abroad. Do you think there’s a distinctly American approach that can solve the problems in our system?

To me, the candidates all seem to be tinkering at the margins of a system that needs fundamental change.

What we’ve learned overseas is that successful national systems have settled on one model — be it Beveridge, Bismarck or NHI — for everybody. This is fairer, cheaper and far more efficient than our badly fragmented crazy-quilt system.

I don’t think the systems we see in our film are un-American. The British system — the Beveridge model — is the same system used by the U.S. Veterans Administration. If this is un-American, why do we use it for America’s military heroes? And the Canadian system — the National Health Insurance model — is the model for Medicare. If it were un-American, would we use it for 36 million elderly Americans?

This is not the first project you’ve done that looked at how other nations address social issues differently — and often with better results — than the United States. Has this approach drawn criticism that you’re being too hard on America?

Anybody who dares say that other countries do anything better than America is liable to be called unpatriotic.

I wrote a book, Confucius Lives Next Door, pointing out that East Asian countries in the Confucian cultural sphere have much lower crime rates than the U.S., more stable families, almost no single mothers. And when I went on talk radio to promote this book, the hosts would say, “You hate America,” or, “Well, if Asia is so much better, why don’t you just move there?”

In fact, facing up to your country’s problems and trying to fix them is a sign of love for your country. The person who really cares about his college, his company or his country is the person who recognizes its shortcomings and tries to improve things. And one excellent way to do that is to study how other colleges, companies and countries have dealt with the same problem.

There are many cherished elements of American life that we copied from other countries: the Interstate Highway System (Germany), text messages (Finland), sushi (Japan), and American Idol (Britain). So it can’t be unpatriotic to suggest that we could cure our ailing health care system by borrowing ideas from overseas.

This report is about health care, but it’s also a travelogue of sorts. What was the most memorable moment from your travels in making this report?

I heard Big Ben toll the hours; I rode the bullet train past Mount Fuji; I ate leberwurst mit sauerkraut in Berlin; I flew a fighting kite on a beach in Taiwan; I strolled the breezy shore of Lac Léman with the president of Switzerland. All in all, a lovely trip.

For me, the best moment came at a new hospital in the fishing village of Jinshan, on the east coast of Taiwan. We went there with Professor Bill Hsiao of Harvard, the guy who designed Taiwan’s new health care system. In the hospital lobby, we met a woman, Mrs. Lee. She told me that her mother got breast cancer in the 1980s, when Taiwan had no [national] health care system and Jinshan had no hospital. Her mother died. In the late 1990s, the daughter, Mrs. Lee, also got breast cancer. By then, Jinshan had the new hospital and a health care system that gave Mrs. Lee treatment. She is now completely recovered.

I pointed out Professor Hsiao. I said, “Right over there is the guy who set up the health care system that treated your cancer.” So Mrs. Lee walked shyly over to Bill Hsiao; she gave him just a tiny, almost imperceptible bow. I thought it was a moving way for someone to say, “Thank you for saving my life.”