News & Opinion

Health insurance imploding

David Lazarus

San Francisco Chronicle
Wednesday, October 19, 2005

And so the demolition derby that is the U.S. health care system shifts into high gear.
Mighty General Motors, the world's largest automaker and biggest private-sector purchaser of health insurance, said this week that it'll slash its $5.6 billion annual health care spending for workers, retirees and their families by about $1 billion a year.

 

For its part, the United Auto Workers, one of the nation's most powerful unions, is apparently prepared to swallow this hit to organized labor's most sacrosanct benefit to forestall additional job cuts.

 

We have reached a critical turning point in the decline of health care in the United States, one almost certain to expand the already appalling figure of 45 million people lacking health coverage nationwide.

 

"It's not just a breaching of the social contract that's existed between companies and workers," said David Autor, an associate professor of economics at the Massachusetts Institute of Technology. "It's a reflection of how health care costs are out of control.

 

"Hopefully this will be an opportunity for government and companies to rethink how health care is provided," he added. "The old system is clearly breaking down."

 

Since World War II, the old system has been predicated on the notion that employers will bear the primary cost of insuring U.S. workers and their families.

 

That system, as the GM announcement plainly illustrates, is no longer viable in the face of double-digit annual increases in health care costs. Businesses have responded by insisting that workers -- and especially retirees -- shoulder more of the burden of their health coverage.

 

To be sure, GM has been rewarding its more than 750,000 union members, retirees and their dependents with an uncommonly generous benefits package. The company also faces numerous other issues that affect its profitability (or lack thereof; GM reported a staggering $1.6 billion loss for the latest quarter).

 

But health care is undeniably one of the automaker's biggest headaches. GM estimates that health care adds about $1,500 to the cost of every vehicle it sells in North America.

 

The company's chief exec, Rick Wagoner, told employees on Monday that health care is an issue "of great importance for the future of overall U.S. competitiveness."

 

He also all but pleaded with political leaders to do something about the situation.

 

"We would welcome a more proactive role from elected officials at the national and state levels in broad-based strategies to address the U.S. health care crisis," Wagoner said.

 

Helen Darling, president of the National Business Group on Health, a nonprofit organization composed of some of the country's largest employers, told me that more and more companies will follow GM's example and significantly scale back health coverage for workers.

 

For example, Ford and DaimlerChrysler are already negotiating similar concessions from the UAW.

 

"There's no one in the business world who doesn't share the position that the U.S. health care system has a crisis," Darling said. "The issue here isn't General Motors. The issue is the unaffordability of health care."

 

So what do we do about it?

 

I've written repeatedly about how a single-payer health care system could provide universal coverage for all Americans at a long-term cost to taxpayers well below what's now paid annually by employers and workers.

 

Single-payer systems are the norm in virtually all other developed democracies. While far from perfect -- long waits for treatment are a frequent complaint -- such systems ensure that any citizen can receive care from any doctor at any hospital.

 

There are no co-pays or deductibles, no private-sector premiums soaring year after year.

 

"The basic system is quite good," said Steffie Woolhandler, an associate professor of medicine at Harvard University. "We just need to fund it adequately."

 

As it stands, she said about a third of all health care spending in this country is now squandered on bureaucratic overhead. Under a single-payer system, savings from streamlined paperwork alone would be sufficient to provide coverage for all Americans.

 

"The meaning of GM's announcement is that even people working for a powerful company can have their health care cut," Woolhandler said. "Anyone who gets health insurance from an employer or former employer should be worried."

 

The right message: Speaking of the auto industry, senior execs at Delphi, the largest automobile supplier, have said they'll take voluntary pay cuts until the company emerges from bankruptcy.

 

The company's CEO, Robert Miller, will reduce his base salary from $1.5 million to just $1 annually and won't receive any bonuses. Delphi's president, Rodney O'Neal, will take a 20 percent pay cut, and other execs will forgo 10 percent of their salaries.

 

Declared Miller: "Delphi's transformation message must be unambiguous and marked indelibly by the commitment of Delphi's leadership."

 

Compare that with the top brass at PG&E, who last year handed themselves $83 million in bonuses while the San Francisco utility was still mired in Chapter 11 proceedings.

 

"It's become standard to reward executives for sticking around during bankruptcy," said Kirk Hanson, executive director of the Markkula Center for Applied Ethics at Santa Clara University.

 

"Cutting your pay sends a strong message to employees that management understands they're suffering," he said.

 

David Lazarus' column appears Wednesdays, Fridays and Sundays. Send tips or feedback to dlazarus@sfchronicle.com.

 

Dead Woman Working: American Dream Died Long Ago

Published on Friday, August 17, 2012 by Common Dreams

by Donna Smith

It was a slow and torturous death, my American dream. And for millions of others, I am guessing it is the same. Nothing this current round of politicos is planning to do can restore it. Just like there is nothing to being a little bit pregnant, there is nothing anyone can do to breathe life back into what once seemed possible. Now I just hang on waiting to die.

This piece is not about who will or will not be our president or vice president, as after voting in every election since the 1970s, I am pretty sure what I need and want isn’t coming from any of them.

Read more: Dead Woman Working: American Dream Died Long Ago

Diagnosis For America

Jonathan Tasini
October 25, 2005

Jonathan Tasini is president of the Economic Future Group and writes his "Working In America" columns for TomPaine.com on an occasional basis. His blog Working Life chronicles the labor movement and other issues affecting American workers.  

It is a measure of our lowered expectations, fueled by media spin, that people shrugged and seemed to think that it was inevitable that workers for General Motors were destined to have their health care coverage slashed. After all, some seemed to think, at a time when their company is teetering on the edge of oblivion, these “privileged” auto workers had “gold-plated” coverage that almost no other workers in America have.

 

But let’s be clear: The loss of benefits for GM workers was not inevitable. It happened as a result of many years of bipartisan political and economic decisions and the bipartisan lack of political courage to take on dumb ideology and corporate power.


In the minds of the elites, socking workers with a larger share of the costs of health care is just a natural part of the new economic order. As the Wall Street Journal editorial board said about the health care cost-cutting deal between GM and the United Auto Workers, “We hope it’s the beginning of wisdom about the global economy for the American labor movement.” Speaking about UAW president Ron Gettelfinger, Delphi CEO Steve Miller—who took his company into bankruptcy—said,  “He’s going to have to help half a million of workers get used to the idea that globalization has taken away the ability to have someone who mows the lawn or sweeps the floor get $65 an hour.”

At least one thing is refreshing: It exposes as a fraud the liberal and conservative mantra about the wonders of the global economy. Democrats and Republicans alike—from Bill Clinton to George Bush, with a supporting cast of media and academic geniuses—have repeatedly told workers that the global economy will bring great benefits to America, after a period of “adjustment.” To their credit, Steve Miller and the Journal are more honest: The global economy is a tool to drive down living standards, starting with health care. Get with it, folks: Living large is so “old economy.”

So, the first obvious point to make is that employer-provided health care coverage has failed. Workers should never face the choice between sickness and financial ruin simply because the company they work for is going under, poorly managed or because they change jobs. More important, this has become, as I pointed out some months ago, a matter of economic competitiveness for corporations based in the United States: The health care system is dragging down profits.

The second point, then, is that health insurance can never be left to those whose sole motivation is profit. The last time health care was debated, the Clinton administration lost its nerve—or, perhaps, never had any other intention to pursue a system other than one that was destined to perpetuate the existing ideological flaws.  “Hillarycare” was a disaster for the public not because the mismanaged process produced an overly complex system. Rather, the Clintons made a conscious decision to leave health care in the hands of the private insurers — which allowed the HMO industry to grow, if you’ll pardon the expression, like a malignant tumor.

If we had a different philosophy, GM workers’ health care would never change. As Ida Hellander, executive director of Physicians for a National Health Program (PNHP), puts it, “Political will is infinitely harder to muster, especially when Congress is owned by the drug and insurance companies.” PNHP has a very straightforward set of four principles guiding its universal health care proposal, which I think, if properly understood by the public, would send millions of people to the streets demanding immediate change:

·                   Access to comprehensive health care is a human right. It is the responsibility of society, through its government, to assure this right. Coverage should not be tied to employment. Private insurance firms’ past record disqualifies them from a central role in managing health care.

·                   The right to choose and change one’s physician is fundamental to patient autonomy. Patients should be free to seek care from any licensed health care professional.

·                   Pursuit of corporate profit and personal fortune has no place in caregiving and creates enormous waste. The U.S. already spends enough to provide comprehensive health care to all Americans with no increase in total costs. However, the vast health care resources now squandered on bureaucracy (mostly due to efforts to divert costs to other payers or onto patients themselves), profits, marketing and useless or even harmful medical interventions must be shifted to needed care. 

·                   In a democracy, the public should set overall health policies. Personal medical decisions must be made by patients with their caregivers, not by corporate or government bureaucrats.

The economics of a single-payer, universal health care system are unassailable. It would save $300 billion in administration costs. It would be financed partly by the 60 percent of taxes that already go into the health care system via Medicaid, Medicare and payments for public employee coverage. The rest of the financing, over the long term, would be easily done with modest tax increases (by a 7 percent payroll tax and a 2 percent progressive income tax) — and result in better health care for people for less money than people shell out in ever-rising deductibles. With one bold stroke, a single-payer system would do more to help the bottom line of companies than any tax break or so-called “free trade” agreement.

The troubling reality to the arguments I’ve made is that they are not particularly original: The moral and economic need for a universal health care system has been well-known for a very long time. The only question now is: How many companies will have to go belly up and how many more millions of workers will face bankruptcy and illness because we allow ideology—the deification of the so-called free market—to triumph over common sense?

 

Business Leaders Support Single-Payer

Business leaders lean toward dramatic health-care changes

 

Friday, September 16, 2005
By Rick Haglund
Detroit Bureau
MLive.com

TRAVERSE CITY — Frustrated over seemingly never-ending hikes in health care costs, some 40 percent of Michigan business executives polled in a new survey say they support nationalized health care or a privately run, single-payer system financed by the federal government.

 

The poll of 350 business people, released here Thursday at the Michigan Chamber of Commerce’s annual Future Forum conference, found that 42 percent of those surveyed supported a national health care system. Answering a second question, 40 percent said they supported a single-payer system.

In the wide-ranging survey by pollster Steve Mitchell, business leaders also expressed a deep pessimism about the state’s business climate and Democratic Gov. Jennifer Granholm’s leadership.

Sixty-nine percent said the state’s business climate is on the wrong track, while only 43 percent approved of the job Granholm is doing.

“We have not seen numbers like this since the early 1990s,” Mitchell said.

That was a time when unemployment in the state topped 15 percent. Unemployment currently is at 6.7 percent.

But Mitchell said Granholm’s low approval rating wasn’t too surprising, given the Republican leanings of most business owners surveyed. President Bush got a 70 percent approval rating in the poll.

Also the national economy is doing well, while Michigan’s manufacturing-based economy is struggling, he said.

Granholm’s spokeswoman Liz Boyd said the governor’s 43-percent approval rating by members of a group with close ties to the state Republican Party was “just great.”

Support for universal health care among most Republican business executives was surprisingly high, even in the face of rapidly rising costs.

“This finding that four in every 10 business decision-makers are willing to look at a different way of delivering health care is something you wouldn’t have seen 10 years ago,” said Mitchell, president of Mitchell Research and Communications Inc. in East Lansing.

His poll surveyed Michigan Chamber of Commerce members from Aug. 15-Sept. 1. Of those surveyed, 72 percent represented businesses employing fewer than 50 workers; 16 percent were in manufacturing.

Rich Studley, senior vice president of government affairs at the chamber, said business owners may be looking to the federal government to provide health care because they’re frustrated that their efforts to control costs aren’t working.

And many of the chamber’s small-business members who can’t afford to provide health insurance for their workers, but who would like to, “see that goal just getting farther and farther away,” Studley said.

William Rustem, president of Public Sector Consultants Inc. in Lansing, said the apparently increasing support by business for universal health care could lead to radical reforms. Many business leaders have been reluctant to push for universal health care because the Bush administration and the Republican-controlled Congress are opposed.

“I think this is an amazing result,” Rustem said about the chamber poll. “This may be a recognition by the business community of a public will to do something about health care.”

On Wednesday, the annual Kaiser Family Foundation survey found it now costs U.S. employers an average $10,800 a year to provide health insurance for a family. That’s up 9.2 percent from 2004.

The chamber survey also found the top two problems limiting the hiring of workers in coming years are a lack of skilled applicants and the high cost of health care.

Among various state taxes, 56 percent of business decision-makers said the Single Business Tax was the most onerous.

Studley credited Granholm with proposing sweeping changes in the SBT earlier this year, even though the chamber has vehemently opposed Granholm’s plan to raise taxes on insurance companies in order to give manufacturing and research companies a break.

He criticized the Legislature for not yet passing SBT reform.

“Every day our members are making decisions about whether to stay in Michigan or leave,” Studley said. “The message we want to send to the Legislature is: For goodness sake, take action.”

For Americans, Getting Sick Has Its Price

Survey Says U.S. Patients Pay More, Get Less Than Those in Other Western Nations

By Rob Stein
Washington Post Staff Writer
Friday, November 4, 2005

Americans pay more when they get sick than people in other Western nations and get more confused, error-prone treatment, according to the largest survey to compare U.S. health care with other nations.
The survey of nearly 7,000 sick adults in the United States, Australia, Canada, New Zealand, Britain and Germany found Americans were the most likely to pay at least $1,000 in out-of-pocket expenses. More than half went without needed care because of cost and more than one-third endured mistakes and disorganized care when they did get treated.

Although patients in every nation sometimes run into obstacles to getting care and deficiencies when they do get treated, the United States stood out for having the highest error rates, most disorganized care and highest costs, the survey found.

"What's striking is that we are clearly a world leader in how much we spend on health care," said Cathy Schoen, senior vice president for the Commonwealth Fund, a private, nonpartisan, nonprofit foundation that commissioned the survey. "We should be expecting to be the best.
Clearly, we should be doing better."

Other experts agreed, saying the results offer the most recent evidence that the quality of care in the United States is seriously eroding even as health care costs skyrocket.

"This provides confirming evidence for what more and more health policy thinkers have been saying, which is, 'The American health care system is quietly imploding, and it's about time we did something about it,' " said Lucian L. Leape of the Harvard School of Public Health.

The new survey, the eighth in an annual series of cross-national surveys conducted by Harris Interactive for the fund, is the largest to examine health care quality across several nations during the same period. The survey was aimed at evaluating care across varying types of health care systems, including the market-driven U.S. system and those that have more government controls and subsidies.

The survey, published in the journal Health Affairs, questioned 6,957 adults who had recently been hospitalized, had surgery or reported health problems between March and June of this year.

"These patients are the canary in the coal mine of any health care system," Schoen said.

Nearly a third of U.S. patients reported spending more than $1,000 in out-of-pocket expenses for their care, far outpacing all other nations. Canadians and Australians came next, with 14 percent of patients spending that much. The proportion reporting similarly high costs was far lower in the other countries.

Americans had the easiest access to specialists, but they experienced the most problems getting care after hours, and Americans and Canadians were the most likely to report problems seeing a doctor the same day they sought one.

Americans were also much more likely to report forgoing needed treatment because of cost, with about half saying they had decided not to fill a prescription, to see a doctor when they were sick or opted against getting recommended follow-up tests. About 38 percent of patients in New Zealand reported going without care; the numbers were 34 percent in Australia, 28 percent in Germany, 26 percent in Canada and 13 percent in Britain.

"If that's not a reason for moral outrage, I don't know what is," Leape said.

About one-third of U.S. patients reported problems with the coordination of their care, such as test results not being available when they arrived at a doctor's appointment or doctors ordering duplicate tests. In the other countries, 19 to 26 percent of patients reported similar problems.

Americans also reported the greatest number of medical errors. Thirty-four percent reported getting the wrong medication or dose, incorrect test results, a mistake in their treatment or care, or being notified late about abnormal test results. Only 30 percent of Canadian patients, 27 percent of Australian patients, 25 percent of New Zealanders, 23 percent of Germans and 22 percent of Britons reported errors.

"The findings show that we have a lot to learn from our colleagues" in other countries, said Carolyn Clancy of the federal Agency for Healthcare Research and Quality during a briefing at which the results were released. She said the federal government has launched a number of initiatives to find ways to improve care, particularly for the increasing number of Americans with chronic illness.

"The findings here reinforce how difficult it is coordinating care. . . . That's the next frontier," Clancy said.

© 2005 The Washington Post Company

Patient-driven health care gains attention

Harvard prof touts advantages

By LUKE SHOCKMAN
TOLEDO BLADE STAFF WRITER
Article published Saturday, November 5, 2005

What if picking your doctor or hospital were like buying a car?

Maybe you'd sort through a Consumer Reports-like guide to see which doctor or hospital most reliably saves lives. Next to each hospital or doctor would also be a price.

 

Using this information, you would then make a decision on which doctor or hospital to choose. Evaluating quality and price is how a lot of transactions - from buying cars and DVD players to choosing a new coat or even a cheeseburger - work in America today.

 

It's not like that with health care. But maybe it should be, said Regina Herzlinger, a Harvard University business professor who spoke yesterday at the Medical University of Ohio. Her presentation was part of a discussion at MUO called: "Health Care Access, Delivery and Cost: Is the Status Quo Sustainable?"

 

The short answer to that discussion? No.

 

Dr. Lloyd Jacobs, MUO's president, said the "course we're on is not sustainable."

 

Health-care costs are soaring every year, and the number of Americans without health insurance - now about 45 million, which is more than the number of Americans on Medicare - continues to grow.

 

The situation is "almost at meltdown proportions," Dr. Jacobs said.
Politicians and the American public have ignored this problem for so long that the time for tinkering is over, he said, and it will soon take a massive intervention, likely by the government.

 

"It's too late for incremental steps. My fear is we're going to experience an upheaval. We'll see the bankruptcy of a large corporation like General Motors [partly because of rising health-care costs] … and we'll end up looking more like Canada," which has a single payer system, he said.

 

It doesn't have to be this way, Ms. Herzlinger said. Give patients information and direct control over their health-care dollars, and they'll do a better job at holding down health-care costs, she argued.

 

This theory, which is being embraced by many companies, is known as "consumer-driven" health care. Though businesses are trying to embrace this concept, it's been a struggle because of the lack of reliable information. "I know more about my car, tomato sauce, and panty hose than I do about the doctor or hospital who is about to perform a mastectomy on me," she said.

Ms. Herzlinger said she favors universal health-care coverage, but not a single payer system because it stifles competition. One major criticism of consumer-driven health care being a solution to rising costs is that it's no help to those who can't afford insurance in the first place. Ms. Herzlinger said she supports things like tax credits or other subsidies that would give all Americans access to insurance plans.

 

Some are still skeptical. Dr. Jacobs, for example, worries that while consumer-driven health care is a good idea, it's not a radical enough step given the sorry state of U.S. health care. Kenneth Raske, president of the Greater New York Hospital Association and another speaker at MUO's forum, is also skeptical.

 

He said the "structure of our health-care system is collapsing as we speak," and like it or not, a single payer system is on the way. "It won't happen in 2008 or 2010? Maybe. But it's going to happen."

 

Contact Luke Shockman at:
lshockman@theblade.com
or 419-724-6084.

 

Curing Health Care Costs: Let the Sick Suffer

New York Times
September 1, 2005
By BOB HERBERT

 

The word in Tennessee is that Gov. Phil Bredesen, a Democrat, has presidential aspirations. I find that interesting. Perhaps he can run on the success he's had throwing sick people off of Medicaid.

Thanks to Mr. Bredesen's leadership, Tennessee is dumping nearly 200,000 residents, some of them desperately ill, from TennCare, the state's Medicaid program. Cindy Mann, a research professor and executive director of the Center for Children and Families at Georgetown University's Health Policy Institute, concisely characterized the governor's efforts:

"What he's decided to do is save health care costs simply by not giving people health care."

How's that for a solution to a tough public policy issue?

What is happening in Tennessee is profoundly cruel. The people being removed from the rolls - some of them disabled, some suffering from such serious illnesses as cancer and heart disease - are mostly working-poor individuals who cannot afford private insurance. They are being left with no coverage and in many instances are in a state of absolute panic.

"People are going to die because of this," said Carolyn Cagle, a widow from Paris, Tenn., whose 34-year-old son, Lloyd, is a diabetic who has already lost part of his right foot. He is being dropped from the program.

Phil Dedrich, a resident of Waynesboro, has also been notified that his coverage is ending. "I am very sick," he said in a statement distributed by opponents of the cuts. "I have severe coronary artery disease, including a 70 percent blockage of my aorta, lung disease, thyroid disease, diabetes, painful neuropathy from the diabetes and high blood pressure."

In addition to the people being dropped from the rolls, benefits are being cut for hundreds of thousands of TennCare participants, and there is a chance that 100,000 more people will lose their coverage next year.

"I'm scared," said Terilyn Gotlieb, a TennCare enrollee whose prescription coverage was reduced sharply. Kidney disease has all but destroyed Ms. Gotlieb's family. She told me her mother, her grandfather, a brother and a sister all died from the disease. Ms. Gotlieb herself underwent a kidney transplant in 2000. She's in constant pain from a broken back she suffered in an auto accident last year, and she's severely depressed.

In a normal month Ms. Gotlieb takes 12 medications, but now TennCare will pay for only 5 and she can't afford the other 7. "I'm scared that if I don't get the right medication, I'm going to end up back on dialysis and lose my kidney I fought so hard to keep," she said. "I could die."

Medicaid was established to provide health coverage for the poor. In the 1990's the TennCare program extended Medicaid benefits to low-income working people who could not otherwise secure health insurance. Among those hailing the program at its inception was Bill Frist, a Tennessee Republican who is now the Senate majority leader. At the time he was the surgical director of the Transplant Center at Vanderbilt University.

Mr. Frist called the program a "bold experiment" and wrote in a newspaper article that "the extension of coverage to working Tennesseans without health insurance is necessary to reduce the need for hospitals to shift these costs to patients who have insurance."

TennCare reduced the number of uninsured residents in the state by one-third and indisputably saved many lives. But the program ran into problems. Parts of it were mismanaged by state officials and by managed care organizations that performed so poorly they either had to be taken over by the state or their contracts were terminated. More insidious is the fact that residents of Tennessee (which limits its state income tax to dividends and interest income) are even less willing than their counterparts in most other states to pay for crucial public services.

So rather than do the heavy lifting necessary to shore up an important and admirable program, Governor Bredesen resorted to the draconian, life-threatening expedient of severing the health coverage of people who have nowhere else to turn.

 

Perhaps that's what one should expect from a former managed care executive. Governor Bredesen's Web site notes that before entering public service, he "was a successful health care entrepreneur."

Medicare-for-All would save money and cover everyone

By Merton C. Bernstein
Special to The Kansas City Star
Posted on Sun, Nov. 06, 2005 

Faced with daunting health insurance costs, American enterprises are eliminating coverage or passing along more of the cost to employees and retirees.

State legislatures, particularly in Missouri, are shrinking Medicaid eligibility and benefits.

There is a better way to tame health-care budgets — eliminate administrative costs by covering everyone through Medicare.

Imagine if the electronics industry used thousands of differently shaped plugs on their appliances, each requiring a matching socket before they could be used. Absurd! But this describes American health insurance: doctors, hospitals, labs and other providers must match their billions of bills with thousands of differing insurance plan provisions, many designed to promote sales rather than sound treatment. Intelligent design? Hardly.

The resulting chaos is unnecessarily costly, with as much as 30 percent of our medical care payments going to process claims. In contrast, in 2004, Medicare administrative costs were 1.9 percent. If Medicare applied to everyone, insurers and care providers would be saved most of what they spend on trying to fit their innumerable plugs into that almost-infinite number of sockets.

Medicare-for-All is the practical answer to the double-digit health-insurance cost increases we’ve faced over the last four years. What’s standing in the way is the outmoded and discredited ideology that the market will discipline health-care costs.

In reality, health-care costs rage out of control. More and more individuals and families lose insurance protection, and medical care charges constitute one of the three major causes of personal bankruptcy. Health-care costs are strangling business and threaten the very existence of many employers with costs that competitors in countries with national health insurance do not face.

State budgets are staggered by the double whammy of having to increase Medicaid outlays for the poor while confronting surging health-care costs of government employees, including teachers.

Health maintenance organizations, touted as a cure, became a disease. Many HMOs collapsed, shriveled or bugged out, stranding their participants. Tax-favored medical savings plans have proven useless, except perhaps to the wealthy.

Tax breaks and other subsidies to encourage coverage only add to total medical care costs, delaying the goal of universal coverage. And as costs escalate out of control, that goal becomes more and more unattainable.

Applying Medicare to everyone would achieve annual savings on the order of $300 billion, enough to cover everyone with a comprehensive plan that surpasses most private coverage and means-tested public programs, even Medicaid.

Establishing and periodically recertifying eligibility for tens of millions of individuals and families under Medicaid incurs administrative costs 5 percent greater than Medicare’s administrative costs. Other federal and state means-tested programs produce similarly unnecessary costs.

For example, Massachusetts operates means-tested programs that use eight different formulas for eligibility and benefits despite similar program goals. Consolidating those programs into Medicare would save tens of billions in administrative costs and give greater assurance that individuals, especially children, would receive timely medical care.

Medicare uses private insurers as intermediaries between providers and patients. These private insurers, under Medicare, operate efficiently and at low cost. Their inclusion in Medicare-for-All would prevent the allegation of “too much government.”

Medicare-for-All would tame costs and make coverage universal. We can readily pay for it by pooling what we already spend on health care. That means no new taxes.

Business, government, individuals and families cannot afford the current costly chaos. It makes economic sense to cut nonbenefit outlays rather than eligibility and benefits.

Those avoidable costs are present but unseen in what we buy or cannot afford. Those unnecessarily higher prices reduce the ability to pay for other needed and desired goods and services. Healthier people incur lower health-care bills, work more productively and avoid the absences and other dislocations that sickness usually brings,

Everyone would be in better hands with Medicare-for-All.

Merton C. Bernstein is a Coles Professor of Law Emeritus at Washington University and a founding board member of the National Academy of Social Insurance.

© 2005 Kansas City Star and wire service sources. All Rights Reserved.
http://www.kansascity.com

 

Pride, Prejudice, Insurance

The New York Times
Op-Ed Columnist
November 7, 2005
By PAUL KRUGMAN

General Motors is reducing retirees' medical benefits. Delphi has declared bankruptcy, and will probably reduce workers' benefits as well as their wages. An internal Wal-Mart memo describes plans to cut health costs by hiring temporary workers, who aren't entitled to health insurance, and screening out employees likely to have high medical bills.

 

These aren't isolated anecdotes. Employment-based health insurance is the only serious source of coverage for Americans too young to receive Medicare and insufficiently destitute to receive Medicaid, but it's an institution in decline. Between 2000 and 2004 the number of Americans under 65 rose by 10 million. Yet the number of nonelderly Americans covered by employment-based insurance fell by 4.9 million.

The funny thing is that the solution - national health insurance, available to everyone - is obvious. But to see the obvious we'll have to overcome pride - the unwarranted belief that America has nothing to learn from other countries - and prejudice - the equally unwarranted belief, driven by ideology, that private insurance is more efficient than public insurance.

Let's start with the fact that America's health care system spends more, for worse results, than that of any other advanced country.

In 2002 the United States spent $5,267 per person on health care. Canada spent $2,931; Germany spent $2,817; Britain spent only $2,160. Yet the United States has lower life expectancy and higher infant mortality than any of these countries.

But don't people in other countries sometimes find it hard to get medical treatment? Yes, sometimes - but so do Americans. No, Virginia, many Americans can't count on ready access to high-quality medical care.

The journal Health Affairs recently published the results of a survey of the medical experience of "sicker adults" in six countries, including Canada, Britain, Germany and the United States. The responses don't support claims about superior service from the U.S. system. It's true that Americans generally have shorter waits for elective surgery than Canadians or Britons, although German waits are even shorter. But Americans do worse by some important measures: we find it harder than citizens of other advanced countries to see a doctor when we need one, and our system is more, not less, rife with medical errors.

Above all, Americans are far more likely than others to forgo treatment because they can't afford it. Forty percent of the Americans surveyed failed to fill a prescription because of cost. A third were deterred by cost from seeing a doctor when sick or from getting recommended tests or follow-up.

Why does American medicine cost so much yet achieve so little? Unlike other advanced countries, we treat access to health care as a privilege rather than a right. And this attitude turns out to be inefficient as well as cruel.

The U.S. system is much more bureaucratic, with much higher administrative costs, than those of other countries, because private insurers and other players work hard at trying not to pay for medical care. And our fragmented system is unable to bargain with drug companies and other suppliers for lower prices.

Taiwan, which moved 10 years ago from a U.S.-style system to a Canadian-style single-payer system, offers an object lesson in the economic advantages of universal coverage. In 1995 less than 60 percent of Taiwan's residents had health insurance; by 2001 the number was 97 percent. Yet according to a careful study published in Health Affairs two years ago, this huge expansion in coverage came virtually free: it led to little if any increase in overall health care spending beyond normal growth due to rising population and incomes.

Before you dismiss Taiwan as a faraway place of which we know nothing, remember Chile-mania: just a few months ago, during the Bush administration's failed attempt to privatize Social Security, commentators across the country - independent thinkers all, I'm sure - joined in a chorus of ill-informed praise for Chile's private retirement accounts. (It turns out that Chile's system has a lot of problems.) Taiwan has more people and a much bigger economy than Chile, and its experience is a lot more relevant to America's real problems.

The economic and moral case for health care reform in America, reform that would make us less different from other advanced countries, is overwhelming. One of these days we'll realize that our semiprivatized system isn't just unfair, it's far less efficient than a straightforward system of guaranteed health insurance.

Notes on International Comparisons of Health Care

Trends in employer-based insurance: The underlying data come from the Census. Here is a shorter, useful summary of the data.(pdf).

International comparisons of health spending: The Factbook of the Organization for Economic Cooperation and Development, an international research organization supported by member governments, is available at www.sourceoecd.org. It provides comparative data on many economic, environmental, and social trends. Data on health care spending per capita are measured using “purchasing power parities” – that is, they are adjusted for international differences in the cost of living.

Two things stand out. First, the United States is off the scale in terms of the amount we spend per person. Second, the U.S. system is unique in its reliance on private spending.

Quality of Health Care: “Taking the Pulse of Health Care Systems: Experiences of Patients With Health Problems in Six Countries(pdf),” is a new study published in Health Affairs. Check out Exhibits 6 and 7, in particular.

Taiwan: A very interesting study, also online, is “Does Universal Health Insurance Make Health Care Unaffordable? Lessons from Taiwan(pdf).” Since it’s predictable that some of the usual suspects will attack my column by citing newspaper articles about runaway costs in Taiwan, it’s particularly interesting to read the paper’s discussion of how “political theater” – overstating the quite mild financial difficulties of the Taiwanese system – was used to sell a modest increase in premiums.

Pride, Prejudice, Insurance: Readers Respond

Nov. 8, 2005
On "Pride, Prejudice, Insurance": Health Care Crisis in the U.S.

Nell Farr, Elk Grove, Calif.: Your fine column contained this line: “. . . Americans too young to receive Medicare and insufficiently destitute to receive Medicaid . . .” This implies that those under 65 receive Medicaid if only they are poor enough. Many people believe this is true. It is not. Only if a person under 65 is on some Federal aid program such as AFDC or a disability program is he/she eligible for Medicaid. Others have an option of a free clinic, if available, or an E.R. for an emergency condition. However, E.R.’s only stabilize a person if further care or diagnostic work is indicated, such as a mammogram or even chemo for cancer, usually such a person is totally out of luck. They die.

 

Your columns are usually 100 percent factually correct, and I was disappointed to see this line that reinforces the mistaken belief of most Americans.

Paul Krugman: It's a bit more complicated than that. As I understand it Medicaid covers many children even if the parents aren't on AFDC, and in some cases covers parents too. But you're right that an American can easily be ineligible for Medicaid no matter how desperate his or her financial straits. In fact, that's a big part of the awfulness of how the government is responding to the aftermath of Katrina. But I didn't have space to go into all of that. Remember, 700 words.

Michael Pistorio, Des Plaines, Ill.: While I completely agree that it is a travesty for Americans to be devoid of a national health care solution, I question the rationale of comparing the costs of an American system to that of a foreign system. My reasoning lies behind the simple fact that the U.S. has a population considerably larger than the most populated country that you mentioned, and with this said, I would think that the reason other countries have lower costs is due to the smaller number of prospective participants. Please help me understand.

Paul Krugman: All of these comparisons are per capita: spending per person. So population is taken into account. Or, if you prefer, add up total spending by Western European countries, which have about the same combined population as the United States; you'll find that they spend only about 60 percent as much on health care, but that everyone is insured, life expectancy is higher, and infant mortality is lower.

Philip Lohman, Lakewood, Calif.: You missed making your best argument: the huge difference between levels of overhead in health systems. Somewhere around 30 percent of all expenditures on health care in the U.S. are for administration. This money buys hundreds of millions of pieces of paper and phone calls, plus the salaries of the legions of employees of insurance companies, H.M.O.’s, P.B.M.’s and all the others who are required to make the whole creaky, maddeningly complex mess function. What i t doesn’t buy is a single office visit or prescription.

Similar administrative costs in other countries are around a third of this. Compared to private insurance, Medicare, perpetually described as a boondoggle by conservatives, is a model of efficiency. I was managememt consultant in healthcare for twenty years. Some days I couldn't bring myself to believe the lunacy of the whole system.

Paul Krugman: I agree, but I'm puzzled that you think I missed your point. The column clearly identifies administrative costs as a key problem with the U.S. system.

Carol Bouville, Gaithersburg, Md.: Why is the obvious so hard for us Americans to accept? We used to not want any government-sponsored child care either because it was too socialistic. I suspect that has a lot to do with not getting government involved in universal health coverage. After all, our leaders are my age and came of age when anything that mimicked socialism was verboten. I lived in France for 18 years. Yes, it was cumbersome sometimes to get around in the health care system, but at least it was very cheap and available — and good, too. We never had to worry about losing our coverage or about not being able to pay for necessary treatment or meds. I argue that because of that peace of mind, we had a better quality of life than most Americans. Why don't people demand access to health coverage and refuse to vote for anyone who doesn't pledge to make the single-payer system a reality? What do we have to do to make that happen?

Neeta Moonka, MD, Demarest, N.J.: Thank you for this column. I am a physician who has been convinced of the need for a single-payer plan in this country since before I went to medical school in 1981. Please know the patchwork of employer based insurance, Medicare, Medicaid, not to mention the uninsured, takes its toll on doctors as well.

Bill Hess, Wasilla, Alaska: Your comments on nationalized insurance resonate with me. I am sitting here, feeling a notable amount of pain, thinking it would be good to go see a doctor and ask about it, but I dare not — I can't afford to. Not because I don't have insurance, but largely because I do. I am 55 years old and when I first got my insurance over a decade ago, it was a good deal. In the time since, my insurers have continually forced me to pay more for less, to drop my dental care altogether, to increase my deductible while still cutting back on my medical benefits. Yet the rate I pay has more than doubled to over $600 a month — that's just for me. Fortunately, my wife and grown children receive care under the U.S. Indian Health Service.

I have a prostate problem for which I take three medications, all of which I must purchase myself along with any other medications I might find myself needing at any time. Last spring, my urologist ordered up a cat scan to double check a few things, which turned out okay. Two weeks later, I was struck by some intense abdominal pain. The physician who saw me felt it necessary to order up still another cat scan, which revealed nothing that wasn’t on the original, but did add several thousand to the medical bills I was already facing, bills denied by my insurance company.

So I have been trying to pay off this big debt and now I dare not go see a doctor again, as long as I am able to function and move around. I simply cannot afford to. An older brother recently had part of his colon removed due to cancer and another brother suffers a variety of often severe colon ailments. My father has had part of his colon removed as well. This puts me in the group of at-risk people who are advised to get a colonoscopy, but I checked into it and, even with my insurance, I would be facing a few more thousand in additional medical debt that would be uncovered by my insurance.

I know what happens when my insurance company receives one of my medical bills — they do not say, “Let's see what we can do to help this guy and keep him healthy for as long as we can.” They say, “Let's see if we can deny all of this, or as much as possible, and lets keep raising his rate dramatically every few months so that, hopefully, by the time he really needs care and we would have to put out some bucks we will already have forced him to drop our coverage.”
They may not actually vocalize it in those terms, but I sincerely believe both scenarios to be an accurate reflection of their policy.

Mark Sengel , Banglamung, Thailand: Thanks for your focus on health care. I am 50 and teach in Thailand. The hospitals here are excellent and tens if not hundreds of thousands of foreigners are coming here from all over the world to have root canals, colonoscopies, and back surgery. Meanwhile, everyone I know in America feels their choices are limited. They choose to stay in jobs they don't like, they don't start businesses, and they live in places they don't really want to in order to get health care. Most have no idea how they are going to retire, estimating they need hundreds of thousand dollars just for health care if they are going to retire in their early 60's. And these are people that are way ahead of the average American. What is the endgame?

Lynne Koester, Yuba City, Calif.: Would it be feasible to convert Medicare into a national health insurance system? I realize that its present per-patient cost is high because of the age of those who qualify for Medicare, but if the pool were enlarged by including most all Americans, wouldn't the per-patient cost decrease? By eliminating the profits built into private health insurance companies, we could save even more money. Plus, when ill, many uninsured people presently use a hospital emergency room because they do not have medical insurance, but if they were covered by a national health insurance, they could be treated in a doctor's office, which is less costly than a hospital.

Paul Krugman: Yes, indeed. One way to implement national health care would simply be to expand Medicare to everyone.

Of course, doing that would require additional funds, probably in the form of an increase in the payroll tax. And that would elicit howls from the right. But the apparent rise in tax rates would be an illusion: it would simply substitute an explicit tax for the implicit tax that companies and workers pay in the form of insurance premiums. Given international experience, I have no doubt that overall spending on health care would actually fall, and that job creation would actually rise, after the supposed tax increase.

It's a simple solution, building on a program that we already know works. It would make the vast majority of Americans better off. And it's considered a complete non-starter politically. Now why is that?

 

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