Fixing What Ails Us
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| Paul Choi addresses a crowd of 300 at an Asheville healthcare reform rally. Photo courtesy of Paul Choi |
by Michael Hopping
As far back as the year 2000, the World Health Organization ranked the US healthcare system only 37th best in the world, sandwiched between those of Costa Rica and Slovenia. The CIA World Factbook (2008) puts us 41st in life expectancy, tied with Puerto Rico and a whisker behind Jordan. Cuba and 44 other countries have better infant mortality rates than the United States of America!
But it is cost, not human suffering, which drives this year’s healthcare debate in Congress. We’re number one by a mile in spending, and the numbers are worsening. This year the average American will rack up $8,160 worth of medical bills. That represents 17.6% of the value of all goods and services produced in the United States. Healthcare’s share may exceed 20% by 2018.
More than 45 million Americans are uninsured. Those who do have
coverage often get it at work. Employers, faced with rising premiums,
are cutting back and/or shifting costs to employees. No other country
saddles its businesses with this competitive disadvantage. Medical
expenses play a role in 62% of American bankruptcies. In 78% of those
cases the bankrupt had health insurance. Medicare and Medicaid,
programs covering high-risk populations, are also going broke.
Diagnosing the problem
Advances in medical technology are raising healthcare costs worldwide,
but why are ours so exceptional? Princeton economist Uwe Reinhardt
listed four prominent causes: higher prices for the same goods and
services, higher overhead costs, more use of high-cost equipment and
procedures, and “defensive medicine” (extra tests and procedures
ordered to reduce the risk of lawsuits).
Why the higher prices and overhead? In a word: profit. The primary aim
of other healthcare systems is healthcare. Our industry focuses more on
making money. Nor is it just pharmaceutical and insurance companies any
more. Television ads encourage us to buy as many diabetic testing
supplies and “power chairs” as Medicare will fund. A recent New Yorker
article by Atul Gawande showed that even some doctors may be treating
their patients as revenue sources.
The object of the profit-driven game – of any for-profit business – is
to maximize revenue and minimize expenses. Do or sell whatever pays,
regardless of a consumer’s best interest. In the world of for-profit
“healthcare,” that means: Don’t insure people who might be sick. Don’t
cover pre-existing conditions. Invalidate claims whenever possible.
Divert the uninsured from your doorstep.
Gaming the system is very profitable for some players. But health
outcomes suffer directly and indirectly. A doctor fighting with an
insurance company on the phone isn’t treating the sick. Public health
departments, jails, and general hospitals are also losers. They treat
the uninsured and have no choice but to pass those costs along to the
rest of us, in higher costs (premiums, fees, and co-pays), or through
taxes.
Treatment options
Other developed nations avoid these problems by having unified national
health systems. Taxes fund them. Everybody is covered. The generic term
is “single-payer,” meaning government pays the bills, funded by taxes
levied on citizens and businesses.
Imagine Medicare for all, without donut holes or the need to purchase
supplementary insurance. Single-payer systems save money by minimizing
middleman, such as insurance companies, and have great bargaining power
with drug companies and other suppliers. Healthcare providers may
remain independent. Standard coverage requirements lower office
overhead.
Single-payer has a strong following among progressives and even some
Republican voters. But the insurance industry derailed the Clintons’
single-payer plan and has prevented serious consideration of one this
year. Then, as now, opponents paint single-payer as socialist evil and
don’t want government standing between patients and doctors. Apparently
insurers think they do a better job of that (though few in the debate
acknowledge that having a Corporate Accountant standing between you and
your doctor is hardly ideal).
We’re told Canadians come here for treatment. It’s also true that an
estimated 1.5 million American “medical tourists” traveled abroad for
care in 2008, double the number of the year before. Others import
prescription drugs at the low prices negotiated by other governments.
President Obama says he wants to keep the health insurance industry but
add a “public option,” a government-sponsored plan for those who prefer
it. The Congressional Budget Office costed out an early draft of
Senator Kennedy’s proposed legislation at $1 trillion over ten years.
Obama promises to offset the expense by eliminating some tax breaks for
the wealthiest Americans and promoting medical efficiencies and “best
practices.”
A public option couldn’t begin to approach the cost-containment clout
of a single-payer system. But it still worries insurance companies, who
essentially admit that people might flock to it.
Public option sticker shock has, however, become an attractive target.
A few Senate Democrats may join Republicans in fighting it, according
to Kent Conrad (D-ND). Conrad proposes an alternative system of
non-profit insurance co-ops. These would have even less ability to
control costs than a nationwide public option.
There’s a fourth general approach to reform. Do nothing and look busy
about it. Jimmy Carter proposed a hospital cost containment bill in
1979. Industry deflected it by promising voluntary restraint. Savings
were short-lived. After funding Harry and Louise ads to torpedo the
Clintons’ Health Security Act, industry again promised to hold down
costs. Our current predicament testifies to how that worked out.
In May President Obama stood before captains of the healthcare industry
and announced their promise to cut the growth of healthcare spending by
1.5% for each of the next ten years. Within the week some of them
claimed Obama had overstated their commitment. They couldn’t do 1.5%
but might save a total of $2 trillion – by slowing not the costs, but
the rate of growth in costs, by 1.5%. (In other words, costs will still
rise, but not quite as quickly.) Still big savings, according to White
House officials. Don’t count on it. There’s already lawyerly concern
that such a price agreement would violate antitrust laws. Industry used
the same excuse to escape its promises to Carter and Clinton.
Sources used for this article:
Kaiser 2009 summary of CMS GDP, average cost and international comparison numbers – www.kff.org/insurance/upload/7692_02.pdf
WHO healthcare rankings 2000 – www.photius.com/rankings/healthranks.html
Life expectancy 2008 – http://en.wikipedia.org/wiki/Life_Expectancy_by_Country
Infant mortality rates –http://en.wikipedia.org/wiki/List_of_countries_by_infant_mortality_rate_(2005)
Medical bankruptcy – www.latimes.com/business/la-fi-medical-bankruptcy4-2009jun04,0,4193398.story
Comparative Cost Reinhardt – http://economix.blogs.nytimes.com/2008/11/14/why-does-us-health-care-cost-so-much-part-i/
Medical tourism – www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/03/BUGA121GPF.DTL&type=health
CBO Kennedy bill cost estimate – www.abcnews.go.com/Politics/Health/story?id=7896576&page=1
Conrad – http://blogs.tnr.com/tnr/blogs/the_treatment/archive/2009/06/14/hacker.aspx
Industry cost containment promise to Obama – www.nytimes.com/2009/05/27/health/policy/27health.html
