Over the past few months, one of President Obama’s greatest legislation goals has been a push for near universal care for all Americans. I generally support universal health care, but I haven’t had a strong opinion on how this country should best achieve this goal, since I’ve yet to get a major health problem that has required me to go through the current medical system. I’ve had several friends who have had bad experiences with their insurance or friends who’ve lost their jobs and have struggled finding health insurance to help them cover their family. I did a cartoon in the July 29, 2009 issue of the Tri-City Voice .
With all this talk, the question first needs to be asked, “Why do we need to reform our health care system?” The June 27, 2009 issue of the Economist was dedicated to the issue of health care reform and it had an editorial that wrote:
Diagnosing what is wrong with America’s health-care system is the easy part. Even though one dollar in every six generated by the world’s richest economy is spent on health- almost twice the average for rich countries- infant mortality, life expectancy and survival-rates for heart attacks are all worse than the OED average. Meanwhile, because health insurance is so expensive, nearly 50m Americans, an obscene number in such a rich place, have none; those that are insured pay through the nose for their cover, and often find it bankruptingly inadequate if they get seriously ill or injured.
The costs of health care hurt America in three other ways. first, since half the population (most children, the very poor, the old, public sector workers) get their health care via the government, the burden on the taxpayer is heavier than it need to be, and is slowly but surely eating up federal and state budgets. Second, private insurance schemes are a huge problem for employers: the cost of health insurance helped bring down GM, and many smaller firms are giving up covering employees. Third, expensive premiums depress workers’ wages.
The July 1, 2009 issue of the New Republic has an editorial that neatly sums up the goals of health care reform:
The only litmus test reform should be whether it achieves its goals: making sure everybody can get timely medical care without experiencing financial ruin; reducing the cost of care overall, so that it no longer imposes such a serious economic burden on individuals and on society as a whole; and improving the quality of care, so that it focuses on prevention and actually makes people better once they are sick. How we achieve these goals is far less important than whether we achieve them.”
There are three models of universal health care being used by the developed nations of the world. Countries like Britain, Canada, and Sweden use a single payer system, which uses taxes for a public system. Countries like the Netherlands and Switzerland obligate its citizens to buy insurance. France has a mixture of a public and a private health care system. I’ll explore the options.
One of the strongest arguments for the single payer health plan is by Pam Pohy, an activist and blogger for Everyday Citizen, a progressive activist site. Pohy quotes the Physicians for a National Health Program in defining a single payer plan and its benefits:
Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or “payer.” In the case of health care, a single-payer system would be setup such that one entity—a government run organization—would collect all health care fees, and pay out all health care costs. In the current US system, there are literally tens of thousands of different health care organizations—HMOs, billing agencies, etc.
By having so many different payers of health care fees, there is an enormous amount of administrative waste generated in the system. (Just imagine how complex billing must be in a doctor’s office, when each insurance company requires a different form to be completed, has a different billing system, different billing contacts and phone numbers—it’s very confusing.) In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services.
The General Accounting Office (a non-partisan government office) projects an administrative savings of 10 percent through the elimination of private insurance bills and administrative waste, or more than $150 billion. The Congressional Budget Office (another non-partisan government office) projects that single payer would reduce overall health costs by more than $225 billion despite the expansion of comprehensive care to all Americans. Pohy feels that this savings in administrative costs would provide medical care for those currently underserved. Roger Bybee, a Milwaukee based activist, concurs with Pohy’s assertion. He wrote an article titled “Health Reform Via Guaranteed Choice” for the December 2008 Z Magazine where he states:
“Essentially, single-payer plans, operating in nations as diverse as Canada and Taiwan, provide health care to all citizens and permit them free choice of their doctors and hospitals. They also largely eliminate the commanding role of private insurers in the system and the huge administrative costs they impose, enabling the health system to cover every citizen. The single-payer plans are typically funded by a mixture of general tax revenues and payroll taxes.”
Though Obama sees merit in the single payer plan, he is not proposing that for our nation because he feels a change to the single payer plan would be too disruptive to our nation at this time. The June 27, 2009 Economist holds a similar view:
If he were starting from scratch, there would be a strong case (even to a newspaper as economically liberal as this one) for a system based mostly around publicly funded health care. But America is not starting from scratch, and none of the plans in Congress shows an appetite for such a Europen solution. America wants to keep a mostly private system- but one that brings in the uninsured and cuts costs. That will be painful, and require more audacity than Mr. Obama has shown so far.”
Obama’s health care plan seems to model itself after the Swiss and Dutch universal private insurance plans. The June 27 Economist writes:
After decades of failed attempts at reform, a consensus appears to be emerging in America around the principles needed for universal coverage. One likely change means a restructuring of America’s failed health-insurance markets. Firms are today allowed to pick the safest patients and reject the sickest. In future they will have to take all comers. Because this imposes unfair burdens on firms that attract lots of older or sicker people, reform is likely to include government-funded mechanisms for risk pooling or reinsurance.
If done properly, this will in time move America towards the Swiss and Dutch models of universal private insurance. These are not perfect, to be sure. Regina Herzlinger of Havard Business School observes that the Dutch reforms have led to rapid consolidation of insurers and hospitals, fuelling resented price increases. She favours the decentralized Swiss model, which preserves individual choice and competition. Others note that Swiss health-care costs are high by European standards. But they are a third less, as a share of GDP, than America’s, and the country’s excellent health outcomes should be the envy of American reformers.”
The crux of the recent debates in Congress right now have been about the “public option”, a government run insurance entity that people can voluntarily join and that could provide competition to private insurers. Obama has argued that such a public option would insure that all Americans would have access to affordable coverage and that rising health care costs could be contained. Such a plan seeks to preserve existing insurance industry arrangements. Shaleigh Murray wrote an article called “The Crux of the Debate” for the Washington Post National Weekly Edition in which she quotes Obama as saying:
“Just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, if they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal, that defies logic.”
One of the strongest arguments against such a public option is that a government program would underprice private insurers. The New Republic July 1, 2009 editorial takes note of that argument and replies:
“The more intelligent criticisms focus on whether a new public program would set prices too low, starving providers of resources and disrupting care, or take unfair advantage of access to taxpayer money in order to underprice private insurers and drive them out of business. But these are reasons to build in safeguards- safeguards that the leading advocates for a public plan have already embraced. They are not reasons to water down the idea beyond redemption, let alone ditch it altogether.”
Another frequent criticism of government run health care plans is that there are long waiting lists that one must be in to receive care. The Economist feels that having incentives would cut on the waiting lists while also cutting down on costs. In it’s June 27 issue, it writes:
“More competition and transparency would help, but the main goal of any reform plan must be to address the perverse incentives that encourage overconsumption and drive costs up. Medicare has been tinkering with ‘pay for performance’, a promising experiment. Mr. Halvorson insists that by rejigging incentives other health providers can also create their own ‘virtual Kaisers’.
If American reformers doubt the power of incentives, they should visit Sweden. Like other relatively cheap OECD systems, Sweden’s single-payer model has been plagued by long waiting lists- a sign, to American conservatives, of the rationing that goes with socialized medicine. Sweden health officials tried and failed to cut queues by increasing direct funding for hospitals and even issued an edict requiring hospitals to cut queues for elective operations to three monts. Then, last year, the health ministry said it would creat a fund into shich it would pay $128 million a year for local authorities that managed to reduce waiting times to that threshold. Nine months ago, virtually none of the counties passed, but this month the health minister revealed that nearly all had cut their queues to three months or less.”
Because of the opposition of the insurance industry to this public option, Shalaigh Murray reported that a bipartisan group of Senators had been working on an alternative plan, a national network of member-run cooperatives. These cooperatives would create a national structure with state affiliates, and would have the authority to pool their purchasing power. Senate Budget Committee Chairman Kent Conrad of North Dakota is an advocate of the co-op idea and feels it would be “strong, significant competitors to private insurance.”
Working in the library, it’s easy to research magazines about the various health care ideas. I learned long ago to do my own research when it comes to learning about a subject so that I could make up my own mind about things. One of the things that the advocates of a government insurance alternative, a single payer plan or a national co-op system have is a desire to break some of the monopoly of power that large health insurance companies have and give some real choices to the average consumer. Ezra Klein wrote the article “The Ghosts of Battles Past” for the August 3, 2009 Washington Post Weekly in which he wrote:
By last year, only 7 percent of American workers were in ‘traditional’ indemnity health plans, while the rest of us- or at least those of us fortunate enough to have insurance- were swimming in the alphabet soup of HMOs and PPOs and HDHPs. we’re all in networks now. We don’t get our choice of doctor. There’s no appeals process. No out-of-pocket caps. Nothing to stop insurers from rejecting our coverage applications based on preexisting conditions. And if we don’t like our insurer? Tough.
…The Justice Department judges an industry ‘highly concentrated’ if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/ Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.
Economic textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period.
I think that this is one of the big things that government health care advocates fear about the present system- insurance companies try to maximize their profits sometimes at the expense of Americans with medical needs, creating soaring costs that individuals and businesses can’t afford. From what I understand of the various articles that I’ve read, I’m more convinced than ever that some sort of universal health care is needed for our country. Hopefully in the next month or two, as Obama and the Congress debate the merits and argue their positions, average Americans can understand the necessity for some type of health care reforms and make informed decisions on what kind of reforms they want.