– Dr. Steffie Woolhandler and Dr. David Himmelstein are both associate professors of medicine at Harvard Medical School and primary care doctors at Cambridge Hospital. They co-founded Physicians for a National Health Program. –
Once they’re finished mandating that we all buy private health insurance, Congress can move on to requiring Americans to purchase other defective products. A Ford Pinto in every garage? Lead-painted toys for every child? Melamine-laced chow for every puppy?
Private health insurance doesn’t work. Even middle class families with supposedly good coverage are just one serious illness away from financial ruin. In a study carried out with colleagues from Harvard Law School and Ohio University we found that medical bills and illness contributed to 62 percent of all personal bankruptcies in 2007 – a 50 percent increase since 2001. Strikingly, three quarters of the medically bankrupt had insurance – at least when they first got sick.
In case after case, the insurance families bought in good faith failed them when they needed it most. Some were bankrupted by co-payments, deductibles, and loopholes that allowed their insurer to deny coverage. Others got too sick to work, leaving them unemployed and uninsured.
Now Congress seems poised to fulfill insurance executives’ prayers; make failure to buy their faulty product a federal offense. We’ve seen this brave new world in Massachusetts. Here, beating your wife, communicating a terrorist threat and being uninsured all carry $1000 fines. Our law has halved the state’s already low uninsurance rate – mostly by expanding Medicaid and similar programs at great public expense.
But reform hasn’t made care affordable for middle class families, or for the public treasury. A middle income uninsured 56 year old is now forced to lay out at least $4,800 for a policy with a $2,000 deductible before it pays for any care, and 20 percent co-payments after that. Skimpy, overpriced coverage like this left one in six Massachusetts residents unable to pay their medical bills last year.
Even among the insured, 18 percent skipped care because they couldn’t afford it. Meanwhile, as costs rise for subsidized coverage our state Senate plans to drop 28,000 people from the insurance rolls, and public hospitals and clinics have suffered draconian cuts as funds were diverted to shore up the reform.
Such shrunken coverage for the middle class and the evisceration of institutions that care for the poor prefigure the ugly reality of the president’s plan. Searching for the $150 billion extra he’d need each year just to cover the uninsured, Obama threatens to tax health benefits for those who are currently insured, effectively increasing its price. And he’d drain Medicare and Medicaid funds from safety net hospitals, anticipating a sharp drop in those unable to pay for care – a drop which has largely failed to materialize in Massachusetts.
The President’s other proposed funding streams aren’t objectionable, just illusory: unenforceable pledges from hospitals, insurers and the AMA to slow health inflation – a repeat of the empty promises made when Presidents Nixon and Carter threatened cost controls; and the assumption of windfall savings from computerization and care management, assumptions that the Congressional Budget Office has dismissed as wishful thinking.
A single payer reform could realize about $400 billion in savings annually on health care bureaucracy – enough to cover the uninsured and to provide first dollar coverage for all Americans. But the vast majority of these savings aren’t available unless we go all the way to single payer.
Adding a public insurance plan option – as the president proposes – won’t fix the flaws in Massachusetts-style reform. A public plan might cut private insurers’ profits, which is why the insurers hate it. But insurers’ roughly $10 billion in annual profits is only a sliver of the money squandered on bureaucracy.
The complexity and fragmentation of an insurance system with multiple competing payers breeds this massive waste. In addition to their profits, insurers spend vast amounts on overhead for marketing (to attract healthy, profitable members); demarketing (to avoid the sick); keeping track of their ever-shifting roster of enrollees and collecting their premiums monthly; fighting with hospitals and doctors over bills; and lobbying politicians. And doctors and hospitals spend tens of billions more keeping track of who got every band-aid and aspirin tablet, and fighting with insurers to collect payment.
A single payer plan would eliminate most insurance overhead, as well as these other paperwork expenses. Hospitals could be paid like a fire department, receiving a single monthly check for their entire budget, eliminating most billing. Physicians’ billing could be similarly simplified.
While a public plan option could save on profits, it would forego most of the other $390 billion that single payer could save. Hospitals and doctors would still have to maintain their elaborate billing systems. And overhead for even the most efficient competitive public plan would be far higher than Medicare’s, which automatically enrolls seniors when they turn 65 and disenrolls them only at death, deducts premiums directly from social security checks, and does no marketing.
Moreover, a kinder, gentler public plan would quickly fail in the health care marketplace. Insurers compete by NOT paying for care: by seeking out the healthy and avoiding the sick; by denying payment and shifting costs onto patients; and by lobbying for unfair public subsidies (as under the Medicare HMO program). Competition in health insurance involves a race to the bottom, not the top.
A public plan that abstained from marketing would soon be saddled with the sickest, most expensive patients, whose high costs would drive premiums to uncompetitive levels. Similarly, failure to emulate private insurers’ schemes that shift costs to patients and other payers would be a crippling competitive disadvantage. To compete effectively, a public plan would have to copy private plans’ bad behaviors.
When addressing liberal audiences, proponents of mandated private coverage with a public plan option conflate it with single payer reform, hoping to deflect criticism from their left. Meanwhile, Republicans warn that such a plan is a back door route to socialized medicine. Both are wrong.
Eight decades of experience teach that private insurers cannot control costs or provide families with the coverage they need. A government-run clone of private insurers cannot fix these flaws. It’s bad enough that insurers are peddling damaged goods. Why make things worse by requiring Americans to buy them?
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First let me be clear that I am insured. I am 56 & own a small struggling retail store. My health insurance policy costs me $6000 a year. In order to have such a “low” premium, I have a deductible of $2500. I have almost no extra money after paying my basic bills. I can’t afford to go to the doctor although I have some real health issues. I fell last year and tore muscles in my leg. I need physical therapy but I can’t afford it. It is difficult for me to walk and it keeps getting worse. My quality of life has greatly deteriorated. I can see myself in a wheelchair in a few years. Blood was found in my urine 3 years ago. I took the tests I could afford but the cause wasn’t found. I can’t afford further tests. Maybe I will end up on kidney dialysis because I have an untreated condition. All I can do is to hope that I don’t. People in my situation who are under-insured are really in a bind. We are not poor enough for Medicaid or rich enough to have good insurance with a low deductible
In what ways can a single payer plan provide incentives to avoid high risk behavior? For example, are people who are obese due to dietary choices still charged more to offset the higher cost of their care? Does a race car driver still pay more to offset their higher chance of injury? Let’s reward people for avoiding risk like the Safeway employee plan has done effectively to stabilize costs.
70% of all health-care costs are the direct result of behavior. 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.
Are there good examples of countries who have a single payer plan which provides rewards based on behavior? Choosing to receive a reward should require that the recipient agrees to non-invasive monitoring by friends and family. If I catch you smoking, I get your reward and you get penalized.
Scott Harrington writes…
Safeway’s program offering employee premium discounts related to tobacco use, weight control, blood pressure and cholesterol levels is a good example.
Financial incentives for healthy behavior have the potential to significantly reduce costs without reducing quality. A failure of health-care reform to permit or incorporate such incentives would make coercive government measures to control costs more likely. These controls might include limits on provider reimbursement, comparative-effectiveness or cost-benefit criteria that must be met for care to be reimbursed, or budget caps. The results would be less health–more obesity, diabetes, heart disease, and cancer–and eventually less health care.
An aversion to having health-insurance rates and coverage linked to individual behavior may be on the verge of becoming national policy. If that happens, the unintended consequences could be very costly.
As an example of the kind of thinking that could easily end up running our health care system, see Samarkand’s post below.
Contrary to the claims of this article, private health insurance DOES work for the vast majority of the insured, as most polls show. It’s worked just fine for me for 31 years, and for every member of my family, protecting us all from financial ruin through major illnesses and accidents, just as insurance should (no thanks to the politicians who have been trying to destroy private health care for more than a decade).
I expect the quality, convenience, timeliness and freedom of my health care to decline under a government-run plan, and its costs to increase. That is because there is only one thing that government brings to the table on any issue that private systems cannot, and that is a monopoly on the legal use of force to compel submission to its wishes. How could that possibly be a desirable attribute of any health care system?
Government-run health care will eventually -
Be operated entirely by unionized employees. Union contracts protect the worst employees and drive off the best. When unions negotiate with politicians for their contracts, the tax-payers and the public who depend on public services become nothing but deep pockets and hapless victims, often not even having a place at the bargaining table if the politicians were put in place with union money, as they often are. The unions have destroyed our car industry, our schools and are bankrupting some of our biggest and (formerly) richest states. Unions and high quality affordable customer service are simply incompatible with each other in the long run.
Make all but the rich and the political elites subject to the whims, fads, prejudices, and corruption of a political bureaucracy. Already, insurance plans are rendered far more expensive than necessary because politicians mandate coverage at the behest of lobbies and anti-science health cultists, and against the wishes of the plans’ customers. Politicians have forced my plan to include coverage for acupuncturists, naturopaths, chiropractors, mental health counselors, and others, not because members of the plan wanted that, but because lobbyists for those groupsd donated heavily to the Democrats who run my state. Naturally, I’m forced to pay for worthless (to me) coverage.
Give the government a financial incentive to terminate the lives of more “expensive” citizens and to limit the health care available to unpopular minorities (or majorities) like the obese, smokers, carnivores, the political out-party, and anyone who doesn’t graciously submit to its demands. What is to stop the government from limiting your health care if you refuse to sign a “living will” authorizing the withholding of treatment? What is to stop the government from requiring that you undergo “counseling” if you want to aggressively fight an illness that the government would rather you give in to, until you agree to what it wants? Right now, if my doctor doesn’t support my choices, I can find a different one. A government-run system simply cannot allow that, any promises it may make now to the contrary.
Not to mention that nothing in the U.S. Constitution grants the government the authority to take over such an intimate area of its citizens’ lives.
A government-run health care system will eventually end up being as dysfunctional as the D.C. public school system, except that you will not be allowed to drop out and you will never graduate from it. There will be no escape. And the costs will end up, as with all major government entitlement programs, vastly exceeding current projections.
I fully agree with Rebecca B. America is the sickest nation on the earth .. the richest, and yet the sickest. I have written repeatedly to the Obama administration to suggest that they tackle the problem from a different angle. Firstly, stop chemical farming, which is not only ruining American health, but it’s also ruining American land, rivers and streams, and our air and seas. If we could get away from the pesticides, chemical fertilisers, GMO’s, and the massive quantity of useless chemical additives in our food we would be in much better health as a nation. Secondly, we should disallow the continuing supply of ‘junk’ food by requiring healthy standards from those who purvey food to the public. Once that has been sorted out, and we go back to organic farming, just as it has been done for millenia, we can replant the Garden of Eden right here on American soil, we can replant the billions and quadrillions of trees we have cut down, and we can grow herbal medicines and aromatics which cannot be patented by the greedy pharmaceutical companies. We can become an example to the world. Only then can we get away from the pernicious pharmaceutical industry that is intent on poisoning us with their expensive drugs once we have eaten the miserable non-nutritious food that is killing us and causing so much obesity and disease. We can’t “keep eating and drinking and smoking” ourselves into oblivion and expect anyone or any system of insurance to restore us. We, each individual, must decide to take our health into our own hands and make sure that our life style rewards us accordingly. Then there will be plenty left for those who are not fortunate to have good health because of genetics or other circumstances, and for those who sustain accidents. I know this doesn’t answer the health care dilemma, but as Hippocrates, the father of medicine, said, “Let food be your medicine”.
I’m not surprised two doctors want the government to ensure everybody purchases cadillac health care. Problems in the health care industry exist because government has intervened in the free market. These doctors fail to see that government actions have driven up the cost of health care and contributed to the personal bankruptcies. For example:
Government creates a big demand (via Medicare, Medicaid, CHIP) but no supply
Government forces hospitals to treat those who do not pay including illegals if they show up at the emergency room
Government allows lawyers to sue doctors for possible but adverse outcomes regardless of negligence and prevents patients from contracting with doctors with a promise not to sue
The FDA increases costs of medications (via various means I won’t get into here)
State governments specify what insurance must cover so males pay for pregnancy, non-smokers pay for smoker’s illnesses, viagara is covered, etc
The federal government prohibits employers/individuals from purchasing insurance across state lines
The solution is not more governmental meddling in the free market. Medical care used to be so inexpensive that doctors actually made house calls. Not any more.
I like a personal healthcare account where I am in control. The government doesn’t care about my health they just want to control me. Thanks but no thanks. Look at our economy and now they want to ruin health,just great.
Although I agree we definetly need health care reform but forcing people to buy insurance will actually going to excarbate the problem We need to get rid of insurance period. Untill then our pocket holes are going to get larger and larger till we will be left with nothing.Then the tides will turn.
If you want to cut down the cost of medical care why not also go after these drug companies that want to charge hundred of dollars for a pill that costs pennies to make? Once the research cost is covered from profits all that is required is the pennies to make it, so there’s no justification of these high prices. Cutting out the bureaucrats is a common sense idea, as such I expect we’ll never see it acted upon.
Health is life. And Good health is a full life.
This is the absolute truth of the whole health issue. You must ask yourself as a citizen what this is worth to you. And also you must ask yourself whether our leaders’ actions will result in genuine, practical, beneficial results.
Educate yourselves fully and don’t rely on soundbites from talking heads. Our whole philosophy on this issue stems from an improper assumption. It is the assumption that money must some how be a limiting factor in providing health care.
There are other ways in which “costs” can be covered. And If we are creative we can find solutions.
In imperial China some doctors would open clinics that offered general care to the community which supported it. Doctors would provide service to the community as needed. If while following doctors orders, one were to become ill, then the ill patient was freed of the obligation to pay the doctor until the doctor made things right.
This arrangement encouraged the doctor to provide sound medical advice and preventative care, and gave the community a sense of control over the quality of care. The clinic was regarded as a community asset, and the community was the life of the clinic.
Perhaps hospitals, clinics, and other such providers should be required to garner support in this fashion.
Just an idea. It would be good to explore other ideas where money is not the central focus.
According to the bureau of labor statistics , administration is the fastest growing job in health care. Up 2500% since 1970. Insurance company = administration. The elimination of national health care from Congress’s consideration is an American travesty of domestic policy.