Camilo Marquez MD
What are the essential elements of the health care crisis? I would say increasing costs, relative poor outcome per unit of cost, lack of access to care due to lack of insurance coverage and health care disparities, together with unequal standards of care. All of these issues are related to the way health care resources are allocated. We have not resolved as a society how those resources should be allocated or on which factors, moral, political or economic, should the decision be based. In the United States our health care system is highly fragmented, and each of these factors is involved to different degrees in guiding the decisions in different segments of the system. In countries which have a unified social insurance program, it would be easier to identify the principles by which the distribution and level of social welfare benefits are governed.
A governmental budget is a political, social, economic and moral document. What would we appreciate of those factors in an analysis of the federal budget? And even more challenging, what would we learn of an assessment of the budget-making process? I think here one might invoke the proscription of knowing how a piece of legislation or a sausage is made. Someone said that politics is the authoritative allocation of scarce resources. While I thought that was the purview of economics, it suggests that control over resources is governed by the exercise of political power. This notion brings us to consider the current issue under discussion in Washington and the media, the so-called “Grand Bargain/Fiscal Cliff” debate over the reduction of budget deficits.
While the outcome of this debate would have significant effects on how health care resources and the benefits they generate are distributed, I submit that this discussion is a sham because it neglects the most compelling budget reform policy option, single payer universal health care. The elimination of private, employer-based health insurance and the adoption of universal health care financed by a single payer through general revenues would make the discussion of deficit finance completely irrelevant. Just the capture of the money taken by private insurance for administration and profit alone would liberate $500 billion, enough to cover all the uninsured without an additional dollar of health expense from our current $2.6 trillion in 2010. The notion floated by Republicans and some Democrats in Congress, as well as President Obama, that the achievement of the “grand bargain” requires cuts in entitlements of Medicare and Medicaid is preposterous in the face of what true health care reform offers.
The issue is not about fiscal policy, but health care policy and social justice. Our health care expenditure per capita is more than twice the average of the industrialized countries of the OECD (Organization for Economic Co-operation and Development), $8,233 compared to $3, 118 in the member countries, excluding the U.S. Health care spending in the United States represents 17.6% of the Gross Domestic Product (GDP), while the average OECD percentage is 9.2. If our GDP share of health expenditure were the same as in France, widely regarded as having the best health care system in the world, in 2010 we could have saved as much as Americans paid in individual income taxes. While we pay more than twice as much for care, do you think our health outcomes are twice as good? No, we lag far behind other industrialized countries on numerous health statistics. We do not have the best health care in the world. It is available, but only if you can afford it.
The problem with the debate on health care reform is not just that the discussion of single payer universal health care is neglected or predetermined to be politically infeasible and dismissed, but that when it is engaged, it is with deceit, distortion and bald propaganda, usually backed by enormous sums from the health care industry paid to lobbyists, public relations firms and political contributions which combine to wield great power and influence. It makes the arguments difficult to interpret or understand when they could be put more simply and honestly.
To understand the debate, one needs to learn a few concepts by which to frame the discussion. I refer to a conceptual approach to health care reform. Three approaches to understanding are involved: historical, structural and moral. For example, knowledge of the history of health care reform in the United States and other countries would disclose the artificiality of the discussion of “entitlements.” It would clarify the reasons for our highly fragmented system of social benefits compared to the unitary structures of European countries. In no other country are social insurance systems segregated by age and income. This is a product of our political history and a long series of compromises made by reformers to achieve broader coverage for sickness and accidents, unemployment and retirement. These kinds of compromises were forced in the effort to broaden health care coverage under PPACA/ACA, known familiarly as Obamacare, and they were costly and will destine the reforms to ultimate failure. That will be examined in the next section.
The historical frame would reveal the structure and process of the health care reform debate as it played out in the campaign for Obamacare. The culmination of a hundred years of mostly failed reform efforts, that campaign illustrates the phenomena alluded to earlier in the idea that politics is the authoritative allocation of scarce resources. While the issues of social welfare, economic security and the impact of rising health care costs on corporate and public budgets were the ostensible subjects of reform debates, the consistent themes that played out in the six major national campaigns for reform were corporate profit, institutional control and fear-based red-baiting of the reform advocates. The conclusion I make from reviewing the history is that there can be no compromise on the basic principles of universal health care. As described by the Vermont Workers Center which spearheaded the successful drive in that state to pass a single payer bill, they are Universality, Equity, Transparency, Participation and Accountability. These are the principles that guide the statewide organization, Health Care for All-Oregon which leads the campaign in our state.
The structural frame is perhaps the most complex and the one on which most discussion occurs and research is done. While complex, it can be simplified by focusing on structural questions from the perspective of each side of the matter, finance and delivery. Most of the debate has been on the side of finance. The issue of single payer has to do with that side only. The other side, delivery, receives a lot of discussion, and there are a number of proposals that are being considered to improve quality and reduce costs. The Oregon Health Plan is one of these. But I suggest leaving that discussion for another time and I will concentrate on finance.
The American health care system is roughly half-private and half-public. The public side is financed through taxation and the private through employer-based private insurance. The majority of large employers are self-insured, with plans administered by an insurance company. The rest is the private insurance you are familiar with through your jobs. Let’s ask this question: what is the primary fiduciary responsibility of health insurance companies? Is it to provide health care? Is it to serve the companies they contract with to provide services? Is it to provide innovative, cost-efficient ways of delivering health care? No, it is to make profit for their shareholders. And how do they do that? By not paying claims, by denying coverage to people who have higher probability of making claims and by acquiring monopsony control of the market for insurance in a region, thereby controlling the reimbursement rates to providers. Essentially, collect premiums from as many healthy people as they can cover and deny payments to as many people who might get sick by exclusion, denial or recision. That is their job.
The fragmentation of risk pools like this leads to some companies getting stuck with losses they must balance by increasing premiums, and as we know, insurance premiums have been rising at two to three times the rate of inflation, enough to make them unaffordable. Without the rescue of health insurance companies by the Affordable Care Act, the health insurance industry was on its way down the tubes. The cost of all this medical underwriting claims review and market manipulation, including very high salaries and profits, equals about 20 to 25 percent of what is paid in premiums. The administrative costs of Medicare are one-tenth of those of private insurance companies. That difference amounts to over $400 billion. Single payer would eliminate all of this by having only one risk pool, no underwriting or claim review, no profit or highly paid executives and a global budget that would manage costs. The Congressional Budget Office has studies documenting the savings of a single payer system.
The moral frame is perhaps the most simple and straightforward of the three. It is the one most advocates of health care reform believe is where reform should start. Health care is a human right. That is the rallying cry of our campaign in Oregon, as it was in Vermont. While that might be perfectly clear on the face of it, I find that analytically it is the most difficult to argue. And I don’t think it is necessary to make a compelling rational argument for single payer universal health care on the basis of social welfare and economics. Most of the leaders of the movement espouse that messaging the narratives of the damaged lives of people who have been betrayed by the health care system is the most convincing approach. For some perhaps, others, not necessarily, and whether it can capture the majority, we will have to see as the campaign unfolds.
Unfortunately, the opponents of reform, and perhaps many who are not engaged in the argument, avoid examining the experience of other countries, which offers a laboratory of different perspectives, history and political processes in the development of health care policy. T.R. Reid, in his book,The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care, discusses health care systems in different countries and how they arrived at achieving universal health care. He demonstrates how various historical, sociological and cultural patterns contributed to a national consensus in different countries which have national health insurance. He poses this background as a contrast for the stark case of the United States, which stands alone among the industrial countries as not having made the moral decision that no one should be without health care. For us, it is ultimately going to be a political consensus that shapes the outcome of the health care debate. How that consensus is achieved perhaps illustrates the concept of the aphorism that politics is the authoritative allocation of scarce resources, with the authority established by moral principles framing the political, economic and social dynamics of the debate.
The argument for single payer universal health care runs into some resistance from advocates of reform who have been encouraged by the significant achievement of the passage of the Patient Protection Affordable Care Act (PPACA/ACA).. They identify its accomplishment and subsequent support by the Supreme Court as evidence that incremental steps toward national health insurance are effective. Some see the investment of political capital in an effort to achieve universal health care as wasted and potentially jeopardizing what has been accomplished. In the state of Oregon, care advocates have welcomed the reforms that Gov. Kitzhaber’s administration made in the Oregon Health Plan. They seek to consolidate the gains that the establishment of the Coordinated Care Organizations offers to improve community involvement and reduce health care disparities. They see a campaign for single payer in the state as fruitless and prefer to put their energies into what they can achieve in the state experiment to improve care to the neediest clients. While I can sympathize with these concerns, I see them as woefully short-sighted and tragically short of the mark of a system which would guarantee health care as a human right to all, regardless of income, employment or prior health condition.
Presently there are 50 million people in the U.S. without coverage because they cannot afford or are denied health insurance. Obamacare will extend coverage to an additional 30 million people, but the Congressional Budget Office expects there will still be 26 million people uninsured after the implementation of the legislation in 2014. While expanded insurance coverage through the exchanges which will offer some premium subsidies to lower-income families will mean more protection from the burdens of illness, high premiums, deductibles and co-payments will be a challenge to those at the lowest incomes. Even middle-class people will be compromised by rising premiums, out-of-pocket expenses and the high cost of catastrophic illness. In Massachusetts, where over 95% of the public is covered, bankruptcies due to medical illness have not diminished. The increasing cost burden of medical care will not be curbed by Obamacare, and the system will break down as the percentage of state, national and family budgets consumed by health care cost mount and crowd out other needed services. Adding to the weight of suffering due to costs and untreated conditions due to unaffordable coverage will be the inevitable deaths of 26,000 people who still do not have insurance coverage under the law. In Oregon, approximately 600,000 people are uninsured, but by 2019 as many as 200,000 will still be without coverage after the expansion of Medicaid and the creation of the insurance exchange.
The expansion of coverage and innovations of Obamacare and the Oregon Health Plan are indeed welcome, but as we see, severely limited in scope. An expanded and improved Medicare for all in the state and eventually the nation would encompass those programs, expand coverage and provide for cost controls and efficiencies they cannot. Most compelling to me is the Win-Win advantage of expanding coverage, improving care standards of single payer, while liberating huge funds which will allow us to protect our budgets for services that are compromised by the increasing costs of the so-called entitlement programs. The innovations of the Oregon Health Plan could be preserved and expanded under a statewide single payer plan as well as preserving the choices one presently has under private employer-based coverage. Integrated provider/insurance plans such as Kaiser Permanente could be reconstituted as an accountable care organization under single payer with a tenth of the administrative costs. Business would be freed of the costs of providing health coverage and be able to compete with the certainty that they would not have to cover those expenses. The expansion of coverage and care will increase economic activity, provide good career-based opportunity for many and protect everyone from the insecurity of illness and accident. Achieving single payer universal health care in Oregon and the nation will require the commitment and action of many to overcome the intense opposition we will face from the opponents of reform. Get involved and join an organization to participate in the campaign.
Camilo Marquez, M.D., is a retired clinical psychiatrist living in northeast Portland, and the chairperson of the Education Working Group of the Health Care Committee of Jobs with Justice.