Failure of profit-centered health insurance
This Web only Speakout has not been edited.
Michele Swenson
Published June 9, 2008 at midnight
The U.S. averages twice as much spending on health care, with worse outcomes, than any other industrialized nation. Our country is unique in its dependence on over 1200 for-profit health insurances that function as gatekeepers to health care. Shareholder and CEO profits trump access to quality health care.
No health care reform proposal by any presidential candidate addresses the failure of the private health insurance industry, characterized principally by rising premiums and decreasing benefits. Premium increases of 87 percent over 6 years outpace both cost-of-living and median family income increases.
Promotion of incremental reform demonstrates lack of political will - the same failure to confront corporate profit-taking by insurance and pharmaceutical industries that wrote Medicare prescription drug reform with billions of dollars of taxpayer subsidies and inflated profits to benefit their bottom lines.
Commercial health insurance is the 800-pound gorilla, responsible for 20 to 30% of health care dollars siphoned to excessive administrative costs, lobbying, marketing, CEO salaries and profit-taking - $1.4 billion stock options to former UnitedHealth CEO William McGuire; $30 billion annual after-tax health insurance profits, plus $32 billion insurance underwriting and marketing costs, revealed by the McKinsey Group Report of 2007.
Profit is a perverse incentive for quality health care: imagine for-profit fire or police protection. Underwriting is the art of evaluating and avoiding risk, insuring profits by covering the healthy and rejecting everyone else as a “pre-existing condition.” “Market-driven” health care treats health as a commodity, to be negotiated like a car or a house. Free-market health care has also spawned “designer hospitals,” built to offer only the most profitable specialty services, e.g., cardiac procedures, eliminating less profitable care, such as emergency room and mental health.
The Wall Street Journal (2/14/07) reports that gaming the system for profit has given rise to the $20 billion annual business of “denial managment” - health insurance middlemen employed solely to search claims for excuses to delay, deny or renege on reimbursements. Thirty percent of provider claims are initially denied, requiring multiple resubmittals.
To protect their bottom line, commercial insurers write policies with reduced benefits, shifting more out-of-pocket costs and risks to consumers, and in turn subjecting more to underinsurance, unpaid medical bills and personal bankruptcies. A 2005 Harvard Medical and Law Schools study identified unpaid medical bills as the leading cause of personal bankruptcy. Proving that insurance does not equal health care, fully 75 percent of these filers had insurance at the start of their illness.
Responding to double-digit premium increases, more employers are opting to move employees into underinsurance - high-deductible catastrophic plans. Simultaneously, the American Hospital Association reports that both family out-of-pocket health expenses and unpaid medical bills have risen approximately 60% over a decade - still more costs ultimately shifted to taxpayers and consumers.
Notably, more than 20 federal and state studies since 1990, including the 2007 Lewin Group evaluation in Colorado, have demonstrated that single-payer health insurance is the only reform model that can both save money and provide comprehensive health care benefits for all. Indeed, the single payer model is the only truly efficient, equitable, and sustainable financing system, enabling universal coverage by spreading risk across the entire population.
Contrary to assertions by the “free market” choir, only single payer insurance permits true choice of pubic or private providers, whereas private insurance is limited to “in plan” doctors. Only single payer provides comprehensive benefits and protection against medical bankruptcy.
Rather than recommending further study of the only truly universal Colorado proposal, would-be health care reformers buried the lead, and once again went with industry-defined, Massachusetts-style reform: protecting insurance profits, and requiring an individual mandate to purchase minimum benefit insurance, subsidized by taxpayers as needed. It is a formula for continued inflationary consumer health costs and decreasing benefits.
National single payer bill, HR676, calls for a progressive 3 to 4 percent employer and employee payroll tax to replace all health deductibles and premiums. Full-coverage costs for a family of four earning $40,000 annually would drop to $110 a month, from current costs of $273/month for employer-sponsored coverage, or $489/month for an individually-insured family. (Kaiser Family Foundation, 2007).
The political class addicted to corporate campaign dollars (and privy to 70 percent-taxpayer-subsidized health coverage) is sidestepping meaningful health care reform for constituents. Nevertheless, polls by Pew and others have revealed increasing numbers - 54 to 65 percent of people - support a national single-payer health care plan. Recently reported, 59 percent of U.S. physicians support national health care, up 10 percent from 2002. A grassroots movement and political reforms that include publicly-financed campaigns may be necessary to instill in our leaders the political will for meaningful reform.
We have everything to gain from quality-, saftey-centered universal single payer health care to replace U.S. dependence on profiteering health care gatekeepers.
Michele Swenson is a resident of Denver.
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June 9, 2008
11:04 a.m.
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dilligaf writes:
Capitalism at it's finest. But boy you better not mention that dirty word socialism. Keep opening your wallets and letting these billionaires in.
June 9, 2008
11:08 a.m.
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BrianSchwartz writes:
If single-payer is so good for health care, what else is it good for? Food, housing? Haven't Cuba, North Korea, and the Soviet Union tried that already? Workers paradise, eh?
Gosh darn it, all those for-profit grocery stores. Let's replace them with a single-payer system where we hand of money to the government, who then tells us when, where, and how we can buy food.
And how about countries with single payer. People die waiting for care there. See my article on it for documentation of that:
http://www.patientpowernow.org/2008/0...
Could it be that problems with health care exist because existing government meddling in the market, which results in our current market that is not free. For a summary of how government policies cripple health care, see Ari Armstrong's article here:
http://www.freecolorado.com/2008/05/f...
I like the false analogies between health care and police/fire services. We know that the police have no legal obligation to protect us. See, for example:
http://www.foxnews.com/story/0,2933,1...
http://www.fee.org/Publications/the-F...
There are many free-market protection services, ranging from firearms, martial arts, burglar alarms, security guards and patrols, etc.
Re. fire, the analogy is to private home-owners insurance. One might be able to compare a fire department to emergency medical services, but that may not hold up either. But certainly municipal fire departments are not analogous to all of health care.
June 9, 2008
2:18 p.m.
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paulhsiehmd writes:
Unfortunately, Ms. Swenson repeats the same old falsehoods about alleged virtues of single-payer health care that have already been amply refuted in numerous studies.
Countries like Canada and Great Britain that use single-payer systems routinely deny care to patients through waiting lists and rationing.
There's a reason that Canadians come to the US when they can't get the care they need in their own country, even if they have to pay out of pocket to do so (in addition to the high taxes they've already paid to fund their own broken system).
There's a reason that frustrated Canadian physicians are coming to the US to practice rather than deal with the bureaucracy and regulations that keeps them from acting in their patients' best interest and practicing according to their medical conscience.
If Americans value their lives and their health, they'll avoid a "single-payer" system like the plague.
For more information about the problems with "universal" health care in other countries as well as practical alternatives based on free market principles, I refer readers to the following three articles:
"Moral Health Care vs. 'Universal Health Care'"
Lin Zinser and Paul Hsieh, Winter 2007-2008 Issue, "The Objective Standard"
http://www.theobjectivestandard.com/i...
"The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World"
Michael Tanner, March 18, 2008, Cato Institute Policy Analysis no. 613.
http://www.cato.org/pub_display.php?p...
"Health Care in a Free Society: Rebutting the Myths of National Health Insurance"
John Goodman, January 27, 2005, Cato Institute Policy Analysis no. 532.
http://www.cato.org/pub_display.php?p...
Paul Hsieh, MD
Sedalia, CO
Freedom and Individual Rights in Medicine (FIRM):
http://www.WeStandFIRM.org
June 9, 2008
2:24 p.m.
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paulhsiehmd writes:
[Here are a few excerpts from something I wrote last year on the problems with "single-payer" systems. --- Paul Hsieh, MD]
http://tinyurl.com/6geua8
"Single-Payer" Health Care Is Anything but Free
By Paul Hsieh, MD
Colorado Springs Business Journal, September 28, 2007
...Canadian law makes it difficult or impossible for citizens to spend their own honestly earned money on medically necessary care for themselves or their loved ones, even when both the doctor and the patient are willing.
To control costs, the government restricts access to crucial medical services via infamous waiting lists. This imposes a second, hidden, cost on patients: their time.
According to the Vancouver-based Fraser Institute, "Canadian doctors say patients wait almost twice as long for treatment than is clinically reasonable, . . . almost 18 weeks between the time they see their family physician and the time they receive treatment from a specialist."
Because of the waiting lists, mortality rates for treatable conditions such as breast cancer and prostate cancer are significantly higher in Canada than in the U.S. A Canadian woman who discovers a lump in her breast might wait for months before she receives the surgery and chemotherapy she needs, with the cancer cells multiplying rapidly as each week goes by. If she lived in the United States, she could receive treatment within days.
This tax on time is especially cruel because the burden falls hardest on the sickest patients, i.e., those with the least time to spare.
Consequently, Canadian patients routinely suffer and die while waiting for their "free" health care. The National Center for Policy Analysis notes, "During one 12-month period in Ontario, . . . 71 patients died waiting for coronary bypass surgery while 121 patients were removed from the list because they had become too sick to undergo surgery."
To guarantee "free" health care, a government must force the individual to pay for everyone else's medical care and limit his freedom to pay voluntarily for his own. With bureaucrats deciding who receives what, the individual is therefore forbidden from spending his money according to his own rational judgment (and the advice of his doctors) as to what's best for his health. When a government forces people to act against their own interests, it's no surprise that the results are misery and death.
Fortunately, Canadians are starting to recognize the problems inherent in "single-payer" health care and are taking very small steps towards limited private medicine. America must not repeat Canada's mistakes. As P. J. O'Rourke said, "If you think health care is expensive now, wait until you see what it costs when it's free."
June 10, 2008
6:13 a.m.
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Mike846 writes:
It never ceases to amaze me how the socialist crowd conveniently ignores all historical and current evidence that shows that government involvement in people's lives is a bad thing. This isn't just opinion; as cited by the fine letters above, its fact. Its more of the creeping, incrimental "nanny" state that the Left pushes for at every opportunity. We don't know what's good for us, they will TELL us what's good for us. We're not capable of making choices about our own lives, much less voting in a manner consistant with the "common good". So, they have to find ways to push their agenda that aren't dependent on voter approval. Judges, administrative orders, "research" studies, and on and on. One more step in the elitist control of "our" lives. Mike
October 13, 2008
8:01 p.m.
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jabuhrer writes:
Wow, thanks for the great write up. Unfortunately, as the other comments suggest, I think our nation is simply too stupid to join the rest of the civilized world on this and many other issues.
Obviously the mean spirited neanderthals that made the above comments didn't take the time to even read your article. If they had (or if they had read any of the reams of other info available on the subject), they'd realize that they could have better coverage than they have now, more choices, and be able to cover millions of additional people that aren't covered now for much LESS than they are currently paying. The momentum of our stupidity as a nation is breathtaking. It is amazing how well these folks are trained by their corporate masters.
November 11, 2008
10 p.m.
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gingerman writes:
Moving to a single payor system will rapidly result in a two tier system. Our next step in healthcare reform should be the elimination through tight regulation of "for profit" health care insurers .
Personal responsibility is not a bad thing and people will have more choice and better quality in a consumer driven health care system vice a national health care system.
Regina Herzlinger eloquently outlines the problems surrounding health reform now but does not emphasize the need for health insurance regulation. Currently we have little to none and therefore the costs are choking us.