How we pay for the lack of national health insurance

By: William Wood

Scenes from my clinical rotations at UNC Hospitals: a farmworker with oral cancer which progressed to a lethal stage because he couldn’t afford to see a doctor; asthmatic children requiring expensive hospitalizations because their parents can’t afford a pediatrician for preventative care; middle-aged folks who can’t buy high-blood pressure medicines, and are headed for far more expensive care down the road for impending future complications like stroke and kidney failure. As the Institute of Medicine concluded earlier this year, “lack of health insurance causes roughly 18,000 unnecessary deaths every year in the U.S,” to say nothing of the loss of quality of life for ill patients who can’t afford medical attention that could easily alleviate their suffering.

The worst part (in my view) is that we pay for national health insurance right now, but don’t receive it. According to an analysis published in Health Affairs two years ago by Drs. Steffie Woolhandler and David U. Himmelstein, both leaders of Physicians for a National Health Program (PNHP, http://www.pnhp.org), “Americans now pay higher taxes per capita for financing health care than do any other nation’s citizens,” yet without achieving universal coverage, as do all those other nations! As most of us have heard, we spend about twice the amount per capita on health care as our neighbor Canada, while having significantly lower life expectancy, higher infant mortality, and numerous other worse health indicators.

For folks just learning about this issue, it is important to understand the distinction between national health insurance and a national health system. Canada has the former; the United Kingdom (Britain) has the latter (physicians are government employees there); we (in the U.S.) have neither. Canada has a health insurance system termed “single-payer,” which is in fact termed “Medicare” there (no relation to our Medicare program here).

The easiest way to envision a similar system in the U.S. is perhaps as a U.S. version of our current Medicare program for seniors and the disabled, extended to everyone – “Medicare For All.” Within the last year, details of this updated proposal have been published in JAMA and NEJM with thousands of physician endorsers (see http://www.physiciansproposal.org to add your name). Most physicians would remain in private practice, as they do in Canada, and compete with each other for patients, as they do there and do here now for current U.S. Medicare patients (primarily the elderly). But they would have only one insurance company to deal with – a federally financed Medicare. In my rural family practice rotation, the group practice of six doctors had to pay two and ½ full-time staff people just to negotiate with the myriad of insurance companies used by their patients for reimbursement.

Insurance exists to pool risk. Everyone pays a premium, and hopes not to need to collect benefits, that is, to get sick, but everyone knows that some of us will get sick, and will collect benefits from the pooled premiums. The most efficient way to run insurance is to have the largest risk pool possible, that is, everyone – meaning a single-payer system. Private insurance companies, however, have a structural incentive to try to limit their risk pools (their clients) to people who will not get sick and ask for benefits, and thus to maximize their profits.

Our private health insurance system hurts patients and the uninsured, but it also hurts doctors, and our larger economy. HMOs and private insurers have higher overhead and administrative costs than Medicare – over 13%, vs. less than 3% in Canada’s system and our Medicare system. Our multiplicity of insurers forces U.S. physicians to spend about 10% of their gross income on excess billing costs. A recent Washington Post article noted that,

For each mid-size car DaimlerChrysler AG builds at one of its U.S. plants, the company pays about $1,300 to cover employee health care costs – more than twice the cost of the sheet metal in the vehicle. When it builds an identical car across the border in Canada, the health care cost is negligible.

As long as we try to “incrementally” reduce the numbers of the 40+ million uninsured in the U.S., instead of setting up a universal system, the tendency will be to “cherry-pick” those who are least likely to need benefits, leaving a smaller and smaller pool of likely sicker and more expensive patients who are excluded, making universal health coverage ever less likely.

The U.S., of course, is the only industrialized democracy in the world without a system of universal coverage. Not every country uses a single-payer system like Canada’s, but I think Canada is the best model for us to achieve universal health insurance here, for a number of reasons – the similarity of our history and culture, the existence of our current Medicare program for seniors as a model, etc. One big difference, though, between the U.S. and the industrialized democracies that have achieved universal coverage, is the nature of private influence in our political system. As for many issues related either directly or tangentially to public health (environmental regulation, consumer protection and auto safety, public education, etc.), the political power of private interests like health insurance companies makes manifest the need for fundamental campaign finance reform, as a key to progress on many issues.

A vast body of academic and lay literature demonstrates what most physicians encounter everyday: while the U.S. may have some of the most advanced medical care available in the world, we also fail to provide the basics to millions in our nation. The issue has been on the table for generations, and will not go away during our medical careers, unless we help lead the campaign for change. Our country’s shameful acceptance of the plight of the uninsured will remain the case as long as we (uniquely in the world) “treat health care as a commodity distributed according to the ability to pay, rather than as a social service to be distributed according to medical need,” to use PNHP’s phrase.

The easiest and simplest step we can each take is to join PNHP and endorse the physicians’ proposal. Beyond that, lobby your Member of Congress to endorse single payer legislation (see, for example, Rep. John Conyers’ (D-MI) website for information about current Congressional supporters of this legislation, at (http://www.house.gov/conyers/news_health_care.htm ). Making the effort to get one more Congressional co-sponsor of single-payer legislation will likely have more impact than all of the drugs you will prescribe, or procedures you perform, during your career.



References

Insuring America’s Health: Principles and Recommendations,” Institute of Medicine, January 2004, summary at http://www.iom.edu/report.asp?id=17632

Woolhander S. and Himmelstein D.U. Paying for National Health Insurance – And Not Getting It. Health Affairs. Vol. 21, No. 4, July/August 2002, 88-98; quote from p. 94.

Woolhandler S, Himmelstein DU. The deteriorating administrative efficiency of U.S. health care. N Engl J Med 1991; 324:1253-1258.

Downey K. A Heftier Dose to Swallow: Rising Cost of Health Care in U.S. Gives Other Developed Countries an Edge in Keeping Jobs. Washington Post, March 6, 2004, p. E01.

See, for example, the second half of Paul Starr’s seminal book, The Social Transformation of American Medicine, for the political history leading to the enactment of our current U.S. Medicare program.