Archive for June 2008

Issues – Healthcare

Since the media won’t start focusing on issues that really matter, I thought I would tackle one a week for a while and see if it sparks any discussion.  Here is a question for you: How much of an American new car price is health insurance for the employees?  It has been estimated that the average price per car is $1500.  Any wonder why healthcare is a cost that makes our businesses less competitive than their counterparts around the world?

I was at a dinner the other night and over a nice Petite Syrah I said that health care is the sleeping dog that is the real issue in the next election and one of the most important issues to the common voter.  This was an important issue to my host who had recently been successfully treated for cancer and once he looses his firm’s (which he is part owner) health insurance after he retires, he is uninsurable.  I asked him what he planned to do and he said he would work until Medicare covered him.  It was his only option.  I pointed out that we had one of the worst healthcare systems in the civilized world.  He strongly disagreed with me on that point.  It turned out that like most disagreements, it was over semantics.

I argued that studies showed that our health care costs on the average at least 30% more than in any other industrialized country.  The U.S. spends more on medical care any other nation, averaging $7000 per person, yet our infant mortality rate, maternal mortality rate, and life expectancy is rated one of the worst in the industrialized world.  As Nickols Kristof pointed out in his editorial Monday morning in the New York Times, “If we had as good a child mortality rate as France, Germany and Italy, we would save 12,000 children a year.  An American mother has almost three times the risk of losing a child as a mother in the Czech Republic.  According to a new report from Save the Children, a woman in the U.S. has a 1-in-71 chance of losing a child before his or her fifth birthday.  Given this argument I challenged my host on how he could disagree with me.  He said, “Oh you misunderstand me.  By best I mean we have the best technology in the world, and the best care, if you can afford it.”

And this is the crux of the issue.  We can’t afford it, not just the poor, but more and more of middle America every day.  We are one of the only nations that do not provide universal health care and we require employers to fund our coverage.  It’s a double whammy.  First we have a large and growing uninsured population and second we keep hanging these costs on businesses that, in a highly competitive global market, could put them out of business.  Add to that the extremely high cost of medical insurance caused by the “competitive” insurance companies burying you in paperwork so they don’t have to pay your claim and you understand that our medical care system is rapidly crumbling.  Clearly big changes are coming and here are our choices:
The existing system is made up of “competing” insurance companies that in theory fight with each other to gain a market share by providing the lowest premiums while presenting you with comprehensive health care.  So much for theory: The reality is that the insurance companies compete to cherry pick enrollees that do not have major medical problems , reducing costs and maximizing profits.  Their overhead at reviewing claims and doing their best to deny them is what has driven our system to be one of the most expensive in the world.  The bureaucracy and paperwork is driving doctors out of business and the cost to administrate these programs through the roof.  So the status quo is no longer tolerable.

There are two other options, both with a goal of reaching universal coverage, but the first one leaves the well connected insurance companies in place and the other one that does away with them.  First things first:  The first approach basically differs only in who they initially cover and the plan basically requires all insurance companies to cover all comers more or less.  They fund this usually by charging employers, workers, hospitals, shifting some to other existing programs, and doctors.  Usually everyone is required to carry health insurance.  They differ in who gets charged how much, limits put on insurance company amounts that can go to administration, and varying requirements on who insurance companies can refuse (means you pick up the bill in tax payments).  My problem with this approach is that it doesn’t solve the problem.  For profit medical care has been a disaster and is getting worse.  What it does solve is getting more people covered in the short term without an all out war with the insurance companies.  It still puts the burden of employee healthcare on business and does not address how we reduce the administrative burden on doctors.

The other approach is the single payer system, usually the government.  In this system we establish a fair tax system and health care is paid for by the government.  Before you go running screaming “Socialized Medicine! Socialized Medicine!” exactly what do you think Medicare is?  Many Americans are now traveling to foreign countries to have surgeries because they are cheaper there and even though they don’t have the profit motive, most survive.  Of course it does away with the insurance companies or in another scenario, the government can contract out the single payer to keep them efficient according to the capitalist theory of efficiency.  This has not worked well for almost all government services that have been contracted out and I would think expanding Medicare would probably be a good model since their costs are at least 30% less than the insurance industry in managing health care payments.   For my money this is the only way to go.  The rest of the civilized world has figured this out and for their money they get better care.  So who is going to propose it?

Don’t hold your breath.  The insurance industry has big pockets (because they are making tons of money and it will be their ox that is gored) and politicians do not say the obvious because it will hurt their campaign contributions until there is no other choice.  So in the meantime watch which candidate provides a plan that leans toward covering all children, with universal care a goal, and focuses on reducing administration costs by covering all comers and promoting preventive medicine.  It will take another 20 years before that system collapses and we face the reality of a single payer system.  In our system we believe that all people have a right to life, liberty, and the pursuit of happiness.  If your health is a function of your pocket book then all three are in jeopardy.