RE-THINKING HEALTH CARE FINANCING
Re-Posted October, 2005. (This is a supplement to a talk
given on June 9, 2005, to the
Senior University Georgetown, a lifelong learning program.)
Adam Blatner, M.D.
We need to re-think health
care financing. There are many solutions being posed. I confess that I
have become somewhat inclined to the idea of a single payer, universal
coverage, national health plan. References and websites that speak to
this problem are at the end of this webpage.
There are several problems:
1. Continuing escalation of health care costs.
2. Continuing escalation of health insurance
premiums--even Medicare premiums, along with co-pays for people who are
already paying hefty premiums.
3. Evidence of decline in certain aspects of quality
of health care.
Even with insurance and/or participation in an HMO, there are often
significant time delays before one can actually see a physician, and
more to see a specialist, if that is indicated.
with medical care, the relationship with doctors and nurses, etc.
4. Increasing difficulties getting payments,
with denials, demands for paperwork, and so forth feeling like a
harassment of the patient.
5. Demoralization of doctors who have to
spend increasing amounts of time advocating for authorization of
referrals, procedures, hospital admissions or continued stays, etc.
6. Numerous degradations of the status
and respect, the autonomy and judgment of doctors and other
professionals by business administrators.
Ideological Blocks to Clear Thinking
Our culture at present has drifted into an attitude that
government is bad, regulation and taxes are bad, business, free markets
and competition are good, and this applies as well to the field of
medicine as it does to any business or trade. I confess to seeing the
situation as a tipping of the balance too much towards laissez-faire
capitalism, when what is needed is more balance between the
enterpreneurial spirit and the needs of the community.
Part of this block involves a deep philosophical question as to whether
health care should be viewed as a right rather than a privilege--an
attitude that has come to characterize most of the developed countries
in the world, except for the United States. (A few other countries that
are at the edge of development, such as Turkey, also don't have
this policy.) Some might view it as a basic moral or even religious
value, while others rationalize the natural gradient of better medical
care for those who can pay for it as an intrinsic necessity for
Having acknowledged these issues, and not wanting to get mired in this
very considerable aspect of the problem, I will bypass a deep treatment
of the problem of the lack of universal coverage--though perhaps it
will be addressed separately some day--and focus instead on the simple
question of cost-effectiveness.
Are we getting value for money?
At present people in the United States, individually and
collectively, spend about a trillion dollars a year on health care,
which is about 14% of the gross national product. This means about
$4,000 for every man, woman, and child. In comparison, people with
comparable life styles in other developed countries spend more like
8-10% of their country's gross national product, more like $2,300 per
year. Moreover, in those countries, everyone is covered,
completely, while in the United States, over 44 million people are
uninsured, and many more are to varying degrees under-insured.
Furthermore, according to a number of research criteria, from expected
life span to infant mortality, the United States is far behind compared
with many other countries! The argument that we offer the best
care in the world is misleading, being true only for certain
conditions, type of elegant surgery, etc. The problem of access should
not be under-estimated.
Item: Over 10% of pregnant women delay getting prenatal care. Of
these, almost half put it off because they have no insurance and can't
pay for it. Another third can't get an appointment! Needless to say,
various complications and types of morbidity are more common among this
The problem of under-insurance is a complex one, because it includes
several categories. Many people are insured with exceptions, like
prenatal care, dental care, eye and hearing care, even obstetric care.
Others with pre-existing conditions, in spite of high premiums,
remained uninsured for further episodes or complications of those
Another type of under-insurance is the provision of unrealistic time
limits, maximum hospital days per year or per lifetime, and for some
people with more serious conditions, this leaves them essentially
bankrupt in the long run. There is also the payment per day limit, and
as hospital costs have risen from less than $20 per day in the 1940s to
hundreds of dollars daily more recently, those limits become ever-more
inadequate. As for the percentage of payment--covering 50% or 80%,
again, for significantly expensive problems, that remaining percentage
still can become an overwhelming stress on families.
Item: Bankruptcies have doubled in the last decade. As of a few years
ago, almost half were caused mainly or in significant part by medical
debt. The suffering of families in such circumstances should not be
underestimated. There has probably been months of dunning by collection
agencies that are not reluctant to use humiliating and misleadingly
Miscellaneous Supplementary Notes:
1989: USA spends 12 % national income on health care.
France spends about 8.6% (the next highest amount)–and also cover
40 million uninsured, many are refused coverage at any cost.
(Yet when they go to hospital, they are billed
at much higher levels than those with insurance, because the latter's
companies have negotiated costs)
22nd in ranking of countries re rate of babies dying before 1st
birthday! Lower than Singapore, Spain and Ireland!
Life span in 1987 shorter than people in Japan, France, Sweden, Canada
Only developed country without universal health care. South Africa
also, though it does offer it to whites (in late 1980s).
Now Turkey (on the edge of development) also lacks it.
Continuity of Care:
Folks in one business' plan get shifted
to another medical group or managed-care program, with different
doctors, when every year or two there is renewed bidding among
competing programs and the "buyer"–the company– is convinced that
company B can do as good a job as company A for less. So they go with
Yet this requires new evaluation
visits for all the patients who are otherwise stabilized on a medical
regiment, if they are to get refills. Disrupts the doctor-patient
Time spent making appeals, getting information, and so forth.
Insurance companies have an incentive to delay
payments, deny or minimize them, and having people give up on having to
wait is one strategy. Having too few inquiry phone lines is another,
with lower level people responding, and the need to speak to higher
level managers then requiring more delay.
Include also time spent:
By patients in trying to get appointments, especially if
follow-up, or urgent care is needed.
By patients in trying to resolve problems with billing
Often a variety
of "unfair" billing practices, and sometimes bewildering and actually
fraudulent or careless mis-billings
By doctors' offices seeking to get clarifications of
denials, demands for paperwork, authorizations for procedures or
visits, and do forth.
By doctors' and hospital clerks in trying to keep up
with shifting requirements
By patients and doctors in coping with the way a
business might change provider organizations covered, as competing
types of health insurance "bid" for business.
Objections: It will cost more in taxes.
Before responding, we must consider the following:
The health premiums payed by companies are tax-deductible. This means
that wealthy corporations save more money, money that would otherwise
enrich the government in taxes and offset part of the raise in taxes.
Tax cuts are subsidies by the taxpayer.
Other tax breaks similarly must be thought of as
total expenditures in the health care budget.
So, yes, there will be more taxes, but they will also be
distributed more fairly, with the wealthier paying more than the poor.
At present, the middle classes and poor pay more, percentage-wise, than
Those costs will also be offset by savings in having a single payor,
eliminating many different and multi-layered middlepersons.
News Feb. 21, 2000: "HMOs hiking rates, but not physician
10.4% - The increase in businesses' health care expenditures from 1999
3.1% - The increase in reimbursements to doctors, hospitals and other
providers in that time.
83.6% - managed care companies spend on patient care (third quarter,
Comment: A net increase of 7.3% of all health
care expenditures is being directed to a middleman industry that is
currently consuming 16.4% of health care dollars. This amounts to
a 44% increase in funds diverted to an industry that exists solely for
the purpose of controlling health care inflation!
(More to be added)
References on Health Care Financing in America
Abramson, John. (2004). Overdo$ed
America: the broken promise of American medicine. New York:
(A physician critiques the Industrial-Political Health
Anders, George. (1996). Health
against wealth: HMOs and the breakdown of medical trust. New
York: Houghton Mifflin.
Armstrong, Pat, & Armstrong, Hugh. (1998). Universal healthcare: what the United
States can learn from the Canadian experience. New York: The New
Press / W.W. Norton.
Bartlett, Donald L. & Steele, James B. (2004). Critical condition: How health care in
America became big business and bad medicine. New York:
Coombs, Jan G. (2005). The rise and
fall of HMOs: an American health care revolution. Madison, WI:
Univeristy of Wisconsin Press.
Cutler, David M. (2004). Your money
or your life: Stong medicine for America's health care system.
Cambridge, UK: Oxford University Press.
Geyman, John P. (2002). Health care
in America: can our ailing system be healed?
books: Also:. Falling Through the Safety Net. )
Devo, Richard A. & Patrick, Donald L. (2005). Hope or hype: the obsession with medical
advances and the high cost of false promises. New York: Amacom /
American Management Association. (Doesn't address health care
financing, but does note the tendency to overestimate new developments.)
Konner, Melvin (1993). Medicine at
the crossroads: the crisis in health care. New York: Pantheon.
LeBow, Robert. (2002). Health care
meltdown: confronting the myths and fixing our failing system.
Boise, ID: JRI Press.
Merrill, Jeffrey C. (1994). The road
to health care reform: designing a system that works. New York:
Mueller, Rudolph. (2001). As sick as
it gets: a diagnosis and treatment plan. Dunkirk, NY: Olin
Quadagno, Jill. (2005). One nation
uninsured: Why the U.S. has no national health insurance. New
York: Oxford University Press. Reviews the history.
Roled, Neil. (1992). Your money or
your health: America's cruel, bureaucratic, and horrendously expensive
health care system: how it got that what and what to do about it.
New York: Paragon House.
Physicians for a National Health Program
This is a particularly rich
Everybody In, Nobody Out
Campaign for a National Health Program
The Center for Studying Health System Change, www.hschange.org
Families USA, http://www.familiesusa.org/
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