Individual health insurance mandates have lately been hailed as the solution to the health care crisis in America. Mandates to buy health insurance have been included in legislative proposals at the state level – for instance, by Gov. Schwarzenegger and Speaker Nunez, in their “Health Care Security and Cost Reduction Act”, or at the federal level, by Hillary Clinton in her “American Health Choice Plan”. Can mandates achieve universal access to health care and control rising costs of medical care? This article explains why they can’t.
Lately, legislation including a universal mandate – a legal obligation that everybody purchase a health insurance policy – has been hailed as the solution to the health care crisis in America. At the state level, mandates have been included, for instance, in Gov. Schwarzenegger and Speaker Nunez’s “Health Care Security and Cost Reduction Act”, and at the federal level, by Hillary Clinton in her “American Health Choice Plan”. Yet many of us remain skeptical. Why? After all, if everybody is forced to buy a health insurance plan – maybe with a subsidy if you are “poor enough” – would this not resolve the problem of uninsurance? Maybe so. But the real question is: would mandating universal health insurance guarantee universal access to medical care? And the short answer is no.
A longer answer would include that many health reform proposals
promising heaven on earth rely on fantasy numbers, not facts: for
instance, there is reason to believe that Swcharzenegger’s stillborn
legislation would have run out of money by the fifth year of operation.
Indeed, often these proposals offer no numbers at all, fantasy or
otherwise: a sound study estimating the capacity of “Hillary Care” to
guarantee that those who “like” their current health insurance “will be
able to keep it”, as Hillary promises, has yet to be
produced. But worst of all is the tendency, popular among many health
care experts, including M.I.T. professors, to commit the capital sin in health policy: confusing universal health insurance with universal access to
comprehensive medical care.
Now, it could very well be that these experts are not confused, and
only hope that ordinary citizens won’t be smart enough to tell the
difference – that we will all be convinced if only they repeat
“universal” enough times. Whichever the case may be, as political
analyst Robert Kuttner recently pointed out, there is a fundamental
difference between “universal” social health insurance, such as
proposed by single payer health care reform, and a “universal” health
insurance mandate.
And it is not merely semantic, because clearly in both approaches
“universal” means “everybody”. It is a difference of substance.
In a social health insurance system everybody gets insurance by virtue
of being a citizen or a resident, everybody contributes to the system
according to ability to pay, and everybody is guaranteed an amount and
type of services. This is possible because the system, whose ultimate
goal is to provide the most and best care to all participants with
whatever budget it has, counts on a predictable influx of money, has as
sole incentive finding the most efficient ways to spend it, is able to
estimate the needs of participants, and can utilize their collective
purchasing power to bargain for best prices of services and goods.
In contrast, in a system based on mandates, nobody “gets” anything,
really. Rather, everybody is compelled to buy a policy, by law. Hence
guaranteeing a decent amount of medical care to the population at
large, that many consider a social problem, is turned into a “problem”
of “every” individual or “every” family, who are forced to
comparative-shop for affordable policies, while second-guessing current
or future medical needs as they decide which is the best investment for
their resources – a more comprehensive health policy, rent, or food.
A key assumption underlying individual mandates is that forcing an
influx of “customers” into the health insurance marketplace, flooded
with private insurers’ “products” made to suit a range of personal
preferences will, through the powerful and reveered “invisible hand”,
improve the quality of medical goods and services and bring their
prices down, such that on average they will be affordable to everybody.
This of course would be true, if shopping for medical services were
functionally equivalent to shopping for designer shoes. Faced with an
offer, you are always free to take it or leave it, depending on how
good the deal is. If it is not good enough, you can always wait until
the next Christmas sale. Or you can decide that you are not so crazy
about those shoes after all, and shop for something else, until those
recalcitrant shoe sellers realize that if they want your dollars, they
have to behave reasonably, and offer the best they can at the least
possible price.
But of course nobody needs a doctoral degree to understand that the
need for medical care cannot be compared with the want for designer
shoes. Nor does one need a doctoral degree to understand that a mandate
to buy, for instance, drivers’ insurance, does not guarantee full
protection against the expenses incurred if one gets into a car
accident. While some policies might cover those expenses, they are
unlikely to be cheap. What the current mandate to buy drivers’
insurance “guarantees”, if the word makes sense at all, is that, given
the law, we won’t get in trouble with it if we are stopped by the
police. Which is why nobody claims we have “universal drivers’
insurance”. Likewise, whichever health insurance policies we may afford
to buy, if there is a mandate, it will only “guarantee”, aside from a
steady pool of clients for private insurers, that we are in compliance
with the law when we file our taxes (assuming this is how the mandate
is enforced).
Under our current system, which relies heavily on private insurance,
paying for medical care is insurers’ greatest “cost”. Now, like any
other business, insurers’ ultimate goal is to control the costs of
running their business while maximizing profits. Hence the increasingly
bewildering range of “choices” of “insurance products” that make sure
that insurers will not have to pay more for medical care than they
collect in premiums and that there remains enough spare change to keep
CEOs and shareholders happy.
And because profit is the essence of business, however much “mandate”
fans boast they will force insurers to not turn people down on the
basis of “pre-existing conditions”, they will not – they cannot – force
them to sell policies that will not meet insurers’ profit maximizing
goals. So mandate supporters remain conveniently vague whenever asked
how much “consumers” will have to pay for policies offering more than
minimum coverage or even what will count as minimum coverage, hoping
that we won’t notice when they fail to compute out-of-pocket costs to
“consumers” – deductibles, co-pays, co-insurance – as “costs”.
Or worse, they hope that by repeating scare stories backed by fanciful
(and distorting) statistics Americans will end up believing that the
only alternative to the current mess is a mandate’s version of
“universal health coverage” and that a social insurance system will
inevitably cause an invasion of alien Reds, with long lines in cold
winter mornings in which everybody is given the same loaf of bread
(substitute “sees the same doctor” or “receives the same medicine”),
however far this scenario is from the daily reality of Canadians,
Brits, Germans, Spaniards, and so forth.
Now, the point is not to force business to do business at a loss. The
point is why, when it comes to health care, we should insist on a model
that confuses health care with designer shoes and that has failed to
deliver the goods. Because it is clear that choices that are
meaningful, not of health policies but of doctors and services when and
to the extent we need them are increasingly out of reach for ordinary
Americans.
Which is why only a system based on the principle of social insurance,
that spreads the risk over a large pool – all Californians, or even
better, all Americans – to which all participants contribute an
affordable proportion of their income, and where individuals are
guaranteed real choice, not of policies but of medical services,
constitutes meaningful universal health care reform.
And sound legislation exists: it is the single-payer model proposed by
SB840, the California Universal Healthcare Act, vetoed by
Schwarzenegger, who appears to dislike “big government bureaucracies” but can live with the 30%
mark-up of the bureaucracy of private insurers. It is also HR676, the
expanded and improved Medicare for All Act, conveniently made invisible
every time the major media or policy thinktanks report on the health
care crisis, and disqualified by Hillary as “difficult to achieve” for reasons that we are never
given.
Now, will a social insurance system resolve all the problems in
American medicine? Of course not. “Financing” and “delivery and
organization” of medical care are different analytic categories, so
securing the first will not miraculously resolve, for instance, the
problems of over-reliance on expensive medical technologies, lack of
uniformity of medical records, or insufficient emphasis on preventive
care (or the never-settled question of whether Americans are as dutiful
as others when it comes to eating our veggies). Those are internal to
the system – to any health care system — and require separate
attention. But a sound financial structure is a prerequisite to making
improvements in the delivery and organization of a medical system
possible.
At any rate, as Kuttner said, the “debate” about whether or not to have
a mandate misses the point that the financial structure of the system,
built on false assumptions and perverse incentives, is sick. The real issue is whether or
not major presidential candidates are willing to “do it right” and use
their formidable political power, social prestige, and precious media
time to bring “public opinion around”, assuming they haven’t yet been
informed about the increasing public support for single payer among the
electorate,
including physicians.
As Kuttner, supporters of single payer wish our politicians and opinion
leaders “got it right” this time, stopped trying to reinvent the wheel,
and stood for the only type of reform that can bring affordable and
comprehensive health care to all Americans.
Claudia Chaufan teaches sociology of health and medicine and health
policy at the University of California at Santa Cruz. She has written
extensively on social inequalities in the diabetes epidemic, for
general and specialized audiences, nationally and internationally. She
is the Vice President of California Physicians Alliance, the Californa
Chapter of Physicians for a National Health Program, an organization
that supports single-payer health care reform.
Categories: Uncategorized
Fastidious respond in return of this difficulty with real arguments and telling the whole thing regarding that.
What we have is the government wanting to control every aspect of your lives. We as americans are really stupid so we need the government to take us by the hand and help us cross the street. We dont need health insurance as much as we need health assurance. We need to be able get healthy foods, alternatve medicines, healthful vitamins and minerals that big business won’t allow through the best government that money can buy.
John McCain, if he has his way, you will not be able to get supplements in the doses that will be beneficial to you. If you think that this health insurance mandate is for your benefit and not the benefit on the insurance companies pockets. I have some cheap ocean front property in Arizona you can have cheap.
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This is a very useful discussion. I live in Miami, and we are having a hard time getting any sort of discussion about health care alternatives going here. The strategy of making sure that the single payer option does not get discussed has worked well here. Moreover, those in the community who work in the system and see the need for radical reform are constrained by economic relationships from speaking out. I would appreciate any ideas any of you might have for promoting discussion.
Now, as to the arguments, I would agree with the person who recommended the Reinhardt article at:
http://content.healthaffairs.org/cgi/reprint/22/3/89.pdf
When you look at the facts, you realize that some arguments that are often made do not hold water. In that group are the arguments that we overuse health care (various countries use doctors and hospitals way more than we do, and yet have half the costs) and that our bad habits are the root of the problem (Europeans smoke and drink more than we do, and the British are right up there on obesity, and yet their costs are half of ours). The high cost of health care in this country is due to several other causes. Among them are:
1. Our enormous administrative overhead, which occurs at the payer level (compare the 2 or 3 percent overhead with traditional Medicare to the 15-20% average among commercial health plans) as well as the provider level (consider the large number of people you see in the typical doctor’s office who are there solely to deal with insurance companies)
2. Overpayments to certain specialists (Europeans and Canadians pay primary doctors at least as well as we do, but pay specialists less).
3. Overuse in some areas of specialists and tests. The Dartmouth Medical Atlas tells us that people on Medicare get twice as many tests and consults in Miami as in Minneapolis, but do not live longer or better lives.
4. Overpayment for pharmaceuticals. The argument is made that the pharma companies need the money for R&D, but in fact they spend most of their revenues on marketing.
These are all documented facts, not matters of subjective opinion. You could, I suppose, make an argument that all of these areas of excess cost are justified because our results are so much better- except that our results are worse, not only in broad measures like infant mortality and life expectancy but also in specific areas like the survival rate for people with kidney failure. In one study of nine conditions and five countries, the US was the best in only one- breast cancer.
Interestingly enough, then, not only cost but quality is a casualty of our system.
The reason we need a strict single-payer system in the US, and that we cannot allow for-profit entities to do business in the health care system, is because we cannot leave an opening for the political influence of contributors who have a financial stake in the health care system. Our elected officials are addicted to campaign money the way an alcoholic is addicted to alcohol. It is not reasonable to expect an alcoholic to have “just one drink.” For the same reason, it is not reasonable to expect our Congress to be able to handle well a situation in which for-profit entities have a stake in the health care system. As Claudia has observed, the history of Medicare provides the perfect example- we overpay Medicare Advantage plans and prescription providers instead of simply integrating services into the structural framework of traditional Medicare. If you have a staph infection, it is generally easier and more effective to kill it all off at once than to try to keep it alive but under control. We need to have a non-profit health care system. This is compatible with competition (although competition is itself problematical, but that is another issue)- the fact that Sloan Kettering and MD Anderson, to name but two, are both non-profit does not keep them from competing.
I think these are all issues that ordinary Americans can understand. I see the job of the reform movement as being (a) to help people to become sufficiently informed that they are not confused by the apologists for the status quo, (b) to link them to continuing sources of information that they can rely on to dispel new myths as they are created, and (c) to create a countervailing power that brings a strong enough combination of votes and money to the table that our elected officials will take us seriously. I am impressed with what you have accomplished in this respect with the One Care campaign in California. I wish that someone would pull together something comparable on the national level- it would make it much easier to organize in tough areas like South Florida.
Nice job, Walter. Claudia, I don’t think you understand economics, health care, consumers or human nature. And you show no comprehension of the importance politics or the geographies, demographics or political systems of the countries you’re discussing.
you’re welcome, my pleasure 🙂
I agree – this has gone on too long. I think you and I are the only ones left! Anyway, thanks for the discussion.
Walter, will all due respect, your arguments are very weak and fly in the face of so much of the world’s experience with providing health care to nations that it’s impossible to list all the reasons and evidence, especially in the brief postings that you prefer (I’ve tried, however, in good faith and to the best of my ability).
Whatever it is that you propose to resolve the problem of accessing health care that an increasing number of Americans are suffering (if I understand you it is a “free” market of either health care or insurance, a “freedom” which, incidentally, has never existed or ever will exist) would fail to deliver the goods for whoever needs them, yourself (and kids) included, for reasons that have been studied exhaustively. It gets boring to go over them again and again.
When you are proposing a new plan, whatever that is, the burden of proof lies on you. Not even other people’s failure to show that you are wrong (assuming this is what went on here) is evidence in support of your views. Believing it is is a common fallacy well known by the intellectuals you seem to despise (as noted in your first posting): it is called “argumentum ad ignoratium”, or fallacy of ignorance, which means assuming you are in the right simply because others have failed to make a case that you are wrong.
Finally, your “final point” is rhetorical: it bears no weight on my case. Contributions to a social insurance pool are mandatory indeed. Others, like the Germans, have used that word meaning exactly that, so nobody, certainly not you, has ownership over a word that is used by thousands in a particular way.
Because Americans, like you, are ideologically, not pragmatically, opposed to taxes (although they accept willingly a range of benefits of living in civilized societies that rely on them) in this health care debate people use the “my plan has no taxes” to suggest that their plans are better, when their reforms have no substance. Incidentally, while taxes or contributions (e.g. payroll deductions), are predictable, your medical needs are not. And if you do not organize a system that prepays for some amount of “comprehensive care” your medical needs are likely to break your pocket, and the “advantage” of not paying taxes will soon disappear. (ok, ok, you will say “but I would rather keep my “freedom” and gamble”).
Anyway, Walter, let’s agree to disagree. I am sure that you, and certainly not me, have any power whatsoever to affect real change. In this country big decisions have typically been in the hands of powerful people whose interests are rarely those of ordinary folks interest, as I am and suppose you are. I do hope however that ordinary people get together this time and make demands. I work with young folks who generally have a good heart and want a better, more compassionate and just, America, so I have some hope they will.
I wish you good luck, Walter, and so long as you live in America, very, very good health.
Claudia, you have provided no case at all for the idea that healthcare is exempt from market forces. In fact, you’ve unwittingly made the opposite point.
In a competitive market, firms cannot charge more simply because they want to “amortize”. If that is happening, then we should be looking at the reasons why the market is not functioning properly. An open and competitive market would be far better at deciding how many MRI machines are needed than any team of government planners could ever be. The planners could never have all of the information that exists in the market.
I never claimed that rationing didn’t occur in the US. In fact, I said that it occurs in all systems, even with social insurance. If we don’t ration by price, we simply have to ration in some other way. It is not possible for everyone to have all they want, all the time, at someone else’s expense. Except perhaps in Canada! 🙂
As for “I’m all right, Jack”, it is precisely because I care about others that I am against policies such as you have proposed. Human beings have value in their own right and do not exist merely to contribute to the “greater good” – which always seems to be defined by self-appointed elites.
Finally: Taxes are mandatory, contributions are voluntary. Conflating the two is what we Americans call, “Blowing smoke.”
Sorry, Walter, I just noticed that you did acknowledge one point after all: that you had misunderstood about social insurance not being compulsory. Of course it is. But individuals are not obligated to buy a policy in a market, as if they were buying shoes: rather, they contribute to a system, whether through taxes or payroll, automatically and in accordance to income (true “shared responsibility”, one where the whole is more than the sum of the parts). Which is why the system is financially sustainable, can estimate needs, and work with budgets. My apologies if my article was unclear. This is a key concept.
Peter, I have little to add to what your postings, including your recommendation about the brilliant paper “It’s the price, stupid”, by Princeton economist Uwe Reinhard, arguably the top health care economist in the country. It explains very nicely why we Americans pay at least twice as much for any service (sometimes hundreds of times more) than any other citizen of any other country. And it is not because we get better quality.
Let me explain Walter why health care cannot be theorized as a “market good”, however convenient the fad of calling patients “consumers” might be. In ideal markets there are no “needs”, just “wants”. There are, of course no ideal markets, and the fact that there aren’t is no reason not to rely on markets to supply all sorts of goods. But health care is not one of them (and I do not mean health care of the sort that you can do without, such as a new nose if you happen not to like yours). But let me continue with why your assertion that increase in demand increases prices is questionable at best. (there are many reasons but I will chose only one. Consider the following scenario (I warn you that it is not short).
You, Peter and I live in a town of 1000 folks, with 1 MRI that, let’s assume for the purpose of the argument, satisfies all of our MRI-needs. In come 9 entrepreneurs with their MRIs, because they think they are a good business (in health policy we call this “medical arms race”). Would the prices of individual MRIs come down? No. They go up. How come, if when supply goes up prices should come down (and quality should increase)?
Because, if your doctor says you need an MRI to rule out a brain tumor you will be scared to death and rush to have one. You do not decide what to purchase: your doctor tells you (ok! ok! assume he/she knows what he/she is doing). And the 10 folks with MRIs, because they will be doing fewer per machine, will want to amortize their costs and will charge you more. And unless you are rich and retired with plenty of time, you will do it in your town, not elsewhere. I will not repeat why the “shopping model” works for shoes or vacations in Hawaii, not for MRIs, because I’ve already done so in my article. In social insurance system there exists what is called “control of capital investment”, so you can, if you so choose to, plan rationally, put in place the right incentives, make sure that doctors or others do not make a buck ordering more MRIs than patients need, and for the right reasons (not to “cut the costs of running your health care business”), and avoid the medical arms care which pushes prices up.
Now, if it is not an MRI but something everybody should have (like a PSA to rule out prostate cancer if you are a man over 50), then “buying” them in bulk (or coming up with regulations, fee schedules, etc. as Peter mentioned) is what keeps prices low.
As to the “long dreadful soviet style” waiting lines, they are often, if not always, bogus. For example, they compare Canada, a publicly financed system, with Medicare, a publicly financed system, not with the “United States”. Why? Because we cannot measure our waiting lines. We would not know where to begin to count. Not to say that often we know that people do not make it to the waiting line, because they can’t even get to the doctor. They die. 18,000 per year, according to the Institute of Medicine, to be more precise. It is a myth that we do not ration, Walter. We do in the most cruel way: on the basis of ability to pay. Last, let me point out that Canada’s alleged waiting lines are evidence that they have problems to straighten out some issues of delivery. But their financial structure is sound, so they have the ability to fix their delivery if they so choose to. But all the dreadful stories about other nations health care in Americans’ fertile imagination are certainly no evidence “for” the way we do things, or for any of many “market” proposals floating around (this is a point in informal logic, so I will stop here).
Walter, how we do things is not only bad morals but bad economics. So even if you are the type “I’m fine Jack, you figure your own stuff””, you should consider these things. Especially so if you have, or even plan to have, kids. I do, and worry. And suffer for my students who often do not have insurance, and cannot afford anything decent. What a shame. Even if I am fine, with wonderful work benefits, and married to a British/Canadian (both countries with social insurance systems). Anyway, I hope your employer never lets you off the hook, although if I were you I would not hold my breath 🙂
Oh – were we talking about Canada?
Of course I know there are cost controls there – that’s why they have had problems with wait times and folks having to come here for treatment. It’s called rationing. Every scarce resource has to be rationed; no complaint there. Just different opinions about how it should be done.
In Canada, I might pay $1000 into the system through taxes and then use $10,000 in services. You can see that I’m shielded from the actual cost of the services, right? I might also not use any services. Now I’m not shielded, I’m actually shielding someone else. The only way I’m bearing the actual cost of my services is if I happen to use exactly $1000 worth. My incentive is to use $1000 or more – after all, I paid for it. Are Canadians somehow immune to natural human tendencies? Maybe it’s the beer.
Finally, your last comment says more about you than about me.
“People absolutely do use more of a service when they are shielded from the actual cost.”
Walter, you assume that in countries with single pay there is no cost control and the government provides all things to all people regardless of cost. If that were true in healthcare then their health costs per GDP would not be half of ours. If fact countries having a social insurance mindset for health payment and delivery do a far better job of cost control. But greater access does not entitle those citizens to unobstructed use. If you have not been lurking here long and have not kept up on discussions you would find that even anti single-pay/universal advocates recognize the need to reduce utilization. Barry Carol for one has put forth what he believes would work without gov. run healthcare. The problem with making these ideas work without central control of bugets is too many players acting in financial self-interest won’t let it work. In Canada the federal government sets out a national objective and legal framwork for pretty much the same coverage across Canada. This means largely there is NO location or place of employment restriction for its labor force because of healthcare. How’s that for expanding “choice”? The federal government also controls a large amount of the purse strings for provincial healthcare through federal taxes which controls consistency across Canada. The provinces manage their own systems, taxes, and also set their own priorities along with their own budgets. The fact that a healthcare budget exists and a framework of cost controls is in place allows for the savings that are non existant in the U.S. This gives greater access along all income groups and serves as one part of a unified and connected Canada, regional disparites aside. Wait times are overstated here by those anti-gov’mt people but are always being monitored by government. Recently more funding was released in Ontario for a backlog of cataract and hip surgeries. We don’t see bus loads of seniors crossing the border for U.S. healthcare. It’s working pretty well with some bumps. And of course the big transparency that exists on healthcosts is taxes. So don’t say their citizens are shielded from actual costs.
But I see where you’re coming from in your comments with your, “I have excellent coverage through my employer coupled with a tax-exempt spending account”. It’s the “I’m alright Jack” and “I got mine so you get yours” attitude that does not float all boats.
Thank you for the article, Peter. I spend far too much time reading about this subject as it is, but your suggestion goes to the top of my list.
Claudia, I’m afraid you’re simply mistaken. People absolutely do use more of a service when they are shielded from the actual cost. This isn’t really a matter of general disagreement, regardless of one’s policy preferences, so I’m a bit surprised to see you challenging it so strongly.
It’s not a matter of people developing an illness so they can go to the doctor. Rather, it’s a matter of consumers having absolutely no concern about prices or unnecessary treatments because they aren’t directly paying for care. In such conditions, they tend to consume more than they otherwise would.
I take full responsibility for not explaining this in a way that you can understand. Please feel free to share my comments with someone in your economics department – they will probably do a much better job than I have.
Thank you for clarifying that social insurance is not optional. I honestly misunderstood your earlier point on that.
Walter, I know you seem to hate long reads, or at least long posts, but healthcare is complicated. However you might want to read this link to get a better understanding of some of the issues that drive costs/quality/utilization/access in other OECD countries and the U.S. It brings up some good comparisons and interesting conclusions. The title is
“It’s the Prices Stupid”.
http://content.healthaffairs.org/cgi/reprint/22/3/89.pdf
Walter, that universal coverage increases demand misses the point. The demand is there already. The trouble is that it is not met, and that people get sick, die, stick to crappy jobs, can’t retire, suffer like dogs, etc. for this reason. When you organize a system that guarantees a basic package of medical care (some analysts call it “comprehensive” but what counts as comprehensive for one is not good enough for others — theme for another posting)what participants have is the option to use a service, not the obligation. Obviously nobody runs to get an appendectomy merely because it is free, or makes themselves type 1 diabetics so that they can take advantage of the system covering their insulin. But you (or at least some of us) want to make sure that when people need certain things they will have it. And this of course is a normative position.
I do not understand your point on paragraph number 4. At any rate, in a social insurance system participation is not optional. Everybody pays (unless you are jobless — there is typically a minimum that is not taxed), as I said, through general taxation or payroll contributions, in varying combinations.
Claudia, I will never skip reading your long posts! It is only when I try to formulate a response to them that the room begins to whirl. Therefore, I will reply to your earlier post, which fits nicely on one screen.
I misspoke when I said that alternative financing schemes would push prices up. It is actually universal coverage that would do so, by drastically increasing demand. My mistake.
As for the misuse of statistics, I’m probably as far from being a conspiracy theorist as anyone you’ll ever meet. In talking about complex systems, there is plenty of wiggle room to make one side look better than it really is – as in the example I gave. Of course, all sides engage in this kind of thing.
I’m afraid I don’t understand your statement about the basic insurance package. Are you saying that participation would be completely optional? Naturally, then, one would receive a tax credit by not participating and could then use the money to purchase private coverage; we would not want to force people to pay twice. Which countries have this system, please?
The dire warnings in your final paragraph would certainly apply to the current system, but then I’m not suggesting we leave things as they are. To anyone who is: Take Heed!
Hello folks, here goes the answer addressing mainly dj’s concerns about my initial article (if he/she is still around). Walter may want to skip it because it is long, sorry.
Dj is right to say that not all other successful countries have a single payer, publicly financed system. But there is a key way in which they all resemble and we are different (unfortunately for us as patients): first, in all the countries dj mentioned (and others as well), “the vast majority of health care costs are not paid by people “buying” insurance in the the same way that they buy a pair of shoes or a trip to Hawaii. “Instead, they contribute to a system”, fed by either taxes, payroll contributions or varying combinations of the two. (Joseph White, 1995, Competing Solutions, excellent book which I use in my classes).
This is the concept of social insurance, which contrasts with that of liability or casualty insurance, where you are running a business rather than providing for a social need or good. It was “invented” by no other than Otto Von Bismarck (or so the story goes), first Chancellor of the German Empire, back in 1883, to provide for the social security (income, health, etc) of the poorest among workers, and to stop the rise of socialism/communism! In such systems, contributions are determined by rules designed to relate costs to ability to pay and to gather enough money to pay for the resulting health care (White, 1995). A basic package is guaranteed. If everybody pays according to these rules, which they largely do because they are compulsory and related to income, there is little need for separate, specially calculated subsidies to individuals (which cost a lot of money to all taxpayers anyway).
So I hope you can see that the key idea is conceptually simple, although as usual the details are complex. This financial structure is what allows them to spread risk widely, cut down administrative waste, utilize the collective purchasing power of participants to the system, plan rationally, and minimize “cost sharing” (that may force many to go without care, with the human and financial consequences. Some systems can, and do, put providers in competition with one another for clients (patients), as the Brits have done for years (within an “internal market”). But you don’t pitch patients against private insurers for cheaper policies, which leads insurers to cherry pick the “best” clients and dump the poor and sicker on public programs.
Now why choose multiple, non-profit payers (not government but strongly regulated) rather than a single-payer (public) source of financing? It has nothing to do with “more choices”, assuming anybody is interested in choice of insurance policies rather than of doctors and services. At any rate, institutions are rooted in history. Europeans built upon middle age sickness funds. Others started from scratch with a national health program at a dramatic moment in history that destroyed the country: such the case of the UK post WWII. Etc. We don’t have a history of sickness funds and our private insurers are nothing like them. But we have a history of social security, Medicare, etc. And we have feasible legislation well under way for a single payer model (HR676, SB840) but not for others.
Well, I hope this answers some main objections. Joseph White’s book is a gem. As he says, we have a choice, it is political, and it can be made. He writes that we can learn from the international experience but understands that many Americans may not want to, as it surely seems. 🙁
Peter – No, I’m not mandated to participate. What happens with the special tax treatment is that if my employer gives me monetary wages instead of the insurance, Uncle Sam taxes me on it. Therefore, I cannot go outside and buy the same coverage, dollar for dollar. It’s a penalty created by IRS rules, not by any private company.
This is one of the big reasons we can’t say that a “free market” exists for health insurance, and therefore, we can’t honestly claim that we’ve tried a free market and it has failed.
Would that penalty be due to rules set out from the requests of private companies so that you are “mandated” to participate in a group for the benefit of the group?
Faulty reasoning, Peter. I’m forced to pay for certain kinds of government benefits through taxes, or in the case of employer-provided insurance, I’m penalized if I try to opt out – see earlier post. There is no inconsistency in advocating for smaller government while making use of the programs I’m currently forced to pay for. Maybe you can afford to pay twice – I can’t. I would much prefer to keep the money I pay into Medicare and SS and invest it as I see fit. For now, though, big-government do-gooders don’t allow me that choice.
“I have excellent coverage through my employer,”
Tax free benefit.
“coupled with a tax-exempt spending account.”
Planning on using Medicare when you retire?
Get that gov’mt out of my life. Ya right.
I ran into the same attitudes in Alaska. What’s significant about AK is that it tends to attract a lot of anti-gov’mt types. They tend not to complain as much when they walk to the mailbox to collect their SS check, government disability check, or their share of the tax free permanet fund government check. And here’s the best, no complaints when using the VA for free healthcare. There’s a one size fits all plan, Walter.
I don’t know about mandates because virtually nobody uses them — except for the Dutch, with great qualifications, and only recently (and 50% of their medical expenses are under social insurance, AWBZ, and all children are covered through taxes-period). But single payer systems “pushing up” prices is patently false. Or should we assume that our elderly fill buses to Canada to buy meds simply because they enjoy the ride???
It is also simply false that in countries who use social insurance as the main or sole mechanism of financing (whether taxes or statutory health insurance) prices are higher. No serious health policy researcher denies the fact that we pay more for virtually every service (and have higher aggregate spending) than any other country in the world, while doing a lousy job as a system. Of course they disagree on causes and solutions. And to suggest that all stats are “doctored” sounds like conspiracy theory to me — false most, if not all of the time.
Last, the “one size fits all” is distorting rhetoric (and again, not an argument). If a basic package of care should include appendectomy for everybody, because it is a common medical condition that nobody is free from developing, not to say inconvenient to shop around for, it does not follow that everybody should have one, or will demand one, merely because it is included in a basic comprehensive package to which everybody has, and should have, access in a minimally civilized, and certainly wealthy, society.
Walter, Walter, don’t even dream to go into business by yourself in our country. If you are over 35 and ever had elevated blood cholesterol (or even a mild yeast infection), you won’t get an affordable policy in your “market” in a million years. And if you have kids, tell them to forget about looking for a job they enjoy. Make sure that they get one with benefits. Or, if we take the “you’re-on-your-own-enjoy-the-market” way that some are suggesting, tell your kids never to get sick, and never, never to get old…
I absolutely agree that people should take care of themselves and address minor problems before they become worse. Government takeover of healthcare is not needed to address this.
Basic economic principles absolutely apply to healthcare transactions, regardless of the payment mechanism. When you hear about wait times and shortages, that’s econ 101, whether in the U.S. or Germany. Can’t repeal those laws – sorry.
I have excellent coverage through my employer, a high-deductible plan coupled with a tax-exempt spending account. I don’t want to trade it in for a one-size-fits-all solution crafted by some D.C. bureaucrat. I would love to shop for an even better plan, but due to outdated federal tax laws, it wouldn’t be cost-effective; as I said earlier, we don’t have a free market in health care, in large part due to government interference.
Stats about lower “costs” under Euro systems are usually doctored (pardon the pun) – not comparing apples to apples. It’s always possible to shift costs to a place where they are less visible and then say, “Look how much we saved!” For example, if someone can’t get care in Canada and has to travel to the US, that’s a cost, but not one that the government wants to talk about.
I share your cynicism and distrust of the government, which is why I won’t willingly turn over control of my health to it.
Hope I haven’t violated my own rule about long posts!
“Your example seems to say that every healthcare choice is a life-or-death matter in which there is really no choice at all, which is ridiculous.”
No, not every choice is life and death (at the moment)but lack of care for simple problems can lead to serious illness. And non-treatment of soon to be serious problems can lead to death. Will a simple toothache ignored lead to serious complications, absolutly. No one has complete control over health outcomes. So to apply “basic” ecomomics to healthcare is to say healthcare is the same as a Ford Truck. So who is being “ridiculous”? Out of interest how are you insured and how long do you wait to see a doc?
As to single-pay or European style mixed coverage pushing prices higher I suggest you research medical costs/GDP of other nations providing accessable healthcare for their citizens. There must be a reason ours is about double despite little government intervention at controlling costs. I guess if we went to an all cash system or barter (chickens and pigs)prices would have to come down but an all cash system for buying houses and cars would bring those prices down too. Are you in favor of that? I have lived under single-pay in Canada and used the U.S. system here and single-pay was/is definately better. But as tcoyote, myself and others realize until our for-money self interest government is reformed we won’t have much of anything in the way of workable reforms, just patch-work edge nipping so corporate contributors won’t stop the money flowing.
Ms. Chaufan, my headache resulted from your tendency to post dissertations rather than comments. If you want to persuade, be brief and clear. Your latest post is more in line with what discussion forums are about.
Peter, you have a good grasp of basic economics. Yes, if people consume less, prices tend to fall. Your example seems to say that every healthcare choice is a life-or-death matter in which there is really no choice at all, which is ridiculous. In any case, we don’t have a free market today; thanks to government interference, ours is rigged toward overconsumption. Both single payer and mandatory coverage would make this worse and push prices higher. What are you proposing to do about that?
Thumbs up Claudia!!
Yea Walter, I was interested hear from you how the free-market was going to rescue us from unaffordable healthcare? Would it be when a large enough proportion of the population simply stop seeking care (and insurance) and the market realizes this through reduced revenue, then prices start to come down which attracts people back to affordable healthcare and eventually we get to equilibrium? I bet at kitchen tables people are discussing how they’re just going to endure the pain and put off that necessary treatment until prices come down. “Honey, the cancer treatments can wait until we can afford it.”
Is it the headache I caused you, Walter, that prevents you from offering good reasons and relevant evidence for whatever points you wished to make? Did this headache also compel you to curse..? Let’s hope it passes quickly so that next time you decide to blog you can contribute productively to this conversation, and offer a reason or two for whatever it is you believe. 🙂
Meanwhile, let me contribute to your headache one last time: it looks like you prefer sound bites, or short cuts, at least in matters of health care. But they don’t work. And sorry, this time you’ll have to figure out the argument yourself.
I tried, I really did. However, having read through Prof. Chaufan’s postings several more times, I have developed a bit of a headache. I feel like a reporter who has asked Joe Biden for a brief comment and finds himself still standing there, long past dinner time, trying to remember what the question was.
I humbly bow to Ms. Chaufan’s utter mastery of the art of bullshit. May she never stoop to using one word where ten will do, and may she never stay on one rhetorical point long enough for anyone to catch her at it.
There are four major points here:
1. “Affordability” is a sad joke for the many of us who can’t “afford” to pay anything for health insurance, but are always ineligible for government assistance, which goes only to the poorest of the poor.
2. The insurance that can be forced upon those who can’t afford it is that with the greatest deductibles and co-pays – hence, insurance that is unusable until one is at the point of dying.
3. Forcing people to pay for health insurance (dictated by the government and the corporate “providers”) is a dreadful invasion of that “control over her own body” which the abortion activists are always talking about. Why should a woman be able to “choose” to have an abortion, but have no say on what kind of health care she wants?
4. Relating to #3, as well as to comments above about other countries, many of those include alternative medicine in their national health plans – and that’s where a lot of cost savings come from. England, for example, pays $2,000 per capita vs. $7,000 in the U.S., and covers everyone – with five homeopathic hospitals and other alternative modalities in the mix. Germany’s Commission E thoroughly researched traditional herbal remedies and other alternative natural care, and approved those it found safe and effective for coverage. Are they offering inferior care compared to our high tech/drug/surgery empire? Heck, no! The opposite – we are down among the worst in health outcomes, including infant death and defects and life sustainability.
Millions of us already use these alternatives, which don’t carry the great risks of “side” effects posed by mainstream stuff. The only reason they aren’t more available is that the government is now basically run by the corporations that make money on business as usual.
Tcoyote, if you are right, as I think, to say that corporations run the show, what makes you think that they can, and should, entrusted a key role in health care…?
I’d like to see your argument (with all due respect, I can’t see it…) in support of private health insurance. What makes you think so, given the enormous evidence against it (our own history) and the enormous evidence in support of social insurance systems (the far more successful history of any European nation, or Canada, by any credible standard)? Let me suggest that the problems others have is no evidence against the soundness of the core concepts underlying their systems. And it is certainly no evidence in support of our way of doing things.
I would also like to understand what makes you think that what we currently have, or what we would have with no government intervention, is “free”. In fact, I would like to understand what exactly you conceive as “no government intervention”. Because what I can only imagine with no government intervention is anarchism. The very notion of “property rights”, what protects your property from other stronger or more numerous taking it away is upheld by social and legal norms. No norms, no rights — life would be “nasty, brutish and short”, believe me, and it would be easy for the millions of unhappy people out there to take over, especially when they have a rope under their neck, medical or otherwise.
Let me address just one former question of yours: Germany. Otto Von Bismark, first chancellor of the German Empire, started a social insurance system for the poorest among workers, because he believed that the social insecurity that these workers experienced was “the greatest danger” (to the status quo). Indeed, he wanted to fight socialism and chose a social health insurance system!! (even