At the Democratic debate in Cleveland, GE/NBC’s Tim Russert and Brian Williams devoted—wasted, actually—16 minutes quizzing Hillary and Barack on the trivial differences between their healthcare plans. The words “single payer” were never mentioned, nor HR 676, nor was there any discussion of Congressional lobbying by health insurance companies, one of which just happens to be GE.
Meanwhile, in a parallel universe very much like ours, the dialog below was taking place, between a questioner, Tim, and a composite candidate, HillBar, whose proposed healthcare plan is an amalgam of the plans proposed by Hillary and Barack. Tim’s questioning reveals serious faults in the HillBar plan, which retains health insurance companies who want to protect their huge cash flow.
Tim also discovers that HillBar would actually prefer single payer insurance like that of HR 676 now before Congress, but thinks that pressure from the health insurance lobby will continue to block it unless voters raise a very large outcry for it.
All this comes out because, in this parallel universe, in contrast to ours, Tim’s employer is not in the health insurance business, he asks intelligent, unbiased questions, and candidate HillBar gives complete and honest answers.
Tim: Concern with healthcare is much in the air, fueled by personal experiences and films like Michael Moore’s controversial “Sicko” and “John Q” with Denzel Washington. But many Americans lack a grasp of the big picture. Could you give us a quick description of America’s health care system, and the problems that concern so many today?
HillBar: Be glad to, Tim. Of the 300 million Americans, about half are covered by one of our government programs: Medicare for the elderly, Medicaid for the indigent, and the VA Hospital system for many veterans. Each of these programs has its problems, but by and large people are satisfied with them. The big concern is about the problems of the other 150 million, who rely on the private healthcare system. Of these, about 100 million are covered by health insurance from private health insurance companies, most under benefit plans paid for by their employers, some under individually purchased plans. That leaves almost 50 million with no health insurance at all.
In other countries, employers are not burdened with healthcare costs, giving them a competitive advantage. As insurance costs rise and international competition increases, US employers are cutting back on healthcare benefits, leaving more people with no insurance or with dangerously weak coverage. Big medical bills cause about half the personal bankruptcies in the US, and 3/4 of those medical bankruptcies befall people who actually had insurance at the outset of their illness.
Like all businesses, the insurance companies naturally want to increase revenues and decrease costs. Some of the practices they engage in to limit costs are distressing to policy holders and people applying for policies: practices such as refusing a policy application due to a pre-existing condition, or denying needed treatments under an existing policy, and, scariest of all, abruptly canceling a policy when treatment costs go up due to serious illness—“rescission” they call it, when they rescind a policy saying it should not have been issued in the first place, often due to a trivial fault in the application.
The other big problem is affordability. Healthcare is expensive, now over $7000 per person, more than $2 trillion per year, and costs are rising rapidly. Health insurance just costs too much for many people and even for many employers. Most of the 50 million uninsured have no coverage for the simple reason that they can’t afford it. And many who are covered find required co-pays beyond their means.
Tim: So how does your plan address the distress caused by the cost-cutting practices of the insurance companies?
HillBar: By introducing government regulation to control those practices. No more refusing to issue a policy due to a pre-existing condition, which also means it can’t subsequently be cancelled for that reason. By requiring that policies be portable, so people can take their insurance with them when they change jobs. As for coverage refusals or limits, the insurance companies still have to be allowed to do that, but the government can oversee the process to be sure it is fair.
Tim: That sounds intrusive: government bureaucrats increasingly sticking their noses into private businesses. And costly: won’t that increase the cost of the average insurance policy? And increase government costs to enforce the regulations called for in the plan? And doesn’t portability mean that, as employees change jobs, employers, instead of dealing with a single insurance company, will have to cope with a growing number of companies, billing them at varying costs and offering disparate benefits to their employees?
HillBar: You’re right on all counts, Tim. But something has to be done to control these practices, which bring worry to everyone and grief to so many.
Tim: Moving on to affordability: what does your plan do for that, especially since increased regulation will make insurance even more expensive?
HillBar: The concept that everyone must first grasp and accept is that people at the bottom of the income ladder cannot afford the healthcare we agree as a society they should have, so in one way or another those higher on the ladder must subsidize their care. Some form of income redistribution is inherently necessary. That happens today when a person with no coverage and no means to pay shows up at an emergency room. The hospital pays for the coverage they receive, and ultimately all of us pay for it, through higher insurance premiums. (By the way, if they DO have means, the hospital will go get them, even if that means driving them into bankruptcy.) If people on the lower rungs are to receive healthcare through insurance, the cost of that insurance MUST be paid for at least in part by those higher on the ladder. The HillBar plan does that by subsidizing insurance payments for those lower on the ladder with government money collected by income taxes, which are progressive.
Tim: So, in effect the government redistributes income from those at the top to those at the bottom of the income ladder, by using tax money for subsidies to help pay for health insurance premiums for those who can’t afford them.
HillBar: Exactly. There is no way around it. If every one is going to get healthcare, people at the top must help pay for people at the bottom, who just can’t afford it.
Tim: I do see problems with that. Won’t those subsidies have to be subjected to a means test? Isn’t that yet more government intrusion into the healthcare process? And don’t those subsidies go to the profit-making insurance companies, increasing their revenues and enriching them in the process?
HillBar: Well, yes. But somehow we have to take care of those most in need, and this is the only way to do that in the context of our present private health insurance system.
Tim: And there is another problem: even with government-paid subsidies, many people will either be unable or unwilling to buy health insurance. What about them?
HillBar: That is indeed a problem. Young, healthy people, who think they won’t need healthcare, even for their children, may opt out. So my plan has mandates that require people to buy insurance. Should insurance be mandated for everyone? Or just for children? Or for any family that has children? Minor differences, which we should not waste time arguing about now.
Tim: The really important question is: what to do about the people who disobey the mandate? Fine them? Put them in jail? Suppose we have a young father, who doesn’t have the money to buy even subsidized health insurance for his children, so he doesn’t buy it, or lets it lapse, even though it’s mandated. Do we fine him? Put him in jail? What?
HillBar: A really tough question, Tim. Could we just move on to another subject?
Tim: I do want to stick with the question of whether the HillBar plan achieves universal coverage, which you claim to be aiming for. It seems that even with subsidies and mandates, some people will still have no healthcare insurance. How many?
HillBar: Of course that depends on how generous the subsidies are, and how stiff the penalties for disobeying the mandates. But somewhere between 5 and 15 million. Of course, if everyone found to be without insurance was summarily executed, why then everyone would have insurance. Everyone left alive, that is. But I don’t advocate such an extreme penalty, and anything short of that will leave some people uncovered.
Tim: So: millions of uninsured people stay in the same boat they are in now, but they become lawbreakers?
HillBar: That’s the best that can be done with a combination of subsidies and mandates.
Tim: And what about cost? At present, the insurance companies slice off about 20% of total premium receipts for their expenses and profits, and impose administrative costs of over 10% on the actual providers---doctors and hospitals---for coping with insurance matters. Would that change? Would your plan reduce the 31% of premium payments that the insurance companies currently cost us?
HillBar: Maybe some, but not much. The insurance companies will still have expenses for sales and marketing and big salaries for management, and they must make profits, after all. None of that would change. Refusing and rescinding policies and denying treatments and imposing coverage limits incurs a lot of administrative expense, some of which might be reduced with the limits we would impose on those activities. But portability and new regulatory compliance would raise costs. Could be a wash..
Tim: But the total cost of healthcare premiums will increase substantially, because there will be tens of millions of new policyholders, as a result of subsidies and mandates. So the total dollars taken in by the insurance companies can only go up, increasing the total healthcare bill, right?
HillBar: Correct. That’s one reason the insurance lobby may not fight it. But Harry and Louise may be back on TV, as they were in 1993, attacking healthcare reform with false ads, funded by the Health Insurance Association of America, a health insurance industry lobbying group.
Tim: Actually, it seems to me that your plan is wide open to attacks from both the left and the right. The right will attack it as “Socialized Medicine” because it redistributes income by using tax money to subsidize low income people and it imposes lots of new regulations on the insurance companies. The left will attack it because it doesn’t cover everyone and pumps tax money into insurance companies. Both sides will attack it because it intrudes into the lives of citizens and its total cost is much higher than the present system. And it still has crucial healthcare decisions being made by insurance companies, who increase their profits by refusing treatments.
HillBar: Nobody said getting to universal healthcare was going to be easy.
Tim: But your plan isn’t universal: it leaves millions uninsured. And it’s a virtual crazy quilt of new regulations, government intrusion, increased insurance costs, increased government costs, taxes, subsidies, and mandates. Isn’t there a better way?
HillBar: Well, actually there is. It’s called single payer. But it’s politically impossible.
Tim: Single payer? What’s that?
HillBar: It works like Medicare. In effect, the government becomes the insurance company. It pays treatment providers—hospitals and doctors—who can be private, as they are now. The money to pay for their services comes from payroll taxes and income taxes. Everyone is covered. Everyone, no exceptions. Everybody paying income tax pays for part of it, and every employee and employer pays for part through payroll taxes. Compared to the present system, there is actually more choice of providers, not less, as is often falsely claimed. Medicare is a very popular program, and single payer is “Medicare for All,” not just those over 65. Like Medicare, it is very efficient, with much smaller administration costs for both the payer and the providers.
Tim: Single payer sounds too good to be true. Since it covers everyone, it must cost more in total than the present system, right?
HillBar: Actually, no. The cost would be about the same as the present system. (And going to single payer would slow the growth of healthcare costs, as shown by countries that now have it. As Dr. Arnold Relman explains in his book “Second Opinion,” moving to single payer also enables taking the step that would really rein in costs: replacing fee-for-service healthcare with large group practices.)
Tim: Single payer would cost the same as the present system? How can that be? Where do the funds come from to pay for the 50 million currently without insurance?
HillBar: Several sources: the big slice of premium collections now retained by the insurance companies would in effect all be redirected into the “Medicare for All” pot. For healthcare providers, working with a single payer would reduce administrative costs, compared to the costs and hassles of dealing with hundreds of insurance companies, each with of a different set of treatment rules and payment terms. Many experts have estimated that altogether, about 1/3 the cost of the present private system would be saved, enough to extend coverage to the 1/3 not now insured. Not exactly, of course, but in the ballpark.
Tim: But isn’t this Socialized Medicine? Like the Canadian system? Americans don’t want anything like that, with its long waits for treatment.
HillBar: The Canadian system is indeed a single payer system that covers everyone. The “long waits” for elective surgery are exaggerated by opponents of single payer, and anyway are now being shortened by increasing system funding. Yes, Medicare for All is somewhat similar to the Canadian system, with an important difference. We now pay twice per capita what the Canadians pay for healthcare, and our move to Medicare for All would fund it at about the same total cost as our present system. Imagine the Canadian system with TWICE the per capita funding they have been providing. What would happen to those “long waits”? They’d be gone.
Tim: But still, it’s Socialized Medicine, contrary to the free market ideology we Americans hold so dear, right?
HillBar: According to some, anything the government touches is “socialized”. When doctors are government employees, as in England or our own VA Hospital system, probably everyone would agree they are working in Socialized Medicine. But physicians in Canada or physicians in the US being paid by Medicare aren’t government employees. What is “socialized” under single payer is not healthcare delivery, but the health insurance system. If that is “Socialized Medicine,” so be it.
The patron saint of free market ideology, Friedrich Hayek, warning against the evils of collectivism in his seminal book “The Road to Serfdom”, allowed exceptions for the army, the police and firefighters, and said two more exceptions would be acceptable: the regulation of polluters, and collective provision for social needs like health care, i.e., “Socialized Medicine.” If it’s OK with Hayek, it ought to be OK for all but the most extreme free market fanatics.
Tim: What about those small businesses who now don’t provide health insurance for their employees? Wouldn’t they be hurt by the new taxes that would be imposed on them?
HillBar: Their competitors would all be in the same boat, so maybe not. Doubtless some businesses would be hurt, but for most Medicare for All would be a boon. Their new taxes would cost them less than the health insurance they now provide for their employees, since the cost of healthcare will be more broadly distributed, not resting so much on the shoulders of those employers providing a health benefit. The crux of the move to single payer is how best to shift from employer-financed health insurance to publicly financed health insurance, paid for with taxes.
Tim: How would the new tax burden needed to fund single payer be allocated? You say progressive taxation is needed, but how progressive? And how divided between employers, employees, and income tax payers? Would payroll taxes be regressive, as they are now, flat, or progressive?
HillBar: Good questions, all deserving debate and resolution, rather than wasting time on the minuscule differences in the ‘mandates’ of one plan versus another.
Tim: You have presented a compelling case for single payer. But the HillBar plan you currently propose is not single payer, which you say is politically impossible. That must mean most voters are against single payer, right?
HillBar: Well, no. Polls show that universal tax-supported single payer health insurance is what most people want. It covers everyone, no exceptions. Like Medicare, it’s simpler for patients and treatment providers. It virtually ends the risk of being denied coverage, or being put into bankruptcy by illness.
Tim: So if it’s best, as you say, and it costs the same as today’s very broken system, and it reins in cost increases, and most people want it, why don’t we have it? Why is it “politically impossible”?
HillBar: The health insurance companies oppose it.
Tim: And they have the clout to block it, despite all it has going for it?
HillBar: Indeed. Remember, premiums on healthcare policies for 100 million people flow in to the insurance companies, a revenue stream of $950 billion per year. Switching to single payer would abruptly shut off that torrent of cash. So the insurance companies are highly motivated to prevent single payer. And they have the means. Boy, do they ever. So guess what: for every member of Congress, there are four healthcare lobbyists, spraying “campaign contributions” to anyone who will oppose single payer. Doing so of course means the office holder must go against the interests and the desires of the voters who elect them. But cash is important to politicians. They need campaign funds to get elected. So they take it. And become beholden to the healthcare lobby, and co-conspirators in keeping it all quiet.
Tim: Wait a minute. You’ve already pointed out what the insurance companies do with the 31% of premium cash they cost. It goes for sales and marketing, management salaries and profits, none of which deliver any value to policy holders, and for those expensive administrative actions for denying treatment to policyholders that probably deliver negative value to them. Taking money and delivering nothing of value for it is sometimes called robbery, which would mean the insurance companies are robbing the policy holders. And on top of that, they divert some of what they are robbing to bribe politicians with “campaign contributions” so they can keep on doing it? Healthcare policy holders are paying for the bribes that keep them from getting what they want? Is that what’s going on?
HillBar: In a word, yes. It’s an incredibly vicious circle, fueled by huge amounts of cash.
Tim: So is that why your plan keeps “a place at the table” for the insurance companies, even though doing so turns the plan into the crazy quilt of flaws I pointed out earlier?
HillBar: Why else? It’s a matter of survival. You can’t defy the healthcare lobby. When asked why he wasn’t backing single payer, Joe Biden said "I don’t want Harry and Louise eating me alive." This was an admission that he had distorted his healthcare plan to mollify the insurance companies.
Tim: And there’s no alternative?
HillBar: Well, there is. It’s called HR 676, a bill before Congress right now. It would deliver single payer “Medicare for All.” But since the health insurance companies oppose it mightily, it is politically impossible, as I said. In fact, even though “healthcare” is high on the list of voter concerns, many voters don’t know what “single payer” means, and have never heard of HR 676. The insurance companies want the media to keep quiet about it, so they do. After all, insurance companies are big advertisers. And some media, like GE/NBC, are in the health insurance business themselves.
Tim: So that means almost no one in Congress supports HR 676?
HillBar: Well, in fact it does have a slowly growing list of sponsors in the House, so far 88. It was filed by John Conyers and championed by its first sponsor, Dennis Kucinich.
Tim: Kucinich?
HillBar: You may recall he was once a candidate for president in the Democratic primary. During a debate, Tim Russet tossed him a bomb of a question: had he ever seen a UFO? If only Kucinich had shot back: “I did see a UFO, and I hope to see one more, to match Ronald Reagan, who saw two,” he might have been spared the subsequent ridicule that made it possible to ignore him.
It’s still a mystery why GE/NBC went to such lengths—a lawsuit and an appeal—to keep him off the debate platform in Las Vegas. Was it his opposition to storing nuclear waste at Yucca Mountain? His opposition to media consolidation? His opposition to the big defense budget? His advocacy of single payer and HR 676? Or all of these? Do you know Tim? And do you know why the Democrats turned over this debate to a huge media giant/defense contractor/nuclear power plant supplier/health insurance company with obvious interests in the issues being contested in the election?
Tim: Hey, I ask the questions here, I don’t answer them. So 88 House members have signed up in support of HR 676. What would it take to get enough backing for it to carry the House, and then the Senate?
HillBar: Well, as you know, Tim, there’s just one thing politicians need more than campaign funds: votes. So a groundswell of support from the public could overcome even intense lobbying by the insurance companies. If enough voters shout out for single payer and HR 676, they will get it. Voters should contact their US Representatives in the House, or anyone running for Congress, thank them if they are supporting HR 676, demand they do so if not.
Tim: And if enough voters demanded it, and Congress supported it, would you drop the complex, problem laden plan you now offer in favor of single-payer HR 676, “Medicare for All”?
HillBar: In a heartbeat. What a relief it would be to promote something that would actually work, instead of the crazy healthcare plan I had to kluge together just to keep the insurance companies in the act. Big public demand for single payer HR 676 would shield me from the wrath of the health insurance lobby, and let me do what I have long wanted to do: get behind single payer and press for its passage. But it's all up to the voters. If they shout out for single payer, they can get it.
Tim: This has been most instructive. Thank you and good night.
HillBar: Thank you, Tim. And don’t forget to contact your Representative about HR 676. To confirm who your Representative is, see http://www.govtrack.us/congress/findyourreps.xpd . For more on single payer, see http://www.pnhp.org . Shout out for single payer! Yes, we can get HR 676 passed!
The post is great. The Bill H.R. 676 is also great with one exception. It takes too severe of an overhaul on an entire segment of the insurance industry. Find ways to utilize the industry to do the administration that the government would handle poorly anyway. Doing this will help the bulk of the overhaul have a chance of passing. Control the insurance companies with limits and guidelines similar to Medicare. Use the industry to work with the Government to hold down prices through negotiated charges for care.
I am going to add this blog to the blogroll at my site.
Posted by: Ken Moyes | March 24, 2008 at 01:56 AM