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The
election of Obama raised expectations for sweeping
health reform sky high. But in spite of several self-imposed deadlines,
Senate and House health-reform bills were not ready by the time of the
August Congressional recess, when passionate local debate erupted at
Congressional home district town hall meetings.
The
Onion
pierced the din: “After months of committee meetings and hundreds of
hours of heated debate, the United States Congress remained deadlocked
this week over the best possible way to deny Americans health care.”
If
the goals are health care for all and reduced costs of care, the
measures being prepared in Congress will not reform the health system.
Instead they amount to a financial rescue package for the private
health insurance industry.
In
2007 more than one out of five working-age people were uninsured for a
year or longer. One out of six working people had health insurance
insufficient to meet the expenses of a serious illness. And there were
8 million uninsured children in the United States. At least 5 million more
people have lost their health insurance in 2008 and 2009 thanks to
galloping unemployment—on top of years of progressively unaffordable
health insurance, inadequate coverage, and steep out-of-pocket costs.
The
failing economy has further accelerated the crisis in health care
through devastating state and local cutbacks in safety-net care. Yet
the Congressional bills that have come through committee offer precious
little relief for these ills, no fundamental reform—and key provisions
would not start until 2013.
Against
this background, a nascent mass movement for single-payer national
health insurance, plugging away for decades, steadily accumulates new
force. Single payer would deliver all necessary care for all
individuals, lifelong, with no co-pays and no deductibles through a
system in which health care would be publicly financed but privately
delivered. By eliminating private insurance, single payer would save an
estimated $400 billion annually in health spending.
The
single-payer bills in Congress are HR 676 and S 703. HR 676 has 86
co-sponsors and has been endorsed by over 500 labor bodies, including
39 state AFL-CIO federations.
Whether
a bill passes or flounders this fall, the details in the proposals that
have come through Congressional committees have little connection with
the popular expectations and grassroots clamor this summer. If Congress
enacts reform, in 2013 individuals will be required to purchase health
insurance. This is the centerpiece of the “reform.” The proposal has
come straight from the insurance industry: criminalize the
uninsured and subsidize unaffordable private insurance premiums with
public funds.
Massachusetts as a model
An
“individual mandate” was enacted in Massachusetts under Gov. Mitt Romney in
2006. All residents of the state were required to join the private
insurance risk pool or pay a fine. Supposedly, this would have reduced
costs through an expansion of the risk pool. It did not. The state
purchased health insurance for everyone with incomes below 150% of the
federal poverty level and subsidized those making between 150% and 300%
of that level. A new state agency, the Commonwealth Health Insurance
Connector, was established to match individuals to private insurance
plans.
The
Connector employs more state workers to assist with the purchase of
private health insurance than the province of Ontario’s Medicare employs. Canada’s Medicare is the agency
that pays for all necessary medical services for all residents. Ontario’s Medicare overhead is
1.3%. In Massachusetts the Insurance Connector
adds 4.5% in administrative cost to each policy it brokers.
The
Massachusetts reform went into effect in
2007. As of March 2008, 40% of those uninsured in 2007 remained without
coverage. High-deductible policies lowered premium costs by shifting
more of the expense onto individuals. Physicians for a National Health
Program found that a healthy 43-year-old man making just over $31,000 a
year would have to pay $5096 before any insurance coverage kicks in,
with additional co-pay and co-insurance costs.
In Massachusetts when you lose your job you
still lose your health insurance. The reform does not protect you from
financial ruin when illness strikes, and
health insurance remains far too expensive. Neither is the program
sustainable for the state. As the state budget deficit rises into the
billions, funding for safety net programs and institutions has been
slashed to keep the individual mandate afloat. Services that have been
cut include care for the poor, emergency and primary care, mental
health and addiction care.
In
July 2009 the state revoked subsidized health insurance for 30,000
legal immigrants. A 2008 survey of opinion intended to bolster
the program found that 50% of those directly affected by the reform in Massachusetts said that the “law hurt
me.”
For healthy profits
The
“individual mandate” is a financial bailout for the insurance industry.
Relentlessly unaffordable premiums, rising far faster than wages,
have threatened the insurers’ profits.
An
April 2008 New York Times business column about sagging profits
at UnitedHealth carried a frank appraisal of
the declining employer-sponsored private health insurance market. “It
is never a good thing if many of your customers can no longer afford
what you’re selling,” Reed Abelson wrote. “In
recent years despite soaring medical costs, insurers have made big
profits by keeping premiums well ahead of health care inflation. But
analysts say that business strategy may be reaching its limits, with
companies finding it harder to raise prices without losing substantial
numbers of customers.”
The
article closed with a quote from a leading health business analyst:
“The hail Mary may be that we turn to some sort of universal care.”
Shortly
after the presidential election, the insurance industry officially
embraced health-care reform. A November 2008 press release from Blue
Cross Blue Shield read: “The Blue Cross and Blue Shield Association
(BCBSA) and the 39 member Blue Cross and Blue Shield companies today
announced support for every individual being required to have coverage
and all insurers being required to accept everyone regardless of their
health status.”
If
the government would only criminalize the uninsured and pay the
premiums for the poor, the industry said, it would stop denying people
insurance coverage because they are ill. The industry further promised
that it would no longer terminate the policies of people who paid their
premiums on time and women would no longer be charged more than men for
health insurance—again, if and only if the federal government would
deliver paying customers—and guarantee the payments too.
But
there is growing recognition that the “reform” is indeed “truly
meaningful” for the profitability of Blue Cross Blue Shield Association
and its competitors. Business Week announced on its front page,
“The Health Insurers Have Already Won: How UnitedHealth
and rival carriers, maneuvering behind the scenes in Washington, shaped
health-care reform for their own benefit.” A Los Angeles Times
headline read: “Healthcare insurers get upper hand. Obama’s
overhaul fight is being won by the industry, experts say. The end
result may be a financial ‘bonanza.’”
Employer-sponsored insurance
Congressional
proposals include a minimum annual tax of $750 and/or a tax of 2.5% of
adjusted income upon people who don’t purchase health insurance. For
those who still could not afford the premiums, a hardship waiver could
be requested. The Senate HELP bill defines “unaffordable” as 12.5% of
income or more.
Companies
that currently arrange skimpy policies—for example, the very high
deductible plans like the one Wal-Mart offers—would be protected by a
grandfather clause and exempted from regulations setting forth minimum
covered benefits. Recognizing that the costs of health insurance are a
nonstarter for individuals, subsidies for private health insurance
policies would be granted for people whose incomes are 400% of federal
poverty or less. And tax credits would be given to small employers to
subsidize the employer share of insurance premiums and grant payments
to employers whose plans cover retirees aged 55-64.
But
as the Congressional Budget Office began adding up the price tag—over a
trillion additional dollars in costs over the coming decade—lawmakers
moved to scale back the subsidy. According to the Los Angeles Times,
“In May, the Senate Finance Committee discussed requiring that insurers
reimburse at least 76% of policyholders’ medical costs under the most
affordable plans. Now the committee is considering setting the rate as
low as 65%.”
Bankruptcies
in the United States in 2009 will affect 3.8
million people. Two-thirds are the result of debt due to illness—more
than three-fourths of whom have health insurance. To prevent this, HR
3200 would cap personal costs (at $5000 for an individual and $10,000
for a family)—but only for covered services.
But
there are more personal costs. With the rhetoric of “shared
responsibility,” the House bill calls for employers to pick up at least
72.5% of the premium for an individual policy and 65% of the premium
for a family. The Senate HELP bill would require employers to offer to
pay 60% of the insurance premium. Consider that 40% (the direct cost to
the employee) of the market price for insurance coverage for a family
of four would equal 2/5ths of about $16,000—$6400 annually or $533 per
month. Plus, there would be co-pays, deductibles, and the rest of the
usual unaffordable out-of-pocket expenses.
Another
feature of proposed bills is a government “exchange,” through which
employers and individuals would be encouraged to purchase insurance.
Individuals would not be allowed to use the exchange if their employers
offer health insurance, including plans that were grandfathered. This
agency would add yet another layer of expensive bureaucracy to the currently
dysfunctional system, like the Connector did in Massachusetts.
“Public option” posturing
The
“public option” refers to the idea that people should be free to
purchase insurance from a public program, along the lines of Medicare.
Proponents believe this would pressure the entire insurance market to
reform itself.
On
moral grounds, supporters of the “public option” advance the same
arguments as single-payer proponents: Insurer profits amount to blood money,
for every penny earned by the company is a penny’s worth of care
cheated from the effort to make a human being healthy. In comparison, a
public program with the lowest possible overhead, its finances open for
scrutiny, presents a morally defensible means of paying for care.
But
the “public option” amounts to a moral posture, not a workable reform.
Single payer would eliminate the insurance industry from health
care, whereas a “public option” cannot. A “public option” cannot
liberate the resources squandered by the private insurance companies.
Instead, it adds duplicative waste in administrative overhead to the
system.
The
most relevant evidence comes from the state of Maine, which has offered a
“public option” since 2003. In six years this program has managed to
cover only 10% of the uninsured and has not forced its competitors to
lower costs. Perhaps the currency of a “public option,” a clever
market-based scheme, reveals something about popular ideological
illusions, for it relies upon a crude kind of “free markets equal low
costs plus high quality.”
Of
course, this is not the way the market works. The laws of the
health-insurance market, in particular, dictate that the successful
competitor will avoid insuring people who are sick and/or poor while
recruiting customers who are healthy and wealthy.
Does
it really make sense to believe that a “public option” tossed amid the
heavily monopolized insurance market in the U.S. would stand a chance at
competing for the healthy and wealthy patients? In the best case
scenario, wouldn’t such a program instead drive the system toward
officially sanctioned disparities in care?
Historical
note: the “public option” first appeared on the scene as a proposal
once Medicare was gaining the momentum required for Congressional
passage. The AMA, Ronald Reagan Republicans, Dixiecrat
Democrats, and other right-wing opponents of Medicare embraced the idea
of allowing seniors to voluntarily purchase insurance from a public
plan instead of enrolling all seniors in Medicare. Does it make sense
to now embrace a proposal that was objectionable over 45 years ago?
Topsy turvy
The
“public option” has been much more a political posture and much less a
specific proposal. It gave liberals and progressives permission
to support a reform that would be, at its heart, a spectacular bailout
for a failing financial services industry, where the government would
hawk the product, coerce customers, and subsidize payments to
companies.
But
in response to the reform proposals, the right attacked the entire
reform, not just the public option, as if it were single-payer national
health insurance. In response the White House seemed prepared to
jettison the “public option” (in exchange for bipartisan support for
the individual mandate).
But
the public option supporters have clung to their moral indignation.
Prevailing
Democratic Party wisdom holds that the tragedy of the Clinton health-reform effort was a
failure to maneuver legislation through Congress quickly, thanks to too
much deal-making behind closed White House doors. The nuance of the Obama administration was to move the deal-making to
behind the closed doors of Congressional committees.
Meanwhile,
the White House, in parallel, also sought closed-door deals palatable
to “stakeholder” profiteers, hoping to expedite bipartisan compromise.
If one accepts such “wisdom,” history seems to have repeated
itself—if the first time tragedy, this time farce.
The
Los Angeles Times reported that former Louisiana Congressman
Billy Tauzin, president and CEO of the Pharmaceutical Research and
Manufacturers of America (PhRMA), visited the
White House six times. In exchange for a pharmaceutical industry
promise to forego $80 billion in profit over 10 years, Tauzin told the Los
Angeles Times, President Obama had
promised not to allow importing of drugs from Canada or Europe and not
to reform Medicare Part D, which has been a financial bonanza for that
industry. Medicare Part D prohibits bargaining for drug prices. PhRMA in turn pledged $150 million in advertising
in support of the president’s reform effort.
When
PhRMA lobbyist and former House Republican
leader Dick Armey joined the chorus of conservative talking heads
attacking the reforms as a “government takeover of health care,” PhRMA forced his resignation from the lobbying
firm.
A
proposal to cut Medicare Advantage plans—the private insurers’ managed
Medicare contracts that cost, on average, 14% per patient more than
traditional Medicare—spurred many seniors to oppose Obama’s
reform. In response, in spite of decades of GOP demands that Medicare
be privatized, the Republican Party came out with a public position of
“hands off Medicare.” And a Democratic Party pollster found that 39%
said “yes” when asked, “Do you think the government should stay out
of Medicare?”
Even
more ironically, the Republican Party also came out in defense of the
Veterans Administration, a socialized health-care system owned and
operated by the federal government. In August the Congressional Budget Office
released a study of the VA that once again underscored evidence that
shows that the quality of care at the VA is better than Medicare,
better than private practice, and better than managed care. If there
were to be a truly evidence-based debate over how to pay for health
care using a “uniquely American” model, it would be a debate between
single payer, the Medicare model, and socialized medicine, like the VA.
Single-payer
national health insurance, after more than 20 years of accumulating
evidence, now accumulates unprecedented popular support. Although polls
have shown that a majority of Americans, including physicians, favor
national health insurance, the depth and passion of grassroots activism
for the proposal is something new. For the first time, this fall single
payer may be voted on the floor of the House of Representatives.
At
the end of July, as the Energy & Commerce committee completed
deliberations on HR 3200, Rep. Anthony Weiner of New York, with six other members of
the House, put forward an amendment to replace the text of HR 3200 with
the text of HR 676. House Speaker Nancy Pelosi offered to allow single
payer to be voted on by the entire House of Representatives if the
amendment were withdrawn from Committee. Perhaps defeating single payer
on the floor of the House of Representatives seemed, to the Democratic
Party leadership, a way to at last get it off the table.
Single-payer
activists have welcomed this turn of events, for it was the direct
fruit of grassroots mobilization, and a vote on the floor of the House
will enhance our legitimacy. Whatever happens this fall, expectations
for fundamental reform have been raised even higher. The proposals
before Congress, with the exception of HR 676 and S 703, will simply
not work. In the meantime, the heath-care system will grow more
dysfunctional. Excellent prospects to build a movement for single-payer
national health insurance will persist.
Dr.
Andrew Coates, a member of Physicians for a National Health Program (pnhp.org), sent this article in
response to a request from Socialist Action for thoughts on current
proposals before Congress.
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