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The Only Good Option For Health Care is a Public Option

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The United States has the most expensive, least efficient and, in many ways, most ineffective healthcare system in the world. But you wouldn't know it if you listened to Republicans talk about the private health care insurance system or Democratic Blue Dogs whine about costs of reform and complain about how unfair it would be to have private health insurance companies compete with a public health care option.

Despite being the most expensive health care system in the world, in terms of medical outcomes, the private U.S. health care system is the most ineffective. In fact, the World Health Organization ranks health care systems based on objective measures of medical outcomes and the United States' health care system currently ranks 37th in the world, behind Colombia and Portugal [which both spend far less on health care than the U.S. The United States ranks 44th in the world in infant mortality, behind many impoverished Latin American countries. While infant mortality in the United States is skewed toward poor people, who have rates double the wealthy, the top quintile of the U.S. population has infant mortality rates higher than Canadians in the lowest quintile of wealth.

Not only are 47 million Americans uninsured (approximately 18.5 percent of the insurable market), 41 percent of Americans with incomes of $20,000 to $40,000 did not have health insurance for at least part of 2007, up from 28 percent in 2001; 53 percent with incomes under $20,000 lack health insurance.

There are additional costs to the haphazard U.S. health care system: More than 50 percent of the U.S. population has medical debt problems; between 1981 and 2001, medical-related bankruptcies increased an astounding 2,200 percent and 55 percent of personal bankruptcies are now caused by illness or medical debts, despite the fact that over 75 percent of the bankrupts had health insurance at the onset of bankruptcy and illness.

Contrary to popular conceptions, the average medical bankrupt was a 41-year old woman with children, some college education; over half owned homes and over 80 percent were in the middle or working classes.

The number of people without health insurance rose 18 percent from 2001 to 2007; average health insurance premiums for a family of four are more than $13,000, which exceeds the annual gross income of a full-time, minimum-wage worker. Lack of insurance causes 18,000 excess deaths a year; people without health insurance have 25 percent higher mortality rates; and, 59 percent of uninsured people with chronic conditions such as asthma or diabetes skip medicine or go without care -- and get sicker.

Out of 30 developed nations, life expectancy in the United States ranks 21st: Life expectancy in the United States is 4.6 years less than Japan, 2.1 years less than France and 2.6 years less than Canada. The United States has fewer physicians, nurses and hospital beds than most developed nations. In the United States, 28 percent say it is "difficult to get care"; in most European countries, Japan, Australia and New Zealand, 15 percent say that. In terms of continuity of care (i.e., five-plus years with the same doctor), the United States is the worst of all developed nations.

By every objective measure, the United States has a second-rate health care system.

The Truth About Healthcare Costs

Even including the 47 million uninsured, the bloated, inefficient U.S. healthcare system costs more than double per capita what single-payer healthcare systems in Europe, Japan and Canada cost.

In the United States, healthcare costs were $6,001 per person in 2007. By contrast, in Japan, with life expectancy 4.6 years more than the United States (presumably a cost-increasing factor), healthcare costs were $2,139 per person; in the United Kingdom, $2,232; Sweden (the ultimate "welfare state"), $2,520; France, $2,903; and, Canada, $3,001.

And, this is not just an individual problem; this is a national problem. Health care system costs in the United States are 17 percent of GNP (and currently increasing 12 percent per year). No other country in the world has healthcare costs which exceed 11 percent of GNP and the average among developed nations is 9 percent. These high costs are making the U.S. uncompetitive in many areas. For example, U.S. car-makers spend $1,500 per car on health care---more than the cost of the steel in cars -- and are competing against European and Japanese car makers who spend nothing for health care.

Administrative costs of the U.S. private health care system consume $300 billion; profits and advertising consume another $300 billion [the CEO of Cigma insurance company made $23 million last year]. Compare those numbers to the $100 billion Republicans and Democratic Blue Dogs complain is too high a cost to reform the system and deliver care to 47 million uninsured. And compare the high overhead costs of the private health care insurance system to the 3 percent overhead of Medicare and single-payer health care systems in Europe, Canada and Japan.

Two years ago, one of my adult sons went to a medical office for testing. On completing the tests, he was handed a bill. The bill had two prices: One was the insurance price, $969.25, the second was the "cash pay price," $678.00 -- exactly 30 percent less than the insurance price. What more do you need to know about the excessive cost and inefficiency of the American private health insurance system than that it costs 30 percent more than the underlying medical services are worth?

This is the costly, inefficient system -- and the profits -- that Republicans and Democratic Blue Dogs [bought off by health insurance money] are seeking to protect.

In America's for-profit private insurance health care system, medical technicians must contend with hundreds of different forms, billing procedures, regulations and requirements from hundreds of insurance companies; U.S. health care companies spend money for advertising and marketing; and, the U.S. health care system is based on profit. Since 1970, the number of medical doctors in the United States has increased 40 percent, while the number of medical administrators has increased almost 3,000 percent.

Currently, we are drowning in a massive, inefficient private health insurance bureaucracy. The increasing cost of prescription drugs also is increasing the health care bill, and U.S. drug costs are the highest in the world. Americans pay 30 percent to 80 percent more for prescription drugs than citizens of any other country largely because Republican legislation enacted under George W. Bush prohibits Medicare and private insurance companies from negotiating lower drug prices from Canadian and European suppliers, even of American pharmaceuticals. So American patients pay double and triple the cost of the same drugs, in the same bottles, made by the same companies in the same plants as Canadian patients. Profit in the present U.S. system has been exalted over good care, health and cost considerations.

You might think that this excess money goes into developing new drugs, but you would be wrong: Only 13 percent of drug costs go to research and development, and little of that goes for pioneering new drugs to deal with life-threatening conditions; 51 percent goes to marketing, administration and profits.

And when considering costs of health care, remember that the U.S. taxpayer already pays for more than 60 percent of the American health care bill. It does this by allowing businesses to deduct the cost of health care for employees as a business expense, thus reducing taxes on businesses, which puts a greater burden on individual taxpayers, as well as paying for government supported health care such as Medicare and the Veteran's Administration health programs. Being the payer of 60+ percent of existing health care costs, you would think the U.S. government would have a right to demand a more efficient system [President Obama thinks it does], but not if you listen to Republicans and Democratic Blue Dogs complain about change [i.e., less profits for their insurance company donors].

The Public Option

The most logical correction to the costly inefficiencies of the American private health insurance system would be a single-payer system -- such as Medicare, a popular and successful single-payer system. But single-payer has proven to be too radical a change for Congress even to consider this time around, so we are left with the possibility of a "public option," which would allow individuals and employer plans to buy into a public system modeled on Medicare. While this "public option" may not be the perfect solution, the perfect should not be the enemy of the good. Moreover, if the public option is robust, over time it would out-compete the costly, inefficient private health insurance system and you would find not only individuals choosing the public option, but also employer health plans concerned about costs. And precisely because the private insurance companies fear competition from a more efficient public health care system, it is using every weapon in its arsenal to spread fears of "a government takeover" of health care, distort the debate and, of course, buy off members of Congress [Republican and Democratic Blue Dog members of the Senate Finance Committee, for example, have received an average of more than $2 million each in donations from private health insurers].

While single-payer will not be legislated this time, what would be unacceptable would be for health care legislation not to include a robust public option, or to so weaken the public option that it could not compete effectively with private insurers, such as prohibiting use of Medicare rates for medical services, prohibiting negotiation with drug companies for lower prices and/or breaking up the public plan into regional, state or local "coops" which would be too small to compete against national insurance companies. This is the current fault-line in Congress and is why the public option is being attacked by conservatives as "socialized medicine." Of course, neither the public option or even single-payer systems are socialized medicine.

Medicare is a single-payer system and single-payer systems such as Medicare do not employ any doctors or own any hospitals or medical facilities, let alone create bureaucracies like the bloated, inefficient bureaucracy the private insurance model has created in America. The Veterans Administration health system is a socialized system, as is the military health system, as they both employ doctors and provide hospital facilities, but ironically none of the opponents of the public option ever mention the VA system or the military.

Rather than hundreds of payers (insurance companies) and thousands of different forms, regulations and procedures, a public option would have one payer and one set of forms and procedures. A public health care option, like Medicare, also would offer more choice of medical providers; unlike the current private insurance system, where patients are limited to panels of providers, a public plan would permit patients go to any doctor they want, submit a national health insurance card and the government would pay -- just like Medicare. It is the simplest, most efficient plan of all.

There are many ironies in the debate about the need for a public option and one of them is that in one breath conservatives argue that the government is inherently inefficient and can't run anything, and in the next breath argue that it would be fundamentally unfair to make private insurance companies compete against a public health care plan. Of course, the truth is that the inefficient private system probably can't compete effectively, but why should we protect inefficiency in health care? We don't run police and fire services privately or the Army, Navy and Air Force, so why should private for-profit insurance companies hold a virtual monopoly on health care, especially when the evidence is overwhelming that they don't do a very good job at it?

Congress will be in summer recess next week. This is the time your Congress member and Senators need to hear loudly, clearly and repeatedly by email, phone and letters that you support a robust public health care option, one modeled on Medicare.

Guy T. Saperstein is the Co-Founder of the New Ideas Fund and past president of the Sierra Club Foundation; previously, he was one of the National Law Journal's "100 Most Influential Lawyers in America."