It is now widely recognized that we are in a global recession of historic proportions, raising comparisons with the Great Depression of the 1930s. The failures of deregulated markets, whether in housing, banking or other industries, has become obvious to all. So far the private health insurance industry has not been called to account, but its day is coming soon.
As the country grapples with an economy in free fall and as discussions of federal bailouts of financial institutions go forward, what are we doing about health care reform, an industry which consumes over 16 percent of our GDP? In short, not enough. The two presidential candidates have incremental proposals which would cost more and still not provide universal access to health care. Both would prop up a failing insurance industry as if it provided added value over public financing.
The Lewin Group has just completed an analysis of the Obama and McCain proposals. The Obama plan would try to increase regulation of the insurance industry (which has never been effectively done), would expand and further subsidize public markets, and would offer a new public option modeled after the Federal Employees Health Benefit Plan (FEHBP), which all members of Congress have (its premiums are going up by 13 percent in 2009). The McCain proposal would reduce regulation over insurance markets, expand the use of tax credits, and subsidize new high-risk pools (which already haven't worked well). The Obama proposal would reduce the projected number of uninsured Americans of 48.9 million in 2010 by 26.6 million if fully implemented in that year, while the McCain proposal would reduce that number by 21.1 million. And at what cost? -- $1.17 trillion from 2010 to 2019 for the Obama plan and $2.05 trillion for the McCain plan.
We already know that deregulated health insurance markets do not work in the public interest. We will never get affordable health care for all Americans by propping up its role. These examples show how much it fails comparisons with public financing (traditional Medicare) in terms of efficiency, costs, value, and equity.
• Administrative overhead five to nine times higher than Medicare
• Benefits reduced by medical underwriting vs standard benefits for all Medicare beneficiaries
• Avoids coverage of sicker people, while Medicare covers all eligibles
• Profiteering on backs of insured, with allegiance to shareholders, versus not-for-profit Medicare
• Fragmentation of insurance pools into many thousands of smaller risk pools by 1,300 private insurers versus one risk pool of 300 million Americans
• Much larger bureaucracy (eg. while its market fell by 1 percent between 2000 and 2005, the private insurance workforce grew by one-third, mostly involved with "denial management")
While the so-called "debate" over health care reform heats up in political dialogue, the only real option to reform health care -- single-payer national health insurance (NHI) -- is being largely overlooked. It is a hidden fix in plain view, but politicians and the media still remain beholden to corporate interests which profit from a deregulated health care marketplace. Compared to the proposals of both presidential candidates, NHI will actually save money (about $350 billion a year) while assuring universal access to care for everyone. This saving is made possible by administrative simplification, shifting to a not-for-profit mode, bulk purchasing of drugs, medical devices and other medical supplies, and elimination of waste by not covering harmful or ineffective services.
The gains to our country will be immense with NHI. All Americans will have a new sense of security about their own health care, morale will improve, and social solidarity will be advanced. U.S. business also has much to gain. Employers will pay less than they do now to insure their workers, will have a healthier workforce, and will be better able to compete in global markets. So given our serious economic downturn, don't we now have an economic imperative, combined with our long-standing moral imperative, to enact a not-for-profit public financing system for health care, coupled with a private delivery system? Such a plan is not radical or utopian; it is conservative in being more efficient, less expensive, and offering more value than what we now have. NHI is not socialistic, in the same way that public financing of schools, police, fire protection, Medicare, and the Veterans Administration are not. And it can do much more for the country than spending billions to bail out industries that have proven themselves unworthy of public investment. We all have an opportunity in the next weeks and months to force a new Congress to do the right thing.
Adapted from Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press
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