Like Wall Street, Current Health Care Policy Privatizes Profit And Socializes Risk

The American Medical Association's proposed health care reform goes by the name Voice for the Uninsured and advocates government-subsidized purchase of private insurance. It sounds remarkably like the Massachusetts plan that mandates purchase of private insurance, reimbursed by government in the form of subsidies, vouchers or tax credits. Many "affordable" plans these days are "minimum benefit plans" -- sufficient until accident or sickness occur. A tax penalty is imposed for failure to purchase private insurance.

The AMA proposal mirrors John McCain's proposed move to individual insurance and elimination of tax credits for employer-provided health coverage. Both would shift some or all of the current $125 billion or greater employee health tax subsidy into taxpayer-subsidized vouchers or tax credits for individual purchase of private health insurance.

At root, AMA-proposed reform resembles proposals supported by America's Health Insurance Plans (AHIP), creating a captive market for purchase of private health insurance subsidized by taxpayers, who would also continue to underwrite health care for the sick. Private insurers could protect their bottom lines by insuring only the healthy.

The excesses of the health insurance industry resemble those of Wall Street and the subprime housing market, typified by privatized profits for insurers and socialized risk for taxpayers and consumers. It's called gaming the system for profit - whether it's Wall Street investments in dubious credit instruments for massive short-term gains, or the health insurance profiteers taking record gains while shifting an increasing burden of risk to consumers and taxpayers.

Uniquely within the industrialized world, U.S. health care is dependent on over 1200 for-profit private health insurances functioning as gatekeepers. Underwriting - the art of risk evaluation and avoidance - insures profits by covering the healthy and rejecting everyone else as a "pre-existing condition." Only the U.S. among industrialized nations treats health as a commodity to be negotiated and leveraged for profit, rather than a necessity to be covered within a shared-risk-pool. Profit-centered police or fire protection is unimaginable. Profit is an equally perverse incentive for health care.

Gaming-the-system-for-profit has spawned the $20 billion annual insurance subsidiary known as "denial management" - health insurance middlemen whose sole purpose is to search claims for excuses to delay, deny or renege on reimbursements. Furthermore, thirty percent of provider health claims are initially denied, requiring multiple resubmittals.

Commercial health insurance is the 800-pound gorilla, siphoning over 25% of health care dollars to overhead costs, including excessive administrative costs, lobbying, marketing, CEO salaries and profit-taking that have resulted in a downward spiral of inflationary premiums and declining coverage. (UnitedHealth's former CEO William McGuire's stock options alone were valued at $1.6 billion.) The 2007 McKinsey Group Study reported $30 billion annual health insurance after-tax profits and $32 billion insurance underwriting and marketing costs.

To protect their bottom line, commercial insurers write policies with reduced benefits, shifting increased out-of-pocket costs and risk to consumers, resulting in increasing numbers of underinsured unable to pay their medical bills, casting many into personal bankruptcy. A 2005 Harvard Medical and Law Schools study described 50 percent of personal bankruptcies precipitated by large medical bills - 75 percent of filers had insurance coverage at the start of their illness.

As premiums increased 87% over six years, employers moved more employees into underinsurance - high-deductible catastrophic plans with high out-of-pocket expenses. Coinciding with the introduction of catastrophic plans, the American Hospital Association reported a 59 percent rise in individual out-of-pocket health costs over the decade preceding 2005. Simultaneously, unpaid medical bills rose 60%, shifting more costs to taxpayers and consumers, and prompting some hospitals to require up-front payment from individuals carrying high-deductible policies.

The phenomenon of underinsurance is not addressed by the AMA proposal, or the many other proponents of two-track public-private insurance that effectively shift the cost of health care for the sick or high-risk to taxpayers, while private insurers continue to milk profits by covering the healthy.

No surprise, the big lobbies continue to steer health care policy. Medicare prescription drug reform of 2003 was written by profiteering insurance and pharmaceutical industries, with billions of dollars of taxpayer subsidies and inflated profits to benefit their bottom lines. The law was exploited as occasion to further privatize Medicare by moving recipients into private Advantage plans at 12% higher cost than traditional Medicare. The law protects big PHRMA profits by prohibiting bulk purchases of medicines, as done by the VA system to bring down medicine costs.

Notably, more than 20 federal and state studies since 1990, including federal proposals like HR676 and the 2007 Lewin Group evaluation of the Colorado single payer proposal, have demonstrated that single-payer health insurance is the only reform model that can both save money and provide comprehensive health care for all.

Legislators like polls, and polls by Pew and others have revealed increasing numbers in the U.S. - 54 to 65 percent - support a national single-payer health care plan. A recent study reported that 59 percent of U.S. physicians "support government legislation to establish national health insurance," an increase of 10 percent since 2002 (Annals of Internal Medicine, 3/31/08).

Dismissing single payer with buzz words like "socialized" or "government" health care is deliberate obfuscation. Single payer insurance is public insurance with choice of private providers. Currently, "government" health care means that taxpayers subsidize over 60 percent of often wasteful health costs; we fund 70 percent of our legislators' health coverage. Although the U.S. spends almost twice as much as every other industrialized nation, we have worse overall health outcomes.

Contrary to assertions by the "free market" chorus, only a single-payer insurance model permits true choice of private providers. Private insurance limits choice to "in plan" doctors, often requiring change of providers with change of plans. Only single payer provides comprehensive benefits and protection against medical bankruptcy, and redresses our hugely fragmented, cost-ineffective approach. It is the only equitable, sustainable health financing system.

To all those running for office: Why not quality-, safety-centered universal single payer health care in place of profiteering health care gatekeepers that feed the downward spiral of U.S. health care, turning it into a crap shoot for everyone? It is no less a catastrophe for the U.S. economy than the havoc wrought by U.S. investment bankers.

This week OffTheBus is publishing a variety of stories that cover the policy differences between Senators John McCain and Barack Obama. If you have a policy expertise and would like to participate, please see Calling All Policy Gurus.

Comments

[Michele Swenson - Huffpost Blogger]

Sen. Obama actually acknowledged that a single-payer insurance would be the best model to provide comprehensive health care for all. He and others have described single payer as "politically unfeasible" -- i.e., "you can't get there from here" based on our current dependence upon multiple private insurers -- therefore incremental types of reform are proposed.

Many would disagree that choice of health insurance equals choice of health care, as more individuals are moved into underinsurance. Failure to address the high overhead cost of profit-centered health insurance has resulted in nominal, inadequate health coverage becoming the norm for many families and individuals. In one recent study, 36% of Coloradans with health insurance reported being unable to afford needed health care.

Not widely understood, there is more choice of providers and health care with a single-payer insurance. Physicians for a National Health Program are advocates for single-payer insurance, and have a lot of information on their website http://www.pnhp.org.

Www.HealthCareforAllColorado.org contains much information, including the following contrast of Massachusetts-style reform with a single payer model: http://healthcareforallcolorado.org/pdfs/Contrast2SP&IndMandate.pdf

[AmericanMedicalAssn]

Our country was founded on freedom of choice and opportunity, fundamentals preserved through the AMA’s health reform proposal. As Americans, we expect to shop around for the best product rather than being tied to a single choice. If our country were to move to a single-payer health care system, that choice would be eliminated. Competition in the health care market is necessary to provide consumers with the highest value product.
There are multiple reasons that our health care market does not operate the way it should, including health insurance monopolies in markets across the U.S. The AMA continues to fight these monopolies, and our reform proposal addresses them. Our proposal, developed 10 years ago and continually refined, would provide Americans with more choice and give low-income Americans tax credits to purchase coverage. We want to establish fair insurance rules that include protection for high-risk patients and greater individual responsibility.
Neither presidential candidate supports a single-payer system. Both plans include some type of AMA-advocated reform including a tax credit or subsidy, support for individually-owned coverage, and efforts to improve quality and health information technology.
But it won’t just be the president who will solve the problem of the uninsured – we’ll need a commitment from bipartisan lawmakers and Americans must be engaged. We encourage Americans to visit www.voicefortheuninsured.org to find out more about the AMA’s proposal and the candidates plans.
Sincerely,
Nancy Nielsen, M.D.
AMA President

[Henryk A. Kowalczyk - Huffpost Blogger]

The link www.voicefortheuninsured.org does not work.
BTW, should it mean that I am the only one clicking on it?

[Michele Swenson - Huffpost Blogger]

As long as the health care reform debate and health care policy are steered by the insurance and pharmaceutical lobbies, we will not have meaningful dialogue, and we will see only insufficient incremental reforms. A grassroots movement is certainly needed. It is also necessary to remove the financial influence of corporate lobbies on our legislators, by instituting public financing of campaigns - the one reform that makes all other reforms possible.

By the way, folks involved with health care reform efforts in Minnesota (home of UnitedHealth) have noted that when the state passed legislation requiring health insurances to be not-for-profit, the insurers used "creative bookkeeping" to hide their profits. Private insurances then got control of the legislature and the insurance regulators, and the effort failed - a testament to the difficulty of regulating the powerful private insurances, even with the best intentions of reformers. Which raises the question: Why do we need profiteering insurance middlemen?

[papapj]

People - there is something seriously wrong with this map!

http://tinyurl.com/4e7yey

To date, our tax dollars are still funding free healthcare for Iraqis and Afghans...

Oi vey...!

[RoloTomassi]

When you go in and DESTROY a soverign nation, providing the survivors of your unprovoked attacks with healthcare is the LEAST you can do.

It really burns my ass when I see folks complaining about the expense of what we spend on Iraq in terms of what we put back into the country; such are funds to replace what we were responsible for destroying in the first place, or taking care of those we left with little or no means due to our invasion.

GROW UP; or, if you can't handle that, become a Republican.

[Henryk A. Kowalczyk - Huffpost Blogger]

Six years ago, I wrote a similar text.
http://www.henrykkowalczyk.com/Neither_health.htm
Nothing changed since then.

[swkidder]

Amen. And there are myriad reasons why the care that would be delivered under a single-payer, universal healthcare system would be superior to what's available now. Since you either work, or used to work, as a nurse you understand this far better than most. And I also believe that "the devil is in the details," and that H.R. 676 is better, but not good enough.
You might find it interesting to take a look at the plan George Lundberg proposed in "Severed Trust," one in which the spectrum of care we receive is divided into logical sections - Prevention, On-going Care, and Catastropic Care? His plan suggests that we should fund and entitle these in slightly different models - with the middle portion being handled as a Medical Savings Account, albeit one funded by the Government. What that does is 1) Frees up physicans and patients for responsible innovation in the area in which we aren't doing a really fabulous job - complex, chronic illnesses, 2) solves the crisis of dwindling numbers of physicians going into Family Practice where we need them most, 3) puts Integrative & Functional medicine on a level playing field with mainstream medical models without requiring us to replace two sets of numerical coding systems on millions of computers, and 4) takes care of the "the Government is going to be able to tell you what kind of care you're allowed to have" once and for all. Love to discuss with anyone who's interested ... swkidder@m­indspring.­com