With little fanfare, Congressional leaders may be near to agreeing on the most sweeping expansion of government in a generation - the de-facto takeover of the health insurance market by the government. Congressional Democrats are already icing the champagne. When the President's "Medicare for all" plan is coupled with the budget, which contains a "down payment" of $634 billion over the next decade for health care, government-run health care may be inevitable.
All sides in this debate acknowledge that the U.S. has long needed easier access to health insurance. This need has gained urgency for the many Americans who are fearful of losing their employer-sponsored insurance in the midst of a recession. Unfortunately, the President's plan will not only endanger the U.S. economy, but millions of patients as well.
The fundamental problem is that the President and congressional leaders lack realistic plans to control the health care costs that are already crippling U.S. global competitiveness. As a percentage of GDP, our businesses spend roughly 70 percent more on health care than competitors in other developed nations, yet we hardly receive 70 percent more in real value. Health care costs also distort the efficient allocation of labor, and therefore the potential of economic growth and increases in wages. Because health insurance can be so expensive - some estimate $14,000 for a family - untold millions reluctantly opt to stay in jobs in large, dying firms that offer health insurance, rather than pursue jobs in the productive, small companies that do not.
The President's budget is short on cost-controlling details, but so far, the Democrats are relying on a new national health-insurance marketplace, modeled on Massachusetts, in which private health-care insurers compete with an expanded Medicare program. But the cost control benefit of public programs, like Medicare, and state-run markets, similar to the one in Massachusetts, is illusory. Any "savings" are achieved with accounting gimmicks that shift costs to taxpayers and future generations, through deficits and unfunded liabilities, not through genuine innovations.
Massachusetts, which operates a U.S. analogue to a national government-run health-insurance market, is, in fact, a case study illustrating why health insurance run by Washington would collapse on itself. By March 2009, the state's uninsured rate fell to 2.8 percent from about 6 percent. The market, stocked with private-sector insurance policies, had insured 169,000 people in two new programs, one of which directly subsidizes uninsured individuals.
Good news, right? Wrong. Both the political right and left have correctly criticized the Massachusetts market for its inability to control costs.
The left complained that costs were so high that 73,000 people were excused from the requirement to purchase health insurance. Further, when 2008 premiums in the subsidized plans rose by 8 percent to12 percent, the government raised enrollees' deductibles and co-pays.
Conservatives criticized the limits on the competition that could lower costs in the government-run market. For starters, the state standardized plan benefits. The choices for patients are akin to a Soviet-style supermarket stocked with essentially identical products.
Conservatives also bemoaned the excessive generosity in benefit design (plans must cover 43 benefits, including in vitro fertilization and chiropractor services). Finally, conservatives questioned the generous level of subsidies (families of four with income up to about $63,000 are eligible).
Not surprisingly, enrollment by subsidized enrollees was some 36,000 higher than expected, while the 19,000 unsubsidized enrollees represented only half of the expected number. The state's bill for employees and their families who work for large companies increased 24.6 percent to $793.7 million in the last fiscal year.
By 2009, Massachusetts enacted almost $800 million in new taxes to fund, among other things, the third year of health care reform. Now, the state government, desperate for revenue, is considering setting the prices of health insurance and essentially taking control over all health-care costs, other than Medicare and out-of-pocket spending. If this sounds like a march into a single-payer Soviet-style system, that's because it is.
Some Democrats argue that Massachusetts cannot control costs because it lacks a public-insurance product akin to Medicare. They view Medicare as a successful cost-controller, pointing to its low administrative overhead, which they peg at 3 percent. But that figure ignores an inconvenient truth: Medicare's unfunded liabilities, estimated at about $34 trillion.
The comparison between the administrative expenses of private insurers and Medicare also ignores the fact that Medicare pays no taxes and, as a monopoly, need not incur marketing expenses. Further, the monopoly power of Medicare and Medicaid enable them to underpay providers by an estimated $90 billion dollars, sums made up by private insurers. But if the market were entirely composed of public insurers, who would take up the slack? The looming doctor shortage could become a national crisis. Prospective physicians who would incur massive debt for their education would reluctantly opt for other occupations in which the government is not their sole source of revenues.
A government market with an underpriced Medicare would likely lead to the death of private-sector markets and products. A recent study by the Lewin Group estimated that up to 118 million people would eventually move into Medicare and out of private-sector plans.
Are we surprised? Public markets and their products are administered by legislators and bureaucrats who often lack the entrepreneurial vision and skills to develop the products that people want at a price they can afford.
In the end, the Democrats' health care reform will require drastic rationing of health care for the sick to control its costs. Consider Canadian patients, who may wait a year or longer to get radiation therapy. Or ask one of the nearly 1.8 million Britons who are waiting to get into a hospital or have an outpatient procedure. Or talk to the German breast cancer patients who are 52 percent more likely to die from the disease than Americans.
Concerns about rationing and patient outcomes are not demagoguery. How else can a government control costs in the real world? Many experts, including the Congressional Budget Office, dismiss as wishful thinking the Democrats' claims of achieving efficiencies through bureaucrats' dazzling implementation of information technology and other technocratic tools.
Of course, all of us must be assured of access to reasonably priced health insurance. But what matters most in this debate are not the good intentions of the President or congressional Democrats but the likely consequences of their policies. Ultimately, the Democrats' version of health care reform will gravely injure both our economy and our ability to provide medical care to the sick.
U.S. Senator Tom Coburn (R-OK), M.D. is a practicing physician specializing in obstetrics.
Regina E. Herzlinger is the Nancy McPherson Professor at the Harvard Business School and senior fellow at the Manhattan Institute. She is the author of Who Killed Health Care? (McGraw-Hill, 2007) and senior author of Financial and Managerial Accounting for Nonprofit and Government Organizations (South Western, 1994).
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Self-inter
Conservati
Sigh.
Simplify this: cost must be controlled as they are in Japan (where I admired the system of national healthcare
Next, everyone pays. Every american can afford $100 per adult and $50 per child. Second, people over 65 years old pay nothing. That will conver all costs. No one needs to pay more for medical attention or medication
To help pay for this cut military spending to double that of the next highest country. China is the next highest spender on military defense and it's $70 billion. So our budget should be $140 billion; NO MORE.
Let's take care of our citizens and not a bunch of lobbyists and military corruption
Tax lobbyists out of DC.
It's a great plan: I don't want Congress to give me health care. I want Congress to give me my money back.
More and more doctors aren't native English speakers, and don't quite get American culture, which makes important communicat
I have a better idea. Let's trade health care plans. I've been uninsured for years, find out how it feels.
I'm not sure why, for example why British and German women have a higher death rate from breast cancer. This statistic is throw around a lot as proof that their system is worse despite the fact that they much lower rates of preventabl
No one goes backrupt in Germany because of medical care.
No one in Germany is refused care.
There is no rationing of healthcare in Germany.
The poor receive subsidies to purchase insurance.
No insurance company can cancel a policy for health reasons.
Hospitals and doctors' practices are not drowning in paperwork: each year, fees for various procedures and treatments are set by a kind of industry-g
There are no long waits for specialist
German physicians
Bandying about breast cancer statistics — you might also want to examine smoking patterns of German women before you blame it on the heathcare delivery system — don't negate the simple fact that every industrial
Are we surprised? Public markets and their products are administer
So, what you are saying is, Medicare is so bad due to a lack of vision and skills on the part of bureaucrat
We have LONG wait lines here. We have denied access here.
We have rationing here. Health insurance companies ration health care to maximize profits and CEO bonuses, not to provide actual health care.
Our system is ranked 37 in the world and no conservati
With 24 years experience (Medical Corps, USN) providing and receiving military medical care, I've got faith that the government can manage health care.
A government hand-out subsidizin
The solution may be Medicare for All, a safety net of essential preventati
Let's go back to prohibitin
We have the resources for universal medical care. However, we spend on grossly excessive advertisin
The U.K. Canada, the Scandinavi
His income is virtually the same because of his near zero overhead, and he needn't worry about how a patient can afford needed care. In fact, an illness that would have bankrupted him here (which began long after his return) is being cared for with no increase in his expenses beyond the taxes he pays.
Some doctors are indeed money grubbers and they are unethical. Most are not.
The real swine at the trough are the insurance companies, Big Pharma, and hospital supply outfits..
I would not argue with the fact that are healthcare system needs fixing.
On the other hand, be careful what you compare it to. When I was a training surgeon for 6 months in England, my consultant left for three weeks and I operated alone as a training surgeon that entire period. That is not legal in the U.S. I would have patients beat on the head with a brick a dozen times and not get a CT scan of their head.
IAnyone can step up and complain about how uncaring, incompeten
If somebody graduates from college with a 3.9 GPA and a major in Molecular Biology, why would they want to go to four years of medical school (with an average debt of $140,000) and then six years of surgical residency only to finish and have the Government pay them 25 cents on the dollar to take out your appendix at 3 AM
You're in the business couldn't you just ask some of the doctors and surgeons outside the U.S. and answer your own question?
So, if you want nationaliz
Then, they can compensate me above $30,000 yearly I was paid as a resident for six years, often working over 110 hours/week
What is your job? Do I have the right to tell you how many hours to work a week? Do I have a right to set your salary? If a pipe busts in my basement, the plumber comes and fixes it. If I don't pay him,should he be forced to come the next time? If your car breaks down, do you force the mechanic to fix it, then speed off?
When I get called at 3AM for an emergency, I don't ask if the patient has insurance. I go and I do my job. And if you don't have insurance, I will treat you exactly like every other patient and you will get exactly the same care from me.
In England, the consultant didn't go in at 3AM and do your surgery, I did. Well, not exactly, the medicine intern helped me.