Is Something better than Nothing?

Forty-four years ago, then President Johnson handed former President Harry Truman the nation’s first medicare card. fdr-march-32That was July 30, 1965. This measure was one of the biggest steps taken during LBJ’s Great Society programs and undoubtedly one of the biggest steps towards eliminating poverty among the elderly since the Social Security Program. Back then, its critics included George H.W. Bush and Barry Goldwater who were bandying about the ‘it’s socialism’ meme as freely as the critics of any health care reform do today. Note to Republicans, yet again. Socialism is when the government turns private assets into public assets. It’s about ownership of assets, not about providing agencies or government sponsored private monopolies the opportunity to provide third party services in failed markets. Do you consider your utility company to be an agent of socialism?

So, today, we have watered down (and that’s being generous) health reform in an era of huge democratic majorities in government. Still, we’re losing the argument for the best and most cost effective plan to hysteria around purposefully promoted misunderstanding. We stand on the verge of passing legislature that is something, which is more than nothing, but hardly much of an improvement over the very bad status quo. Is that really worth it?

The Hill reports that Waxman’s compromises have created furor among Liberals. Count me among those of us that know that the only true way to save money on health insurance, cover every one, get the benefits of risk pooling and the economies of scale that come from uniform process and paper work is with a universal health care plan. What are we getting now? Basically a foot in a closing door and that ain’t much.

That’s a problem, since the draft bill already promises to be a tough sell for liberals. It eschews two central Democratic priorities: the creation of a government-run public insurance plan option and a requirement that most employers provide health benefits.

Leaders also agreed to allow states to create health “co-ops” that would compete with the government-run “public option” and private insurers, which deals a blow to liberals.

But why is every one afraid of expanding Medicare?

Look at some customer satisfaction information concerning Medicare from today’s Progress Report via HuffPo.

A recent Commonwealth Fund survey found that “elderly Medicare beneficiaries reported greater overall satisfaction with their health coverage.” Medicare is so popular that most Americans support expanding its coverage to Americans aged 55 to 64. According to a recent Kaiser Family Foundation poll, “over half of Americans (53 percent) ‘strongly’ support such a proposal and an additional 26 percent say they support it somewhat, totaling 79 percent backing.” Similarly, a Health and Human Services Department-commissioned study released in June found that “56 percent of enrollees in traditional fee-for-service Medicare give Medicare a rating of 9 or 10 on a 0-10 scale,” while “only 40 percent of Americans enrolled in private health insurance gave their plans a 9 or 10 rating.” “The higher scores for Medicare are based on perceptions of better access to care,” the National Journal noted, commenting on the surveys, adding that “[m]ore than two thirds (70 percent) of traditional Medicare enrollees say they ‘always’ get access to needed care (appointments with specialists or other necessary tests and treatment), compared with 63 percent in Medicare managed care plans and only 51 percent of those with private insurance.”

Is getting something that will most likely cost a lot of money and not do what it’s supposed to do, really worth it? I have a feeling that this situation is now more about passing, something, anything, than getting health care right. After all, the one has to bring change, even if it’s just expensive status quo, K Street enabling nastiness.

Let’s just look at one of these so-called changes. We tried health care co-ops during the New Deal years and it was one big dead end. Private Insurance companies killed the co-ops using adverse selection. This history lesson is from Timothy Jost from Seton Hall University School of Law, Health Law & Policy Program.

First, a word about history. We have tried cooperatives before. During the 1930s and 1940s, the heyday of the cooperative movement in the United States, the Farm Security Administration encouraged the development of health cooperatives. At one point, 600,000 mainly low-income rural Americans belonged to health cooperatives. The movement failed. The cooperatives were small and undercapitalized. Physicians opposed the cooperative movement and boycotted cooperatives. When the FSA removed support in 1947, the movement collapsed. Only the Group Health Cooperative of Puget Sound survived. Over time, moreover, even Group Health, though nominally a cooperative, has become indistinguishable from commercial insurers–it underwrites based on health status, pays high executive salaries, and accumulates large surpluses rather than lower its rates.

The Blue Cross/Blue Shield movement, which also began in the 1930s, shared some of the characteristics of cooperatives. Although the Blue Cross plans were initiated and long-dominated by the hospitals and the Blue Shield plans by physicians, they did have a goal of community service. The plans were established under special state legislation independent from commercial plans. They were non-profit and, in many states, exempt from premium taxes. They were exempt from reserve requirements in some states because they were service-benefit rather than indemnity plans and because the hospitals and physicians stood behind the plans. They were exempt from federal income tax until the 1980s. In turn, they initially offered community-rated plans and offered services to the community, such as health fairs. In some states their premiums were regulated and they were generally regarded as the insurer of last resort for the individual market.

Over time, however, the Blues lost their focus on community service and began to look more and more like their competitors. They abandoned community rating (which, realistically, they could not maintain when faced with competition from experience-rated commercial plans) and began to impose underwriting and cost-sharing requirements indistinguishable from the private plans. Although providers lost control of the Blue plans, the plans never took a leadership role in bargaining aggressively with providers, despite their market dominance in many states. Many of the largest Blue plans became for-profit, and those that remain non-profit are largely indistinguishable from commercial insurers.

Private Insurance Companies cherry-picked the healthy and left the co-ops with the ill. Here’s another thing on health co-ops from an advocate that quotes Howard Dean.

Let’s be clear about what’s at stake here. Between the disaster of private insurance and the hope for a government-funded plan a third option seems problematic. Firstly, the notion that state-level customer health co-ops can negotiate better rates from the major insurance companies is dubious. Secondly, how will co-ops provide insurance for those who cannot pay, unless there is federal funding. Several experts have made this very clear. For example:

Howard Dean (that is Doctor Dean) has said:

“ [The insurance companies] will kill the co-ops completely by undercutting them, using their financial clout to do it. In the small states like mine and like Senator Conrad’s, you’re never gonna get to the 500,000 number signed up in the co-op that you need to in order for them to have any marketing [power].”

This health care reform is looking more and more like a pig in a poke all the time. I can’t imagine it’s not due to the influence of the private insurance industry and all those advocates that make their profits from the 31% mark up that American’s pay for private insurance to ration our health care and pay bonuses to their executives. Again, look at the delivery statistics. This one is from the World Health Organization. We’re ranked number 37 in health systems in the world on that list and number 2 in costs (behind the Marshall Islands). Here’s the rankings for Health System Attainment and Performance. We’re number 72!!!!! We’re right beneath Sri Lanka, Panama, Kuwait, former Yugoslav Republic, Bosnia and Herzegovina, and Argentina. Why all this fear mongering by Republicans? Could we really do any worse than this?

Here’s some more information from last year’s NY Times when these WHO study numbers came out.

American medical care may be the most expensive in the world, but that does not mean it is worth every penny. A study to be released Thursday highlights the stark contrast between what the United States spends on its health system and the quality of care it delivers, especially when compared with many other industrialized nations.

The report, the second national scorecard from this influential health policy research group, shows that the United States spends more than twice as much on each person for health care as most other industrialized countries. But it has fallen to last place among those countries in preventing deaths through use of timely and effective medical care, according to the report by the Commonwealth Fund, a nonprofit research group in New York.

Access to care in the United States has worsened since the fund’s first report card in 2006 as more people — some 75 million — are believed to lack adequate health insurance or are uninsured altogether. And within the nation, the report found, the cost and quality of care vary drastically.

The findings are likely to provide supporting evidence for the political notion that the nation’s health care system needs to be fixed.

Yes, our nation’s health care system needs to be fixed. The question is why aren’t we borrowing from what is working around the rest of the developed nations instead of relying on past failures?

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3 Comments on “Is Something better than Nothing?”

  1. 1539days says:

    The only way to cut costs in a single payer plan is to turn private assets into public assets. Insurance companies would have to be regulated out of the marketplace. Hospitals and doctors would have to be financially regulated into accepting negotiated fees. Drug companies would have to face the US government setting drug prices like Canada and Wal-Mart does.

    I’m sure satisfaction with Medicare is high because it is universal and “free.” It is also bankrupt in 8 years. Still, reimbursement is so low that some private doctors are no longer accepting Medicare patients.

    When “Sicko” came out, a site called pointed out that the WHO and other international criteria for the best health care was heavilly weighted toward universality and individual cost. The US has the best technology and many of the best doctors. However, millions of Americans are uninsured and most have to pay some amount out of pocket. Those facts give us our low ratings, not access or quality.

    To put 40 million people on Medicare in a health care system that already makes up 1/6 of the economy would cost $1 trillion per year, every year until it goes higher. That jacks up the federal budget by 40% (a Bush one. Only 20% for an Obama one).

    • dakinikat says:

      Insurance isn’t an “asset” per se. It’s a third party payer system. We’re not talking about nationalizing hospitals and clinics and we’re not talking about nationalizing the drug industry. We’re talking about a single party payer system that puts every one into one big risk pool to minimize adverse selection and moral hazard, and then standardizing paperwork. Not the same thing as turning all the private health provider assets into public assets like in Russia or in the U.K.

      • 1539days says:

        Insurance isn’t an asset as much as it is asset protection. But you have a point. Insurance has become a payer. If someone buys car insurance, they may not ever make a claim. Under health insurance in its current form, it is virtually certian that a claim will be made.

        Republicans have been talking about HSAs. There may be some merit to this. If people were to pay a certain percentage of their income, match by the government to equalize coverage for poor vs rich, people would still have some obligation but get the funds for average medical costs.

        If there were a system above HSAs for catostrophic health coverage, (say, over $10,000) an insurance policy would be cheap. Claims would be considerably less frequent and less prone to preexisting conditions.

        The only real solution is to increase competiton and some trust busting in the Medical industry.