Clyde Winter on Health Care

Part I: Cost, Quality, and Choice in Health Care in the U.S.
January, 2003

While legislators, judges and politicians and their families enjoy at no cost, for the rest of their lives, the finest comprehensive medical care benefits taxpayers can provide, one out of every six Americans has no medical care insurance. Over 30% of workers in agriculture, construction and household services are uninsured. One out of nine health care workers has no medical insurance. Two-thirds of all uninsured persons are employed workers and their families. Half of all bankruptcies in the United States involve illness or medical debt. The uninsured die at a 25% higher rate and thousands die yearly from lack of coverage.

During the booming nineties, health care costs skyrocketed while health care became a commodity (where the criterion for receiving care is ability to pay, rather than medical need) and the healing professions were being transformed into a profit seeking industry. In 1985 three-fourths of HMO members were in non-profit plans. By 1999 only one-third were enrolled in non-profit HMOs. While average premiums of investor owned and not-for-profit plans are virtually identical, medical insurance plans designed to make profits spend almost 50% more on administration and profits, and correspondingly less on actual patient care. The number of non-medical administrators in the increasingly profit oriented, market driven system has grown ten times as fast as the numbers of physicians, nurses and other clinical care givers. As much as half the health care dollar is never applied to health care. It’s consumed by administrative costs, marketing, profits, insurance brokers, disease management and utilization review companies, lawyers, business consultants, billing and collection agencies, information management firms, etc. Health insurance overhead alone takes one percent of U.S. GNP.

Not only did costs go through the roof, but the proportion of those costs that were paid directly by the employee doubled and tripled during the nineties. By 2000, elders in the U.S. were spending, on average, one-fourth of their total income just for medical care, due to deductibles, co-payments, non-covered items and premiums that have been tacked on to Medicare by politicians and legislators. Medicare currently pays for only about half of the medical expenses of the elderly.

Quality of care is lower when the providing institution is there to make a profit. For-profit HMOs calculate a “medical loss ratio” which is the percentage of their revenue which they have to actually spend on medical care. They seek to lower this ratio because their responsibility is to the shareholders, not the patients. When the “loss ratio” falls, their stock’s value on Wall Street and the CEO’s personal fortune typically rises. As a result, arbitrary rules and gatekeepers who are not your doctor or nurse, and are often not even medical professionals, determine whether to authorize procedures and treatments, even in emergencies. Employer sponsored plans that are managed for-profit view the employer, not the insured patient, as their customer. The HMO wins a contract by defining optimal care as that which minimizes costs. A doctor’s “productivity” is evaluated and financially rewarded based on how little time he spends with each patient and how little his recommended treatment costs the plan. Patient outcomes are not even a factor in these productivity evaluations. A study published in the Journal of American Medicine found that for-profit HMOs nationwide scored worse than non-profit HMOs on all fourteen quality-of-care indicators. The largest quality differences were in the care of seriously ill patients. If all American women were enrolled in for-profit HMOs, the annual death toll from breast cancer would rise by thousands. Because profit is the issue, not patient outcome, for-profit HMOs selectively refer heart surgery patients to the hospitals with the highest surgical death rates and the highest death rates are at for-profit hospitals.

One purported advantage of the U.S. system of health care is the smorgasbord of “choices” represented by the many insurance companies and agents, the lists of “preferred providers” (who prefers them, anyway, and why?), all those for-profit HMOs, and the various corporate predators gobbling up what remains of our old respected non-profit community medical institutions and then each other. The choices we face in health care for ourselves and our loved ones are at once mind boggling and frightening. We find ourselves one day, clutching a ream of insurance papers full of restrictive and exclusionary clauses, entering a hospital called something like “The Sisters of Mercy” that we suspect, with good reason, is owned by a group of investors expecting dividends for themselves of at least 20% per annum, whose chief executive is a ruthless corporate raider working to takeover all the hospitals within a five state target region for marketing advantage. How can we know whether the doctor, nurse or whatever is telling us everything they know, or whether she or he is telling us only what treatment, if any, the private insurer intends to allow?

But many Americans don’t have to suffer those confusing and distressing choices. The uninsured and underinsured usually have no difficulty weighing their options and choices. They have none. And four out of five employees in small firms and half the employees of large companies are offered the “choice” of only one plan, which usually restricts them to a doctor and clinic chosen by The Plan. A lot of privately insured Americans change plans, but only one out of ten change in order to get better care. Three out of every four who changed were forced to by a job change or because their employer switched plans. There is, however, one important choice many Americans will be making regarding health care. Four out of ten terminally ill patients or their families report that the personal financial costs of the illness are a moderate to severe problem. Too often, an American’s only substantial medical “choice” is between trying to live and regain health or saving their family money.

Is there a better way? Don’t miss Part II and the good news.

Part II: Winning Less-Expensive, Better-Quality Health Care for America

February, 2003

The solution to the problems I outlined in Part I that confront Americans regarding our medical care system is simple and proven. We need Single Payer National Health Insurance that is:

Universal – all Americans would be fully covered; no tiers for “commoners”, the elite, and the uninsured.

Portable – coverage stays the same regardless of changes in employment, residence, age or marital status.

Accessible – medical services would be covered from any provider anywhere…no “preferred” providers.

Comprehensive – no denial of care for pre-existing conditions, no “pre-approval”, no exclusions, no ceilings.

Publicly administered – Oversight of effectiveness to be provided by public scrutiny, the democratic process and medical professional review, rather than corporate CEOs, accountants and their desire to maximize profits, dominate the market and rake in millions in bonuses, stock options, and golden parachutes.

And we need, we must have, medical care providers that can retain the commitment and the ability to serve, first and foremost, the traditions and ethical standards of their ancient and honorable profession.

The free-wheeling insurance and HMO giants have transformed U.S. health care because their arm-twisting drives providers (the traditional private practice physicians, drugstores and independent community hospitals) into takeovers by for-profit corporations and mergers into mega-corporations which then wrestle with the insurance companies for slices of the billions of health care dollars. The more health care dollars there are, the bigger the pie. The fewer of those dollars actually spent on health care, the bigger the profit margins. The consequences to us of this development in health care are severe, and adverse to cost containment, quality of care, and choice in America.

All modern nations in the world, except the U.S, have Universal National Health Care. And U.S spending on health care per person is twice that of all other modern industrialized nations. Switzerland, our nearest competitor in big spending, puts out 65 cents for every dollar we spend per capita. When Universal National Health Care was first mandated in Canada, their costs were the same as costs in the U.S. But by 1995, Canada’s health expenditures per person were only 55% of what America was spending. These countries health care costs are way less than ours because their systems are publicly funded, universal and comprehensive. There are no legions of what we used to call paper shufflers, no determining eligibility, no chasing after payments from impoverished patients, no prior approval for medical treatment, no endless variety of complicated forms and procedures depending on which HMO or insurer, which species and permutation of health care “Plan” applies. Doctors and nurses can spend all their time on patient care, less of their time on paperwork and none being monitored or struggling to comply with payment and treatment directives from a myriad of insurers. Canadian hospitals spend 30% less on administrative costs than do U.S. hospitals.

The American employment-based multiple-insurer system, full of dangerous gaps and loopholes, leaves American business holding the bag. A small business has no leverage negotiating with the insurers. To provide employees with truly good (check the fine print) coverage places the business at a severe disadvantage with the competitor who slyly provides junk insurance or none at all. Associations and big corporations are also caught in the crunch. Fifteen years ago, Chrysler spent $500 more to build a car in Detroit than it did to build one across the bridge in Ontario because of the cost difference of health care. That’s another excuse for jobs to migrate overseas. And it’s only gotten worse. Canada spends 10% of GDP on health care costs while the U.S. spends 14%.

Quality of care is secondary to the profit motive in the U.S. system. All countries ration medical care. In Canada this rationing depends on urgency of medical need. In the U.S. it depends on (a) whether your particular insurance coverage even allows you to get in a particular service line, and (b) whether you can pay to jump to the head of the line. Managed care attempts to control costs by monitoring and controlling the treatment plans of physicians. But under Canada’s national universal plan, doctor’s clinical decisions are neither questioned nor monitored except by the College of Physicians and Surgeons. In Canada there are 25% more nurses working per capita than in the U.S. where providers rely heavily on untrained “aides” and “assistants” for patient care. Canadian elders receive four times as many home or nursing home care-giver visits as do Americans. After WWII the U.S. led the world in life expectancy. By 1997 American women ranked 20th among industrialized nations, men ranked 22nd in life expectancy, and the U.S. ranked 24th in infant mortality. Quality of medical care in a nation is not measured by what is procurable by the very wealthiest of individuals. It is measured by what is actually provided to all of the people.

Paradoxically, citizens in countries that have publicly financed Universal National Health Insurance have more individual choice in their medical care than do we Americans with our privatized, for-profit, multiple-insurer, employer-based system. Most people in the U.S. have a “choice” of only one “Plan”… that chosen by their employer. Preferred provider lists and required pre-approval restrict us to specialists, hospitals and treatment plans chosen neither by us nor by our doctor. If the HMO takes a hike, if our job changes or if the boss decides to sign a different contract or none at all, we may lose our family doctor. Universal national health insurance lets you chose any doctor you want; the doctor and patient can refer to any specialist or hospital; and there is no pre-approval required of your treatment.

A Gallup poll found that 96% of Canadians prefer their health care system to the U.S. model., and a majority of Americans also prefer Universal National Health Insurance. A 1997 public poll published in the New England Journal of Medicine found that “health insurers and managed care companies were ranked 2nd & 3rd from the bottom, just above the tobacco industry”. Let’s get the health care system we need now, and stop the corporations with their obscene campaign “contributions” that are getting rich off the present mess from derailing real reform.

Mankind has become so much one family that we cannot ensure our own prosperity except by ensuring that of everyone else." - Bertrand Russel