The Public Plan Option: Bipartisanship, Or Fear And Loathing?

by Rob Cunningham
Health Affairs Blog
February 5, 2009

The tea leaves say President Barack Obama will do more than pay lip service to bipartisanship, but they don’t say whether others will follow his example.

“I sense a genuine interest in working together on the part of key Republicans in the Congress,” Senate Finance Committee chairman Max Baucus (D-MT) said this week. “They all want to be in on this. There’s a lot of excitement.” To be sure, differences over how to promote effectiveness research or IT will test the commitment of the pragmatic center. But, arguably, where there’s a will there’s a way.

That may not be the case, however, with another critical feature of the Democrats’ reform vision. Jeanne Lambrew, of the White House office of Health Reform, said this week that the administration eventually wants… to create a structured market, or “exchange,” as it is called in the Massachusetts version of universal coverage… and also a “public option.”

The subject of the public option came up frequently in the course of the Feb. 2-3 National Health Policy Conference, sponsored by Health Affairs and AcademyHealth. Whenever it did, old wounds seemed ready to reopen. A Business Roundtable representative asked if administrative costs of the public plan would be subsidized with taxpayer funds, giving it an unfair advantage over private plans. If the market power of the public plan enabled it to force lean reimbursement on providers, as the Medicare and Medicaid programs do, would providers shift costs onto private payers? The public plan idea makes the private sector nervous, said a participant in a workshop on employers’ perspectives on reform. “There’s a lot of concern.”

Republican Hill staffers at the AcademyHealth conference also expressed deep reservations about the public plan option and the related idea of creating a National Health Board to oversee the national exchange and other health-system functions. Ryan Long, minority staffer on the House Energy and Commerce Committee, asked if the public option would mean that everyone in the exchange would end up on Medicaid. Dan Elling, from the House Ways and Means Committee, wondered if the Health Board would constitute “one big HMO.” But Democratic staffers insisted that the public plan option is a must for them.

Lambrew said that details of the administration’s plans aren’t likely to be available for weeks, because work on the stimulus package takes precedence. So the exact shape of this new animal is still somewhat obscure. But fear and loathing of public-sector solutions in health care remains powerful, as it has been for most of the past century. It may be the ultimate test of the new president’s dream of post-partisanship.

http://healthaffairs.org/blog/2009/02/05/the-public-plan-option-bipartisanship-or-fear-and-loathing/

Well, we are there now. The progressive community had decided that the political barriers that have prevented reform over the past century must be brought down. A solution that would appease the conservative community must leave in place a private market of financing options. The progressives have agreed, and have asked only for one more option - a plan administered by the government.

In this Health Affairs Blog, Rob Cunningham reports on the pulse of the cross section of attendees at the National Health Policy Conference this week. What is clear is that every single detail of The Great Compromise - the public Medicare-like option - will be challenged during the legislative process. It is a fantasy to think that a bipartisan or post-partisan process will ever lead to the enactment of public option that would have any resemblance to the progressive concept of a comprehensive, better-than-Medicare plan with a financing system that would make it affordable for anyone.

Rob Cunningham reports that the mere discussion of such an option created an atmosphere in which “old wounds seemed ready to reopen.” But those wounds have never healed! And they never will.

Removing politics from policy is an impossibility. So are we going to establish battle lines over an emasculated public option that will send us back to our corners to sulk because we failed again? Or are we going to establish those same battle lines over a bona fide single payer national health program? The alignment would be the same, but with the first option, we surrender before the battle has even begun.

Sen. Baucus Discusses Prospects for Health Care Overhaul This Year

Kaiser Daily Health Policy Report
February 4, 2009

(Sen. Max) Baucus also said that he does not believe a single-payer health care system is the right model for the U.S. at this time because the shift would be too big of a change and would place too much of the private sector under control of the government. He said, “We’re constituted differently than European countries” with single-payer systems, adding, “There’s more of an entrepreneurial sense” in the U.S. “So we’ve got to come up with a uniquely American result. And a uniquely American result will be a combination of public and private insurance,” Baucus said (CQ HealthBeat, 2/3).

http://www.kaisernetwork.org/Daily_reports/print_report.cfm?DR_ID=56795&dr_cat=3

And…

The Biggest Idea in Health Care

By Andy Louis-Charles
The Motley Fool
February 3, 2009

Andy Louis-Charles: Your thoughts on a single-payer system? Should health care be treated any different than police, fire, or postal services?

Uwe E. Reinhardt: Many countries with single-payer systems (Canada, Taiwan, etc.) ask that question. Those countries do view health care like fire protection and elementary and secondary education, and they structure their health system accordingly. We are rather an exception, viewing health care as basically a private-consumption good, but we don’t quite believe that either — hence the coexistence of unbridled kindness and unbridled callousness in our health system. We do not have our head straight on this issue. Other countries have.

http://www.fool.com/investing/general/2009/02/03/the-biggest-idea-in-health-care.aspx

So with Tom Daschle stepping out of the picture, Sen. Max Baucus is maneuvering to take the lead on reform by advocating for a “uniquely American result” with “more of an entrepreneurial sense” since “we’re constituted differently than European countries.”

Uwe Reinhardt quite correctly characterizes the U.S. exceptionalism as “the coexistence of unbridled kindness and unbridled callousness in our health system.” It really is time that we learn from other countries so that we can get “our head straight on this issue.”

Today, Dr. Quentin Young, national coordinator of Physicians for a National Health Program, called on President Barack Obama to nominate Dr. Marcia Angell or Dr. David Satcher to head the Department of Health and Human Services.

Angell is a senior lecturer at Harvard Medical School and former editor of the New England Journal of Medicine. Satcher is a former U.S. surgeon general and is director of Morehouse School of Medicine’s Center of Excellence on Health Disparities.

Young said, “In the wake of former Sen. Tom Daschle’s downfall, it has become perfectly clear that the new HHS secretary must be free of compromising financial links to corporate medicine. In this regard, Dr. Marcia Angell or Dr. David Satcher would be superb candidates who pass this test.

“Either one of these distinguished physicians would make an excellent nominee for the position of HHS secretary,” Young continued, noting their many outstanding achievements in medicine and health policy. “Perhaps most important is their belief that health care is a human right, not a commodity for sale. We need precisely that kind of vision at the helm of HHS to help bring about the fundamental health reform our nation so desperately needs.”

“Both Dr. Angell and Dr. Satcher are thoroughly committed to protecting the public interest,” Young said. “Further, they are untainted by the blandishments of the private insurance and pharmaceutical industries. Our nation would be well served by having either of these remarkable physicians in this critical role.”

Young said messages of support for Angell or Satcher could be sent to President Obama by calling the White House comment line (202-456-1111) or the general switchboard there (202-456-1414). Messages can also be faxed to the White House (202-456-2461), e-mailed (visit whitehouse.gov/contact), or sent via U.S. mail (The White House, 1600 Pennsylvania Ave. NW, Washington, DC 20500).

Marcia Angell, M.D.

(Courtesy the National Library of Medicine/National Institutes of Health, http://tinyurl.com/bxn8wq)

In 1999, Dr. Marcia Angell became the first woman to serve as editor-in-chief of the New England Journal of Medicine, the premier journal of medical science in the United States. She is also committed to broadening the public’s understanding of science, and has written for a general audience on the relationships between medicine, ethics, and the law.

After completing her undergraduate studies in chemistry and mathematics at James Madison University in Harrisonburg, Va., Marcia Angell spent the next year as a Fulbright Scholar studying microbiology in Frankfurt, Germany. She received her M.D. degree from Boston University School of Medicine in 1967 and completed residencies in both internal medicine and anatomic pathology.

Currently serving as a senior lecturer in the department of social medicine at Harvard Medical School, Dr. Angell has devoted her life to researching, writing and speaking on topics incorporating medical ethics, health policy, the nature of medical evidence, the interface of medicine and the law, and end-of-life care. “My most fundamental belief,” wrote Dr. Angell in the preface to her 1996 book on the breast implant controversy in the United States, “is that one should follow the evidence wherever it leads.”

A board-certified pathologist, Angell joined the editorial staff of the New England Journal of Medicine in 1979. A decade later she was named executive editor and, in 1999, she became the first woman to serve as editor-in-chief of the prestigious journal. “I was fortunate enough to have a ready-made outlet for my thoughts,” Dr. Angell said of her tenure there. In addition to her academic writing, Dr. Angell has written for The New York Times, Newsweek, USA Today, The Washington Post, and other national publications.

Dr. Angell is a member of the Institute of Medicine of the National Academy of Sciences and a fellow of the American College of Physicians. In 1997 Time Magazine named her one of the twenty-five most influential Americans.

David Satcher, M.D.

(Excerpt courtesy the Satcher Health Leadership Institute, http://tinyurl.com/cr95xf)

Dr. David Satcher established The Satcher Health Leadership Institute (SHLI) at Morehouse School of Medicine in 2006 as a natural extension of his experience in improving public health policy for all Americans and his commitment to eliminating health disparities for minorities, poor people and other disadvantaged groups.

As a champion of improved health care quality and expanded health care access for minorities, Dr. Satcher found himself drawn to the Atlanta University Center (AUC), the largest association of Historically Black Colleges and Universities in the world, for his next challenge. In an environment with a rich history of nurturing minority leaders who engineered the Civil Rights Movement, Dr. Satcher finds both the inspiration and resources to carry out his ambitious mission.

Appointed by President Bill Clinton in 1998 as the 16th surgeon general of the United States, Dr. Satcher served simultaneously in the positions of surgeon general and assistant secretary of health at the U.S. Department of Health and Human Services. As such, he held the rare rank of full admiral in the U.S. Public Health Corps, to reflect his dual offices.

During his service as surgeon general, Dr. Satcher tackled issues that had not previously been addressed at the national level, including mental health, sexual health, and obesity, as well as the disparities that exist in health and health care access and quality for minorities.

His initial report on mental health, the first Surgeon General’s Report on this important health topic, asserts that mental illness is a critical public health problem that must be addressed by the nation. The reports he issued as surgeon general have triggered nationwide efforts of prevention, heightened awareness of important public health issues, and generated major public health initiatives.

He also served as director of the Centers for Disease Control and Prevention and administrator of the Agency for Toxic Substances and Disease Registry (1993-1998).

In addition to his governmental and academic credentials, Dr. Satcher served as a fellow at the Kaiser Family Foundation and as a Robert Wood Johnson Clinical Scholar and Macy Faculty Fellow. He is a fellow of the American Academy of Family Physicians, the American College of Preventive Medicine, the American College of Physicians, and the American Psychiatric Association.

This afternoon Dr. Quentin Young, national coordinator of Physicians for a National Health Program, made the following statement:

It’s entirely heartening to fight for a just cause and, with remarkable speed, win.

Yesterday, I and others called for Tom Daschle’s nomination to the position of Health and Human Services secretary to be withdrawn, given his tax problems and his compromising financial links to the health care profiteers. In view of these links, we now understand why nominee Daschle claimed that single-payer reform was, in effect, “off the table.”

Today, Mr. Daschle has withdrawn his nomination, and now the possibility of a progressive replacement looms.

To those who helped win this victory: congratulations all around.

Those concerned about the prospects for fundamental health reform should inform President Obama of the importance of appointing an unblemished civil servant to the HHS post.

Cordially,

Quentin Young, MD, MACP

Chicago

Getting Health Reform Right: A Q&A With Jacob Hacker

RJ Eskow
The Huffington Post
February 2, 2009

Professor Hacker’s proposal, Health Care for America, is based on two simple principles: First, that both the employer-based private system and publicly-funded Medicare are essentially working for their members. Second, that every uninsured American (or legal resident) should be able to buy into a Medicare-like public program at affordable rates, with need-based subsidies.

The plan has been well-received across the center/left spectrum, even receiving a friendly review from Don McCanne, MD, a Senior Fellow with single-payer advocacy group Physicians for a National Health Program (PHNP).

http://www.huffingtonpost.com/rj-eskow/getting-health-reform-rig_b_163270.html

And…

Getting Health Reform Right: According to Jacob Hacker

By DrSteveB
Daily Kos
February 3, 2009

There is a must read interview with Jacob Hacker, the re-inventor of the individual mandate bulding blocks plan for liberals (it originally came from center-right think tanks) which is the same core as Obama/Baucus/Daschle et al, summarized on HuffPo and in full at Richard Eskow’s the Sentinel Effect blog.

As Don McCanne and other Single Payers advocates have been pointing out:

Leaving the private insurers in place perpetuates the administrative waste of those insurers and the administrative burden on the providers. Intense regulatory oversight of the private insurers would be even more imperative since they would increase their efforts to game the system through surreptitious favorable selection and other clandestine market expediencies. The public program would likely concentrate lower-income individuals initially, risking a political transformation into a welfare program. Also his plan includes features of both an employer mandate and an individual mandate, each with its own policy problems, though he does ameliorate the impact to a certain extent with some of the other features of his plan. From a single payer perspective, it would be far better to totally cut the link between financing and coverage. A system of equitable tax funding of the entire risk pool is more efficient than a system of premiums linked to the individual.

nativist posts:

I read that post, and like this author, I think Mr. Hacker is incorrect as to the effectiveness of private healthcare.

I’m surprised Don Mcanne is supposed to be onboard with the features of Hacker’s proposals. Speaking broadly, yes it’s good to have Medicare or a close clone compete against trad insurers. Perhaps half a loaf is better than none in his view.

DrSteveB posts:

Don was being polite in Jan 2007… Don is always polite with our erstwhile incrementalist reformist friends

http://www.dailykos.com/story/2009/2/3/72018/39311/226/692345

My response, as follows, was posted on both blogs (edited to under 250 words for Huffington Post):

Jacob Hacker deserves our respect, even if wrong

DrSteveB is right. I was being polite. Jacob Hacker is a highly respected political scientist who supports social justice. I have greatly admired his work.

In his proposal he was looking for a political solution to satisfy those with good employer-sponsored plans who are uncomfortable with trading them in for a public plan that has not yet been precisely defined (since any proposed public plan must clear the hurdles in Congress). In so doing he compromised on policy, trading away many of the advantages of the single payer model.

Since I wrote the comments above, the public option described by Hacker has come under intensive attack by Enzi and his fellow Republicans, by AHIP, and by the U.S. Chamber of Commerce. It has been singled out as the most important feature that the Democrats will have to trade away if they expect the Republican support and industry support that they will need.

At best, “universal” coverage will be FEHBP plans with unaffordable premiums. Obama understood that an individual mandate cannot work, though efforts are being made to require that. According to the Milliman Medical Index, an average working family is already paying $15,600 for health care. That’s average, so many are paying more. Using private plans with premiums indexed to the average costs of individuals and their families is an obsolete model of financing health care.

Health care costs are now so high that only an administratively efficient, equitably funded universal risk pool will work. It would automatically include everyone, with financing based on ability to pay. As a single payer, the program would be a single purchaser (monopsony), finally providing us with a mechanism that would ensure value in our health care purchasing.

(I’ll add here that a social insurance model using private plans would also “work,” but is a far more expensive model of reform that trades away administrative efficiency, equity and true universality. Perpetuating unfairness, waste, and leaving some out is not the definition of what works, in my book.)

Don McCanne

Today, Dr. Quentin Young, national coordinator of Physicians for a National Health Program, sent the following open letter to the president:

Dear President Obama,

The recent revelations of former Sen. Tom Daschle’s direct financial ties to the powerful insurance and pharmaceutical industries fighting health reform are alarming. His nomination to head the Health and Human Services Department must be withdrawn.

Mr. Daschle’s numerous conflicts of interest and tax problems end his ability to lead this vital agency. Mr. President, I earnestly call upon you to name an HHS secretary who can achieve the urgent health reform our nation needs, a program that will necessarily replace the vested interests that have generously employed Mr. Daschle in the recent past.

Respectfully,

Quentin D. Young, MD, MACP

Chicago

Insurers overcharged Medicare for prescriptions, report finds

By David Goldstein
The Miami Herald
February 1, 2009

If you buy medicine through Medicare’s prescription drug program, you could be paying too much.

The taxpayers who finance Medicare aren’t doing too well, either.

Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars, according to the inspector general for the Department of Health and Human Services. Eighty percent of the participating insurance companies owe the program an estimated $4.4 billion for 2006 alone.

Medicare, however, has been slow to do something about it. In fact, the agency doesn’t even know how much money the insurance companies owe taxpayers because it hasn’t begun most of the financial audits needed to determine that.

Inspector General Daniel Levinson found a number of problems. Among them:

A quarter of all bid audits done for the years 2006 and 2007 had errors that resulted in higher profits for the insurance companies, higher costs for Medicare and higher premiums or fewer benefits for the beneficiaries.

Some administrative and marketing costs also were “unreasonably high.”

Costs charged by companies in some cases were questionable because the supporting financial data was “poor” and “inadequate.”

However, none of the findings resulted in changes to the program, the inspector general found, because the bid audits are done after the contracts with the insurance companies are signed and beneficiaries are enrolled.

The insurance companies never faced penalties for their mistakes and overcharges because the bid audits don’t say whether errors are “misrepresentations” or honest mistakes.

That means problems haven’t been fixed, the inspector general said.

“Bid audits are not designed to lead to sanctions,” the report says. “However, without any consequences … their deterrent effect is limited.”

http://www.miamiherald.com/news/politics/AP/story/882606.html

The determination of the Bush administration and the Republican-controlled Congress to turn the Medicare Part D drug program over to private insurers produced no surprises. Medicare was overcharged, and the patients were overcharged.

One more consequence of electing a president and members of Congress who don’t believe in government is that appropriate oversight has been lacking. Limiting oversight to sanction-free audits long after the fact is an open invitation to abuse and wink-of-the-eye fraud.

Even if rigid oversight were introduced, these private intermediaries will always find innovative ways of shifting an excessive amount of public funds and patient funds into their own coffers. Patch one leak in the system, and they’ll punch three more into it.

Those who believe in Medicare understand that we need to fold the drug benefit into the traditional Medicare program and eliminate these wasteful, intrusive intermediaries. Now that we have elected a Congress and an administration whose members believe in government, how can we distract them from their intense conversations with the insurance and pharmaceutical lobbyists who helped elect them?

Waxman to push ‘09 health care reform

By Sean Lengell
The Washington Times
January 30, 2009

The top House lawmaker in charge of writing health care legislation said Thursday he is committed to passing a universal health care package by the end of the year…

“This is our time, we need to move forward, we need to get this job accomplished this year and get the bill to the president,” said House Energy and Commerce Committee Chairman Henry A. Waxman at a conference sponsored by Families USA…

“The economic times which are so difficult is another reason why we need to do it right away,” he told reporters after his speech. “The health of our economy depends on a great extent on our dealing with the health of our health care system.”

But Mr. Waxman said private insurers would play a significant role in the implementation of universal health coverage, adding that relying solely on a Canadian or European-style single-payer system is unrealistic in the United States.

“Reform in the health care system to achieve universal coverage has to come by building on the system that is in place - adjusting it, improving it to fill the gaps,” he said. “I believe we must have a significant role for private insurance, but I think it’s critically important that we have a public [health care] program alternative.”

http://www.washingtontimes.com/news/2009/jan/30/waxman-to-push-09-health-care-reform/

House Majority Whip James Clyburn (D-S.C.), obviously an insider, recently confused observers of the Washington scene by stating that health care reform would be incremental. This appeared to conflict with the position of other important players - Barack Obama, Tom Daschle, Ted Kennedy, Max Baucus, Pete Stark, amongst others - who have indicated that comprehensive reform would be as expeditious as possible - presumably this year or early 2010 at the very latest. The statement by Henry Waxman seems to confirm the fact that the House of Representatives is aligned with the Senate and The White House to move forward expeditiously with comprehensive reform.

They are also aligned on the position that single payer is unrealistic, and that reform will be based on private insurance. There is still confusion as to whether there is agreement that a public option must be a Medicare-like program, or if the public option would be satisfied by a pool of FEHBP-type private plans. The Republicans, AHIP, and the USCOC have said that the former is a non-starter, so the public option may well end up being just more private insurance in disguise.

If a U.S. model based on private plans were as effective as the Swiss and Dutch systems, it would still leave about 7,600,000 individuals without insurance, which certainly tests the definition of universal. With much higher health care spending in the United States, the premiums for private plans, even with generous subsidies, certainly would test the definition of affordability. U.S.-style private plans, designed to enhance business success by creating patient barriers to care and payment for care, certainly tests the definition of social insurance.

Maybe James Clyburn did let slip the dark secret of the Washington reformers. If we were to continue with only incremental reforms, we would end up with a system that will leave many without insurance, that will leave health care unaffordable for many more, and that will leave in place an industry that takes away health care access and choice to further its own financial interests. Hmmm… Looks like another con job. Go the incremental route, but call it universal.

Recession Slows Medical Inflation, Helping Insurers

By Avram Goldstein
Bloomberg.com
January 28, 2009

The recession may restrain growth in medical expenses this year as fewer people visit doctors, buy drugs or have surgery, helping health insurers such as WellPoint Inc. safeguard profits, analysts said.

WellPoint, which covers one in nine Americans, rose the most in four weeks after reporting that medical expenses climbed less than 8 percent in the fourth quarter. The increase was at the low end of a forecast given in October, and the report sparked a rally for managed-care companies.

During an economic slump, people who are worried about costs hesitate to tend to their health needs because of out-of-pocket expenses. The U.S. entered a recession in December 2007, and the economy suffered the biggest job losses last year since the end of World War II.

“Many analysts, me included, think that the recession will lead to lower health-care utilization, which could benefit managed-care companies or at least help stabilize their margins,” said Matt Perry, an analyst with Wachovia Securities Inc., in a note to clients today.

WellPoint rose even though it reported a 61 percent drop in net earnings. Besides investment losses, WellPoint had 288,000 fewer customers, mostly because of job cuts by its clients. The easing in costs outweighed the loss of subscribers.

The insurers “have very thin margins, so margin expansion is much more important to earnings per share than changes in enrollment,” said Ana Gupte, an analyst with Sanford C. Bernstein & Co., in a telephone interview today. “Everyone is expecting the recession will moderate” policyholders’ use of benefits this year, she said.

The cost of living fell in the U.S. in December as the recession deepened, capping the smallest annual gain in a half century, according to Labor Department data released this month. Consumers’ medical-care prices rose 2.6 percent last year, compared with a 5.2 percent increase in 2007.

WellPoint forecast in October that medical-cost inflation, which affects the setting of premium rates, would range from 7.5 to 8.5 percent and that it could speed up in 2009. The company said it was raising 2009 prices to stay ahead of that trend.

“We’re not ready to declare the trend has slowed down, and we’ve maintained our higher pricing levels,” said Wayne DeVeydt, WellPoint’s chief financial officer, in a conference call today.

http://www.bloomberg.com/apps/news?pid=20601202&sid=aAeilLHULubY

Let’s see. It’s really good news that 288,000 people lost their WellPoint insurance primarily due to job cuts, because the resultant reduction in spending on health care “outweighed the loss of subscribers.” So the expanded profit margins made possible by paying for less health care “is much more important to earnings per share than changes in enrollment.”

More good news for WellPoint is that medical care prices rose only 2.6 percent last year. In a message to investors, WellPoint’s chief financial officer announced that, quite conveniently, they would not accept the government numbers as a “trend,” and go ahead with their plans to increase the premiums at over three times the rate of health care inflation.

The Democrats promised us comprehensive reform that would provide affordable health care for everyone. Yet they are crafting reform based on an industry that celebrates the loss of coverage for another quarter of a million people, and, at the same time, gouges the rest of their clients with outrageously excessive premium increases.

We have no greater ethical duty than to abandon this nefarious health care financing industry that defines good news as what works best for investors, and replace it with our own public financing system that strives for the good news of what works best for patients. After all, doesn’t that represent the ethics behind change you can believe in?

How the U.S. measures up to Canada’s health care system

Worldfocus
January 28, 2009

As part of Worldfocus’ Health of Nations signature series, correspondent Edie Magnus conducted this half-hour interview with Uwe Reinhardt on January 20, 2009, the day of President Barack Obama’s inauguration.

Edie Magnus: What do you think of Canada’s national health care system?

Uwe Reinhardt: I think it’s a high performer in the following sense: Canadians spend half as much per capita on health care as we do in the U.S., and yet if you go up there, sure you have to wait for some MRI image or for some heart procedures, but overall the system produces very good health outcomes. People are more satisfied there with their care than Americans are with theirs. So if you diagnosed it like a physician, you’d give that system an A and you’d have a hard time giving more than a B to ours.

Edie Magnus: Why do you think it is that most Americans don’t see it that way?

Uwe Reinhardt: Most Americans, first of all, are bombarded with propaganda. You don’t know how many think tanks are paid by certain industry — insurance, drug, organized medicine — to feed out negative stories about the Canadian health system. They do of course have mishaps, as do we, but there is a whole industry collecting them and beaming them out here. That is one.

Secondly, people are always more comfortable culturally with whatever they have than with some other system.

Third, people imagine having the worst illness, and if you are really very sick in the U.S., you generally do have more hope than in any other country if you are very sick, particularly if you are well insured. But if you sort of live the average life of Americans and have a Canadian system, they have better primary care, easier access to it. They would never go bankrupt over health care, because they don’t do that up there. They would realize what they are missing here.

Edie Magnus: We were in a hospital that was affiliated with McGill University, and it was a regional system that had six hospitals that were affiliated with one another, and they annually have some 39,000 inpatients, and they do about 34,000 surgeries and they deliver about 3,000 babies. And managing all of this is a staff of 12 people doing the billing, the administration. What would an equivalent hospital in the U.S. take to run administratively?

Uwe Reinhardt: You’d be talking 800, 900 people, just for the billing, with that many hospitals and being an academic health center. We were recently at a conference at Duke University and the president of Duke University, Bill Brody, said they are dealing with 700 distinct managed care contracts. Now think about this. When you deal with that many insurers you have to negotiate rates with each of them. In Baltimore, they are lucky. They have rate regulations, so they don’t have to do it. But take Duke University, for example, has more than 500,000 and I believe it’s 900 billing clerks for their system.

Edie Magnus: What are 800, 900 people doing?

Uwe Reinhardt: Well first of all there’s a contract. With each different managed care contract you have different rates. You have different things that need pre-authorization, not depending on the contract. You haggle over every bill. You submit the bill, the insurer rejects it, you haggle, and it may take 90 days to settle one bill. They don’t have that in Canada. You see, we spend in this country an enormous amount of money just administering claims. It’s a huge wrestling match over the payment.

Edie Magnus: When we pay a medical bill, how much of that bill goes to these kinds of administrative costs?

Uwe Reinhardt: Well, in general what you’ll find in our official statistics, we’re spending 7 percent on administration, but that only accounts for the insurers’ administrative costs and that includes Medicaid, which burns only two percent of its money throughput on administration. On the other hand, Medicare and Medicaid both cost the hospitals administrative costs that are booked as medical care, but it’s really administrative costs.

Steffie Woolhandler and David Himmelstein of Harvard did a study comparing Canada and the U.S. looking at what it costs employers, providers, doctors and hospitals and the insurance mechanism and compared Canada and the US, and they found that we in 1999, spent $300 billion on administration for all these three functions, and that was about 24 percent of national health spending there, but they say it was actually 31 percent because of the fraction of spending that they could actually identify and link to administrative costs. So they came to 31. So it’s somewhere between 25 and 30 percent that goes for administration and it doesn’t even include the patients’ time of billing. Anyone who has had anyone really sick in their family knows how much time you spend haggling over the bills and they have none of that in these systems.

Edie Magnus: I know that there’s some dispute about all those numbers, about what percentage of our spending the administrative costs represent, but you have said that with what America could be saving in administrative costs, that it could completely fund universal health care for all Americans.

Uwe Reinhardt: Oh yes, I’m totally convinced of that.

****

Edie Magnus: Would national health care work in the United States?

Uwe Reinhardt: Yes.

Edie Magnus: Would Canada’s plan work in the United States?

Uwe Reinhardt: Well, it works. We have a Canadian health plan in America. It’s called Medicare. It works. Don’t tell me Medicare doesn’t work. Tell that to the elderly. One way to test it is to say “Let’s take it away.”

Full transcript and video:
http://worldfocus.org/blog/2009/01/28/how-the-us-measures-up-to-canadas-health-care-system/3783/#comments

Save this link until you have 27 minutes to watch the complete video. It will be well worth your time.