Universal Health Insurance

There are 44 million Americans without health insurance, and an estimated 30 million more who are underinsured. Out of this national failure, Congress has made several attempts at incremental improvements, with largely disappointing results. As a nation, we are left with the obvious conclusion: the healthcare marketplace on its own is unwilling and ill-equipped to cover the uninsured. Indeed, the increasing financial instability of the managed care industry leaves all of us with the anxiety of not knowing when a health plan will pull out or become insolvent. The attempts by Congress to address the staggering numbers of uninsured have been piecemeal, makeshift and seemingly incapable of repairing the system's structural flaws.1

Our current disjointed health insurance system is not working. Of the 44 million of our fellow citizens who have no health coverage, 85 percent of them are from working families. 50 percent of personal bankruptcies are primarily caused by medical bills. Health insurance costs are rising as much as 15-20 percent a year. Insurance companies and HMOs spend as much as 25 to 35 percent on overhead, administration and advertising. Patients are demanding laws that will protect them from the arbitrary bureaucracies of HMOs and their profit-enhancing cuts in services.

States are taking the lead in trying to cover the uninsured. Rather than abandon the uninsured, or conclude that the problem is too overwhelming to solve, states are experimenting with a potpourri of plans, programs and remedies that may point the nation in the right direction. While no state has found the perfect solution, some have made substantial progress.

During this period of strong economic growth, we should be able to devise a plan that assures universal, comprehensive and affordable care. The United States spends 13.7 percent of its Gross Domestic Product (GDP) on healthcare, and has a 44 million-person gap in coverage. In contrast, both France and Germany cover all their citizens, while spending only 9.8 percent and 10.5 percent of their GDP respectively.2

A universal health system is not "socialized" medicine. It is a financing mechanism. Physicians and hospitals would still be in the private market, and patients would have the freedom to choose their physician or hospital. Funds are simply pooled to ensure the equitable distribution of health care services. Calling this "socialism" is comparable to saying we have "socialized" parks, streets, police, fire departments, schools, courts and mail delivery.

A universal health insurance system controls costs by curtailing the use of healthcare dollars for non-health expenses, such as marketing costs, prior authorization teams, billing clerks and investor profits. There is substantial evidence that, in medicine, competition actually decreases efficiency and increases administrative waste. In fact, government-managed healthcare is cheaper and more efficient than our private insurance system. Medicare uses only 2.2 percent of its revenue for administration. The Canadian health insurance system uses only 2.5 percent. Including administrative costs, hospital and clinic administration, billing, marketing, and insurance profits, the United States currently spends 25-30 percent of all healthcare revenues on non-medical expenses.3

A universal health insurance plan would save money for families, costing an average of two percent of income for complete coverage. For a nationwide plan, the typical, middle-income household cost would be only $731. This is less - in many cases substantially less - than what most families are already paying for deductibles and co-payments. In a universal plan, employers would pay only seven percent of payrolls to fund coverage for all their employees and dependents. This is less than what many businesses that provide coverage already pay. Health economists around the world conclude that for-profit health care is less efficient than a universal health insurance system. Cooperation (along with negotiated fees and budgets), not competition, is what works in health care.4

Universal health insurance proposals are being seriously debated in the states. Federal legislation for universal health insurance, H.R. 1200 (the McDermott Bill or The American Health Security Act of 1999) had 120 co-sponsors in the 1994 Congress - more than any other health reform proposal. Similar bills have been introduced in several states. A universal health resolution was on the California ballot in 1994, and a guaranteed coverage initiative appeared on the Massachusetts ballot in 2000. The Governor of Vermont has expressed a strong commitment to providing health insurance coverage for every resident by 2002. And in Maine, their legislature recently passed a single payer bill, which awaits approval from the governor.

1 Consumers Report, September 2000.Ê
2 "Ibid"Ê
3 Physicians for a National Health Program,, Chicago, IL.Ê
4 "Ibid"

Copyright (C) 1999 Center for Policy Alternatives