Major surgery is the only cure
By David Lazarus
San Francisco Chronicle
October 1, 2006
Our health care system is a shambles. Here’s yet more proof:
- Insurance premiums paid by employers and workers have nearly doubled since 2000, according to a new report from Menlo Park’s Kaiser Family Foundation. The 7.7 percent increase this year is more than twice the rate of inflation.
- San Pablo’s Doctors Medical Center says it expects to file for bankruptcy protection this week after losing about $1 million a month for the past two years. The obstetrics department is scheduled to close today and the hospital’s 11 emergency-room physicians have given notice that they’ll quit by the end of the month.
- Gov. Arnold Schwarzenegger has vetoed state legislation that would have established universal health coverage for all Californians. He offered no alternative plan to help the state’s roughly 7 million uninsured.
“We’re watching the health care system collapse around us,” said James Kahn, a professor of health policy at UCSF.
The Kaiser report issued last week serves as a frightening reminder for all families that health insurance in the United States is an increasingly costly and, for many, unobtainable goal.
Premiums have increased 87 percent during the past six years, the report shows. Family health coverage now costs an average $11,480 annually, with employers paying the bulk of that amount and workers paying an average $2,973. That’s about $1,354 more than the typical worker had to pay in 2000.
This year’s 7.7 percent hike in premiums is the slowest growth rate in six years but it’s still more than double the annual increase in wages (3.8 percent) and the overall cost of living (3.5 percent).
“The bottom line here is that health care costs are increasing dramatically faster than wages, and that’s why people are feeling pain,” said Drew Altman, president of the Kaiser Family Foundation. “We’re seeing a slow unraveling of the employment-based health insurance system.”
Nationwide, about 47 million Americans lack health coverage — a number that’s steadily rising as more companies abandon health programs for workers. (About 61 percent of businesses now offer coverage to at least some employees, according to Kaiser. That’s down from 69 percent in 2000.)
“Health insurance is becoming increasingly unaffordable for businesses and working people,” Altman said.
The financial woes plaguing Doctors Medical Center in the East Bay illustrate how dysfunctional the U.S. health care system has become.
The hospital, which serves some of the more economically challenged communities of Contra Costa County, was run by Tenet Healthcare until 2004. It lost $24 million that year alone.
The facility was taken over by the West Contra County Healthcare District, which cut the deficit to $15 million in 2005 but now foresees even more red ink due to lower-than-expected patient volume, technology upgrades and other factors.
Perhaps the biggest problem faced by the hospital is the fact that about a third of ER patients have no insurance and can’t pay their bills. About 10 percent of all patients arriving at the facility lack health coverage.
To help turn things around, the hospital’s board last week approved a contract for up to $84 million to treat at least eight San Quentin inmates every day for the next few years.
“The prison contract offsets some of the losses we’re seeing in other areas,” said Gisela Hernandez, a hospital spokeswoman. “But it’s not the entire solution.”
For this reason, she said a bankruptcy filing is all but certain this week. And even then, the future of Doctors Medical Center remains uncertain. “Without an immediate infusion of cash, it’s going to be tough,” Hernandez said.
ER doctors gave notice last week because they say they haven’t been paid for six months.
Hernandez said universal coverage would go a long way toward keeping hospitals like Doctors afloat. “If everyone had health insurance,” she observed, “we wouldn’t have any uninsured people in the emergency room.”
However, it looks like that won’t be happening anytime soon. The governor recently vetoed legislation — SB840 — that would have used taxpayer funds to establish a universal health insurance system for all Californians.
Independent analysts say such a system would be cheaper than existing insurance payments for most businesses and workers. But Schwarzenegger, bowing to pressure from the insurance industry, said the system envisioned by the bill would be tantamount to socialism.
“Socialized medicine is not the solution to our state’s health care problems,” he said in a statement, adding that the proposed system would be “a serious and expensive mistake.”
UCSF’s Kahn countered that the governor has it wrong.
“SB840 is not about socialized medicine,” he said. “You would still have public and private health care providers. What this is really about is simplifying the finances of health care.”
According to researchers at Harvard Medical School, about a third of all health care spending nationwide is squandered on bureaucratic overhead — the result of a vast array of insurance forms and procedures.
“All the evidence suggests that the current system doesn’t work,” Kahn said.
And gradually, business leaders are reaching the same conclusion.
“The (health care) system is out of control, it’s unstable, it’s basically bankrupt, it gets worse each year and all we do is tinker around the edges when what we need are major fixes,” Craig Barrett, chairman of chipmaker Intel Corp., said in a speech last week.
He didn’t call specifically for universal coverage, but he said that employers should demand that hospitals use standardized record systems to keep costs under control.
“The current health care system is economically unsustainable and negatively impacting our nation’s ability to compete globally,” Barrett said. “It’s time for a systemic transformation, and U.S. employers must lead.”
Unless, that is, our politicians can find the courage to do so.
David Lazarus’ column appears Wednesdays, Fridays and Sundays. Send tips or feedback to dlazarus@sfchronicle.com.