Posted on May 27, 2008

Viewpoints: The Health Care Debate - Dr. David Himmelstein


Physicians for a National Health Program Co-Founder David Himmelstein - Posted May 21
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David Himmelstein, co-founder of Physicians for a National Health Program, which advocates for a universal, single-payer national health program, and Associate Professor of Medicine at Harvard Medical School, talks with the Foundation’s Jackie Judd about how a single payer model will lead to universal coverage, the obstacles to achieving it and the implications of such a plan on health care providers and the insurance market.


JACKIE JUDD: Dr. David Himmelstein is the co-founder of Physicians for a National Health Program, thank you for joining us on today.

DAVID HIMMELSTEIN: Thanks for having me.

JACKIE JUDD: Let me ask you a question that we are asking everyone else as part of this interview series and that is in your organization’s view, identify the single biggest problem facing the health care system today.

DAVID HIMMELSTEIN: Well, the greatest problem is the large number of people who are uninsured and have great difficulty in getting any care at all, and related to that is a growing number of Americans who have insurance but also cannot afford care because of gaps in their coverage. So our view is that the lack of access to care is most acute for the uninsured, but growing for the insured as well – this is the biggest problem we face.

JACKIE JUDD: I know when you co-founded the organization about two decades ago now, it was founded on a single issue and that issue was to create a single-payer plan. Is that the remedy you still see today, all these many years later?

DAVID HIMMELSTEIN: Very much so. In fact, we think the evidence is much more striking than it was two decades ago that nothing else can get us to universal coverage at a cost the nation can afford. That is the only viable solution.

JACKIE JUDD: And for people who are uninitiated, describe how the single-payer plan works.

DAVID HIMMELSTEIN: Single-payer national health insurance would be very simple. Basically government would be the insurer for all Americans in a single, public plan that would be paid for out of taxes, much as the Medicare program is today, but instead of covering just the elderly it would cover everybody for all necessary medical care. Unlike Medicare, we would include full prescription drug coverage, much more extensive outpatient coverage and home care coverage than Medicare does at present, and nursing home care as well.

The other things that we would do differently than Medicare is that instead of paying hospitals on a piecework basis, patient by patient, we would use what’s called global budgets for hospitals and other institutions. So as a fire department is currently paid, they get one check a month to cover all of their work and we think that is a much more rational way to pay hospitals, clinics, nursing homes that are institutional providers of care in our system. So it would tremendously simplify the billing apparatus for those institutions.

JACKIE JUDD: And so all private insurance goes away, all insurance through employers goes away?

DAVID HIMMELSTEIN: That is right. Virtually all insurance. You might still have a very small private insurance market for things like private rooms when they are not medically indicated, some of the luxuries that are not medically necessary but that a few wealthy individuals might want, could remain privately insured. But for the vast majority of medical services, private insurance would disappear.

JACKIE JUDD: Why does the organization believe that this is the only remedy when it would cause such disruptions to what so many people are currently accustomed to.

DAVID HIMMELSTEIN: First, for patients and doctors and nurses the disruptions would in fact be miniscule. Every patient would have complete coverage from the patient’s point of view. You would have an insurance card that would be good at any doctor, any hospital, any clinic in the country. You could go and get your care and the disruption of actual care would be zero. For doctors it would tremendously simplify our billing, virtually all of us who bill Medicare are familiar with the kind of billing that would be involved.

So the disruption for the actual delivery of care would be minimal. But it’s a huge disruption for the insurance industry, that is actually the biggest thing. And for employers it is a disruption. I think for many of them it would be a welcome disruption because it would relieve them of the burden of providing coverage and of administrating coverage for their workers.

The reason that we think that this politically difficult step is worth taking is that first you get enormous potential administrative savings, so by cutting out the insurance companies who are now the middlemen, you save something like $80 billion a year just on their overhead alone, so for every dollar we pay in to a private insurance plan, we only get about 87 cents worth of care out and the rest pays for the administrative costs of the plan and the CEO’s income and the other things.

We know that Medicare can do that same job for 3 percent. The Canadian national health insurance program runs for 1 percent overhead. So we could save $80 billion just on insurance overhead, but also private insurance inflicts on providers, on hospitals and doctors and nursing home a mountain of paperwork that we ought to be able to do away with.

Again, if you pay a hospital like a fire department, they don’t have to bill for each aspirin and band-aid, you cut out a tremendous administrative burden on hospitals and similarly for doctors offices. If they are billing one program with one set of rules, you simplify my colleagues and my administrative work and we have done detailed studies on that published in the New England Journal of Medicine and the potential savings are on the order of about $350 billion each year. That is enough to cover all of the uninsured and to upgrade coverage for the rest of us so that we would have first-dollar coverage, no co-payments and deductibles, without any increase in health spending at all.

That is the only way you can actually give people terrific coverage and not drive up the cost. And other things it then makes possible is much improved quality improvement possibilities, because you have got the data for the health system in one place, you can monitor practice patterns and look at where problems are. It also gives you leverage to negotiate prices with the drug industry and medical suppliers and to do many other things that need doing in our health care system. It really creates the infrastructure to move forward and also frees up the funds to solve the acute crisis.

JACKIE JUDD: In other countries that have some parts of what you have just described, you will often hear complaints about care being rationed, about a long waiting list to get some kind of service that an individual patient feels he or she needs, that a doctor is compelled to see more patients than is reasonable in order to get their incomes up. Would all of that happen here?

DAVID HIMMELSTEIN: Well, we currently spend about twice as much per person as, for instance, Canada does and if we were to cut our budget down to the Canadian level, half, we would have to limit certain expensive high technology kinds of care. If we are willing to go on spending at our current level, we ought to be able to deliver really terrific care to every American without any significant limitations on that care.
Now, that said, it is also true that we are doing large volumes of procedures that probably do no good for patients. So many of the coronary artery stents that are put in are clearly unnecessary. A lot of the spine surgery doing no good and some of the knee surgeries, many of the CT scans and other diagnostic procedures delivering high radiation doses are not actually improving our patient’s outcome.

We ought to be limiting, to some extent, the care we are giving because at present the financial incentive in our system are really creating some terrible practices. But, we ought to limit those things because that could improve the quality, not because the finances are not there.

In terms of doctors, if you ask Canadian and American doctors, for instance, how happy are you with your practices and this has been done with surgeons who have practiced on both sides of the border, generally they are happier with practice in Canada than in the U.S. Sure, there are problems, but they are generally smaller than ours. And I think the issue of how much doctors ought to make is going to be a contentious issue under any health system.

At present American doctors are making about $200,000 per doctor per year, that is after they pay their malpractice costs and office expenses, and I think that is a plenty good income. The budgeting we have done for single-payer national health insurances, you could continue paying doctors at that level without really any problem under the kind of system we are proposing.

JACKIE JUDD: I would like you to talk for a moment or two about what the big obstacles are to achieving this vision. Certainly it has been talked about for many decades in this country. Earlier in the interview you described it as politically difficult, but it is also culturally difficult, isn’t it?

DAVID HIMMELSTEIN: I think it is culturally difficult for the insurance industry because we are saying we you are not doing anything useful in the health care system and we have no place for you and that is the major obstacle. We are taking a $500-billion-dollar-a-year industry and saying you no longer have a place in our national life. And they have tremendous financial clout and political clout that goes along with it.

The second major obstacle is the drug industry, because they are very well aware that when you have got a single payer, you have got the clout to bargain with the drug industry. So in Canada the reason they have lower drug prices is because provincial drug plan have bargaining power and have driven those prices down. If we had a national health insurance program with a single payer we would drive drug prices down. Now they still make a profit in Canada, but they do not make nearly the huge profits that they make in the U.S. So for the drug industry, national health insurance would be a hit on their profits.

I think for most other Americans it is not a big cultural shift. Your own group, Kaiser, has done surveys that have shown about 60 percent of Americans favor a Medicare-like program paid for out of taxes covering all Americans, and 59 percent of doctors favor a single-payer national health insurance program in a recent random sample survey of American doctors.

I think the people in this country, doctors, patients, clearly nurses; the American Nurses Association favors it as do the California Nurses Association/National Nurses Organizing Committee. The people on the ground are ready for national health insurance, but powerful players in our health system and in our political life are dead set against it.

JACKIE JUDD: I have a final question and that is if, as we move into 2009, a new administration and there is serious consideration of changes in the current health care system, short of adopting a single-payer plan which does not seem in the cards at the moment. What would your priorities be? If there could be one smaller change, what would it be?

DAVID HIMMELSTEIN: It is very hard for me to tell you that because I am not a political person, I am a doctor, I am a primary care doctor and I generally view my role as telling my patients and my community the truth and helping them to make decisions as I do with my patients. If one of my patients has a serious cancer, and I have a cure for it that I can offer them, I offer that to them and they say to me, what about aspirin, what about Tylenol, what about narcotics, I need to tell them those may dull the pain for a little while, but they will not cure the cancer and we do have a cure. So think short of national health insurance those other things fall short.

In Massachusetts we have had a reform that is far short of national health insurance that includes government essentially providing free insurance coverage for people below the poverty level and then partial subsidies up to 300 percent of the poverty level and then above 300 percent you are supposed to buy it yourself.

What we have said to our patients and our colleagues here is we are happy that the patient under 150 percent of poverty are getting free coverage and that is a step forward, but also we must warn that that system will not work and that we have been that route before, this is the fourth time we have tried a mandate-like system, the three previous ones have failed because cost continued to rise, the recessions that came strapped the state budget with high costs for subsidizing the growing number of poor just as the tax revenues went down. And they were then repealed and we bounced back to more uninsured than before those programs were ever passed.

What I hear is that lesser reforms cannot possibly work and that we build up expectations and then disappoint them and give them the impression that it is impossible to fix the health care system. I guess that said, the one lesser reform that I could imagine working is to say we are going to do a single payer for inpatient hospital care.

So one could imagine that that is the way they did it initially in Canada is to say we will cover every American for inpatient care, we will pay hospitals on a global budgeted basis and we will take that out of the private insurance market. For the drug industry that is probably a little less noxious for the insurance industry, it leaves them with some business, but I am skeptical that they would be prepared to see that without a huge fight because they would see where that leads as it lead in Canada.

People said we are doing this for the hospitals; it makes sense to do it for all care. And it would distort care because it would say to the uninsured; you are insured, but only on the inpatient side. We would start doing all kinds of irrational things driven by that. But that is about the only incremental step I would see.

JACKIE JUDD: Thank you very much Dr. David Himmelstein.