For-profit insurance: No value added
By JAMES C. MITCHINER
Detroit Free Press
July 27, 2009
In the health care debate, the one question we should be asking is: What is the marginal value of having private health insurance?
After all, if the purpose of health insurance is to mitigate the financial consequences of catastrophic illness or injury, the current level of medical bankruptcy shows that having such “insurance” is, for many Americans, anything but. Recent research from Harvard University and Ohio University showed that 78% of the individuals whose illness led to bankruptcy had health insurance at the onset of the illness that pushed them or their families into bankruptcy court.
Yet we continue to trust private insurers. Policymakers and federal legislators seem to have blind faith in their ability to solve the problems of American health care.
In order to maintain their profit margins, insurance companies are raising premiums while pushing more of the costs of care onto individual policyholders. Premiums are increasing annually at a rate that is three times the rate of inflation. Fewer employers, especially small firms, continue to offer comprehensive coverage, and for workers with employer-based insurance, out-of-pocket expenses increased 34% between 2004 and 2007. Those who have been laid off are finding that extension coverage under COBRA is overpriced and unaffordable.
Moreover, it is hard to argue that premium money spent on administration, marketing, public relations, lobbying, inflated CEO salaries and corporate profits is preferred to spending money on actual patient care.
Aside from costs, for-profit insurance companies will tell you that they facilitate high-quality health care and offer more choices than a government plan would offer. Really? There is no evidence of which I’m aware that for-profit insurers consistently provide better quality of care than their nonprofit private and public plan counterparts.
The argument that for-profits preserve choice of medical providers is also invalid, given that the “choices” are made for you through the insurers’ selective contracting with provider networks that include a limited number of physicians and hospitals. In addition, those who feel that they can go to any doctor of their choice without incurring additional costs should remember that over 90% of metropolitan areas are served by only one or two insurers.
But there is a viable alternative. Single-payer health insurance is simply a way to finance universal health care. By replacing the 1,200 private insurance companies — each having its own set of regulations, provider networks, prescription drug formulary, pre-authorization forms, 1-800 number and Web site — into a single insurance entity, such a single-payer system would reap the benefits of economies of scale, reduce administrative waste, mitigate bureaucratic duplication, sever the link between health insurance and employment, reduce health care disparities, and at last provide creditable coverage for the millions who lack it now.
And, unlike so-called socialized medicine — which requires you to go to a doctor employed by the government and receive treatment at a government hospital — single-payer utilizes private physicians and private hospitals, chosen by you and not by your employer, your health plan or the government. It is basically a simplified, commonsense Medicare-for-All program, a plan that characterizes universal health care in Canada and is the established norm in most Western European countries.
In most polls where various health reform options are listed, a universal, tax-supported single-payer plan is preferred by the majority of respondents. Single-payer is supported by thousands of physicians, hundreds of labor unions, several large medical and public health organizations, over 80 members of Congress, and three Nobel laureates.
A bill, HR 676, the U.S. National Health Care Act, has been introduced by U.S. Rep. John Conyers of Detroit. And, although he evidently doesn’t like to admit it, single-payer was at one time publicly supported by candidate Barack Obama.
President Obama’s goals for health reform are to expand access to high quality affordable care, control costs and preserve choice. Single-payer health insurance is the only plan that will simultaneously and synergistically accomplish all three goals, and without breaking the bank. We should stop pretending that the private insurance industry can do it better.
James Mitchiner, M.D., is an Ann Arbor emergency physician and the former president of the Washtenaw County Medical Society.