Forwarding from PHNP NY Chapter:
This year we have seen the national and local media recounting, almost daily, the "unraveling" (as economist Paul Krugman has put it) of the private health insurance system. While we witness a growing demand among community groups, labor unions and members of the public for a single payer national health program, a number of states have already taken steps that can seriously derail that movement. Physicians for a National Health Program is committed to keeping health care reform focused on national health insurance, the only way that the nation's health care problems can be addressed in an equitable, cost-efficient and universal manner.
Massachusetts has adopted an "individual mandate" that would require everyone without health insurance to buy private health insurance. Our Chapter, along with others in PNHP, has questioned the Massachusetts Plan. We've pointed our that it is wasteful and costly to low- and moderate-income families, and that it will result in "stripped down" private health insurance plans that offer only limited coverage with high deductibles. It will undermine existing employer-sponsored coverage without providing a viable alternative, and will soon be seen as economically unworkable. In Vermont, too, a move toward universal access to care was sidetracked into a program run by private insurers.
Meanwhile, the Bush administration and the insurance companies are advocating cut-rate insurance coverage through high-deductible policies, which PNHP recognizes as simply a disguised form of under-insurance. The dreadful experience of Medicare "Part D" these past months is sad testimony to the consequences of keeping Aetna, Oxford, United Health Care and the rest as players in the funding of health care. It is widely known that Part D protects the drug companies from having to negotiate drug prices with the Medicare program. But the same so-called "Medicare Modernization Act" has less-publicized provisions that directly undermine public insurance by reimbursing private companies at a higher rate than traditional Medicare and by establishing automatic triggers that threaten to cap government funding for Medicare.
Our New York Metro Chapter continues with our high level of activity, speaking out on these issues and expanding our education and advocacy outreach. We continue conducting our timely, well-attended monthly forums, assisting members in New Jersey and Westchester County to organize branches of our chapter, supporting PNHP student groups at all the medical schools in the New York area, working closely with the American Medical Student Association and the Student National Medical Association, and adding new members more than 130 in the past year alone.
Some of our special activities this year have included:
· Speaking before major unions and union coalitions, leading to their strong endorsement of the Conyers Medicare for All Bill, HR 676. We are exploring ways to move corporations and small business to support national health insurance as well.
· Sponsoring PNHP's first public meeting ever at Harlem Hospital, with more than 100 in attendance.
· Organizing a major forum on "The Health Care Crisis and What To Do About It" at which New York Times columnist (and Princeton economics professor) Paul Krugman spoke before an audience of more than 500.
· Most significantly, in a major step forward for the Chapter, we have just hired an experienced, capable Media/Communications Specialist, Ms. Bodine Williams. She will be helping us hone an effective strategy to get our message out through a variety of media.
We need your continued support to maintain this level of activity. Working with our extraordinary Executive Director, Joanne Landy, and our new Media/Communications Specialist, we look forward to enhanced visibility for our Chapter, our message, and our cause, in the coming months.
Over the past year, you and other supporters of the New York Metro Chapter have contributed more than $100,000, the largest amount ever for our Chapter. However, we need your assistance now if we are to continue our work into the Fall.
We are ready and able to carry the message that there is a realistic and effective public solution to the health care crisis a solution based on taking private insurance companies out of our health care system. Please give generously; you can make a real difference in ensuring that our voice is heard.
Sincerely,
Oliver Fein, MD
Chair
P.S. All donations are tax-deductible. If you can, we urge you to make a monthly contribution using our convenient credit card system. If you wish to make a monthly pledge, please fax or mail the amount and your credit card number and expiration date to PNHP-NY Metro Chapter, 2753 Broadway, #198, NY, NY 10025 or fax 212-866-5847. Do not email, since email is not secure!
P.P.S. Donors of $250 or more (Sponsors) will receive a choice of a PNHP T-shirt, an attractive gold PNHP lapel pin saying "Health Care is a Human Right" or a copy of The Great Unraveling: Losing Our Way in the New Century by Paul Krugman. Those who give $500 or more (Sustainers) can choose among the T-shirt, the lapel pin, the DVD of the May 30 meeting with Paul Krugman and Robin Wells, or a copy of The Great Unraveling. (see above). Donors of $1000 or more (Benefactors) can select any two of the premiums, including two of the same item.
When we receive notification of your contribution, we will ask you which gift you would like to receive; we will also ask all donors of $100 or more if they would like to be listed on our Chapter's stationery and website
Please note: Gifts to the Chapter are in addition to national dues.
***************************
Transcript
PAUL KRUGMAN AND ROBIN WELLS
"The Health Care Crisis
and What to Do About It"
A public forum at the Community Church of New York
Tuesday, May 30, 2006
Sponsored by
The NY Metro Chapter of Physicians for a National Health Program
The Community Church of New York Action for Justice Committee
The New York Review of Books
PAUL KRUGMAN
You may remember those horrible few days at the end of August and the beginning of September when Katrina hit New Orleans, and we all watched in horror and in anger as the city of New Orleans suffered, people were stuck, and as help failed to arrive. Those days when you just couldn't believe that this is America, where is the aid, why aren't we saving those people, why aren't we coming to the aid of that city? And that was an appropriate reaction. We're an extremely rich country. We're a country of enormous resources. And there's one thing that needs to be looked at that rich societies do quite well, which is to come to the aid of people in trouble. We don't expect this for most ordinary risks in life, but we do believe that we have the moral duty to protect our people when they are victims of circumstances beyond their control, and society in fact can come to their aid.
That is ultimately what the health care debate is about. I'm an economist, a quantitative guy, I do numbers and all those things economists do, but ultimately this is a moral issue. Preventable illness, the personal strain, often the financial disaster that comes with illness, are things that we can handle. We can come to the aid of our fellow citizens. And every advanced country except the United States does. Every wealthy country has taken that particular risk off the table and made it a social responsibility. The United States is unique in being a place where the cost of illness and medical expense can bankrupt you, where the inability to pay for basic medical care can lead to a downward spiral in your health, and eventually death. Millions of Americans are unable to afford medical care and the results are dire. The best estimates suggest that something like 18,000 unnecessary deaths take place each year just because of inadequate health insurance. That's the equivalent of six 911s every year. And there's much more, there are many people who suffer from ill health, who suffer a collapse of their finances, collapse of their families, all because of this failure of basic health care provision that every other wealthy country has managed to do, but that we have not.
The American public, when asked in the abstract "Do you think there should be universal health insurance covering basic health care?" says "Yes" by a very large margin. But somehow we fail to actually come up with a system that does that.
Now, there are a couple of things you might say on the other side that we need to talk about in this country. Isn't this a question of individual responsibility? Shouldn't people make their own provisions to ensure that they have health care when they need it? And isn't trying to ensure that everyone has basic health care just too expensive?
The answers are, of course, that it's actually not possible for most people to guarantee for themselves that they have the health care that they need. That comes to the whole issue of why, in fact, free markets don't work for health insurance, which I'll talk about in a moment. The fact that we have a private health insurance system at all is actually a result of complicit government subsidies. It's a result of a jerry-rigged system that is, in fact, public policy, not individual responsibility, and that system isn't working at all -- it is coming apart.
And as for its being too expensive, there are a lot of reasons to say that it isn't, but the most obvious one is that every other wealthy country does it, and what's more, they spend a lot less on health care than we do. There's a lot of business slander in this country against the British system, but it's a very cheap system that spends 40 cents for every dollar that we spend. There are other systems, for instance, the French system, which is by most measures better, at the very cutting edge. Yet we spend almost twice as much per person as the French on health care, and we get poorer results. We have a system which is the most expensive in the world, and yet it delivers results that are close to the bottom among the wealthy countries.
Why are things so bad? Well, it comes down to the fact that health care is provided here primarily by insurance. [And health insurance is a market that...The reason health care has to be provided by insurance, by the way this is something that people] I know that it really bothers conservative economists who don't like the idea that the system so depends on insurance. They would like to sell health care the way we sell bread, but it doesn't work that way. Health expenses in a given year tend to be very small for most people. Most people are healthy, but when they become ill, the costs are enormous.
I have talked to a couple of people who actually pay for all their health care in cash, who don't worry about insurance. All of them have a net worth of more than a hundred million dollars. The fact of the matter is that, when serious health care costs arrive, they are very large, too large for even millionaires. That's the nature of medicine: if you are healthy, it doesn't cost anything; if you are sick, it costs a lot. As we know, in any particular year, 20% of the people account for 80% of health care costs, 1% of the people account for more than 20% of the health care costs. And you don't know if it's going to hit you so, you have to have insurance so you can have access to what modern medicine can do.
If everyone was completely unaware of how likely they were to need expensive medical care, then perhaps you could have a system where everyone would pay the same amount. Unfortunately, you don't know if you're going to need expensive care, but you do know a little bit, and that undermines the system. Just imagine an insurance company that tried to offer a one-size-fits-all policy, a flat fee, no medical exam necessary, no questions asked about whether you have a pre-existing condition. You just pay X dollars, and we'll cover you.
If an insurance company offered that policy and set the premium to cover the average costs of people in the United States, you know what would happen. People who believe themselves to be relatively healthy wouldn't go for the program, and people who knew they were likely to have big medical bills would, and the insurance company would quickly go out of business, or be forced to raise the premiums to an enormous level. This has a name, and it's called "adverse selection."
And it's devastating to the private insurance market.
To the extent that private insurance works, they've dealt with this problem in two ways. One is that the insurance companies expend a lot of resources trying to identify people who really need health insurance, and then not giving it to them. They spend enormous amounts of resources screening out where it might be expensive. Aside from the fact that this means the very people who most need care don't get it, it also means that there's a huge expense involved. One thing that has been consistent is that the administrative costs of such a system are high. (One of the weird things about the ideological environment in which we live, that we've been trained to believe that government is a bureaucratic organization with lots of people pushing paper around, but it turns out, when you do have government provision health insurance, the bureaucracy has been quite small, the costs are quite small, and it's the private insurance industry that has enormous bureaucracy and enormous costs, and has a lot of people pushing paper around, and so on.)
The other way that private insurance works -- and the reason we've managed to stagger along in our health care system until just about now -- is that we have employer-based insurance. There's a long story about how that came into existence, having a lot to do with the existence of wage and price controls during World War II, but what really sustains it is the tax benefits it provides. To the extent that your employer provides insurance and pays the premium, that is a form of non-taxable compensation. It never shows up in your private income tax. Further, employers, particularly large employers, are to a certain extent able to do what private insurance companies by themselves cannot, which is to create large representative groups of people.
And so we've staggered along for the past 60 years with a system under which most people under the age of 65 get health insurance through their employers, but it is an enormously expensive system. If you actually try to go through the reasons why the US spends far more than everybody else and yet leaves a large part of the population uninsured, it comes down to the inefficiencies of private insurance. There are some other factors, but a very large part of it is the enormous cost of the use of private insurance companies.
With Medicare, about 98 cents of every dollar paid in payroll taxes gets spent on actually providing health care. When you look at the private insurance companies, it is more like 80 cents; the rest goes to administrative expenses and profits. And there are many additional costs imposed on the doctors and health care providers themselves, who have to deal with a fragmented, complex system in which they have to negotiate, amend, or cajole payment from many different insurers.
Again it comes down to a system where everyone is trying to get somebody else to pay, and the process is simply shifting that payment around, and so the end result is that we spend a great deal and actually get less health care. My Princeton colleague, Uwe Reinhardt, has done a lot of work on this, showing that the United States spends far more on health care than other advanced countries, but if you look at things like the number of physicians, of nurses, of hospitals beds, even at this point of advanced technology like MRIs, the United States has no more and sometimes less than other countries.
There are other costs created by the system we have. It is definitely a drag on the economy, definitely bad for business. Just a little point there are two different stories. Most large employers do provide health insurance to their employees, although there seems to be a gradual shift toward employees paying a greater portion of it. But most large employers do still provide coverage and, for that reason, they have high costs.
If you just look at the auto companies, there are a lot of reasons why they're in trouble, but one of them is that their competitors overseas are not spending great sums providing health care for their workers. It's an interesting point that General Motors is an enthusiastic supporter of single payer health care -- in Canada. General Motors Canada, in fact, all of the big three US automakers, are enthusiastic supporters of Medicare, which is what the Canadians call their system, and they write letters more or less every year saying "Do not tamper with this crucial competitive advantage."
For small employers, many don't provide health insurance, but that too is a big disadvantage. It means that they are unable to compete for workers. A lot of people who might prefer to work for a small business stick to a large business because it's the one that provides health care. And it goes beyond that. A lot of people are stuck in their jobs, afraid to lose their health insurance. People don't change jobs or occupations when they should. There have even been some reports of people who are stuck in their marriages or end up marrying the wrong person. There are really a lot of people held hostage by the desperate need to provide health insurance in this society, which does not guarantee it.
Now consider single payer. In a way, this is a problem with words, because it's not a term that sounds like something you do in America. If you say "single payer", people think several things. They think it's socialized medicine, which it is not, since we're simply talking about insurance, not the provision of care. There is a role for government in the provision in health care as well, but certainly nobody's talking about the United States moving to something like the British National Health Service, even though that system is a lot better than people think.
It's that bugaboo of big government. I'll come back to that in just a bit. But of course that's largely an illusion. We're very much the prisoners of history here. Harry Truman looked like he was going to create National Health Insurance back in the 1940's. It came pretty close. It was torpedoed by an unholy alliance between the American Medical Association and southern politicians who didn't want to see hospitals integrated. If it had succeeded in getting through, it would be regarded as something as American as apple pie. We would find it inconceivable that we would have to go back to private insurance. But that opportunity, and several other opportunities were missed.
And one of the nasty consequences of that is that powerful interest groups have been created who stand opposed. The insurance industry was not a big deal 60 years ago; now it's an enormous force. The drug industry was not what it is now, even 30 years ago, but now it's an enormous force, standing against any sort of national system that might be able to bargain over drug prices. So there are powerful interest groups opposed.
There ought to be powerful interest groups in favor of a national health insurance system, and the most obvious one would be business. One of the political economy mysteries is why we don't hear more from those companies that do provide health insurance for their workers and are in fact hurt by it. You can read the editorials, the op-ed articles written by the CEO of General Motors quite recently about the enormous burden that our health insurance system imposes on his company. And you say the next paragraph is going to be "We need a national solution", and that paragraph is never there. It always veers off. One speculates on how much of that is just personal, a fear he wouldn't be able to show his face at the country club afterwards. Is it that the company has other interests and is afraid to go this strongly against the doctrine of a majority Congress and Administration, to whom these ideas are anathema.
But we still have to mobilize those forces, and I would like to believe that we will eventually get to a point where the business community says "Hey, this is actually good for business, too, and we need it." I worry a bit that, instead, what we'll see is the Wal-Martization of corporate America, where benefits are dropped and they no longer feel that it's their problem. This is a big concern.
Still, there is momentum building for deep reform, and the reasons for that building momentum are simply that this jerryrigged system that we have is breaking down. The cost keeps increasing, not because of inflation so much, but because of medical progress allows us to spend more on improving health care, but this means the cost of health insurance keeps on rising.
It's finally reached the point where tax incentives for employer-based coverage will no longer work. And health insurance for those under 65 is simply becoming too costly. The obvious answer is single payer, or, as PNHP now says, Medicare for All. Because this is a very amazing thing. If you ask the United States people "Do you favor single payer system?", they say "What's that?". If you say that's what Canada has, they've heard horror stories which are almost entirely false. But if you say Medicare, which is basically a single payer system, they say "I like that," One moment that I treasure from the 2004 campaign -- there aren't a whole lot of things I treasured then, but there was this one -- was when someone at a town meeting said, "Don't let the government get its hands on Medicare." He just didn't understand what's going on.
Even though Medicare for All is a slogan that is a lot easier for people to digest, we should recognize that Medicare itself was originally not a sure thing, but now, of course, it's an enormously popular program. It's hard to imagine our country without it. But there have been real problems extending it.
What's happening right now is there is a movement to provide some approximation to universal coverage but through a kind of complex method that doesn't displace the role of the private insurance companies. The most dramatic example is the Massachusetts plan that's just come along. What should we think about a plan like that? Should we go along with it? Should we support it? To be honest I'm a little ambivalent. Let me tell you what the issues are.
The positive thing about a plan like that is that it will cover most of those that are uninsured. And that is, after all, ultimately the moral issue for our fellow citizens. The downside is that the plans adds additional costs to the system as it now exists -- greatly simplified, the plan requires that all individuals purchase private health insurance -- and it taxes higher-income people so that they subsidize the purchase of private insurance by lower-income people. Thus the idea is to get everybody insurance, but through private insurance companies -- it's going to be universal, but everyone must buy it. The State will provide financial aid to those that can't afford it.
The advantage is that those that don't now have insurance will get it. The disadvantage is that they have failed to address the vast inefficiencies in our current system. I think we could support that as an interim step, as a way to start, provided that we need to still move toward conversion to a full single payer system.
I understand that you can't produce that at the state level, but if we get anything like that at the national level, it must include an ability for people to simply say they want the single payer option -- you have to give them the option. And I say that knowing with certainty that, if it's fair competition, the public sector will win. I have never seen a single study in which the private sector wasn't substantially less efficient in the provision of health insurance than the public sector. The great danger in all of this is that, given the political climate, politicians responding to interest groups will try to prevent any fair competition in the name of protecting the private sector.
Let me tell you briefly about Medicare Part D. There is actually a Medicare Part C, which is the Medicare Advantage program in which, instead of taking direct standard Medicare, you go to an HMO and Medicare the HMO. It's a long story, but the actual situation is that every time they have tried, the HMOs have proven unable to compete on cost. And, of course, what actually happened in Congress is that, given clear evidence that this privatization doesn't work, Congress subsidized the private insurers in order to maintain the private sector, making it more expensive for the public sector.
Now, Medicare Part D, the drug program could have been run with consumer choice, either you go with an insurance company's drug plan, or you simply get drug insurance directly from Medicare. And you know what would have happened: the drug insurance burden for Medicare would have been less and would have avoided the administrative costs. So Congress solved that problem by not making it possible for seniors to go to Medicare directly; they set it up so that you can only go through the private sector.
I am afraid that the odds are it will be easier to get some kind of jerry-rigged complex solution than it would be to get a straight simple program. I'm not sure whether I would oppose that, but it's clear that this would be a more complicated and costly solution. What we should really do is have Medicare for All, H.R. 676. That's the way to do it. And the fact of the matter is it happens to be an economic winner. Almost nobody would end up paying more. The premiums you now pay, or that your employer now pays, would be paid instead with a payroll tax, and you would end up getting more health care for less money. And it would resolve the great injustice in our current system in which a large number of people don't have health care simply because they fall through the cracks in the system.
I want, in the end, to come back to this: This is a vast moral issue that we can solve. It turns out that we can do this not just for free, but for negative costs. All the evidence says that you could cover everyone, could guarantee health care for everyone, and actually save money in the process. But even if that weren't true, we still should do it. Ultimately this is a moral issue. We are a society, we are a community, and we shouldn't allow our fellow citizens to go bankrupt, suffer ill health, or die, simply because we are unable to overcome the political barriers to a simple efficient system.
ROBIN WELLS
Like Paul, I was trained as an economist, and like him, I became convinced by models, by numbers, by analysis, that the current system we have in health care is fundamentally wasteful, it's wrong, it's harmful, and that's why I wanted, for a very long time, to write this article that the New York Review of Books has been so kind as to publish.
But I also wanted to say that there is a larger issue in which I think the health care crisis is embedded. Paul and I have been in the trenches now, literally speaking, since about 1999, when Paul started working as a commentator. And what we've seen over that period of time is really that this is a country that has lost its way. This issue crystallizes so much of what has gone wrong, the deification of markets, the masquerading of what is really corporate interest for what is purported to be the public welfare. It is getting to the point where we feel as if people have lost hope for doing anything better. So we really wanted to bring this issue to the forefront, because it is one where we think that, at the grassroots, there can be hope that something can be done and can be made better.
Thank you.
Paul Krugman - From the Q&A
On state level efforts for reform: I support efforts to achieve reform of the system at the state level. However, I recognize also the real limitations that states will have. States are pretty open, and there is a real issue of an individual state being able to compete with other states if it raises taxes to pay for health care. But I have studied the history of the New Deal, and much of the progressive movement which it represented began in the states, especially in New York State under Governor Al Smith. So state-level action can help move these issues forward in a progressive way.
On Clinton's missed opportunity: The insurance companies and the drug companies and the medical equipment makers are a pretty formidable bloc, and it's not going to be easy to make the kind of reform we need. So, beyond the specific details of plans, there is a big political problem: Do you try to co-opt these big players, or do you just confront them? Politicians will agonize about this quite a lot. We do have a history. Many things went wrong with the Clinton plan in 1993, but if I had to identify a single wrong decision, it would be this: There were people advising them that a single payer plan was the cheapest and simplest way to accomplish their goal, but they decided that the interest groups had to be accommodated, so they devised a plan designed to preserve a role for the insurance companies, in the hope that this would defuse the opposition. But guess what; the insurance companies fought the plan anyway. At the same time, the complexity of the plan unlike Medicare for All, which we can explain pretty simply the Clinton plan was not easy to explain, and it crashed and burned. We missed a crucial opportunity.
On fighting the insurance companies: There is a lot of public anger building against the insurance companies and the drug companies. The fact that these powerful interests are opposed to a broad insurance plan might, at some point, turn into a political advantage.
On why business isn't yet on board: Business is scared about the health care issue. This is a terrain having government take over health care financing in order for them to survive that is very different from the lower-tax regime they've been pushing for many years. Why can't American business act in its own interest? Business has, in many ways, gotten what it has asked for lower taxes and smaller government but that isn't what it has really needed. So it has to make a major turn-around, and it just hasn't done it yet.
On where political change will come from: There is a big difference between just trying to cover the uninsured, and trying to get to a rational system. Even many of the policy intellectuals and think tanks are desperately afraid that it might be politically too hard to do. They are timid, and so they come up with complicated, confusing, and limited plans, even when they share my values on and my diagnosis. This makes me think that we will get there either through a bad plan that somehow greases the rails toward universal health care, or there will come a point where the national distress leads to a popular tidal wave. I believe this will come, not from Congress or the progressive think tanks, which are infuriatingly cautious on this issue, but, if it's going to come, it will have to come from an aroused public. So I applaud those of you who are working actively to rouse the public on this issue.
On Skinny Plans and the Massachusetts Approach:
Oliver Fein: We in PNHP are very worried about the Massachusetts Plan, especially the individual mandate, because we think it will result in stripped down or "skinny" insurance policies. We looked around to see if we could find such a policy. Massachusetts outlaws them at present, but New Hampshire has one: $2,484 a year for a 30-year-old non-smoking woman, but it would have a $1,000 deductible, which means that preventive care like pap smears and flu shots would be out-of-pocket, and then she would have to pay 20% co-payment for additional services up to $5,000. And the most amazing thing to us was that this was truly skinny coverage, since it didn't cover the most likely medical event for a 30-year-old woman, pregnancy, labor, and delivery. Individual mandates and employer mandates to buy private health insurance only provide Swiss-cheese coverage; it's just full of holes.
Paul Krugman: This whole ideology of property rights and individual responsibility, which has led in Massachusetts to the requirement that everyone buy insurance, even if they are only stripped-down, skinny plans, is totally wrong at many levels. We have overwhelming evidence that, when people don't have insurance for routine medical expenses, they don't care out essential preventive care. Even highly affluent people don't do it. What we really need is a comprehensive health care program. I like to quote from a passage in the Economic Report of the President, because it's so damnably wrong. They say the big problem with our insurance system is that people have insurance that pays for routine visits to the dentist or for minor expenses. That's not where money is wasted or large expenses are. What actually happens is that, when people have insurance with large deductibles, they do not do those things, they have worse health, and they then have higher medical expenses as a result.
Billie Spaight:I'd like to comment on those stripped-down plans. Right now I have excellent coverage under my husband's plan. But already we are spending $500 a month on medications. If I had one of those plans where I had to pay $600 or more additional every month, or if I lived in Massachusetts, I'd be packing my bags. If that were the law of the land, I'd be moving to Mexico. Incrementalism like this leaves out people who fall between the cracks. You can't leave out people with real medical problems. Let's have a universal system that covers everything, with no cracks.
Joanne Landy: The problem with the Massachusetts approach is that it will not work and will discredit universal health care. It's up to us to analyze why it won't work, that it won't create a single risk pool, that it doesn't eliminate the waste, it doesn't eliminate the unfairness, and we have to explain why it doesn't work and not urge people to go down a path that won't work and will just make people feel demoralized and give up.
Paul Krugman: There are going to be these state-level initiatives and maybe one way to view this is to make sure that the spin wars are won by the right people."