Perhaps the greatest conceit of health care reform debates is the notion that free-market competition among private insurance companies will lower health costs. Instead of a free market, the insurance industry is increasingly a monopoly market, now dominated by three national firms – United Health, Wellpoint and Aetna. Indeed, the commercial insurances have not brought down premium costs. Inflationary premium rates have increased more than 70 percent in just the past six years. Corporatized health care continues to shift greater costs to taxpayers and consumers. Even as we pay more for coverage, we experience less access.
Abandoning the principle of shared risk, private insurers maximize shareholder profits by insuring the healthy and excluding everyone else as a ‘pre-existing condition’; by denial or delay of provider reimbursements; and by peddling high-deductible policies with Health Savings Accounts as tax shelters for the wealthy, and greater out-of-pocket expenses for individuals.
The American Hospital Association reported a 59 percent increase in individual out-of-pocket health costs over the decade preceding 2005. Increased marketing of catastrophic insurance that individualizes risk and fails to provide either adequate health or financial protection, contributed to a 60 percent rise in unpaid medical bills over the same period. Consequently, some hospitals now require up-front payment from individuals carrying high-deductible policies. Medical bills also account for an estimated 50 percent of all U.S. personal bankruptcies. It has been reported that of the 50 percent increase in bankruptcy filings from 2006 to 2007 alone, 99 percent were personal bankruptcies.
Since Newt Gingrich’s ‘opportunity’ society morphed into government-of-the-highest bidder post-1994, language is increasingly manipulated to obscure true intent. Jockeying for rhetorical advantage in recent election cycles, the Republican Congressional Campaign Committee has distributed candidate talking points, advising: "Never use the word ‘privatize’ when referring to Medicare..." Instead, terms like 'choice' and 'free-market' competition mask the intent to destroy Medicare as a social insurance plan and turn it into a defined contribution or voucher plan for purchase of private insurance.
Heritage Foundation president Edward Fuelner has been at the forefront of
ultraconservative opposition to all forms of social insurance programs, vowing to privatize-for-profit Social Security, Medicare and Medicaid.
The decades-long effort to eliminate Medicare as a true social insurance plan by moving seniors into multiple private plans, received a huge boost from the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). Steered by the powerful insurance and pharmaceutical industries to benefit their bottom lines with billions of dollars of subsidies and inflated profits, reform expanded privatization through Medicare Advantage health plans that are subsidized by taxpayers at 12% higher cost than traditional Medicare (with 2% overhead cost).
Medicare has been further eroded by a series of cuts to provider reimbursements—underpayments that few providers are able to absorb. The ironically-named Medicare Sustainability Act in the ‘90s called for 9 annual cuts to provider reimbursements. Absent congressional action, another 10% cut in reimbursement is due in January 2008.
George W. Bush’s disparagement —'federalized' health care— pointedly invokes fear of any government role in health coverage. The misnomer "socialized medicine," while appropriate for select systems like the V.A. and Great Britain, serves as distraction from the fact that U.S. corporatized health care, with its complicated wasteful administrative system of over 1200 private health insurance companies, inflates overhead costs to account for 31 percent of all health care dollars spent.
Physicians for a National Health Program notes that commercial insurances spend 20 percent of health care dollars on administration, marketing and profits -- compared to less than 2 percent overhead cost for Medicare. Another 12 percent administrative cost is imposed on providers and hospitals, due to varied paperwork, medication formularies, and requirements of multiple insurers. Add to that the cost of resubmitting denied claims, and the annual ritual of provider re-credentialing by each insurer.
Over 20 federal and state studies since the ‘90s by the Congressional Budget Office, the General Accounting Office and others, have demonstrated substantial savings with single payer insurance, enough to insure the the uninsured and upgrade coverage for the under-insured. Indeed, single payer insurance is an antidote to the wasteful corporate insurance bureaucracy that no longer function as the ideal of insurance – the largest possible risk pool providing coverage for all in the most cost-effective manner. Single payer coverage saves money principally by eliminating wasteful administrative costs of multiple insurers, and by permitting negotiation of bulk rates for pharmaceutical and durable medical goods.
The U.S. spends more to maintain a complex system of health care administration that erects barriers to health care access than it would cost to simply cover everyone in a single risk pool.
A key question is how to develop the political will for meaningful health care reform. Massachusetts-style reform is proving to be universal in name only. Minnesota tried to legislate not-for-profit health insurances, only to see the insurance industry take legislative control of their own regulatory process and adopt ‘creative bookkeeping’ to mask their true profits. Understanding that influence of financially powerful lobbies must be separated from policy-making, the California nurses last year ran an initiative for public financing of campaigns.
Where are leaders willing to take on the big-monied lobbies? Is public financing of campaigns required before the U.S. can achieve meaningful health care reform?
Failure to address the elephant in the room – the huge cost of health care administrative waste – will perpetuate the game of cost-shifting, an exercise as futile as rearranging deck chairs on the Titanic.
Massachusetts Health Care - Universal in Name Only
Minnesota's experience trying to legislate insurance reform
Summary of 19 state and federal studies of single payer health care