Debating the Road to Universal Coverage

Can we reach a consensus on what we need to do to achieve meaningful health care reform in the U.S.?

This week, I have been mulling over The American Prospect’s May 2008 Special Report: The Path to Universal Health Care At first glance, it might seem that the eight articles in the report take eight different roads to reform. But I’m glad to see agreement on many pivotal points.

Yet there are still major issues that could divide reformers: Should we acknowledge that we won’t be able to cover everyone unless we learn to “control costs”? Should we move directly to a single-payer system?  And finally, should we try to move quickly, to cover everyone, or should we aim for incremental progress while sticking, stubbornly, to first principles? 

In the months ahead, I think it is crucial that would-be reformers try to hash out their differences on these issues and unite under a single banner. Only then, can we divide opponents who have billions invested in preserving the status quo.

With that in mind, I decided to weave together some of the strongest insights in the Report—focusing on recurring themes—while also addressing the areas where reformers remain divided.

First, as I wrote two weeks ago on TPM Café the high and rising cost of health care may be the greatest obstacle to health care reform.  In the American Prospect report, Ezra Klein captures the problem with brilliant simplicity at the very beginning of his piece: “If health insurance were cheap, we could all buy it. If universal health care could get 60 votes in the Senate, we'd all have it. But these two imperatives—the need to control costs and the need to attract the 60 Senate votes required to overcome a filibuster—point in opposite directions. This is the central paradox of health reform.”

Congressmen are loath to vote for a plan that would rein in spending for two reasons. First, they fear that if they call for “cost-control,” voters will hear “rationing.”  Secondly, they know how lobbyists will react to any attempt to cut the waste in our bloated healthcare system. One man’s hazardous waste is another man’s income stream.

Nevertheless, as Klein recognizes, something must be done about runaway health care inflation: “The most intractable policy problem is not, fundamentally, the 47 million uninsured or the fact that insurers have a business model right out of Dickens. It’s cost.”

In her contribution to the Special Report, Dr. Marcia Angell, senior lecturer on social medicine at the Harvard Medical School and a former editor-in-chief of The New England Journal of Medicine, agrees with Klein: “Costs are the central problem; universal health care would be easy if money were no object.”

Angell then slices to the heart of why our for-profit health care system is so expensive: “The U.S. health system is unique in treating health care as a commodity to be bought and sold in a marketplace. Care is distributed according to the ability to pay, not according to medical need. Private insurers compete by avoiding high-risk individuals, limiting services for those they do cover, and, whenever possible, shifting costs to other payers or to patients in the form of high deductibles and co-payments. We have the only health system in the world based on avoiding sick people.”

In the next paragraph, Angell zeroes in on the essential conflict between a for-profit system and the goal of having affordable, sustainable, high quality care for all: “All of this drives up costs to the overall system, while yielding profits for the various players within it. In fact, there's a fundamental illogic to trying to contain costs in a market-based system. Markets are about expanding, not contracting. Like all businesses, hospitals want more, not fewer customers –but only as long as they can pay.”

Whether they are drug-makers, medical device-makers or for-profits hospitals, U.S. corporations are hooked on growth. (And as I have written here, many not-for-profit hospitals have decided that, in order to compete, they, too, must grow—whether or not their community needs more bleeding-edge equipment or more beds.)   

To be fair, corporations are only responding to shareholders who clamor for higher earnings, quarter after quarter, year after year. But that double-digit growth is what is bankrupting our system.  As I have said before, Detroit’s auto-makers cannot afford to keep Genentech’s shareholders in the style to which they have become accustomed.

Moreover—and this is something that more and more reformers realize—when it comes to healthcare, lower costs and higher quality go hand in hand. When one Medicare patient goes to the Mayo Clinic’s flagship St. Mary’s hospital and a second, very similar patient with nearly identical problems goes to UCLA Medical Center, Medicare winds up paying roughly half as much for the patient at the Mayo Clinic. And no one thinks that that Minnesota’s Mayo Clinic is delivering discount care.

Why is health care less expensive at Mayo?  Research reveals that, at the Clinic, fewer doctors will tend to the patient. And they will tell each other what they are doing. Mayo is less likely to do unnecessary tests or procedures and more likely to get the diagnosis right in the first place. On average, the patient will spend 43 percent fewer days in the hospital—which gives him less time to develop an infection while he’s there. Finally, St. Mary’s has no need to try to “grow” its business. It is the one academic medical center in the U.S. that doesn’t advertise. Mayo does nicely on word-of-mouth alone. 

And St. Mary’s is not unique. The same research demonstrates that the Cleveland Clinic, to name just one example, also is very efficient—which means that it offers higher-quality care at a lower total cost than most hospitals, in large part because it avoids the unnecessary care that can be hazardous to a patient’s health. And just as at St. Mary’s, both doctor and patient satisfaction is high.

Nevertheless, at many other medical centers “a combination of newly available technology and an unchecked demand to use it” drives health care inflation skyward observes Jonathan Cohn, a senior editor at The New Republic, in his American Prospect piece.

Here, I would add only that the “demand” is usually coming from physicians, not patients. Consider this passage from Complications: A Surgeon’s Notes On An Imperfect Science where Dr. Atul Gawande describes how doctors are drawn to new technology at a conference where device-makers display their wares:

“Then he put the device before the camera. It was white and shiny and lovely. Against any high-minded desire to stick to hard evidence about whether the technology was actually useful, effective and reliable, we were all transfixed.”

Patients don’t “demand” the newest devices and medical equipment because, in most cases, they don’t know about them until their doctors propose using them.

Meanwhile, “fee-for-service-payments” reward doctors and hospitals to “do more,”  Cohn observes:  “While the payment reforms of the 1980s, so called ‘diagnosis related groups,’ helped mitigate that problem, they didn't eliminate it, and  patients don't actually seem to be better off for the extra attention.”

As we’ve discussed on Health Beat, in cities like Manhattan, Miami and Los Angeles, where research shows that patients consistently receive more intensive, more aggressive and more expensive care, outcomes are no better—often they are worse.

Nevertheless, hospitals continue to compete for well-insured patients (and the doctors who treat those patients) by buying the newest, most expensive equipment—whether or not they need it. In other countries, where virtually every patient has insurance, hospitals are not desperately vying for customers who can pay their bills.

This brings me back to Angell’s point that a for-profit health care system is all about growth—even though more care doesn’t necessarily mean better care. Indeed, Angell explains that there is as much waste in government-sponsored Medicare as there is in our private sector health care system because “Medicare is embedded in our market-based entrepreneurial private system, and therefore experiences many of the same inflationary forces, including having to deal with profit-maximizing hospitals and physicians' groups. Doctors' fees are skewed to reward highly paid specialists for doing as many expensive tests and procedures as possible”—something I have talked about here on Health Beat.

“The bottom line,” Angell observes, is that “Medicare inflation is almost as high as inflation in the private sector and similarly unsustainable.”

In addition, Angell notes: “Medicare is not what it once was. For the past eight years, it has been at the mercy of an administration intent on dismantling and privatizing it. The prescription-drug benefit enacted in 2003 is an example. It's a bonanza for the pharmaceutical industry because it forbids Medicare from using its purchasing power to get good prices.” Meanwhile “Medicare pays private insurers an  average 12 percent more than it would cost traditional Medicare to care for the same people.” And “ even as public funds are siphoned off to the private sector, premiums and co-payments have been increased.”

I couldn’t agree more. As we discussed on Health Beat last week, the “Medicare Advantage”  system which funnels Medicare through private insurers is proving hugely expensive, not only for Medicare and taxpayers, but for beneficiaries who use it.

Cohn agrees with Angell that Medicare is, in his words, “trapped in a deeply dysfunctional system—one in which too much money goes to the wrong uses and not enough goes to the right ones. Unless we want to simply hack away at the program's benefits—in effect, undoing one of the greatest social-policy advances in American history—the best way to stabilize Medicare is to think even bigger and fix the rest of the health-care system.”

Cohn sees Medicare reform as part of overall health care reform, and he lists the fixes that many reformers agree on: reduce unnecessary, ineffective care;  create new scientific institutions (or redirect existing ones) to compare drugs, devices and treatments and to establish what “best practices” are based on unbiased, medical evidence;  create an electronic medical record system, to cut down on errors and improve coordination of  care, and finally, use Medicare’s size and clout to negotiate for lower drug prices. 

The latter would not stifle innovation, Cohn argues, because in our for-profit health care system, “the driving force behind developing new drugs isn't a push for the best new treatments science can concoct. It's a push for the best new products that the pharmaceutical industry can market to gullible consumers and  compliant doctors, often trivial variations on existing drugs about  to go off-patent.”

While Angell and Cohn agree that Medicare is mired in a dysfunctional system, Angell has a different solution: scrap Medicare and replace it with a new, government-sponsored health care system for everyone.

“The only workable solution is a single-payer system . . .” Angell declares. “There would no longer be a private insurance industry, which adds little of value yet skims a substantial fraction of the health-care dollar right off the top. Employers, too, would no longer be involved in health care. Care would be provided in nonprofit facilities. The most progressive way to fund such a system would be through an earmarked income tax, which would be more than offset by eliminating premiums and out-of-pocket expenses.”

It is a bold proposal, and I love the “sweep clean” simplicity of it. But unfortunately, most Americans don’t agree with me. As pollster Stan Greenberg emphasized in an earlier Health Beat post: for most Americans, “Choice” is “key, key, key.” And this includes allowing “families, if they choose, to keep the private insurance they now have.”

I wish Americans didn’t make ‘choice” such a high priority—especially when so many of the  alternatives that the private insurance industry offers them are, in fact, tawdry “Swiss Cheese policies” filled with holes that you don’t discover until you try to use the insurance. Nevertheless, poll after poll shows that Greenberg is right.  Americans who have employer-based insurance don’t want to be told that they have to give it up.

This is why Yale political scientist Jacob Hacker has proposed a plan for reform that would let Americans decide whether they want to keep the private insurance they have now, or choose a public-sector plan that would be much like Medicare. Both Barack Obama and Hillary Clinton have adopted versions of this plan.

Angell is not willing to accept Hacker’s strategy. She acknowledges that “conventional wisdom holds that we need to retain [employer-based private insurance as an alternative] because many Americans are satisfied with it. But except for industry spokespeople and politicians whose campaigns they support, I've never met anyone who actually is. Many people like their doctors, but that is not the same as liking the system.”

Here, I disagree.  When polls show that 80 percent of Americans like the insurance they have, this does not mean that they like their insurer. It means that they like having employer-sponsored insurance. Given a chance to compare that coverage to a public sector plan, they might even pick the government’s plan.

But voters just will not accept a government edict telling everyone that they have to give up what they know for an unknown—government-sponsored, single-payer care. Most people are afraid of change.  They are particularly wary of switching from the devil they know to one they don’t know.  And the last eight years also have not bolstered their faith in programs run by the federal government. Congressmen know this. And this explains why they will not vote for single-payer.   

The debate  between those who would hold out for single-payer—and those who think that politically, it’s just not possible—is, I think, the issue that most divides reformers.  My hope is that those who favor a single-payer system will eventually come round to the notion that if people are given a chance to choose, government will be able to provide insurance that provides better coverage for less. I’m convinced that, with time, Americans will vote with their feet, and single-payer will become a reality.

Angell calls such a hope “wishful thinking that overlooks the power of the private health industry, through its huge lobby, to influence the rules so that it continues to profit while the public system is undermined.”

Make no mistake, she is entirely right to be worried. Unless private insurers are tightly regulated, and forced to compete with public sector insurance on a level playing field, they will design their plans to pick off the healthiest customers. Ezra  Klein shares Angell’s concerns that private insurers will offer coverage “to healthy, young firms at advantageous prices,” while “pressuring sicker, older companies and individuals into the government options. If they succeed, the risk pool in the public sector plan will grow expensive, the premiums will grow inordinately pricey, and cost savings won't be realized without cutting care, no matter what the government mandates.”

This would turn national health insurance into something like Medicaid-For-All, “a poor plan” not just for the poor, but for many middle-aged Americans. Younger Americans who have a very sick child—or who suffer from a serious chronic disease –might also find that they would have a hard time getting jobs at firms where private insurers offered “advantageous prices.”

The only way to avoid such inequality is to insist that private insurers offer everyone in a given community the same insurance at the same price. Young and old, sick and healthy, everyone pays the same price for the same coverage, and no one can be denied insurance because of pre-existing conditions.

Insurers will not do this voluntarily. But no one can argue that such a system would “undermine capitalism” or be “un-American.” The fact is that this is now the law in a number of states; under national health reform it would become the law nationwide.

Secondly, if insurers are going to compete on a level playing field, they cannot be allowed to sell bare-bones or high-deductible plans in an effort to skim the healthiest and wealthiest Americans from the pool.  Hillary Clinton’s plan, for instance, insists that private insurers must offer coverage that is “equal to what Congressmen receive under the Federal employees’ plan.”

But “regulating” insurers means going up against the lobbyists.  Can we really do that in America? 
Yes, I would argue, if the patients, employers, physicians and state governors who realize that rising costs threaten to wreck our system pull together. If they unite, they can put enough pressure on Congress to defeat the special interests who rake in enormous profits—as our $2.2. trillion health care bill continues spiral. 

In the American Prospect Report, Anthony Wright, executive director of Health Access California makes this point: “powerful interests killed reform” in California. “A united health-reform base of consumers, labor, and providers might have overcome such opposition, but these constituencies were split as well.  The lesson Wright draws from his experience:  Get enough support to unite – and then divide the lobbyists who are committed to the status quo.”

In part 2 of this series, I will explore how we might “divide the lobbyists,” and  address two remaining questions that still divide reformers: First, should we even talk about “controlling costs”—or is that giving too much ammunition to the opposition? And secondly, can we hope to achieve universal coverage all at once, or is Robert Kuttner, co-founder and co-editor of The American Prospect, right when he says: “Today there are not the votes in Congress to enact a true universal health-insurance system. Any progress toward universal coverage will necessarily be incremental”?

Comments

[Kristen Hannum]

Another benefit of Angell's single-payer solution, (regards taking employers and insurance companies out of the business of healthcare) will be no longer having to worry about employers and insurers discriminating against people on the basis of their DNA.

Congress is about to pass a law forbidding genetic discrimination. It's a law less needed in our peer countries, where employers aren't likely to come across such information. In London, employers are not in the business of covering their employees. As for the NHS, it's hard to think that it discriminates against Brits with genetic predispositions towards cancer or diabetes. On the contrary, according to T.R. Reid's Frontline exploration, the NHS relentlessly pushes preventive care.

Yet another benefit -- less discrimination in the marketplace against parents. The news tonight had a story on how moms have a harder time getting jobs than women with no children. Certainly part of that is because employers believe the woman will take time off to care for her kids, but the higher cost of health insurance also plays a role.

Where are our priorities?

[Maggie mahar]

Kristen--

Thanks for weighing in.

You're right, as the price of health insurance levitates,
more employers do (and will) discriminate against those who are likley to have higher health care bills.

I think of the infamous WalMart memo (prepared for the Wal-Mart board of directors by the vice-president for benefits recommending discouraging unhealthy workers from even applying for work by arranging for "all jobs to include some physical activity (e.g. all cashiers to do some cart-gathering)."

And if I were applying for a job at a small comapny and had a sick child, I certainly wouldn't tell anyone ..

This is another reason why, over the long run, it would be better if employers simmply paid a tax into a national pool to help subsidize health care rather than playing a hands-on role in picking insurance for their employees--and worrying about which employees might be expensive. Many employers would like to get out of the health benefits business, recognizing that it is not their area of expertise

Moreover, employer-based insurance greatly adds to the administrative costs of U.S. health insurance. When people talk about high administrative costs, they usually think of the private insurance company's administrative costs, but that's only a smart part of the total. There is all of the paperwork involved at the employers' end and at the providers' end with so many insurance companies selling a zillion different products to so many employers. Our system is very costly because it is fragmented and there are so many middle-men.

But for the time being, most Americans like the idea of having employer-based insurance. So I think we have to give them a choice--and demonstrate that public-sector insurance that comes to them directly cam offer more value for the dollar.

This seems to me a case where
"telling" people won't work; you have to "show" them.

[Gene Martinez]

Speaking of getting 60 votes in the Senate for universal coverage, the democrats need to be prepared to play political hardball. If we have a democratic President, and increased majorities in the House and Senate, are we all prepared to just stand back and let the republicans obstruct enacting univeral coverage?
I think democrats should threaten republicans with ENDING the fillibuster all together if they try and obstruct this legislation which the American people support and have voted for. After all the republicans threatened to get rid of the fillibuster in order to get their Supreme Court nominees approved, and it is time to stand up to these people and do the same if necessary.
The alternative is to once again fail to act when our nation's health status is in such jeopardy!

[maggie mahar]

Gene--
Thanks for your comment.

Unfortunately, the conservatives are not the only obstacle to universal coverage. Many independent and democratic voters who say they want "health care reform" define reform as "lower health care costs for me and my family"--not as "universal coverage."

For example, a Kaiser tracking poll released in October showed that 44 percent of Republican voters and 39 percent of Independents rated “reducing the cost of health care and health insurance” No. 1 as the health care issue that they would most like to hear presidential candidates discuss.

Only 21 percent of Republicans, 30 percent of Independents and, sadly, only 44 percent of Democrats listed “covering the uninsured” first.

These reponses are part of a trend. When pollsters Greenberg, Quinlan, Rosner asked, “Which Values Should Guide Reform?” in November,only 46 percent of Independents chose “healthcare is a fundamental right– every American should be guaranteed coverage that can never be taken away.”

A Kaiser poll released just last month shows that this is not just a difference between conservatives and liberals. When Kaiser surveyed different income groups, it found that a mere 27 percent of those living in households earning over $75,000 rated universal coverage as one of the two most important issues in the coming election. By contrast, 50 percent of those in households where joint income equal less than $49,999 named health care as one of their two top concerns.

Wealthier Americans are not as concerned about universal health care because the majority have employer-based coverage-- and it many cases, it’s free. (Sixteen percent of "better paid households" work for employers who pay 100 percent of their premium. They suspect, rightly, that if we move to universal coverage, the amount that they would be required to contribute to the pool would be more than zero. The average "better paid" worker is asked to pay only 27% of the premium for a family plan. "Lower-paid workers" are asked to pay 34%. Again, if we had universal coverage the amount that a "better paid" worker might be asked to contribute would, in many cases, be more than the 27% of the premium for a familiy plan (roughly $3,000 a year) than he pays now.

I've written about this on www.tpmcafe.com here http://tpmcafe.talkingpointsmemo.com/2008/04/08/the_politics_of_health_care_re/

There I explain that in the U.S. wide income disparities lead to less social solidarity than in many other
developed countries that are mainly middle-class. This leads Princeton heatlhcare economist Uwe Reinhardt to argue that we'll "never have high quality, sustainable universal coverage in this country."

I disagree. But it will, as you suggest, require an enormous battle to get the votes in Congress. Many many Congressmen realize that the independent, more affluent voters who helped elect them are not enthusiastic about universal coverage.

This is a problem that may only be overcome as more upper-middle-class workers become worried about losing their insurance. As we move into a deep recession, more employers will shift more costs to employees, some employers will back away from offering benefits altogether, and some white collar workers will lose their jobs. Unfortunately, this may be what it will take to create "social solidarity" on this issue.

I remain very hopeful that we will achieve universal coverage, but I'm not at all sure how quickly it will happen.
In a post later this week on the Century Foundation's www.healthbeatblog.org I'll be talking about reforming Medicare as a way to pave the way for universal health care reform, by creating a "demonstration project" showing that reform can mean higher quality and lower costs.
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