Government
Underwritten with Private Sector Administration
by
Christopher M. Dawson, M.Soc.Sc, CPCU, ARM, ALCM
He who has health has hope; and he who has hope has
everything.
—Arabic
Proverb[2]
Executive
Summary
This model proposes an alternative approach to providing universal
health care to the American public by using a method widely accepted and
adopted by businesses and associations who self-insure. It is known as Third
Party Administration. The government solely underwrites the health risks of the
nation and or states, but is supported by contracted insurance companies and
providers who handle all the major administrative service functions. These
private companies support the program by engaging in singular or multiple
operations: marketing, selecting and supporting the healthcare networks, collecting
the premiums, responding to customer issues, settling claims, and offering singular
or aggregate stop-loss reinsurance. This approach creates thousands of private
sector jobs and opportunities in the insurance industry. The government can
just be “the bank (i.e., risk-taker)” or selectively employ its own
underwriters, auditors and actuaries who set and apply the rates as well as
evaluate the performance of the supporting private contractors.
This proposal also questions and rejects the arguments that the United
States has ever offered health care that is the highest quality and reasonably
priced (i.e., value for money) or that universal healthcare must be either public (socialist) or private
(capitalist). It also introduces the principal of social reciprocity and speaks
to the economic impact on workers and businesses in the competitive global
marketplace.
Introduction
Let us consider universal
health care, taken for granted in many countries but hotly debated in our own
society. Why don’t we have a universal health care program in the United
States? We are the only country among developed nations, except South Africa, that does not provide
universal health care for its citizens. There are underlying principles,
values, history, and interests that we must explore in order to weigh the
merits of the arguments put forward and the deceptions employed.
A central argument against universal
health care or socially provided health care is that health care is more
effectively delivered by insurance companies in a private, market-driven
system. Any proposed involvement of government might undermine the entire
health care delivery system.
Social Reciprocity
The principle of
social reciprocity is a good place
to begin our discussion. Within a society, we are all interconnected.
Fundamentally, social reciprocity suggests that in a society, we all enjoy
mutual relationships that require give and take. This means that your gain is
my gain and your loss is my loss. We generally recognize our social obligation
to help those distressed by catastrophic loss caused by floods, hurricanes,
tornadoes, earthquakes, etc., as well as those less fortunate than ourselves.
This is an underlying belief and moral value central to our culture, albeit
tempered somewhat by the exception of “personal fault.” This social
responsibility is also a central principle in many religions. Another aspect of
social reciprocity is our society’s belief that we should all pay for the
benefits that we receive.
Let us focus on
health care. How might this apply? An example: through no fault of my own, I
have bad eyesight. It requires that I have an eye exam and get new glasses once
every year or so.
This costs me perhaps
$400 or $500 per year. Fortunately, I can afford to pay for eyeglasses to
address my disability. However, should you
help pay for a small portion my eyeglasses? Perhaps, that question is
inappropriately framed. The more relevant question is, “Do you benefit
from my having corrective lenses?” I joined baseball teams in my youth,
I drive a car, I read and write unassisted, and I actively participate in and
contribute to our society more productively as a result of having my
eyeglasses. As a member of this society, don’t you think you should pay for
that “minute” benefit you receive? This idea may seem outrageous to you.
So let us elevate the argument to
another level. You attend school or a movie. Sitting next to you is a person
with “infectious, drug-resistant tuberculosis.” The person has no health care
insurance, so they have not seen a doctor in years. Can you simply say “tough
luck” to that person? No. When
another member of society does not receive medical care for a contagious
disease, your personal risk grows. You should be willing to pay for the
benefit you derive when that person
receives medical care. Similarly, when people have maladies (through no fault
of their own) that create personal financial burdens which reduce their
capacity to contribute to society, we all lose. Still not convinced?
Now we will take the argument yet
another notch higher. Your children ride a school bus each day. Unbeknown to
you, their part-time bus driver cannot afford or is ineligible for employer
provided medical insurance and, as a result, has not seen a medical provider in
many years. The driver has advanced coronary disease and suffers a heart attack
while transporting your children. Children are seriously injured. Perhaps you
now can better understand the principle of “social reciprocity.” People
mistakenly think that government healthcare programs subsidize the poor or people who choose not to purchase private
coverage.[3] We need
to think a bit differently. How
do you…or all of us… benefit when
every person has health insurance or suffer when they do not?
Mandating Healthcare
Opponents to
universal health care think the government is overstepping its authority by
making everyone purchase health care coverage, private- or government-backed.
The fact is government requires you to pay taxes on other services that are
available, whether or not you choose to participate. For example, childless
couples and the elderly are required to pay taxes and contribute to school
bonds for public schools, yet they have no children in the school system.
Aren’t they benefitting from living in a more literate society, or should they
be exempt from paying?
Is the government going to require everyone to
see a doctor annually? Of course not, but if people are required to participate in a universal health care plan, they will
certainly want something for their money; so there should be an increased
likelihood that they will visit a doctor. Remember, mandatory participation
means we are all paying for the benefit of a “reduced risk” of personally
suffering a loss as a consequence of another person’s failure to have proper
medical care. This is not an “entitlement” program—this is a pay as you go
program. Their loss is your loss—is our loss.
Proponents of universal health care
might have gained a better foothold in public sentiment if they had initially appealed
to moral and religious values or social responsibility. They could have reduced
a common opposition to “entitlement programs” by explaining the benefits we all
receive under the principle of social reciprocity and the reduction of cost we
gain by increasing the size of the risk pool of participants.
Socialism or
Capitalism?
Some people argue that government is
unreliable and inefficient in delivery of its services. Most Americans favor
solutions within a private or capitalist
economy rather than a government (public) controlled socialist economy. However, our current private health care system
is an aberration in capitalism. A fundamental basis of capitalism is that you
supply a product or service to meet the demand of the marketplace. Generally,
the more you sell, the greater is your profit; but demand for health care
treatment is based on risk of illness or disability. Hence, the fewer product features and the less care that is authorized
by the insurance companies, the greater will be their profit.[4]
These practices obviously create inequities in the
delivery of products and services that greatly favor the healthy and wealthy at
the expense of the needy. The invisible
hand[5] is not
working in our insurance marketplace. The private suppliers are not meeting the
health care demand according to a “capitalist doctrine.” As it currently
operates, private health care insurance is in fact anti-capitalist. Denial of care – supply not meeting demand –
maximizes profit and is counterproductive to the social need. Private health
care currently maximizes its profit by selectively insuring the wealthy and the
healthy that do not have the same level of need/demand for the product as the
poor and the needy. The only effective way to check this practice is to offer
alternative public options that introduce competitive products and services to
meet the demand of the needy and or otherwise cause the private sector to
competitively meet the true market needs.
Single payer universal health
care is not socialized medicine. It is a health care payment, not a health care
delivery system. Health care providers would be in fee-for-service practice,
and would not be employees of the government, which would be socialized
medicine. Single payer health care is not socialized medicine, any more than
public funding of education is socialized education or the funding of the
defense industry is socialized defense.[6]
While some label universal health
care “socialist,” we forget our history of public services. There was a time
when the government provided neither public police protection nor public fire
protection. The wealthy hired private security guards to protect their person,
property, and business. The common (poor) people had to fend for themselves.
Robert Peel created the Bobbies in the early 1800s;[7] our own
public police have roots in the mid-1800s with the private detective agency
Pinkerton. Historically, only private fire protection was offered based on a
paid subscription. A wall plaque identifying the subscriber was placed on the
front wall of the wealthy property to alert the fire department as to which
properties they were obliged to protect.[8]
Imagine the outrage in our society if upon calling
911, the dispatcher for a fire department or police department told us that it
would be too expensive (unprofitable) for them to respond to your need or that
you could only have their service on a preapproved, prepaid basis. We do not
speak of government providing fundamental public protection as “socialist;” so why
is it interjected in the discussion of universal health care? Addressing health
risk is no more a “socialist” than is addressing fire or crime risk. To my
knowledge, there are no plans for a U.S. health care system to be government
operated, (i.e., socialist). There is no plan or intent for doctors, hospitals,
and the hospital workers to be in the direct employment of the government.
The United States in 2014 already
provided about 36.5 percent of health insurance[9] through
government programs for the 89.6 per cent of the population who are insured
(283.2 million). In place, we provide coverage through Medicare (50.5 million),
Medicaid (61.65 million), and or Veterans Administration or other military care
(14.14 million) (people may be covered by more than one government plan). In
2015, nearly 28.5 million nonelderly people in the U.S. had no health insurance[10]. These
programs generally are effectively run government health care systems. Why should
we do away with these programs as well as fire and police protection because
they seem to be socialist? This
labeling is deceptive. Wouldn’t it make more sense to expand coverage to
include the small numbers of those who are uninsured?
Private
versus Public Delivery
Let us deal
directly with the issue that pits private delivery against public delivery
options. It is not a question of either/or.
In fact, health care delivery can be both. Germany, the Netherlands, Japan, and
Switzerland present examples of societies that provide universal coverage
directly through private providers to meet social mandates addressing the
market needs of the poor and unhealthy.[11] Several
mixed options are available to consider in delivering health care insurance.
Building a universal healthcare system requires detailed planning for the
complex issues that will be faced. Below is an outline offered as background
for addressing the key issues. Further detail and concerns can be found in several
academic studies[12]
or review of existing plans of other industrial countries.
Before we can
define a viable joint private-public delivery system we must understand the
basic components of private insurance company operations, i.e., how they
deliver healthcare services. Insurance operations have four fundamental
components that support profit making: business production and marketing,
administrative operations, claims, underwriting or risk taking, and investment.
Let us look at each of these components in a bit more detail with the idea in
mind that each can “stand alone” or be employed in different combinations. The
government could selectively contract multiple private “third-party
administrators (TPA)” or “administrative services only (ASO)” vendors by bid
that would be compensated for effective, efficient delivery in providing any or
all of these services. Or, a single vendor (TPA) might be able to offer full
services, providing all required components, necessary to comprehensively support
underwriting of risk by a government agency. Renewable contracts would be for
minimum periods of five to ten years.
ASO contracts are a big part of health insurers' business,
representing billions of dollars in annual revenue. ASO plans are also becoming
a preferred option for smaller and larger employers alike, in part because of
the Patient Protection and Affordable Care Act. As more employers explore the
advantages of self-insurance and ASO contracts, insurers know they have to
compete to retain or grab that business. That means they have to find
innovative ways—including wellness programs, accountable-care networks,
hospital bill audits and direct contracting with providers—to appeal to
employers and help them reduce costs and improve care.[13]
Business
production and marketing in healthcare starts by determining how best to
deliver the services to the public. Developing a sales force and marketing
strategy is built on research and data gathering for a designated area or
segment of the population. To produce business one can set up a sales force of
screened, licensed, bonded, and educated independent or exclusive insurance agents,
agencies, and or internet producers. Each must meet short term and long term
objectives. Their main function is to enroll policy holders through advertising
and or personal contacts. Agents handle the application process and help
customers select the right government offered programs to meet their personal
needs. These agents can work on a commission basis which rewards enrollment of
new customers and retention of existing customers. For example, agents might
earn 25-35% of a customer’s first year premium on new business and 5-10% for
each year’s retention premium. They would be responsible for advertising,
marketing, production expenses and collection of the first year’s premium
deposit. The agents might be able to realize a 60-90 day investment “float” on
submission of initial premium.
Another component
of production is the responsibility for identifying and developing a comprehensive
healthcare network (e.g., HMO, PPO) of hospitals, doctors, specialists,
pharmacies, etc. to support healthcare delivery services. This might also involve advertising and
marketing of services for recruitment. The appointment, vetting and development
of each healthcare provider would be handled by a vendor through their medically
trained representatives. Vendor(s) would also provide continuing educational
services, troubleshooting, and on-going support to the network providers.
Compensation could be negotiated for number and type of appointments as well as
support services. Current insurance companies might take advantage of their
existing healthcare networks in this recruitment. Many existing networks and
providers would be anxious to participate in the private-public offering of
healthcare.
Administrative operations’ primary
functions are to collect the premium, issue the insurance policy and identity
cards, maintain financial records for the producers and their clients as well
as the members of the healthcare networks. Customer service is its main responsibility
– billing, collecting payments, cancellations, renewals, etc. This component
would also be responsible for distributing commissions to the agents and
assuring the healthcare providers were being paid appropriately for services
provided at agreed rates. These functions require strong information technology
support. The administrative component should also adjudicate issues between
clients, agents and healthcare providers. It would be able to realize a
cyclical investment “float” of 60-90 days on premium collections before payment
to the government underwriter.
The claims component is central to
the success of a universal healthcare system. It makes the specific
determination that each loss is covered under the terms of the insurance
contract and authorizes appropriate disbursements to medical providers and or
insureds. This requires a bonded, knowledgeable staff including attorneys,
physicians and adjusters. They must set up reserves for known losses as well as
those incurred-but-not-reported (IBNR) losses. In the event of catastrophic
claims (singular or aggregate) they will set up long term managed care and structured
payout plans. The claims component provides feedback to government underwriting
on the source and nature of losses to assist them and their actuaries in
ratemaking, trending and future planning.
Insurance companies could also be
contracted for direct excess risk-bearing involvement by offering reinsurance
to the government program. For example the government might only bear the risk
for a set amount of aggregate annual losses such as $1 trillion and or singular
case medical losses up to $20 million. Multiple reinsurance companies could provide
layers of insurance coverage for amounts excess of these singular or aggregate limits.
This would spread the risk among multiple private entities and create long term
investment opportunities for the insurance carriers.
While it may be in the government healthcare
program’s interest to have its own employed auditors to make certain that each
of the service contractors and providers is keeping appropriate account
records, this function could also be contracted. This would also be true for
actuarial services. The underwriting function – selection, evaluation, and
pricing of risk – should probably remain in-house with government employees.
However, if there are qualified “full service” insurance companies capable of
offering all of the component functions described, then they might handle all
aspects of healthcare delivery except the core risk taking, subject to
government periodic audit by an objective, independent company or government
team.
Obviously, there are many more
dimensions involved (i.e. legal support, information technology, accounting,
investments, etc.), but the TPA/ASO model can be an effective substitute for a
full-fledged government healthcare system. The private sector can be an
integral partner without giving up its opportunities for profit from providing
services and gaining investment income. They might welcome the chance to escape
the “risk bearing” uncertainty and gamble for a steady service support
function. These contracted administrators could focus on operating profits made through efficiencies in providing
third-party services. Additionally, they might be offered a “float” on
collected premiums that allows for some short-term investment profits. Finally,
the premiums and reserves for losses could be invested on behalf of the
government using private investment firms. All of this would occur under public
oversight (involving bidding, regulation, audit, etc.). The private insurance companies
would retain a major role in the health care delivery system. Of course, the
implementation of this model would not prohibit private insurance companies
from offering their own health insurance policies in a competitive marketplace.
A second type of mixed, government-private option is
the assigned risk pool approach that
can involve a government-regulated program that is privately operated. The
state governments must approve the rates used to develop premium charges by the
insurance companies licensed in their state. We see a similar approach when
there is mandated responsibility for carrying personal auto insurance or
workers’ compensation for businesses. Essentially, the driver or business with
a poor record, having been refused standard insurance in the private
marketplace, can secure insurance coverage by being assigned through a
state-sponsored risk pool.
All insurance companies licensed in the state must
participate in this risk pool. If the insurance companies do not voluntarily
accept the nonstandard application, the state government designates a private
insurance company which must write
the coverage. The insurance companies may add a reasonable surcharge based on
the poor prior loss experience of the policyholder. The designated insurance
company handles all the operational aspects (application, rating, policy
issuance, premium collection, claims) of the policy. However, when it comes to
losses, the state makes an allocation of the total pooled losses to
all the participating insurance companies pro rata to the relative amount of
premium they write for their voluntary business. [There are similar plans
(e.g., FAIR Plan) in property, and this concept can be applied to health
insurance]. While this option answers the requirements to make insurance
available to all those in need, there must be a supplementary government funding
system to assure that all customers can afford the market driven base premium
requirements. However, given the universality of this proposed health program,
the average premium charged should be driven down considerably. A simple
“ability to pay” formula could be applied and funded through a portion of the
premiums collected.
Many countries currently have
programs with mixed options for providing universal health care.[14] Our
federal government could certainly expand the Medicare/Medicaid programs and
try to provide universal coverage without the direct assistance of the private
sector. The government has demonstrated that capability, but regardless, there
will always be a requirement for contracted private support programs. By framing
the debate as private versus public delivery, without mixed solutions, we find yet
another deception in the discussion of universal health care.
Unaffordable
Cost?
Universal health care is said to
be an unaffordable entitlement program, which must be subsidized through higher
taxation. This disguises the real question which is “What are our priorities?
In
fiscal year 2015, military spending is projected to account for 54
percent of all
federal discretionary spending,
a total of $598.5 billion.
Military spending includes: all regular activities of the Department of
Defense; war spending; nuclear
weapons spending; international
military assistance; and other Pentagon-related spending.[15]
Yet only 6 percent ($66 billion) of
discretionary spending was budgeted for Medicare and Health.[16]
Of federal mandatory spending, Medicare and Health
represent about 38.40% of the $2.45 trillion budget.[18] To
fight a few thousand terrorists, the military budget is more than double (in
constant dollars)
what it was when
we faced the massive armed forces and nuclear weaponry of the Soviet Union.[19] As the
chart below shows, the U.S. spends more than the next seven highest spenders
combined.
Let us keep in
mind the two fundamental yet opposing political philosophies that spell out the
principal obligations of government. The Conservative (Hobbes) contends that
government’s job is protection. This
includes protection of our citizens and their interests at home and abroad. At
the other end of the political spectrum, the Liberal (Rousseau) philosophy
supports the responsibility of government to assure empowerment (i.e., to create a level playing field so that everyone
has an equal opportunity to take full advantage of the benefits of living
within our society). To both of these ends, the government provides public
protection against fires, crime, terrorists, and enemies of the state; it also
provides public education and regulation of commerce.
The
Constitution, a foundation document central to conservatism furthermore
guarantees the rights “to life, liberty and pursuit of happiness.” Yet we have
examples in health risks and medical problems that kill more people annually
than fire, crime, terrorism, war, and illiteracy combined, that deny life,
liberty and the pursuit of happiness. While the two political groups spar over
minutia, the fact is that universal health care is rooted in and consistent
with the common political philosophies of both
divergent political groups. Universal health care is not a conservative versus
liberal argument; it is a well-disguised deception of special interests versus
the general commonwealth.
Exceptional Care
for the Higher Cost?
Let us take on the central argument of
those opposing universal health care reform. Their argument against universal
health care or government provided health care is that our health care is more
effectively delivered in a private, market-driven system. While “a bit” more
expensive, the United States is said to have the highest quality of health care
compared to other nations that have public funded or government supported health
care systems. To counter this argument we first will address our cost of health
care; then we will compare health care results in the United States to the
other developed countries reported through the Organization for Economic Co-operation and Development (OECD) and
other organizations.
With
regard to health care spending,[20] the
United States, by far and away, has the highest per capita cost (see Figure 6.9). In 2015, this cost per
capita was reported to be $9,450. This level of health spending is two-and-a-half
times the average of all OECD countries (USD $4,010).[21] The
next closest spending level per capita (allowing for PPP, purchasing power
parity in U.S. dollars) among the OECD members is Switzerland at $6,930 which
is just 73.33 cents for every dollar we spend. The average among the top 34
countries is 42.43 percent of what the United States spends per capita. On
average then, these thirty (34) countries are spending 58¢ less for each dollar
per capita on health care that we are spending. This excess overhead places our
businesses and corporations at an extreme competitive disadvantage in the
global markets.
When
we start to look at our major economic rivals that provide universal health
care in this group, we see them spending substantially less per
capita compared to the United States: Canada at 48.78 percent, France 46.77
percent, Germany 55.77 percent, Australia 46.77 percent, United Kingdom 42.54
percent, and Japan 43.92 percent. We are spending double the amount our
competitors spend for health care. This can be attributed to our significantly
higher costs in medical technology, prescription drugs, administrative costs,
and hospitalization. An MRI scan of the neck region costs $1,500 in the United
States but only $98 in Japan.[22]
Administrative costs (including claims administration, underwriting, marketing,
profit margin, etc.) for private insurance companies as a percentage of
national health expenditures are well above those seen in other nations. The
U.S. share is more than 30 percent greater than Germany’s and more than three
times that of Japan.[23]
Figure 6.9: Health Spending[24]
U.S
health insurance companies have the highest administrative costs in the world;
they spend roughly 20 cents of every dollar for non-medical costs — France’s
health insurance industry, in contrast, covers everybody and spends about 4
percent on administration. Canada’s universal insurance system, run by
government bureaucrats, spends 6 percent on administration. In Taiwan, a leaner
version of the Canadian model has administrative costs of 1.5 percent.[25]
Having a high
percentage of uninsured persons contributes to more expensive health care costs
because conditions that might have been prevented, or treated inexpensively,
often develop into catastrophic claims. Our
high cost of health care requires a greater diversion of resources which
affects our economic output as measured by GDP (gross domestic product). Health
care spending represented 16.9 percent of our GDP in 2015. The next highest
percentage of GDP for 2015 is Switzerland at 11.5 percent. Few of our rivals
have ever exceeded 11 percent. The current OECD average is 9.0%, but the United
States has not seen that level since 1980.[26]
Our health care
spending is nearly double the average of these other OECD countries. While our
citizens may think that our health care costs are slightly higher than other countries, “We the People” probably have
no idea of the real magnitude of these differences in cost. Again, the United
States of America is the only country of the developed world, except South
Africa,[27] that
does not provide universal health care for its citizens. A single payer
universal health care could save between $100 and $200 billion per year despite
covering the uninsured and providing increased health care benefits.[28] Not
addressing universal health care at this time because of the perceived
immediate impact on the deficit can be a mistake.
While
these numbers give the macro view of
spending by the society, the costs may be better understood on an individual
and family level. Unfortunately, most of us with private health care insurance
think that our current situation is acceptable and that it will not change in
the future, that the private marketplace will be stable. In 2016, the average annual
premiums for employer-sponsored health insurance (the leading source of private
health insurance) are $6,435
for single coverage and $18,142 for family coverage.[30] For
employer-sponsored single coverage insurance in 2009 the premium was $4,824.
For family coverage, the average annual premium was $13,375 in 2009. Hence,
single-coverage premium rose by 33 percent and family coverage premium rose by 36
percent from 2009 to 2016.
As
Exhibit D shows, employers in 2006 paid 74.1 percent of the health insurance premium,
but that contribution dropped to 70.9 percent in 2015. The average annual employee
(worker) contribution on family coverage rose from $2,973 (2006) to $5,277 (2016)
for a 78 percent rate of increase. During the same period, considering
inflation,[31]
the average wages rose a mere 3.7 percent.[32] An
indirect cost we have already seen is the fact that wages have not increased
more during this decade in part because companies are paying more for health
insurance and passing the rising costs on to employees.[33] People
receiving employer-based health insurance are likely to pay more or find a
shift in costs through boosts in deductible and co-payments.
If the premiums continue to increase at the
same rate (58 percent) as they have in the last ten years, the premium for
family coverage is estimated to rise to $28,664 by 2026. That can be the
equivalent of a second mortgage payment. To make matters worse,
employer-sponsored insurance plans were offered by about 61 percent of all
firms in 2006, but firms offering these plans have dropped to 56 percent in 2016.[34] Small
business (3 to 49 employees), the heart of American employment, participation dropped
from 58 percent to 53 percent during the same period. Not only are the rates of
premium skyrocketing, but the main source and least costly offering of private
insurance (i.e., group insurance) is declining. Individual policyholders do not
have the same clout with the insurance companies as businesses in terms of
protection against arbitrary denial of coverage, cancellation of coverage, or
increases in premium.
Perhaps our
willingness to accept these increasingly high costs is based on the
media-promoted assumption that the price we pay for our private delivery system
yields superior results to a public delivery system. We do not want those
“notorious waiting lists” of public health systems. Those
lists presented early problems in universal health care but have been
addressed; in some cases, cost controls were the driving force rather than
inefficiency. The OECD reports that despite higher medical expenditures, there
are fewer doctors per capita in the United States than in most other OECD
countries.[35]
We rank 28th among the 34 OECD countries (see Chart below). If we
actually study the waiting times for appointments the United States ranked second
to last among eleven nations—Australia, Canada, France, Germany, Netherlands,
New Zealand, Norway, Sweden, Switzerland, United Kingdom, and United States—on being able to see their doctors same-day
or next-day.[36] U.S. patients reported relatively longer
waiting times for doctor appointments when they were sick but relatively
shorter waiting times to be seen at the emergency room, see a specialist, and
have elective surgery.[37] Among
fifteen United States metropolitan areas the average cumulative wait time to
see a family physician was 19.5 days.[38] Only 45.7 percent of these U.S. physicians
would accept Medicaid and only 76% would accept Medicare.[39]
Citizens in other countries are allowed longer hospital stays and more
medication than Americans[40] yet
have lower medical expenses.
While waiting
times may be emphasized in the media for measuring quality of health care, they
are not primary to assessment. The World Health Organization gathers global
statistical data regarding success in health care delivery. Let us concentrate
on the same thirty-four OECD countries as we did for cost. (Refer to the charts
that follow.[41])There
are two key indicators to consider in evaluating the quality of a health care
delivery system. First is average life expectancy at birth.
Longevity gives us a good measure of the ability of the health care system to
address the burdens of ill health for its population throughout the life
course. The second indicator is the mortality rate, in particular the infant
mortality rate, which is the number of children born who survive to one
year of age per one thousand live births. This
is a measure that helps predict whether a society will be able to successfully
propagate.
Of the comparably
developed OECD countries, we find the United States ranking twenty-ninth in life
expectancy at birth for 2014, down from twenty-seventh in 2012. This means
that our health care system is in the bottom quartile of the most developed of
the OECD group when we consider life expectancy.[42] This is well under the life
expectancy of Japan, Canada, Spain, Switzerland, and Italy each with a current
life expectancy at birth greater than 83 years.
We must also recognize that there
are pockets in our own population—among minority groups, regions, and those who
only use emergency health services—who have a significantly lower life
expectancy than the general average. For 2009 findings by “researchers found that white men with 16 or more years of
schooling can expect to live an
average of 14 years longer than black men with fewer than 12 years
of education.(For white and black women with the same educational differences,
that gap was 10 years.)”[43] In 2009 the
life expectancy for whites was 78.8 years while that of blacks was 74.5 years.[44]
So
based on this first measure, the United States health care delivery system is
not performing as well as comparable OECD countries offering universal health
care for their societies. It is performing just slightly ahead of the
“developing” (also known as second- and third-world) nations.
The
United States posts worse results when it comes to the second key healthcare
indicator, child mortality rates. Considering
infant mortality, the United States ranks thirty-third among the comparable
OECD nations with a rate for both sexes of six deaths before age one per one
thousand live births in 2015. If we consider 2016 estimates of infant mortality
for all the reporting countries the United States ranks fifty-seventh out of 225 countries.[45] As with
life expectancy, there are pockets or regions in our own population or among
our minority groups that have “third world” infant mortality rates.
Our
infant mortality is adversely affected by lack of prenatal care (linked to
absence of medical insurance) and a high percentage (12 percent)[46] for
births of preterm babies. Again, these findings point out that the United
States’ private health care delivery system, despite what we are being told
(and sold), is not providing “the
best medical care that money can buy.” That is yet another deception; the data
shows that when considering both indicators (life expectancy and infant
mortality), the United States is not even close to the best.
In earlier studies, the World Health
Report 2000[47]
provides a further assessment of health care systems through its surveys to
determine responsiveness, overall performance, fairness of financial
contributions, and satisfaction with health systems. The United States does
rank number one (1) among reporting countries in “responsiveness to
client/patient expectations.” However, this indicator is for those persons
fortunate enough to have had access to private health care. It does not include
those who did not see medical providers because of inadequate coverage or no
coverage which is estimated at 15.5 percent of our population. The United
States ranked thirty-seventh in the world for performance based on how well its
health care service performs relative to its given level of resources. Only 40
percent of the U.S. population is “satisfied with their health care service.”
This is low compared to Denmark (91 percent), Finland (81 percent), even France
(65 percent) and England (57 percent). In the measure of the degree to which
financial contributions to health care systems are distributed fairly across
the population, “the United States was the lowest (least fair) among the OECD
countries, tied at 54th.”[48]
If we look for
other simple health care indicators such as immunization or vaccination rates,
we find that among the OECD community the United States is tied for twenty-fifth place in percentage of
one-year-olds receiving the DPT3 vaccine, tied for thirty-fifth place for percentage one-year-olds receiving the measles
vaccinations, and fifth for
influenza immunizations among the elderly. Also, the obesity rate among
adults in the United States is the highest among the OECD countries at 35.3
percent (2013) compared to the OECD average of 19.0, a key indicator leading to
higher health care need and spending.[49]
While there are some conflicting
arguments as to how many Americans are without any health care insurance
coverage, the actual number is probably somewhere in the range of 32 million
(2014).[50] This
lack of health insurance is linked to the absence of necessary care and
treatment resulting in the annual death of 45,000 individuals.[51] Also, a
“2014 survey of bankruptcies filed between 2005 and 2013 found that medical
bills are the single largest cause of consumer bankruptcy, with between 18
percent and 25 percent of cases directly prompted by medical debt.”[52] This means the
lack of adequate health insurance is a leading cause of bankruptcy which is
rarely the case in countries with universal healthcare coverage.
Universal
(national) health care started in the United Kingdom in 1948, and many other
countries soon followed. This care is considered the single most vital social service provided by the government in most
industrial nations. Like education and social security (old age pensions)—it is
considered essential for the survival and well-being of a society. Health care
is a matter of fundamental social protection, like the military, the fire
department, and the police. Most other developed nations believe it to be the
duty of government to provide this protection when the private sector delivery
system does not effectively do so. Medicare, Medicaid, and Veterans Affairs (Tricare, CHAMPVA) programs are already
in place here.
The resistance
to universal health care in the United States continues to be fierce. Clearly
the insurance companies and HMOs are
very strong in their opposition to any public program. They do not want to give
up their profits. Another hidden, rarely
discussed issue is the fact that 55.4 percent of the population in 2014
received its health care insurance through employer-based group health
programs.[53]
Employers have been able to leverage these favorable private health care plans
to reduce the likelihood that employees will leave or risk losing their
employment. This is known as “job lock”.[54]
While the early
research findings on this topic were ambiguous, more recent evidence, most
notably the study by Hamersma and Kim, supports the existence of a substantial
job-lock effect associated with EPHI[Employer Provided Health Insurance]…. A
number of carefully designed studies over the past 2 decades did find solid
evidence of a joblock effect. These studies provide a solid basis for the view
that EPHI has a substantial effect in reducing the frequency of job changes.[55]
Group health
insurance can be a powerful incentive (or entrapment), particularly if a family
member has a poor health history or preexisting conditions; hence, businesses
may be reluctant to endorse universal health care, fearing that they may lose
this ability to “capture labor.”
However, with
any foresight, businesses, and the private health care providers ought to
recognize the inevitability of the pressures of a global economy and global
community. The rising, private health care costs carried by U.S. businesses
(through employee benefits) will ultimately undermine their ability to compete
against international firms based in countries with government-supported health
care programs; hence, it is likely that American companies and capitalists will
be the ones ultimately demanding a reduction in the cost burden of their
overhead through instituting a balanced public health care delivery system.
Having navigated the deceptions in
arguments against universal health care, it is difficult to understand how the
opposition has gained so much traction. The propaganda has been ferocious. The
success in disguising the deceptions by a small, powerful group with special
interests, at the expense of the commonwealth of our society, is nothing short
of amazing. The question should never have become, “Can we afford it?” it
should have been framed as “Is it the right thing to do?” Clearly, opposition
to universal health care has no moral high ground or religious values to
support it; it undercuts the foundations of social reciprocity necessary for
living together in a society; it is no more socialist than existing social
services and protections; it provides for new, less risky supporting
opportunities in our capitalist economy; it addresses the exorbitant and rising
costs we are incurring for health care; and it is likely to improve the overall
quality of health care services we receive.
Questions
for Discussion:
1.
Do
you accept a social/moral value based on religious doctrine (or other beliefs)
that we should come to the aid of people experiencing significant loss or
hardship?
2.
Do
you believe that you should pay for/contribute to all benefits (including risk
reduction) that you receive from society and its institutions, either private
or public?
3.
Do
you support “caveat emptor” (buyers
beware) that consumers have no rights to protection against, or regulation of,
unethical or unscrupulous vendors?
4.
Can
you point to one society that exists now, or ever existed, that functioned
successfully as a uniquely laissez-faire
capitalist model without government involvement in economic policy?
5.
Has
universal health care in the United States been proposed as a government-planned,
government-owned, government-run, government employee-based, distribution
system (including government doctors, government medical facilities, etc.)?
What is/was the planned or expected involvement of private contractors or
enterprises?
6.
Is
the good health and well-being of all our citizens a priority for society?
7.
Fewer
than 3,000 people were killed during the September 11 attack. The United States
has committed billions of tax dollars for military and domestic response to
that event. Can you rationally justify those costs yet question or deny funding
for a program that addresses the loss of 45,000 members of our society who die
annually through lack of health care?
8.
Do
you think that only the wealthy
(people who have the means to pay for it) should have health care? And the
constitutional right to life?
9.
How
do you explain the disparity in the costs we pay for private health care
services versus the lower costs in other countries that provide universal
health care? Is this a good use of our resources? How does this affect our
global competitiveness?
10. How do you
explain the disparity in the quality (results) we see in our private health
care services versus the better results in other countries that provide
universal health care?
11. Are the results
for the uninsured specifically responsible for our high rates in mortality and
lower life expectancy?
[1] ©2017, Christopher
M. Dawson, All Rights Reserved. This is an updated adaptation of Chapter 13
from my book, We the People Servants
of Deception: Reconsidering Social Reality (2012).
[2]
http://quotationsbook.com/quote/19478/
[3] Donald H. Taylor, Jr., “At
the Heart of Health Insurance,” Raleigh, NC: The News and Observer, June 07, 2009, 15A.
[4]
George Lakeoff,
Eric Haas, Glenn W. Smith, and Scott Parkinson, “The Logic of the Health Care
Debate,” A Rockridge Institute Report,
October 18, 2007, http://www.cognitivepolicyworks.com/wordpress/wp-content/uploads/2009/06/logic-of-the-health-care-debate.pdf.
[5]
Adam Smith, The Wealth of Nations (1776),
Digireads.com Publishing, 2009.
[6]
John R. Battista,
M.D. and Justine McCabe, Ph.D., “The Case for Single Payer, Universal Health
Care for the United States,” Connecticut Coalition for Universal Health Care, 1999.
[7]
Historic
UK.com. http://www.historic-uk.com/HistoryUK/England-History/SirRobertPeel.htm
[8]
Wikipedia 2010. http://en.wikipedia.org/wiki/Fire_insurance_marks
[9] Jessica C. Smith and Carla Medalia, U.S.
Census Bureau. Current Population Reports, pg. 5, Health Insurance Coverage in the
United States: 2014, U.S. Government Printing Office, Washington,
DC, 2015.
[10]
http://kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/
[11]
T.R. Reid, “Myths
about Health Care Around the World,” The
Washington Post National Weekly Edition, August 31–September 6, 2009, 26.
[12] For
Example see:
[13]
http://www.modernhealthcare.com/article/20150103/magazine/301039980
[14]
True Cost – Analyzing our economy, government policy, and
society through the lens of cost-benefit at http://truecostblog.com/2009/08/09/countries-with-universal-healthcare-by-date/
[15]
https://www.nationalpriorities.org/campaigns/military-spending-united-states/
[16]
Ibid.
[17]
http://books.sipri.org/files/FS/SIPRIFS1604.pdf
[18] https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
[19]
Center for Arms
Control and Non-Proliferation at http://www.armscontrolcenter.org/policy/securityspending/articles/022609/
_fy10_topline_growth_since48/
[20]
HC.R.1 Expenditure
on health at http://www.ecosante.org
Total expenditure on health is defined as the sum of expenditure on activities that—through application of medical, paramedical, and nursing knowledge and technology—has the goals of:
- Promoting health and preventing disease;
- Curing illness and reducing premature mortality;
- Caring for persons affected by chronic illness who require nursing care;
- Caring for persons with health-related impairments, disability, and handicaps who require nursing care;
- Assisting patients to die with dignity;
- Providing and administering public health;
- Providing and administering health programs, health insurance and other funding arrangements.
Total expenditure on health is defined as the sum of expenditure on activities that—through application of medical, paramedical, and nursing knowledge and technology—has the goals of:
- Promoting health and preventing disease;
- Curing illness and reducing premature mortality;
- Caring for persons affected by chronic illness who require nursing care;
- Caring for persons with health-related impairments, disability, and handicaps who require nursing care;
- Assisting patients to die with dignity;
- Providing and administering public health;
- Providing and administering health programs, health insurance and other funding arrangements.
[21]
OECD (2016),
“Health Spending”, in Society at a Glance 2016: OECD Social Indicators, OECD
Publishing, Paris. : http://dx.doi.org/10.1787/soc_glance-2016-24-en
[22]
T.R. Reid (2009), loc.cit.
[23] Sara R. Collins, Ph.D.,
Rachel Nuzum, M.P.H., Sheila Rustgi, Stephanie Mika, Cathy Schoen, M.S., and
Karen Davis, Ph.D., “How Health Care Reform Can Lower the Costs of
Insurance Administration,” The
Commonwealth Fund, Volume 57, (July 16, 2009).
[24] OECD (2015), Health at a Glance 2015: OECD Indicators,
OECD Publishing, Paris. http://dx.doi.org/10.1787/health_glance-2015-en.
[25] T.R. Reid (2009), loc.cit.
[26]
http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective
[27] Referencing: Stephen M. Ayres, M.D., “Health
Care in the United States: The Facts and the Choices,” (Chicago and London: American
Library Association, 1996), 12. South Africa, while providing universal
coverage in principle has not extended universal access in practice by 1996 to
all of its townships. http://dll.umaine.edu/ble/U.S.%20HCweb.pdf.
[28]
John R. Battista,
M.D. and Justine McCabe, Ph.D., loc.cit.
[29]
OECD
(2015), loc.cit.
[30] The Kaiser Family
Foundation and Health Research & Educational Trust, “Employer Health
Benefits, 2016 Summary of Findings.”
[32]
https://www.ssa.gov/oact/cola/awidevelop.html
[33]
Daniel Gross, “The
Private Option,” Slate, September 10,
2009, (www.slate.com),
[34]
The Kaiser Family
Foundation and Health Research & Educational Trust, loc.cit.
[36]
http://www.ctvnews.ca/health/canada-ranked-last-among-oecd-countries-in-health-care-wait-times-1.1647061
[37]
The Commonwealth
Fund, 2005, http://www.commonwealthfund.org/Content/Performance-Snapshots/International-Comparisons/International-Comparison--Access---Timeliness.aspx
[38]
https://www.merritthawkins.com/uploadedfiles/merritthawkings/surveys/mha2014waitsurvpdf.pdf
[39]
ibid.
[40]
Nicholas D. Kristof,
“Health Care: We Could Do a Lot Better” Raleigh, NC: News & Observer, (November 8, 2009): 23a.
[41]
OECD
(2015), Health at a Glance 2015: OECD Indicators,
OECD Publishing, Paris. http://dx.doi.org/10.1787/health_glance-2015-en
[42]
CIA World Factbook (Jan 2011) shows latest
life expectancy of 78.37 years Among all reporting countries the U.S. has a
life expectancy rank of forty-ninth. See http://www.indexmundi.com/g/r.aspx?t=50&v=30
[43]
http://www.businessinsider.com/huge-racial-gap-in-life-expectancy-2014-1
[44] http://www.cdc.gov/nchs/data/nvsr/nvsr62/nvsr62_07.pdf
[45]
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2091rank.html
[46]
March of Dimes,
2010, http://www.marchofdimes.com/pnhec/188_1080.asp
[47]
World Health
Organization, 2000,
http://www.who.int/whr/2000/en/.
[48]
The University of
Maine, “The U.S. Health Care System: Best in the World or Just the Most
Expensive?” 2001, http://dll.umaine.edu/ble/U.S.%20HCweb.pdf
[49]
OECD
(2015), Health at a Glance 2015: OECD Indicators,
OECD Publishing, Paris. http://dx.doi.org/10.1787/health_glance-2015-en
[50]
DPE, Fact Sheet
2016, The U.S. Health Care System: An International Perspective; www.dpeaflcio.org.
[51]
David Cerce, “New
study finds 45,000 deaths annually linked to lack of health coverage,” Cambridge Health Alliance,
(September 17, 2009), http://www.harvardscience.harvard.edu/medicine-health/articles/new-study-finds-45000-deaths-annually-linked-lack-health-coverage.
[52] Austin, Daniel A.
“Medical Debt as a Cause of Consumer Bankruptcy”, Maine Law Review, Vol
67, No. 1 pp 1-23 (2014). Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2515321 cited from DPE Fact
Sheet 2016.
[53] http://www.census.gov/newsroom/press-releases/2015/cb15-157.html
[54]
http://www.aarp.org/content/dam/aarp/ppi/2015-03/JobLock-Report.pdf
[55]
Ibid.
