The Health of Nations

[Donutboy 0]

The Health of Nations

By PAUL KRUGMAN

Published: February 17, 2004

The Economic Report of the President, released last week, has drawn criticism on several fronts. Let me open a new one: the report's discussion of health care, which shows a remarkable indifference to the concerns of ordinary Americans — and suggests a major political opening for the Democrats.

According to a recent Gallup poll, 82 percent of Americans rank health care among their top issues. People are happy with the quality of health care, if they can afford it, but they're afraid that they might not be able to afford it. Unlike other wealthy countries, America doesn't have universal health insurance, and it's all too easy to fall through the cracks in our system. When I saw that the president's economic report devoted a whole chapter to health care, I assumed that it would make some attempt to address these public concerns.

Instead, the report pooh-poohs the problem. Although more than 40 million people lack health insurance, this doesn't matter too much because "the uninsured are a diverse and perpetually changing group." This is good news? At any given time about one in seven Americans is uninsured, which is bad enough. Because the uninsured are a "perpetually changing group," however, a much larger fraction of the population suffers periodic, terrifying spells of being uninsured, and an even larger fraction lives with the fear of losing insurance if anything goes wrong at work or at home.

The report also seems to have missed the point of health insurance. It argues that it would be a good thing if insurance companies had more information about the health prospects of clients so "policies could be tailored to different types and priced accordingly." So if insurance companies develop a new way to identify people who are likely to have kidney problems later in life, and use this information to deny such people policies that cover dialysis, that's a positive step?

Having brushed off the plight of those who, for economic or health reasons, cannot get insurance, the report turns to a criticism of health insurance in general, which it blames for excessive health care spending.

Is this really the crucial issue? It's true that the U.S. spends far more on health care than any other country, but this wouldn't be a bad thing if the spending got results. The real question is why, despite all that spending, many Americans aren't assured of the health care they need, and American life expectancy is near the bottom for advanced countries.

Where is the money going? A lot of it goes to overhead. A recent study found that private insurance companies spend 11.7 cents of every health care dollar on administrative costs, mainly advertising and underwriting, compared with 3.6 cents for Medicare and 1.3 cents for Canada's government-run system. Also, our system is very generous to drug companies and other medical suppliers, because — unlike other countries' systems — it doesn't bargain for lower prices.

The result is that American health care, which at its best is the best in the world, offers much of the population a worst-of-all-worlds combination of insecurity and high costs. And that combination is getting worse: insurance premiums are rising, and companies are becoming increasingly unwilling to offer insurance to their employees.

What would an answer to the growing health care crisis look like? It would surely involve extending coverage to those now uninsured. To keep costs down, it would crack down both on drug prices and on administrative costs. And it might well cut private insurance companies out of the loop for some, if not all, coverage.

But the administration can't offer such an answer, both because of its ideological blinders and because of its special interest ties. The Economic Report of the President has only negative things to say about efforts to hold down drug prices. It talks at length about insurance reform, but it mainly complains that we rely too much on insurance; it says nothing about either expanding coverage or reducing insurance-company overhead. Its main concrete policy suggestion is a plan for tax-deductible health savings accounts, which would be worth little or nothing to a vast majority of the uninsured.

I'll talk more about alternatives for health care in future columns. But for now, let's just note that this is an issue the public cares about — an issue the administration can't address, but a bold Democrat can.

[TitanTiger 21,068]

Let me say this: I'm not ideologically opposed to universal health care. I think it's a noble goal and we should find ways to insure as many people as possible. The costs of health care are so exorbitant. I know people who own small businesses that simply cannot afford to provide a health care plan for their employees right now. They don't have the buying power or they're just breaking even at this point in the history of the business. I know others who do provide some health care, but they are paying a lot for it and it's not exactly the Cadillac of plans...high monthly premiums, large deductibles, and they still pay 20% after the deductible is met.

So, I'm open to ideas. The thing that I am opposed to right now is a government run health care system, ala Canada. This is not a system to emulate. Neither is Britain's. The costs are an enormous burden on the taxpayers, the standard of care is much lower than it is here, the wait for even the most basic of procedures is unbearably long...it's just not a workable plan.

The problem we have right now is that both sides are so dug in, we can't seem to come up with a workable solution. There is a sizeable portion of the left that simply will not go along with anything short of completely socialized medicine. They view any compromise as a hindrance to their ultimate goal. They are afraid that if they go along with measures such as allowing businesses to negotiate across state lines with insurance companies on a national basis, that people will be happy enough that they won't want to continue pushing for a gov't run system. There's also a sizable portion of the right that is so opposed to the gov't having any role, they don't vote for measures that allow the federal gov't to facilitate things...they view it as taking power away from states.

I don't want people who need health care and are working hard to provide for their families to be unable to afford it. I'm not talking about lazy people who are always sucking on the gov't teat here. Frankly, that portion of the population, whatever it is, can figure things out for themselves. You can't make people work. But there's a larger group of hard working people, people who own businesses and those who work for them, who need the peace of mind that comes from having a good health care plan and simply cannot afford it. We need to fix that.

[DKW 86 7,867]

Health Care will never be denied anyone at any Hospital recieving even $1.00 in Federal money. Fed Law. We have a safety net now. We have the world's best health care. Why do we need to become the world's most expensive healthcare provider, and given US history, the worst managed, just so a few limousine liberals can feel better about themselves?

I am a Vet. I know folks that have gone to the VA Hospitals. That is a great example of health care managed by the govt. It inhales!

[channonc 466]

Ok, first off, there is a public health system. There are several health clinics around in most every county in the country. You just have to be prepared to wait all day for service, but it is free of charge.

Secondly, with the rise of health care costs its no wonder many Americans are being left out in the cold. Companies are beginning to cut coverage or no longer paying for insurance premium increases. They pass that on to their employees. Finding your own insurance plan isn't that expensive if you are single, however, if you have a family you need to insure, YIKES!! Insurance companies keep uping the cost of coverage while cutting what it will actually cover. Finally, hospitals and health clinics are the only industry I can think of that buy the newest best thing as soon as it arrives on the market. This in turn ups costs for them which they pass on to the consumer. Malpractice insurance is millions of dollars for a doctor, which they have no choice but to charge higher fees just to cover this. So this is only some of the problems with our health care system. In my opinion, mostly due to insurance companies.

Right now all sides involved: doctors, insurance companies, patients, hospitals-- can't seem to find a solution on their own. Unfortnately, they all expect and are beginning to demand the government do something about it.

While I am not a big fan of universal healthcare, it seems to be the least complicated solution, since those in the industry WANT the government to do something about rising healthcare costs. Its easier to wipe the current system and just give everyone the same thing as opposed to trying to negotiate with all of those involved to try to find a solution (which by the way I do think would be best). Right now, none of the sides seem to want to find a solution, patients are demanding health care now.

In my opinion, countries such as Canada and Sweden, who are the most mentioned as far as universal health care, have 1) higher tax rates by a lot and 2)

have a population about 1/3 of the US. Lastly, my dad used to be head of a plant in Canada, and his plant manager had a heart attack, the third one of his life. He was in desperate need of bipass surgery, but the waiting list was over 2 years. The doctor told him the only way he could move to the top of the list is if he had a heart attack that was so bad that he was on his death bed. Until then, he was placed on oxygen, given blood thinners and told to pray he has another heart attack so he could move up the waiting list.

Honestly, this is not the type of health care I think we really want as a country. Also, talk about a true class warfare, those who are ultra wealthy, will still hold on to their private doctors and be treated in private VERY expensive clinics, while forcing those who used to not depend on the public system into it. Trust me, hollywood stars and politicians will still continue with their current health care.

[TitanTiger 21,068]

channoc, in fact the last thing you said happens in Canada. The richest Canadians come to the US and pay for better health care. They generally don't take part in their home country's system at all...except of course, by footing the bill for it.

[DKW 86 7,867]

I would listen to channonc, they are very well connected in this debate as far as I know.

[Tigermike 3,657]

Ok, first off, there is a public health system. There are several health clinics around in most every county in the country. You just have to be prepared to wait all day for service, but it is free of charge.

Obviously the USPHS is still out there doing something. If the govt needs to or should do something, there already is a Dept in place to take the initiative. Do we really want another bureaucracy?

http://www.usphs.gov/

http://www.surgeongeneral.gov/phs200/

Right now all sides involved: doctors, insurance companies, patients, hospitals-- can't seem to find a solution on their own. Unfortnately, they all expect and are beginning to demand the government do something about it.

If they want it why not have them sign up for the USPHS?

Right now, none of the sides seem to want to find a solution,

That is the problem, none of them wants to give up their slice of the pie.

Why not just sign up every citizen to the same health care insurance that senators and congressmen have? Or even the Fed Employees Insurance program? I would like to be in one of those programs.

[Tiger Al 0]

Titan, when you say "socialized medicine" what do you mean? When I hear that term I think of the way medicine is performed in the military and the VA. Government owned hospitals, all personnel are gov't. employees, etc. Everything is owned by the government. If that's what you mean when you use that term, then I would agree, that it's not the direction we should go.

I think the universal healthcare most of the Democrats have proposed that I've seen only apply to the actual paying of the bill, a la BCBS, Aetna, etc. Doctors, hospitals, clinics, labs, etc. would still be owned and run by the same people who would otherwise do it.

We already have a system in place called Medicare. It seems to me that it would be a simple matter to expand eligibility for it. Would it cost money? Yes. I think this becomes more of a moral question than it does a financial one, though.

[channonc 466]

I think the universal healthcare most of the Democrats have proposed that I've seen only apply to the actual paying of the bill, a la BCBS, Aetna, etc. Doctors, hospitals, clinics, labs, etc. would still be owned and run by the same people who would otherwise do it.

We already have a system in place called Medicare. It seems to me that it would be a simple matter to expand eligibility for it. Would it cost money? Yes. I think this becomes more of a moral question than it does a financial one, though.

Al, I must admit to not following this as closely as some. However, I don't get the impression that this is what is being proposed.

However, if that is the case, (and like I said, I am not completely up on this debate as much as I probably should be) I would be for it. But, what I seem to be hearing on Capitol Hill is a system replacement. A complete wipeout of what we have now as a healthcare system. But I am first to admit, I could be wrong.

I am definately for expanding the Medicare program as a temporary solution. People need healthcare coverage, period. However, I also think that one of the major problem is the insurance industry and unfortunately, they are the ones putting up the biggest fight toward change. Ultimately, we have to figure out why the healthcare costs are rising so rapidly, and figure out how to properly regulate the insurance industry. JMO.

[Tigermike 3,657]

But, what I seem to be hearing on Capitol Hill is a system replacement. A complete wipeout of what we have now as a healthcare system.

What are they talking about replacing with? Any thoughts there? Just curious.

[CCTAU 3,469]

Have ANY of you ever tried using Medicare. It's just as convoluted as the rest except MANY thieves/doctors areout there looting it because its managed so poorly. You would think with all those employess the feds could investigate the fraud as good as a private entity.

The first grand step in controlling costs is controlling malpractice insurance and tort reform as far as the medical industry goes. There are a LOT of docs still out there doing it for the love of people that simply just quit and sign on to a hospital emergency room because insurance costs are so high.

[Tiger Al 0]

Have ANY of you ever tried using Medicare. It's just as convoluted as the rest except MANY thieves/doctors areout there looting it because its managed so poorly. You would think with all those employess the feds could investigate the fraud as good as a private entity.

The first grand step in controlling costs is controlling malpractice insurance and tort reform as far as the medical industry goes. There are a LOT of docs still out there doing it for the love of people that simply just quit and sign on to a hospital emergency room because insurance costs are so high.

CCT, do you know how EASY it is to defraud any insurance company, not just Medicare?

[Tiger Al 0]

I think the universal healthcare most of the Democrats have proposed that I've seen only apply to the actual paying of the bill, a la BCBS, Aetna, etc. Doctors, hospitals, clinics, labs, etc. would still be owned and run by the same people who would otherwise do it.

We already have a system in place called Medicare. It seems to me that it would be a simple matter to expand eligibility for it. Would it cost money? Yes. I think this becomes more of a moral question than it does a financial one, though.

Al, I must admit to not following this as closely as some. However, I don't get the impression that this is what is being proposed.

However, if that is the case, (and like I said, I am not completely up on this debate as much as I probably should be) I would be for it. But, what I seem to be hearing on Capitol Hill is a system replacement. A complete wipeout of what we have now as a healthcare system. But I am first to admit, I could be wrong.

I am definately for expanding the Medicare program as a temporary solution. People need healthcare coverage, period. However, I also think that one of the major problem is the insurance industry and unfortunately, they are the ones putting up the biggest fight toward change. Ultimately, we have to figure out why the healthcare costs are rising so rapidly, and figure out how to properly regulate the insurance industry. JMO.

The key there is "that I've seen." There may be a lot more that I haven't seen. Are some of the ones you know about going to basically wipe out BCBS and the other payors? If so, I can see why the insurance companies would oppose everything!!!

[channonc 466]

Have ANY of you ever tried using Medicare. It's just as convoluted as the rest except MANY thieves/doctors areout there looting it because its managed so poorly. You would think with all those employess the feds could investigate the fraud as good as a private entity.

The first grand step in controlling costs is controlling malpractice insurance and tort reform as far as the medical industry goes. There are a LOT of docs still out there doing it for the love of people that simply just quit and sign on to a hospital emergency room because insurance costs are so high.

CCT, do you know how EASY it is to defraud any insurance company, not just Medicare?

Well said TigerAl.

[TitanTiger 21,068]

CCT, do you know how EASY it is to defraud any insurance company, not just Medicare?

Anyone have any stats on the amount of fraud that private insurors like BCBS have versus Medicare?

[CCTAU 3,469]

CCT, do you know how EASY it is to defraud any insurance company, not just Medicare?

Anyone have any stats on the amount of fraud that private insurors like BCBS have versus Medicare?

Having to deal with both. I will tell you that the private ones ask a helluva lot more questions than the feds.

[MDM4AU 337]

Just A Little FYI

2003 Health Care Cost Survey Conducted by Towers Perrin

•Survey results, based on responses from Fortune 1000

companies, show that the average cost of employers health

benefit plans rose 16% in 2003

• Average cost per employee for all types of health plans

increased $833 to $6,384, which equals $3,156 a year for

employee-only coverage and $9,144 for family coverage

• Towers Perrin estimates that health care costs per active

employee in 2004 are expected to rise to $7,308, which is

$742 higher than in 2003

• The biggest cost drivers are prescription drugs, medical

innovation and plans that give patients freedom to choose

health care providers

Center for Studying Health System Change

Outpatient Hospital Spending 37%

Inpatient Hospital Spending 14%

Physician Services 27%

Prescription Drug Spending 22%

(% of overall increase in Healthcare spending)

Health care spending per privately insured grew four times faster than the overall economy

Hospital costs were the leading factor

American Association of Health Plans (AAHP) in April 2002

47% of Increase in health insurance premiums comes from rising provider expenses, RX and Medical Advancments, and Litigation (approx. $32 Billion)

18% of Increase in health insurance premiums comes from general inflation (approx. $12 Billion)

The company I work for operated on $.05 on the dollar. Well below the reported average. How many companies can or wish they could say that?

[Tiger Al 0]

What company do you work for?