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CAN THE FREE MARKET RESCUE THE AMERICAN HEALTH CARE SYSTEM?
10/23/2007
PART TWO: CRISIS IN THE AMERICAN HEALTH CARE SYSTEM
In the United States of America, we say with pride that we have the best medicine in the world, just like we say we have the best military, the best National Parks, the best universities, the best malls, etc. Certainly we can point with pride to the continual improvements in medical technologies used in both diagnoses and treatment, and the constant development of new medications. What we cannot say is that we have the best health care system in the world.
While new technologies add to the prestige of American medicine and do save many lives, they also greatly increase the cost of medicine as well as the cost of health insurance, leaving many without access to affordable health care. The drawback to all this wonderful technology and increasingly expensive health care, is that in order for some of us to utilize this medicine, we have to leave others out of the system, or as economist Paul Krugman says "We have to rob Peter of basic care in order to pay for Paul's state-of-the-art treatment." So while we may have the best medicine, we certainly don't have the best health care system. France, Germany, Canada and Britain, for example, pay far less for medical care (half as much in most cases) and yet have longer life expectancies and lower infant mortality. All have a system of universal coverage.
We cannot continue as the only modern, industrial nation without a universal system of health care. To allow the system to remain as it is today is not an option because of the following realities:
1. THE CURRENT SYSTEM IS TOO EXPENSIVE
In 2004, the United States spent 16 percent of GDP on health care, compared to 5.2 percent in 1960. The United States spends more on health care per person than any of the European countries, as much as two and a half times per person. With that much spending one might expect that Americans would be healthier, but the United States ranks 37th in measurements of health care, according to the World Health Organization.
The enormous cost of medicine in the United States is the result of many intersecting factors.
New pharmaceuticals for serious physical diseases like cancer, diabetes, heart disease, arthritis, Parkinson's Disease, and Alzheimer's Disease, as well as new drugs for psychiatric conditions like anxiety, depression, post traumatic stress, attention deficit disorder, and drugs for quality of life conditions such as erectile dysfunction and hypoactive sexual desire are all bringing added costs to the health care system. And because new medications have up to 17 years of patent protection, there can be no real competition for lower drug prices until a patent runs out.
New and better screening tests, and better treatments for cancer, arthritis, heart disease, organ failure, and other chronic diseases are raising the cost of care. In a sense, we are the victims of our own success. As more and more excellent research develops effective treatments for once fatal diseases or chronic conditions, and as these treatments become known, the general public not only wants them, they demand them. Kidney failure, which used to be fatal, is now being treated routinely with three times a week dialysis provided at the thousands of dialysis centers in operation around the country. Chemotherapy to cure or manage cancer as a chronic disease is routine. Organ transplants are common. Diabetes is on the rise in both children and adults, as is treatment for diabetes which now accounts for one tenth of all health care costs. And, as we develop better screening tools, which are also expensive, we uncover more diseases which cost money to treat.
People are living into their eighties and nineties because of better technology and better medications to control the diseases associated with old age, diseases that likely killed their parents and grandparents at much younger ages. (Some say that we have not really increased life expectancy in the United States, we have simply extended the dying process by thirty years.) It is not at all unusual, for example, for seniors to be on a dozen or more daily medications. Older Americans are also routinely undergoing expensive treatments such as transplants and joint replacements. All of this is enormously costly for the Medicare system and will only get costlier with the aging of the baby boomers.
And finally, administrative costs are extremely high, especially in the private insurance sector where about 15 percent of the cost of insurance premiums goes to administrative expenses. Those expenses include the cost of underwriting and creating benefit packages as well as reviewing and paying or denying claims. Medicare and Medicaid, by contrast, only spend about 4 percent of their budget on administrative costs.
2. THANKS TO THE AMERICAN LIFE STYLE, AMERICANS ARE GETTING SICKER EACH YEAR.
There is, as mentioned above, an obesity epidemic in this country, and the epidemic has now infected millions of children, who as a result will have serious medical problems all of their lives. While many conservatives would like to blame obese children for "not being able to put down the fork" as one C-SPAN caller did, the main reason for childhood obesity has to do with what is on that fork, provided by the hi-fat, hi-sugar junk food manufacturers of our free market system, who advertise on children's television programs and install vending machines in schools.
Poverty is also one of the contributors to childhood obesity. While it might seem logical that poor children would be underfed and thus thin, in reality it is just the opposite. Poor families cannot afford to shop for healthy foods such as fresh fruits and vegetables, which may also be hard to find in their neighborhoods, and so must stretch the food budget by buying inexpensive but sugar and fat laden foods.
Other factors contributing to obesity in children are that many schools have cut gym classes out of their curriculum because they must cut costs, and the reality that in our economy many households must have two wage earners, leaving children unsupervised to stay inside (rather than run around outside and get exercise) and watch television or play video games till mom and dad get home. As a result of this obesity epidemic, type 2 diabetes (the kind adults usually get) is on the rise in children, as are other disorders such as arthritis normally seen only in adults.
It isn't only children who have problems with obesity and the health problems that accompany it. Adults do as well. Overbooked American workers often rely on unhealthy fast food or dine-in restaurants with super-sized portions for at least one meal a day. Americans are depressed, stressed, and time starved, often turning to Starbucks to provide the stimulants to keep them going. They also sit behind desks all day, and in front of the television at night, where they get no exercise. All of these habits will be costly as people age and their bodies manifest the effects of poor health habits.
Other factors also contribute to health problems. Environmental pollutants contribute to the increased incidence of asthma and cancer diagnoses, as does the use of tobacco, a quintessential "free market" product, whose producers (those small southern tobacco farmers) have received yearly subsidies from the federal government. Hi rates of alcoholism and drug addiction, and related health problems, also contribute to increased health care costs.
3. NOT ALL AMERICANS HAVE ACCESS TO HEALTH CARE
There is a difference between the quality of our medicine, or the quality of medical care for those who can afford it, and the quality of the overall health care system, which includes not just actual care, but also access to that care. In our country, that access comes mainly through health insurance, either provided by one's employer, purchased individually, or provided to the poor and elderly by the government.
As the costs of medical treatment rises, three things with respect to health insurance become increasingly problematic:
1. Insurance companies raise rates to cover their increased losses (the term they use for the payments they make to doctors and hospitals.)
2. Insurance companies refuse to cover patients with pre-existing conditions, or charge rates these patients cannot possibly afford.
3. More corporations of all sizes are eliminating health insurance as a benefit, leaving many more Americans to fend for themselves in the health insurance market where the cost of individual policies is much higher than the cost of group policies once provided by employers.
Many companies can no longer afford, or don't want to pay, the increased health insurance premiums for their employees. In the 1990s, for example, Wal Mart instituted new practices with respect to insuring their employees: insuring only full time workers who had been employed more than two years, and charging high premiums for others who wished to secure the insurance. Since then, many other small businesses and large corporations are finding ways to stop insuring their workers. Unions that used to demand health insurance for their members are becoming rare, and when former union members who lose their health insurance must go out to the marketplace and find an individual plan, they find those plans prohibitively expensive.
As a result, the unemployed, the self-employed, and increasingly the employed do not have health insurance. Most fall into a no man's land, making too much money to qualify for the government programs, and too little money to be able to afford an individual policy. Today, forty-seven million are uninsured.
4. LARGE NUMBERS OF UNINSURED AMERICANS MEAN HIGHER COSTS FOR EVERYONE
Uninsured citizens have only a few choices with regard to health care. They either forgo treatment when they need it, getting sicker and often dying prematurely, or they go to the emergency room where they cannot be turned away. Once they arrive at the emergency room, they may be asked to put their bill on a credit card, if they have one, so that the hospital will be paid. However, once they get the bill from the credit card company, they may be unable to pay, and forced to file bankruptcy, which contributes to higher credit card fees for all of us.
The other option is that they simply cannot pay their hospital bill. When large numbers of uninsured do not pay their emergency room fees, a hospital will pass on those fees to the rest of its insured patients, or in extreme cases, find it must close its doors. Higher hospital fees for insured patients will ultimately mean insurance rates go up. Higher insurance rates and closed hospitals hurt us all.
Those without health insurance also delay going to the doctor, and get little or no preventative care. They do not have routine screening tests which could detect problems early on and thus reduce what it costs to treat these conditions at later, critical stages. For all of these reasons, the uninsured end up being a very expensive drain on the health care system.
5. THE INSURANCE INDUSTRY INCREASINGLY FUNCTIONS IN AN ADVERSARIAL MANNER
Another problem with health insurance is that too often it functions in an adversarial way. Payouts to doctors and hospitals are called "losses" in the insurance industry where everything possible is done to prevent those losses by denying or delaying claims, refusing to cover certain services, refusing to cover individuals with pre-existing conditions, and charging higher and higher premiums to the healthy and especially the unhealthy.
You can't get treatment at most doctor's offices without health insurance, but even with insurance, you may not get care as HMOs may refuse to allow certain services. Also, claims are routinely denied because of simple mistakes on an insurance form or other technicalities that insurance companies use to deny or delay payment. This puts patients and doctors on one side and insurance companies on the other side of what is increasingly becoming a game of "pass the buck" and make the other guy pay. Because of the adversarial nature of health insurance, doctors' offices and hospitals have to hire multiple experts just to manage the complicated pre-approval and billing paperwork. This, of course, raises the cost of health care.
6. THE MOST IMPORTANT PLAYERS ARE THE LEAST POWERFUL
The most important players in the health care system ought to be the patients and the providers. Patients deserve to have access to the excellent medicine that this country can provide, and providers deserve to be paid an appropriate amount for their expertise as well as their time and dedication. Yet we find that the ones with the most power, in terms of access and control of the purse strings are the pharmaceutical corporations, the technology corporations, the insurance industry, and the lobbyists who represent them on Capitol Hill.
Conservatives love to say they don't want the government to take choice away from the American people, yet it is not only the government that is taking away choice, it is the corporations involved in medical care. Government takes away choice by protecting the ability of pharmaceutical and insurance companies to charge whatever they choose to gain the highest profit. Corporations, for their part, lobby Congress to pass laws, or not pass laws, so that they remain unregulated and can thus operate with little or no regard for consumers (i.e. patients).
Allowing pharmaceutical and insurance corporations to call the shots in terms of access to and cost of health care, regardless of how many Americans are excluded from the system, would be like allowing military contractors to determine what is needed by the soldiers in the field, based only on what is best for their bottom line. Neither is good policy.
WHAT CAN WE EXPECT TO HAPPEN IF WE DON'T REFORM HEALTH CARE?
If we do nothing with respect to the health care system, we can expect that medicine will become more and more expensive and health insurance rates will continue to rise. In addition, more and more people will be pushed into the Medicaid system, or into the ranks of the uninsured. The federal government, with increased enrollment in both Medicaid, as people lose their health insurance, and Medicare, as the baby boomers age, will by default rather than careful planning assume a larger responsibility for health care in this country. If we don't make a serious effort to find a way out of this mess, the disjointed and inefficient system of government and private insurance will limp on until it collapses.
So what can be done? Liberals and conservatives, democrats and republicans, have very different ideas. In the next segment of this five part series, I will look at what the conservatives have to say about the health care crisis.
-Ellen Terich
All content © 2005 outragedcitizen.com
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