[Mb-civic] Band-Aid Measures

Wed Jul 28 20:09:45 PDT 2004

Band-Aid Measures 

By Steffie Woolhandler and David Himmelstein, In These Times
 Posted on July 28, 2004, Printed on July 28, 2004
 http://www.alternet.org/story/19370/

Editor's Note: This article is part of a feature package from In These Times
called "8 Ways to Build a Better Body Politic."

Like Capistrano's swallows, the Democrats always return to health reform.
Unfortunately, this year they're showing little more brain power than the
birds.

Don't get us wrong, we're no fans of President George Bush's health agenda:
Ship tens of billions of federal dollars to a panoply of healthcare firms,
privatize Medicare and dangle skimpy tax credits in front of the 44 million
uninsured Americans. But Kerry seems intent on refilling a failed
prescription for reform: by proposing to give hundreds of billions to
private insurers in exchange for measly coverage for some of the uninsured.

Our healthcare system is so sick that even people with good insurance are
feeling the fever. Premiums for employers and their workers are rising 12
percent, even 18 percent per year. Employers have downsized coverage by
super-sizing copayments and deductibles. Insurance often proves illusory
when it's most needed  payment denials, visit limits, loopholes and policy
cancellations leave millions stuck with huge medical bills despite what they
thought was good coverage. Most people's choice of doctors and hospitals is
restricted. Seniors can't afford drugs, Medicaid recipients face draconian
cuts and everyone's rushed out of the hospital.

Investor-owned healthcare has flourished, despite definitive evidence that
it raises both costs and death rates. And bandit CEOs regularly raid our
health-care system, making off with seven- and even eight-figure incomes as
their reward for cooking the books, defrauding Medicare and abusing patients
to inflate profits.

Bush's single healthcare achievement, passage of the $534 billion Medicare
prescription drug bill, already is unravelling. Double-digit yearly price
increases  even for older drugs  already have eaten up the paltry savings
(about 15 percent) available from the recently introduced Medicare drug
discount cards. Even the massive flow of federal funds that will commence in
2006, when the full drug benefit kicks in, will only get seniors back where
they started last year in terms of drug spending.

Why will $534 billion in new federal spending (over 10 years) buy so little?
First, the new drug coverage will be purchased through private insurance
plans with overhead costs that average four times that of Medicare. Second,
the bill prohibits Medicare from negotiating with drug companies to lower
their prices (and effectively bans imports of Canadian drugs on the
preposterous pretext that they're unsafe). Both the Canadian government and
our own Defense Department have used their purchasing clout to garner volume
discounts. Prohibiting such bargaining assures drug firms of hundreds of
billions in excess profits.

Finally, the bill hands Medicare HMOs  which have been ripping off Medicare
for years  an extra $46 billion. Since 1985, Medicare has paid HMOs for
seniors who choose to enroll. The payment formula has allowed HMOs to
collect far more than it would have cost the taxpayers to care for these
seniors in the traditional Medicare program. The Congressional Budget Office
and the General Accounting Office have estimated these extra costs at about
$2 billion per year. Yet HMOs  burdened by administrative overhead far
higher than Medicare's  complained they couldn't make a profit from
Medicare patients.

Bush's solution? Send them more money. So in 2004, Medicare will pay HMOs an
extra $552 above the cost of traditional Medicare for each senior they
enroll, according to an estimate by the Commonwealth Fund.

Incredibly, the Republicans (and many Democrats) describe this corporate
welfare program as a "pro-competition" health policy. Drug firms are granted
patents that shield them from generic competitors, foreign drug imports are
banned, government is precluded from negotiating prices and HMOs are given
huge subsidies to compete unfairly against Medicare  all in the name of
competition.

Sadly, many Bush initiatives merely continued Clinton's policies. Kerry
promises more of the same. He proposes to spend about $65 billion annually
to expand coverage through two mechanisms: One, offering government
subsidies for private insurance; two, expanding Medicaid. As a nod to
middle-class Americans, he'd try to hold down private premiums by having the
feds pick up the tab for any patient whose care costs more than $50,000  a
misguided effort that shifts some costs to the taxpayers but leaves control
in the hands of private firms. Kerry's massive new spending would leave at
least 17 million uninsured (by his own estimate) and tens of millions more
with inadequate coverage, and stimulate the malignant growth of healthcare
costs.

In contrast, a single-payer national health insurance (NHI) program could
simultaneously cover all of the uninsured, upgrade coverage for most other
Americans and save money. Under NHI, everyone would be covered for care at
any hospital, doctor's office or clinic without copayments or deductibles.
Patients would enjoy a free choice of provider, and doctors and nurses would
be freed from the massive bureaucracy that encumbers care and wastes money.
For-profit ownership of hospitals and other clinical facilities would be
proscribed, and private health insurers and most HMOs would be eliminated 
saving billions now squandered on profits and executives' incomes, while
upgrading quality.

Surprisingly, universal coverage under NHI would not increase health costs.
At $6,200 per capita, Americans already spend nearly twice as much for care
as do Canadians, Australians, Germans, Swedes and the Swiss  all of whom
enjoy universal coverage and lower death rates than ours. Much of the cost
difference is due to our mammoth health bureaucracy, which wastes upward of
$300 billion annually. NHI could slash bureaucracy by replacing the current
welter of private plans with a single public payer and simplifying payments.
Even the Congressional Budget Office and the General Accounting Office
concede that NHI could save enough on bureaucracy to cover all Americans for
what we're now spending.

On the contrary, Kerry's plan would actually boost bureaucracy. He'd funnel
hundreds of billions of additional public dollars through wasteful private
plans. And he'd do nothing to cut the tens of billions that doctors and
hospitals waste on insurance paperwork. Kerry claims administrative savings
for his plan  through computerized billing and claims processing. But such
claims are not credible; more than two-thirds of all healthcare bills
already are filed electronically. It's not sending the bill that's
expensive. It's the insurance advertising and sales, utilization review,
eligibility determination, obtaining pre-approvals for referrals,
cost-tracking, and co-payment collections. All would continue under Kerry.

For the 85 percent of Americans who currently have insurance, Kerry offers
virtually nothing. No plausible plan to upgrade their coverage, slow premium
increases, bring down drug costs, improve quality, or expand the number of
nurses. He'd just ask taxpayers facing skyrocketing premiums to chip in for
the coverage of the uninsured.

Much of what Kerry is proposing already was tried, and failed miserably.
Medicaid expansion has been pushed by Democrats for decades. Since 1987,
11.4 million people have been added to the Medicaid rolls, and Medicaid
spending has risen from $50 billion to $228 billion, eating a hole in state
budgets. Yet the number of uninsured has grown by 10.2 million people during
this period, and Medicaid has remained second-class coverage, segregating
the poor. On many measures, Medicaid patients fare no better than the
uninsured. Medicaid should be replaced by mainstream coverage, not expanded.

Subsidies for private coverage also have a dismal track record. A 2002
federal program offers to pay 65 percent of premium costs for workers who've
lost jobs due to foreign imports. As of December 31, 2003, 8,874 of the
500,000 eligible workers were taking advantage of the subsidy. With private
coverage costing about $10,000 per family, few low-income workers can afford
insurance, even with a big boost from government.

NHI isn't just good policy, its good politics. According to a recent
Washington Post/ABC News poll, 62 percent of Americans favor "a universal
health insurance program, in which everyone is covered under a program like
Medicare that's run by the government and financed by taxpayers."

Of course, NHI would be a death blow to the health insurance industry and it
would threaten the super-profits of powerful drug and hospital firms.
Presumably, that is why only Ralph Nader and Dennis Kucinich have been
willing to buck the special interests, and say what Americans long to hear
about health care: NHI can succeed. Healthcare is a right, not a commodity.