Band-Aid Measures

[Guest guest]

http://www.alternet.org/story/19370/

 

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.

© 2004 Independent Media Institute. All rights

reserved.

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