[Mb-civic] Band-Aid Measures: Bush health plan disaster, Kerry too

Wed Jul 28 22:10:29 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.

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