Saturday, April 25, 2009

The Social Ethic and Covering Everyone: Reinhardt and Himmelstein

Don McCanne, MD, provides a widely-read information service and commentary called “Quote of the Day”. It is distributed by listserve, but is also available through the PNHP website (, a link to which is on the left side of this blog. On a couple of occasions, Dr. McCanne has been kind enough to pick up quotes from this blog. Today I would like to call attention to two recent “QOTD”s and to the testimony before Congress that they cover. On April 22, Dr. McCanne noted the testimony of Uwe Reinhardt, PhD, the Princeton University health economist, before the House Committee on Ways and Means, and on April 23, the testimony of David Himmelstein, MD, from the Harvard Medical School and national spokesperson for PNHP, before the House Committee on Education and Labor’s subcommittee on Health, Employment, Labor, and Pensions. Both of these testimonies are required reading, but I wanted to select a few items to feature here.

In his Introduction, Dr. Reinhardt defines the functions of a modern health-care system, which he categorizes as Financing, Pooling Risks, Purchasing, Producing, and Regulating, and he systematically addresses the first three in his testimony. He addresses the “Social Goals of Health Systems” and notes that “Most industrialized nations in the OECD, along with Taiwan, seek to operate their health systems on the Principle of Social Solidarity [which] means to them that health care is to be viewed as a so-called ‘social good’, like elementary and secondary education in the United States….” but that “…Unfortunately the United States never has been able to evolve a widely shared consensus on the distributive social ethic that out to govern the US health system. The bewildering American health system reflects that lack of consensus.” He addresses not only the bewildering health system, but the bewildering and frequently self-contradictory nature of US ideological beliefs:

“the same citizens and politicians who look askance at 'socialized medicine' reserve the purest form of socialized medicine – the VA health system – for the nation’s allegedly much admired veterans.
[and, I might add, the military itself!] A foreigner may be forgiven for finding this cognitive dissonance bizarre.

"Similarly, there are many Americans, who believe that government does not have the right to impose on them a mandate to have health insurance, all the while considering it their moral right as Americans to receive even horrendously expensive tertiary health care in case of critical need, even if the recipients have no hope of financing that care with their own resources. Foreigners may be forgiven for shaking their heads at this immature and asocial entitlements mentality, which would be rare in their home countries.”

It would be wonderful if people would “own” the implications of their ideological positions, if, for example, the NRA would say “Yes, 30,000 excess gun deaths per year in the US is bad, but it is a price worth paying for the right to keep and bear arms.” They won’t, and neither will be health ideologues.

Dr. Reinhardt then follows his Introduction with an extensive discussion of the health insurance market and forces governing it, and makes a strong argument for the benefits of a “public option”, such as has previously been advocated by President Obama when he was a candidate.

Dr. Himmelstein’s testimony addresses, in part, the flaws of offering such a “public option”, and makes the case for a single-payer system. He notes research that 75% of those who went into bankruptcy as a result of medical costs (about 50% of all personal bankruptcies) were insured. He points to massive savings of eliminating reimbursement bureaucracy, to the tune of about $120 billion for hospitals and $95 billion for doctors, under a single payer system. However, he notes that:

“Unfortunately, these massive potential savings on bureaucracy can only be achieved through a single payer reform. A health reform plan that includes a public plan option might realize some savings on insurance overhead. However, as long as multiple private plans coexist with the public plan, hospitals and doctors would have to maintain their costly billing and internal cost tracking apparatus. Indeed, my colleagues and I estimate that even if half of all privately insured Americans switched to a public plan with overhead at Medicare’s level, the administrative savings would amount to only 9% of the savings under single payer.”

9%! Why go with a “reform” that leaves over 90% of potential savings on the table?

Himmelstein goes on to note that
“While administrative savings from a reform that includes a Medicare-like public plan option are modest, at least they’re real. In contrast, other widely touted cost control measures are completely illusory. A raft of studies shows that prevention saves lives, but usually costs money. The recently-completed Medicare demonstration project found no cost savings from chronic disease management programs. And the claim that computers will save money is based on pure conjecture. Indeed, in a study of 3000 U.S. hospitals that my colleagues and I have recently completed, the most computerized hospitals had, if anything, slightly higher costs.”

He also addresses the popular (among pundits, not people!) “mandate” method of requiring everyone to buy health insurance, as has been done in Massachusetts. I have previously addressed how the lack of primary care providers makes the “universal” system in Massachusetts untenable (Dec 11) and how forcing everyone to purchase health insurance from them is the preferred “solution” for the insurance industry (Apr 5). Himmelstein clearly demonstrates that this is not a solution:

My home state of Massachusetts’ recent experience with health reform illustrates the dangers of believing overly optimistic cost control claims. Before its passage, the reform’s backers made many of the same claims for savings that we’re hearing today in Washington. Prevention, disease management, computers, and a health insurance exchange were supposed to make reform affordable. Instead, costs have skyrocketed, rising 23% between 2005 and 2007, and the insurance exchange adds 4% for its own administrative costs on top of the already high overhead charged by private insurers. As a result, one in five Massachusetts residents went without care last year because they couldn’t afford it. Hundreds of thousands remain uninsured, and the state has drained money from safety net hospitals and clinics to kept the reform afloat.”

We can keep it up. We can pretend, incorrectly as Reinhardt notes, that we all want the same thing. We do not. Insurance companies want big profits. Politicians want contributions from insurance companies. We the people want everyone to have access to high quality health care at a cost that is affordable to us all. So far, a single payer system is the one way that has been suggested to do that.

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