GreenSpot

Glen, like Scott, I work in the industry too. The consumer-driven plan that some companies are implementing in effect makes the risk to the employer more stable. However, in that system the responsibility then lies with the consumer to reduce their need to visit a physician through wellness programs, diet, exercise, etc. While I acknowledge that this idea works fairly well for the young and fit, but perhaps not so much for families and the elderly. I believe that stabilizing or reducing costs requires the number of lawsuits to go down.

Scott,
Do you think employers would be better served by a system with less risk and a more stable cost? That sounds like the arguement I am trying to make. I don't think the insurance companies would close shop. More than likely thier interests are covered either way.

Many folks have valid personal concerns here in Chattanooga.The folks that are crowding Earlanger's ER now, have the same concern. 45 million people without healthcare is a scary number. The human face of that number is more personal. The GAO and the CBO have run the numbers. Sorry but I would prefer that the insurance business not write anymore legislation. That strikes me as letting the inmates write law and run the jail. The numbers fall where they will ,it is a crime in my opinion to fail those amoung us who cannot take care of themselves. My perspective is personal. I have been there and my family has struggled with what gets paid and what doesn't.
A little history might add some flavor to the debate. I have been doing some research for school, so it may seem a bit wordy. I picked up the historical focus about the turn of the last century.
During the Progressive Era, President Theodore Roosevelt was in power and although he supported health insurance because he believed that no country could be strong whose people were sick and poor, most of the initiative for reform took place outside of government. Roosevelt’s successors were mostly conservative leaders, who postponed for about twenty years the kind of presidential leadership that might have involved the national government more extensively in the management of social welfare.
AALL Bill 1915

In 1906, the American Association of Labor Legislation (AALL) finally led the campaign for health insurance. They were a typical progressive group whose mandate was not to abolish capitalism but rather to reform it. In 1912, they created a committee on social welfare which held its first national conference in 1913. Despite its broad mandate, the committee decided to concentrate on health insurance, drafting a model bill in 1915. In a nutshell, the bill limited coverage to the working class and all others that earned less than $1200 a year, including dependents. The services of physicians, nurses, and hospitals were included, as was sick pay, maternity benefits, and a death benefit of fifty dollars to pay for funeral expenses. This death benefit becomes significant later on. Costs were to be shared between workers, employers, and the state.
AMA supported AALL Proposal

In 1914, reformers sought to involve physicians in formulating this bill and the American Medical Association (AMA) actually supported the AALL proposal. They found prominent physicians who were not only sympathetic, but who also wanted to support and actively help in securing legislation. In fact, some physicians who were leaders in the AMA wrote to the AALL secretary: “Your plans are so entirely in line with our own that we want to be of every possible assistance.” By 1916, the AMA board approved a committee to work with AALL, and at this point the AMA and AALL formed a united front on behalf of health insurance. Times have definitely changed along the way.
In 1917, the AMA House of Delegates favored compulsory health insurance as proposed by the AALL, but many state medical societies opposed it. There was disagreement on the method of paying physicians and it was not long before the AMA leadership denied it had ever favored the measure.
AFL opposed AALL Proposal

Meanwhile the president of the American Federation of Labor repeatedly denounced compulsory health insurance as an unnecessary paternalistic reform that would create a system of state supervision over people’s health. They apparently worried that a government-based insurance system would weaken unions by usurping their role in providing social benefits. Their central concern was maintaining union strength, which was understandable in a period before collective bargaining was legally sanctioned.

Private insurance industry opposed AALL Proposal

The commercial insurance industry also opposed the reformers’ efforts in the early 20th century. There was great fear among the working class of what they called a “pauper’s burial,” so the backbone of insurance business was policies for working class families that paid death benefits and covered funeral expenses. But because the reformer health insurance plans also covered funeral expenses, there was a big conflict. Reformers felt that by covering death benefits, they could finance much of the health insurance costs from the money wasted by commercial insurance policies who had to have an army of insurance agents to market and collect on these policies. But since this would have pulled the rug out from under the multi-million dollar commercial life insurance industry, they opposed the national health insurance proposal.
WWI and anti-German fever

In 1917, the US entered WWI and anti-German fever rose. The government-commissioned articles denouncing “German socialist insurance” and opponents of health insurance assailed it as a “Prussian menace” inconsistent with American values. Other efforts during this time in California, namely the California Social Insurance Commission, recommended health insurance, proposed enabling legislation in 1917, and then held a referendum. New York, Ohio, Pennsylvania, and Illinois also had some efforts aimed at health insurance. But in the Red Scare, immediately after the war, when the government attempted to root out the last vestiges of radicalism, opponents of compulsory health insurance associated it with Bolshevism and buried it in an avalanche of anti-Communist rhetoric. This marked the end of the compulsory national health debate until the 1930’s.
Why did the Progressives fail?

Opposition from doctors, labor, insurance companies, and business contributed to the failure of Progressives to achieve compulsory national health insurance. In addition, the inclusion of the funeral benefit was a tactical error since it threatened the gigantic structure of the commercial life insurance industry. Political naivete on the part of the reformers in failing to deal with the interest group opposition, ideology, historical experience, and the overall political context all played a key role in shaping how these groups identified and expressed their interests.
The 1920’s

There was some activity in the 1920’s that changed the nature of the debate when it awoke again in the 1930’s. In the 1930’s, the focus shifted from stabilizing income to financing and expanding access to medical care. By now, medical costs for workers were regarded as a more serious problem than wage loss from sickness. For a number of reasons, health care costs also began to rise during the 1920’s, mostly because the middle class began to use hospital services and hospital costs started to increase. Medical, and especially hospital, care was now a bigger item in family budgets than wage losses.
The CCMC

Next came the Committee on the Cost of Medical Care (CCMC). Concerns over the cost and distribution of medical care led to the formation of this self-created, privately funded group. The committee was funded by 8 philanthropic organizations including the Rockefeller, Millbank, and Rosenwald foundations. They first met in 1926 and ceased meeting in 1932. The CCMC was comprised of fifty economists, physicians, public health specialists, and major interest groups. Their research determined that there was a need for more medical care for everyone, and they published these findings in 26 research volumes and 15 smaller reports over a 5-year period. The CCMC recommended that more national resources go to medical care and saw voluntary, not compulsory, health insurance as a means to covering these costs. Most CCMC members opposed compulsory health insurance, but there was no consensus on this point within the committee. The AMA treated their report as a radical document advocating socialized medicine, and the acerbic and conservative editor of JAMA called it “an incitement to revolution.”

FDR’s first attempt — failure to include in the Social Security Bill of 1935
Next came Franklin D. Roosevelt (FDR), whose tenure (1933-1945) can be characterized by WWI, the Great Depression, and the New Deal, including the Social Security Bill. We might have thought the Great Depression would create the perfect conditions for passing compulsory health insurance in the US, but with millions out of work, unemployment insurance took priority followed by old age benefits. FDR’s Committee on Economic Security, the CES, feared that inclusion of health insurance in its bill, which was opposed by the AMA, would threaten the passage of the entire Social Security legislation. It was therefore excluded.

FDR’s second attempt — Wagner Bill, National Health Act of 1939
But there was one more push for national health insurance during FDR’s administration: The Wagner National Health Act of 1939. Though it never received FDR’s full support, the proposal grew out of his Tactical Committee on Medical Care, established in 1937. The essential elements of the technical committee’s reports were incorporated into Senator Wagner’s bill, the National Health Act of 1939, which gave general support for a national health program to be funded by federal grants to states and administered by states and localities. However, the 1938 election brought a conservative resurgence and any further innovations in social policy were extremely difficult. Most of the social policy legislation precedes 1938. Just as the AALL campaign ran into the declining forces of progressivism and then WWI, the movement for national health insurance in the 1930’s ran into the declining fortunes of the New Deal and then WWII.

Henry Sigerist

About this time, Henry Sigerist was in the US He was a very influential medical historian at Johns Hopkins University who played a major role in medical politics during the 1930’s and 1940’s. He passionately believed in a national health program and compulsory health insurance. Several of Sigerist’s most devoted students went on to become key figures in the fields of public health, community and preventative medicine, and health care organization. Many of them, including Milton Romer and Milton Terris, were instrumental in forming the medical care section of the American Public Health Association, which then served as a national meeting ground for those committed to health care reform.
Wagner-Murray-Dingell Bills: 1943 and onward through the decade

The Wagner Bill evolved and shifted from a proposal for federal grants-in- aid to a proposal for national health insurance. First introduced in 1943, it became the very famous Wagner-Murray- Dingell Bill. The bill called for compulsory national health insurance and a payroll tax. In 1944, the Committee for the Nation’s Health, (which grew out of the earlier Social Security Charter Committee), was a group of representatives of organized labor, progressive farmers, and liberal physicians who were the foremost lobbying group for the Wagner-Murray-Dingell Bill. Prominent members of the committee included Senators Murray and Dingell, the head of the Physician’s Forum, and Henry Sigerist. Opposition to this bill was enormous and the antagonists launched a scathing red baiting attack on the committee saying that one of its key policy analysts, I.S. Falk, was a conduit between the International Labor Organization (ILO) in Switzerland and the United States government. The ILO was red-baited as “an awesome political machine bent on world domination.” They even went so far was to suggest that the United States Social Security board functioned as an ILO subsidiary. Although the Wagner-Murray-Dingell Bill generated extensive national debates, with the intensified opposition, the bill never passed by Congress despite its reintroduction every session for 14 years! Had it passed, the Act would have established compulsory national health insurance funded by payroll taxes.
Truman’s Support

After FDR died, Truman became president (1945-1953), and his tenure is characterized by the Cold War and Communism. The health care issue finally moved into the center arena of national politics and received the unreserved support of an American president. Though he served during some of the most virulent anti-Communist attacks and the early years of the Cold War, Truman fully supported national health insurance. But the opposition had acquired new strength. Compulsory health insurance became entangled in the Cold War and its opponents were able to make “socialized medicine” a symbolic issue in the growing crusade against Communist influence in America.

Truman’s plan for national health insurance in 1945 was different than FDR’s plan in 1938 because Truman was strongly committed to a single universal comprehensive health insurance plan. Whereas FDR’s 1938 program had a separate proposal for medical care of the needy, it was Truman who proposed a single egalitarian system that included all classes of society, not just the working class. He emphasized that this was not “socialized medicine.” He also dropped the funeral benefit that contributed to the defeat of national insurance in the Progressive Era. Congress had mixed reactions to Truman’s proposal. The chairman of the House Committee was an anti-union conservative and refused to hold hearings. Senior Republican Senator Taft declared, “I consider it socialism. It is to my mind the most socialistic measure this Congress has ever had before it.” Taft suggested that compulsory health insurance, like the Full Unemployment Act, came right out of the Soviet constitution and walked out of the hearings. The AMA, the American Hospital Association, the American Bar Association, and most of then nation’s press had no mixed feelings; they hated the plan. The AMA claimed it would make doctors slaves, even though Truman emphasized that doctors would be able to choose their method of payment.

In 1946, the Republicans took control of Congress and had no interest in enacting national health insurance. They charged that it was part of a large socialist scheme. Truman responded by focusing even more attention on a national health bill in the 1948 election. After Truman’s surprise victory in 1948, the AMA thought Armageddon had come. They assessed their members an extra $25 each to resist national health insurance, and in 1945 they spent $1.5 million on lobbying efforts which at the time was the most expensive lobbying effort in American history. They had one pamphlet that said, “Would socialized medicine lead to socialization of other phases of life? Lenin thought so. He declared socialized medicine is the keystone to the arch of the socialist state.” The AMA and its supporters were again very successful in linking socialism with national health insurance, and as anti-Communist sentiment rose in the late 1940’s and the Korean War began, national health insurance became vanishingly improbable. Truman’s plan died in a congressional committee. Compromises were proposed but none were successful. Instead of a single health insurance system for the entire population, America would have a system of private insurance for those who could afford it and public welfare services for the poor. Discouraged by yet another defeat, the advocates of health insurance now turned toward a more modest proposal they hoped the country would adopt: hospital insurance for the aged and the beginnings of Medicare.

After WWII, other private insurance systems expanded and provided enough protection for groups that held influence in American to prevent any great agitation for national health insurance in the 1950’s and early 1960’s. Union-negotiated health care benefits also served to cushion workers from the impact of health care costs and undermined the movement for a government program.

Why did these efforts for universal national health insurance fail again?

For may of the same reasons they failed before: interest group influence (code words for class), ideological differences, anti-communism, anti-socialism, fragmentation of public policy, the entrepreneurial character of American medicine, a tradition of American voluntarism, removing the middle class from the coalition of advocates for change through the alternative of Blue Cross private insurance plans, and the association of public programs with charity, dependence, personal failure and the almshouses of years gone by.

For the next several years, not much happened in terms of national health insurance initiatives. The nation focussed more on unions as a vehicle for health insurance, the Hill-Burton Act of 1946 related to hospital expansion, medical research and vaccines, the creation of national institutes of health, and advances in psychiatry.
Johnson and Medicare/caid

Finally, Rhode Island congressman Aime Forand introduced a new proposal in 1958 to cover hospital costs for the aged on social security. Predictably, the AMA undertook a massive campaign to portray a government insurance plan as a threat to the patient-doctor relationship. But by concentrating on the aged, the terms of the debate began to change for the first time. There was major grass roots support from seniors and the pressures assumed the proportions of a crusade. In the entire history of the national health insurance campaign, this was the first time that a ground swell of grass roots support forced an issue onto the national agenda. The AMA countered by introducing an “eldercare plan,” which was voluntary insurance with broader benefits and physician services. In response, the government expanded its proposed legislation to cover physician services, and what came of it were Medicare and Medicaid. The necessary political compromises and private concessions to the doctors (reimbursements of their customary, reasonable, and prevailing fees), to the hospitals (cost plus reimbursement), and to the Republicans created a 3-part plan, including the Democratic proposal for comprehensive health insurance (“Part A”), the revised Republican program of government subsidized voluntary physician insurance (“Part B”), and Medicaid. Finally, in 1965, Johnson signed it into law as part of his Great Society Legislation, capping 20 years of congressional debate.

Let me put some color to your statistics about Medicare, but first I must disclose that I work in the industry (i.e., healthcare insurance). That overhead you're complaining about puts food on my family's table, so keep in mind that sweeping government reforms just might solve problems for some and create problems for others.

Your overhead estimates for non-profits and for-profits seem high to me (like the outliers). However, like I alluded to earlier, I'm sure we can all find a statistic to support whatever we want to argue (or at least spin it in our favor). I could get into what our company's overhead costs are, but then I'd probably get in trouble.

The quote below is taken from an article on healthleadersmedia.com. In one section the author discusses the apple to oranges comparison between Medicare's overhead costs to that of private insurers.

Medicare overhead has the appearance of a gold standard: 2.1 percent overhead compared to a commercial average of 13 percent and a “best practices” company commercial average in the range of 5-8 percent. Medicare clearly has economies of scale, but its overhead figure is a bit misleading. The average per-member-per-month premium for commercial HMOs in now in the $200-$250 range, while the typical PMPM for Medicare is in the $600 range. If the Medicare PMPM were $200 rather than $600, then it would have an administrative overhead of 6.3 percent rather than 2.1 percent—still very good, but not out of the range of the very lowest-cost private insurers.

For that relatively low overhead, Medicare offers only a single product (little choice except in urban areas where Medicare+Choice is available), provides limited medical management (and that seemingly by lawsuit), conducts provider contracting by fiat (negotiations take place in Congress), and has almost no marketing costs (no competitors).
By the way, my analogy before about cars and healthcare...was to say that affluent and poor alike in America want affluent healthcare. We want the best. We don't want to see a Physicians Assistant or have a nurse remove a wart for us (like they would in the Army). No, we want the best and we want it now. We don't want anyone telling us that we can't go to the doctor, which is why I think HMO's are on the decline. However, because we don't realize the costs of care we spend our employer's money (or the government's if we're on Medicaid) unwisely.

For example, back when we were in an HMO it was nothing to run off to the doctor. It was only a $10 co-pay. It did not matter to me how many times I saw the doctor or what it really cost, so long as I had that ten bucks. Fast forward to our current consumer driven plan in which the overall cost is the same (coinsurance plus premiums), but the method of payment (a healthcare reimbursement account tied to a high deductable PPO plan) is designed in such a way that I come out ahead if I take care of myself (via preventative care) and don't needlessly see my doctor. (Keep in mind that the insurance is still there to back me up if I'm really sick). How would a single payor system encourage people to spend our tax dollars in a similar miserly manner?

The affluent for all thier "mercedes tastes" are not served any better for the extra dollars. The national center for health statistics lists that Aus., Can. NZ, UK. reported better access. I did not blame "the man" but merely point out that private sector management has been a complete failure. Medicare's ovrehead is about 3%, even not for profits have 16% admin. overhead, and for profits have as much as 26.5% . Medicare has done a heck of a lot better at containing cost than the "free-market."
How to pay for it is the question. If we are going to privatize management, then we are back in the same boat. I would like to see 7% split employer and employee. I agree with the center for medicaid and medicares services numbers.seven percent split between the 2 would be a substantial savings for both. It is worth pointing out that the democratic governments that have single payer systems enjoy better outcomes in care. They consistently rank higher in the stats. And that compares apples to apples. of course it is also worth pointing out that the U.S.A. falls inline behind "botswana" for
mortlity and morbidity.

Since when has the government managed ANYTHING well?

Dismiss me as a think-tanker, but as Benjamin Disraeli said...there are three kinds of lies--lies, damn lies and statistics. If you just want to quote a bunch of numbers and be a Chicken Little, then I am not sure it the kind of debate that I want to engage in anyway.

Can you explain how do you make the jump from the numbers you gave to saying that it is all the fault of management (and could you define what you mean by management...is that private corps, government, etc.)? Sure, I don't disagree with you that healthcare costs have risen, but I think it's a lot more complicated than blaming it all on "the man."

Regarding your statement about Americans with above average incomes having more access to care problems than countries with socialized healthcare...which of your facts backs that up? Your last bullet point was not a statistic, but a statement.

Here's what one French Canadian economost has to say about his country's healthcare system.

http://www.self-gov.org/freeman/8903lemi.html

It sounds like the solution you want us to embrace is higher taxes to pay for a compulsory socialized healthcare system. Do you think that is the best way for our healthcare system to be reformed?

Scott,
while I disagree with you about free-market economics, I do want to have a debate with the greater population. I would hope we can have a discourse that is driven by facts, not think tanks.
We have 25 years of market driven management failures of healthcare. Cost have not been contained , but have been driven up by that management. I do not think the govenment can fix it. I think the government can manage it very well. The management cost for medicare are substancially lower than "free-market managed care."

I think there are two issues with the healthcare system. The first is rising costs. The second is who pays for it (regardless of the cost). The two are related at some levels, but are somewhat independent.

In terms of costs, I think Americans in general desire Mercedes Benz quality healthcare, when in fact most of the time Volkswagon level care will due. But between the malpractice insurance costs and obstacles to competition (government regulations and licensing restrictions), costs continue to rise.

The second issue is who pays for it. Insurance is about managing risk. It is not a social program. Someone still pays for the cost of the healthcare. People talk about insurance as if it is a free lunch. But in reality it is the employer who pays for the cost of the insurance benefits. The problem is that the employee doesn't see the true cost of their care, so therefore they drive up utilization (sometimes unnecessarily) which in turn increases costs. How many times have you been to the ER and had to wait because of someone who is there for the flu?

There is a shift in the marketplace away from managed care and toward consumer driven health plans. Such plans force the employee to engage up front in the cost of their healthcare, by providing an employer sponsored fund (HRA) that they can use toward meeting their deductable. Only when consumers are forced to make choices are they going to see their healthcare benefits as part of their salary and not some free pass to luxurious healthcare.

So, in short I propose less government restrictions, more competition and increased consumer awareness/responsibility. Also, rather than say that the system is broken, consider the fact that the market is responding to the need.

But then again, I sense by your post that you think that healthcare is a basic human right (at which point you're going to disagree with my free-market assessment anyway). You probably want the government to take over and fix it, huh?