Health Insurance & History

We should learn from history, but do we? Do we listen to possible misinformation from a select number of sources, or do we actively seek knowledge? Do we really try to understand, or refuse to change once forming an opinion?


Take the issue of universal health care in America. Did you know:

1. American health insurance, until the last couple of decades, used to be non-profit?
2. Around 1920, the chief cost associated with illness was not the cost of medical care, but the loss of time from work
3. Compulsory, nationalized health insurance, first proposed in the 1920's, failed mostly because of opposition by commercial insurance companies, pharmacists, and physicians.
4. Medical costs in the US began to rise significantly due to stricter requirements, licensing, and medical education--proposed by the AMA and ACS. Stricter requirements caused fewer schools to meet those requirements and restricted physician supply.
5. Medical expenses from hospitalization increased dramatically, so that, by 1934 they had risen to nearly 40% of a family's medical bill.
6. Blue Cross was the first pre-paid insurance plan for hospital care, founded by a group of Dallas teachers and Baylor University Hospital.
7. Physicians, alarmed that Blue Cross would move into the area of physician services, created a series of plans that finally merged into Blue Shield; they could retain their power to price discriminate by charging different prices to different patients.
8. Commercial companies saw that the non-profits were working and jumped on the bandwagon; since they weren't non-profit, they could charge sicker people higher premiums and healthy people lower premiums. They undercut the non-profits and grew swiftly.
9. In 1942, Congress limited wage increases in the Stabilization Act, but permitted the adoption of employer-provided insurance plans. Two major rulings reinforced this type of system in 1945 & 1949.
10. In 1958, nearly 75% of Americans had some form of private health insurance coverage.
11. Between 2001 & 2003, the percent of employers offering health insurance fell from 67% to 63%.
12. The drop in retiree benefits has gone from 70% in 1985 to 36% in 2000.
13. In percentage of one-year-old children fully immunized against polio, we are number seventeen.
14. There are lower rates of low birth weight babies born in Egypt and Jordan than here at home.

The AMA has consistently opposed any form of national health care, suggesting that such proposals were socialistic, would interfere with physician income, and affect the doctor-patient relationship. It fought against proposals in 1935 (under the Social Security Act) & helped defeat the Murray-Wagner-Dingell Bill in 1949 (which would have provided health insurance to all Americans). To help defeat the latter, they charged every physician who was a member $25 for their lobbying efforts!

It would not be until 1965 that Medicare was passed, a program automatically enrolling anyone 65 and over (Part A) & subsidized insurance for physicians services (Part B). Medicaid was enacted to provide medical resources for the indigent. Until 1983, Medicare reimbursements were done by what was "usual and customary." This changed to a set fee schedule by the government. Medicaid expenditures remained fairly constant until eligibility requirements were changed in the 1990's.

The US spends 16% of its gross domestic product on health care, but more than 46 million people are without coverage (at a time when only two other countries, Switzerland and Germany, put out more than 10 percent). 1 in 4 Americans have trouble paying for medical care. The US healthcare system is the most expensive in the world, but is ranked 37th in a WHO report (France ranked #1).

Averaging over the first years of the new millennium, the United States spends circa $5,200 per person on healthcare. Canada $2,900; Germany $2,800; Switzerland $2,600; Britain $2,200. Yet, each of them boasts of a longer life expectancy, lower infant mortality, and better U5MRs than we. All have a national healthcare service that covers all their people.

The United States has 2.9 hospital beds per 1,000 residents compared with 3.7 beds/1,000 in the average OECD nation; 2.4 physicians per 1,000 people compared to 3.1/1,000; 7.9 nurses/1,000 compared to 8.9/1,000 among the others. The U.S. has 12.9 CT scanners per one million population compared with 13.3 elsewhere in the developed world. We do have more magnetic resonance imaging (MRI) machines than the other OECD nations listed, but ours are only in use ten hours daily, compared to fourteen in the others.

A common misconception among Americans is that European systems are similar to each other but vastly different from the US. They are all different. "In fact, the Americans and the French both distrust “socialized medicine.” Both peoples cherish patient choice, independent physicians, medical practice freedoms, and private insurers in a qualitatively different way than the Canadians, the British, and many others." 2

"The European countries' systems are actually all very different, and they're not all single-payer models," Stoll says. (Kathleen Stoll, director of health policy at Families USA)

"It isn't just European countries, however, that have employed diverse methods for financing universal healthcare. In addition to the U.K., Canada, Japan and Taiwan also have opted for single-payer systems. Australia joins Belgium, Denmark, France, Germany, the Netherlands and Switzerland on a list of countries that have adopted a multipayer approach to funding universal healthcare.

"Under single-payer models, taxpayers and employers pay into a national healthcare fund, and money from that fund is used to pay for every citizen's primary care, hospitalization and, in most cases, prescriptions. The fund compensates medical providers and hospitals and pays for medical technology, including, typically, a shared electronic health-record database. Coverage may or may not require patient copayments.

Pluralistic or multipayer models use a mixture of private and public funds to create a system that guarantees coverage to all citizens. Employers have the option to provide free or subsidized coverage for their workers or pay into a government healthcare fund that will provide free or subsidized coverage. Tax dollars are also used to create or subsidize insurance plans for workers who are not covered by their employers. Those workers as well as self-employed citizens can select and buy into affordable plans, while low-income or unemployed residents receive subsidized or free coverage similar to the way Medicaid operates in the U.S.

Healthcare policy analysts interviewed by Modern Healthcare mostly agreed that a single-payer system would be a more challenging approach to universal healthcare in the U.S. given the entrenched nature of for-profit insurance companies and the existence of a well-established and complex multipayer system. What's more, the U.S.' population is more than 4.5 times the size of Germany, the next most-populated nation examined in the Commonwealth Fund's report, so system size alone will have a great bearing on the effectiveness of a financing approach. But experts say there are lessons to be gleaned about price controls, care coordination and quality-improvement mechanism from each approach." 6

Countries such as Switzerland & the Netherlands have established universal healthcare systems where 100% of citizens are covered by private insurance providers--debunking the idea that all healthcare must be government run. Citizens in these countries can choose between private & government-employed providers. In the Netherlands, employers pay 50% of monthly costs & employees 50%. Tax credits help citizens finance premiums & low-income citizens receive subsidies. Swiss citizens get tax & pension-fund subsidies; low-income citizens get additional subsidies.

Why does the US still not have universal health care? The one constant (besides antisocialist propaganda, a weak labor union, & racial politics) throughout all this is that powerful interest groups have used every weapon possible to fight it. For the first 1/2 of the 20th century it was physicians groups, allied with hospital administrators, large manufacturers, and insurers. By the 1970's, it was the insurance industry lobbying against national healthcare and controlling key Congressional committees.

• The former chief executive of HCA Inc. unveiled a $20 million campaign to pressure Democrats to enact health-care legislation based on free-market principles 7
• Health Care Industry Spent $445M on Federal Lobbying in 2007 8
  
• Since 2006, the health sector has spent more money on lobbying than any other sector of the economy 9
• Billy Tauzin, a Republican congressman from Louisiana and chair of the House Energy and Commerce Committee, played a key role in the passage of an industry-friendly Medicare prescription drug bill. His payoff was to trade his seat in Congress for the lucrative role of leadership of PhRMA, the lobbying arm of the pharmaceutical industry. 10
• Finance Committee Chair, Sen. Max Baucus (D-Montana) was also key in brokering 2003 Medicare reform. Named "K Street's Favorite Democrat", perhaps it was a Freudian slip when Sen. Baucus explained, "Merck is not ready for single pay. I mean, America." (between 2003-2008 Baucus was the recipient of $588,185 from the insurance industry & $523,313 from the pharmaceutical/health product industry - in fact, the leading Democratic recipient of corporate largesse).11

Guess what healthcare benefits the 535 members of the U.S. Congress and the few hundred in the upper executive and judicial branches of government get?

• unlimited doctor office visits of your choosing
• covers all accidents, routine exams, physical therapy, labs and X-rays
• unlimited hospital visits and stays
• certain chronic care and rehab
• full prescription coverage
• unlimited specialty consultations.
• There are no deductibles, no co-pays, and only a $35 monthly fee taken from an annual salary of $158,000.
• For the employee and the entire family.
• full pension and continued coverage until their deaths

And who retired with a $1.6 billion option package at a time when more than 40 million Americans lack health insurance? CEO William McGuire from UnitedHealth Group.
Or who received an $83 million pension plan in 2008? CEO Hank McKinnell, Pfizer.

Sources:
1. http://eh.net/encyclopedia/article/thomasson.insurance.health.us
2. http://www.cornellpress.cornell.edu/cup_detail.taf?ti_id=4724
3. One Nation, Uninsured, by Jill S. Quadagno, Oxford Univ Press, 2005, pg 202.
4. Practicing Medicine Without a License, Don Sloan, M.D., 2007.
5. http://knowledge.wharton.upenn.edu/article.cfm?articleid=1481
6. Why over there isn't over here, Rhea, Shawn, Modern Healthcare; 3/31/2008, Vol. 38 Issue 13, p32-34.
7. http://online.wsj.com/article/SB123561083268377547.html
8. http://www.healthfreedom.net/index.php?option=com_content&task=view&id=437&Itemid=
9. http://content.nejm.org/cgi/content/full/359/13/1313
10. http://www.huffingtonpost.com/michele-swenson/dems-repubs-on-health-car_b_179668.html