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United States Health Insurance

They Just Don't Get It!

by: Gary Bannerman

EDITOR'S NOTE: Gary Bannerman is a veteran Canadian journalist and co-author of the book Squandering Billions (with Dr. Don Nixdorf and illustrator Kerry Waghorn), analyzing Canada's national health care system, but also focusing extensively on American experience and research.

It doesn't require a movie like Michael Moore's SICKO or the rhetoric of a Presidential campaign to comprehend the astonishing horror show of American health management. The U.S. spends vastly more per capita on health than whatever nation is in distant second place, yet the country's ranking among world nations in health statistics is within a cluster of third world countries, dead last among first world democracies.

The 40-50 million uninsured Americans, along with likely an equal number of under-insured citizens, are the only people in the civilized democratic world who live in constant fear of an economic catastrophe related to health care.

How is this so? A disproportionate number of the world's best and brightest in the health field, supported by the most advanced and expensive technology and institutions, work all across the country. The U.S. has the greatest health centres (Mayo, Johns Hopkins et al.), the greatest medical schools (Harvard, Stanford, Duke Chicago and dozens more) and some of the most advanced health care managers, leaders in the "wellness" mission, a recognition that keeping insured families well is more profitable than waiting for tragedy to strike: The "Blues," Kaiser Permanente, Humana and others.

What seems so mystifying to the world is to listen to prominent American politicians make a very simple principle and obvious solution, sound so complex. The words of Barak Obama, Hillary Clinton, John McCain and so many others who went before them, resemble something from Mad Magazine.


Illustrations from Squandering Billions, created by world acclaimed caricaturist, Kerry Waghorn.

  • A simple goal: basic health care as an enshrined right of citizenship - no citizen or resident ever fears losing their homes or being driven into bankruptcy because of medical expenses, and no visitor (even illegals) is ever denied necessary care.
  • A simple solution: one national insurer for all basic and life-threatening health services.

That's the norm in the free world. The United States is the sole exception.

The fundamental flaw in all of the so-called "universal health care" plans (it's hard to determine whose plan is more absurd) is that they take a top down view. They start with the 40-50 million uninsured and then basically say that we want to keep everyone else intact - hospitals, doctors, HMOs, pharmaceutical companies and all related institutions - without impacting upon their profit-structure and business plans, and then cover everybody else, just as Medicare serves the elderly and Medicaid looks after the poor.

It would be rather like announcing a new auto insurance company pledging only to insure the demonstrably high risk drivers. The financial medical establishment in the U.S. is wrong-headed about this as well, feeling that a public system would be a mortal wound to their profit structure. They would certainly have to change, but they would have other valuable services to market. The good news for them is that the preponderance of current claims costs would disappear, virtually overnight. Current premium revenues would change as well, but they would be based on the value they deliver to corporate and individual clients.

Here's how it should work:

  1. The national insurer is the U.S. federal government, entirely financed from the tax base. The principles would be the same as any HMO defining services and determining costs, with actuarial science applied to the entire population.
  2. A national program would be adopted outlining what is covered. A comprehensive plan such as what exists in most democratic countries covers consultations with health professionals, care for all diseases, emergency health, most surgery and some pharmaceuticals. The most sophisticated plans also include nurse practitioners, chiropractors, homeopathic doctors and advanced multidisciplinary health clinics, because all of these specialties tend to minimize the need for drugs and surgery, the most expensive solutions that often cause more problems than they solve.
  3. Service delivery would be a State responsibility, including hospitals, laboratories and fee negotiations with health professionals covered under the plan. If the pattern of other countries is followed, the State plan would assess an annual insurance premium paid by individuals and families who are in a financial position to afford it.
  4. HMOs would build their business on extended coverages, such as dental, pharmaceuticals, advanced diagnostics, wellness programs and non-catastrophic medical treatments not covered by the national plan.
  5. Private practice health professionals would remain so. Instead of chasing poor people for fee payment or submitting claims to an HMO, they would submit the same bill to the State-managed branch of the national insurance plan.

There is no standard template followed by all of the countries with universal health care. In Canada - theoretically - it is illegal for any doctor or hospital to directly bill a patient for a covered service, or to impose any surcharge over published fees. In the United Kingdom, there is a dual track system: everybody is covered by public health and they are treated, when needed, by public health doctors in private practice, or in public hospitals. But there is also a large private sector pay-for-service health system. You (or your insurer) can choose to pay a specific doctor or hospital for what is perceived to be superior care, or you can choose public health. A patient cannot submit a private health bill to the public system for partial payment, but insurance plan premiums, private medical services and hospital costs are tax deductible.

Most other countries of Europe and Scandinavia, as well as Japan, have some kind of patient co-payment, a modest charge to discourage abuse and to encourage patients to take some responsibility for their own health. There are also ways to pay more through private health to expedite and expand levels of care, but never at the risk of compromising the core national Medicare plan.

If you follow the politics of any of these countries you will see major health controversies and the appearance of dissatisfaction. The theme of these debates is always for greater money and less about effectiveness and efficiency. Nothing ever seems to get measured in terms of quality service, as if more dollars automatically ensured better care. Costs have soared, levels of service sometimes appear to have deteriorated and political promises seem unfulfilled.

Yet leaders in the evolution of health policy in all of these nations share one common area of certainty: the U.S. system is a tragic joke, the most abject mismanagement and political irresponsibility in the health world today.

The president of the Mayo Clinic Dr. Denis Cortese, in a March 21, 2008 speech to the National Press Club referred to political debates in which people are “talking about the health system being broken,” leaving the implication that we might be able to go out and fix it. In fact, he told the audience that there is no system at all, and it is now time to design one, a system that starts and ends with the patients’ perspective and the patients’ best interests at heart. He emphasized that there needs to be more awareness of and documentation of the tens of thousands of annual deaths due to medical mistakes, as a cornerstone of subsequent efforts to do a better job.

The Canadian scene:

Michael Moore regularly holds Canada up as a beacon of civility in contrast to the U.S. Despite our somewhat quiet national pride and welcoming any pat on the back, most thoughtful Canadians cringe every time he does it, because we have serious problems too.

We have replaced the discriminatory nature and excesses of for-profit health with enshrined monopolies of bureaucrats, medical doctors and hospital administrators. The theory of our national plan - called Medicare - is that every citizen is insured and could decide to seek treatment from all accredited professionals and institutions.

In practice, we have so enshrined the power base of medical doctors, laboratories, pharmaceutical companies and administrators, they have been able to so narrowly define coverages to ensure that most of the money comes to them, irrespective of quality care. What is supposed to be an insurance plan for individuals has devolved into a guaranteed income scheme and fiefdom for insiders.

Our Provincial (like U.S. States) budgets now spend more than 40 per cent of all available financial resources on health, and Finance Ministers don't believe that many years will pass before we are at 50 per cent. Canada spends more on pharmaceuticals than it does on fees and salaries for medical doctors. Politicians don't know how to say no and none among them seem to have the courage to revisit the roots of our universal care system in order to renavigate the journey.

Think about the pending 50 per cent of all Provincial budget expenditures! California currently invests 25 per cent of its budget on health care.

Health spending is predominately a service-industry, an economy built upon taking in each other's washing. Is it not the ultimate in selfishness to exhaust resources on our own aches and pains, with less concern about future generations. Where is the investment in what will build society for tomorrow? Why are school budgets languishing so that politicians can feign improvement of Medicare, sprouting statistics about specific areas of alleged improvement. A favourite is to cite record numbers of hip surgeries, despite these patients being a sector of the economy mostly retired and no longer contributing to the economy? Why are we financing the ingestion of mountains of pills that seem to be doing society more harm than good, and enriching those who manufacture and dispense them?

Canadian "adverse events" statistics are just as alarming as those in the United States, more people killed or seriously injured as a result of medical misadventures each year than all of the statistics from highway accidents and crime combined. American deaths in the Iraq war have surpassed 4,000 - contrast this to a suspected 100,000 deaths a year due to adverse events within health care.

Why is this not a major national initiative? Why are independent autopsies not performed on all mysterious deaths within the health system, just as they are if the death occurred in a private car or home?

The Rx for Canada - important notes for the U.S. too.

Dr. Pran MangaAmong the distinguished professionals who designed Canada's national health plan is a University of Ottawa health economist, Dr. Pran Manga. He is no less certain today than he was 40 years ago that the Canadian plan is best for all affluent nations, but he despairs at how we have allowed vested interests to distort the system.

In our book Squandering Billions, Dr. Manga gives the following suggestions to get Canada back on course, thoughts that should also be central to any new plan in the U.S.

What’s wrong with Medicare?

Dr. Pran Manga cites a number of serious malignancies that have sapped the potential of Medicare, largely creating today's crisis:

  •  The senior people do not put the public interest first and foremost. They put the special interests first. Federal and provincial leaders fight for budget. Once acquired, every bureaucratic interest has a bite at it. Then follows regions, hospitals and professional associations, each with an insatiable shopping list. It is amazing that anything ever gets to the patient, always the lowest priority in a real sense. The patients' most useful role is to justify the building of empires and bank accounts.
  • From the outset, the phrase "medically necessary services" was never intended to be the exclusive domain of medical doctors. The Act does not preclude coverage of other health professionals and each of them, within their special niche, would save money and improve results - dramatically so. But, from the beginning, the Canadian Medical Association has put its own definition on the government wording. They and the provincial associations seem always able to hijack the process and secure relative exclusivity, a system that guarantees the most expensive approaches possible for each problem, no matter how minor, and duplication of costs as the MD gatekeepers hand off to others.
  • Governments can't seem to grasp the word "substitution" when different services are considered. Study after study shows that if nurse practitioner, optometric, chiropractic and other highly specialized regulated professions are used, costs per patient go down and outcomes improve. Drug utilization and rates of surgery decline. Yet politicians and bureaucrats see these as "additional" costs if they are not now covered and potential cost-cutting targets, if they are currently part of the program.
  • There is far, far too much bureaucracy. Each health practitioner seems to carry an army of paper pushers on his or her shoulders.
  • There is insufficient competition because of medical, dental and pharmaceutical monopolies. Manga often cites the fact that British Columbia has the lowest rates for dental hygiene services than anywhere in Canada, simply because it is the only province which doesn't give dentists an absolute monopoly on their services. B.C. hygienists are the only ones permitted to have an independent practice. In dental colleges, hygienists are professors. Manga says, "the dentists say to the hygienist that you can be my professor, but in the real world, you have to be my employee." The notion that there is any vital health prerogative for teeth-cleaning to be a monopolistic preserve of dentists is preposterous, a political gift to an already wealthy profession.
  • Despite overwhelmingly positive statistics from multidisciplinary community health centres employing nurse practitioners, physicians (usually on salary) and other health professionals as needed, there has been too little progress on expanding the mode of care, again because of opposition from the medical profession.
  • Home care, convalescent hospitals and small surgi-centres should be dramatically expanded, each with the aim of restricting acute care hospitals to only the most serious of all cases, but this must be done with political courage, eliminating all unnecessary personnel and infrastructure as soon as they become redundant. Acute care hospitals and trauma centres are not in the health and healing business, but focused on procedures, serious illness and emergencies. Convalescent patients or those with minor conditions simply get in the way and become vulnerable to the adverse events that haunt big hospitals.
  • Pharmaceutical utilization and costs are out of control, with about half of the $22 billion (2004 dollars, now in excess of $26 billion) annual expenditure a complete waste. "You cannot possibly consider a pharmacare program if you have a bad system. ...the system has to be fixed first." Any consideration of pharmacare before addressing core issues would be profoundly stupid with predictably devastating consequences.
  • Manga says good policies work if the leaders are prepared to be tough. Lamentably, that is too rarely the case. It is easier to coast along tinkering with the status quo. There has been no shortage of good ideas for health reform, but a lack of political will.
  • Too often, the search for ideal, unanimous and even perfect solutions prevents any improvements from taking place. "The best is always the enemy of the good," he said. "Progress gets lost in minutiae."

And more thoughts from the book:

Squandering Billions: Health Care in CanadaTo use a popular sports colloquialism, governments "hit the wall" in terms of health spending within the past few years. The 10 percent of Gross Domestic Product we now invest stands up well by any international comparison, but the services do not. We have been going backwards. The share of provincial budgets as high as 48 percent is an unconscionable assault on everything else government is supposed to do, and, to be brutally frank, spending 48 percent of resources serving the current population is grotesquely unfair to future generations, who have the right to expect a society made better as a result of our inhabitation.

Therefore, some severe surgery and reconstruction is required:

  •  ADVERSE EVENTS - A study of a small slice of Canadian health care determined that 185,000 patients are victimized each year as a result of errors or diseases contracted within the system, and as many as 23,750 of these people die. The research focused on hospital records composed in somewhat of an "honour system" within the institutions where the problems occurred. A Harvard-based expert on this topic says that these records are never more than 5-20 percent accurate. The truth is definitely far worse.

    And, since this evidence represented only a selection of acute care hospitals, and not the total field of drugs, surgery, doctors' offices, other institutions and clinics, it may be correct to project 50,000 unnecessary deaths each year as a result of medical mistakes. The cost of treating errors must be multiple billions of dollars.

    Various initiatives have more recently recommended third party review of all incidents.

    This is a tragedy and a crisis beyond imagination.
     
  • DRUGS OUT-OF-CONTROL - Every professional study demonstrates that 50 percent or more of all drugs prescribed is a complete waste: incorrect prescriptions, over-prescribing, dangerous conflicts with other medication and unnecessary in the first instance. Experts advise that we consume two or three times per capita the amount of antibiotics used in Europe, without supporting evidence of more disease requiring attention. The 2004 numbers show $18 billion in prescription drugs and $3.8 billion in over-the-counter remedies. Nothing has grown faster in health costs and there is absolutely no statistical evidence that any of the additional cost has achieved a system-wide benefit. Profits of drug companies have soared. Fees to prescribing professionals remain robust. How many billions of this total end up in toilets, garbage cans, gathering dust in medicine cabinets and causing more harm than good - sometimes fatal - within patients, no one really knows.

    Government should consult experts such as Toronto's Dr. Joel Lexchin about a return to compulsory licensing and a national purchasing system such as that which operates so effectively in Australia. This should be a top priority federal-provincial assault: fewer and more accurately dispensed prescriptions, and a national purchasing system.
     
  • COMPREHENSIVENESS - It is time to make the "comprehensiveness" clause of the Canada Health Act as it was intended by its authors. Vigorous policies to enhance the abundance and utilization of nurse practitioners, chiropractors and all other regulated health professionals would improve service, increase the emphasis on health rather than disease, and significantly reduce the amount of unnecessary drugs and surgery. There is a vast body of evidence to support these claims.

    An example of the savings possible is Dr. Pran Manga's internationally accepted methodology analyzing what might be possible if the Ontario Health Insurance Plan fully covered chiropractic for neuro-musculoskeletal problems (one third of all visits to the health system), rather than less effective medical doctors. Dr. Manga's 1998 numbers estimated a minimum annual saving of $380 million to a maximum of $770 million per year in Ontario alone. His average or "likely" estimate of $548 million, extrapolated nationally, would be $2.2 billion. Assuming an average inflation of 3 percent since 1998, it would indicate a potential national saving of $2.7 billion per year. Put another way, by not following his 1998 advice, the country has squandered $10 billion, completely irrespective of the hundreds of thousands of patients who received inadequate or inappropriate care, and suffered unnecessarily.
     
  • ADMINISTRATION - Sometimes it seems as if Canada's leading health statistic is the number of meetings, seminars, conferences, task forces, Royal Commissions, and parliamentary inquiries than there are treatment programs. Salaries in the managerial side of the health system are ridiculous, particularly in hospitals and regional health authorities, and cannot possibly be defended by any accountability process. Hospital managers typically earn $300,000 to $500,000, with every benefit under the sun, travel first class and often get more in wrongful dismissal damages when fired, than when they are at work.

    Because there are 32 million shareholders in the Canadian health network, a democracy in action, it is unrealistic to expect private sector efficiencies and accountability. Private firms can be selective about the work they do and how they report. Democracy is cumbersome. But need we have a daily airlift of federal and provincial bureaucrats traveling around inflating each other's sense of importance?
     
  • CO-PAYMENT - Nothing would impact more positively upon health resources than an effort to encourage responsibility among both doctors and patients. Co-payment - a modest user fee for professional visits - should be considered. The amount is almost irrelevant and the administration cost would be net zero. Half of whatever is charged would be debited from professional fees paid by the patient's medical plan. The other half would cover the administrative cost of the new process at the point of care. Social services recipients would be exempt; seniors and the working poor would be refunded fully through tax credits. We are the only universal access nation in the world that does not have a user fee to encourage responsible behaviour by both patients and service providers.

    Despite all of the obstacles placed by the system to divert patients from chiropractors, optometrists, naturopaths, podiatrists, acupuncturists, physiotherapists, massage therapists and others, for whom the patient or their insurer must pay some or all of the fees - as opposed to the "free" medical doctor competition - these professions demonstrate every day that people will pay for value received. It is high time medical doctors earned the same respect for their "free" medical services to patients.
     
  • CLOSER TO HOME - The best investment in better and lower cost future care would be a determined program to evolve small convalescent hospitals, multidisciplinary Community Health Centres, and comprehensive home care infrastructure.

    If this is pursued with vigour, wherever possible encouraging competition among professionals and provider organizations, including private sector firms and non-profit organizations, it is likely to have heavy up front costs, far in advance of any savings from current hospital-based systems.

    However, if the individuals we elect have the strength to ignore the self-serving broadsides sure to come from today's monopolists, this cannot fail to provide better and more economical health care in the future. The up front investment, if amortized like a typical business proposition, will prove to be exceptionally wise.

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