Ghosts of Harry and Louise
The Senate Republican leader is channeling a couple of GOP golden oldies to oppose a public option in the health care reform pending in Congress.
Unlike Harry and Louise in the 1993 TV commercials to torpedo the Clintons’ initiative, Mitch McConnell’s protagonists are real people–sort of–Bruce Hardy of England and Shona Holmes of Canada, who have been brought out to personify the horrors of “socialized medicine.” But their stories have been as edited as a TV commercial to make the point.
Hardy had to pay for a new cancer drug for two months before it was approved. McConnell’s take: “The government bureaucrats who run Britain’s health care system denied the treatment, saying the drug was too expensive…that Bruce Hardy’s life wasn’t worth it.”
About Holmes, who paid for her own surgery in the US as she could have in Canada, the GOP leader finds this lesson: “Here’s how Shona described her plight: ‘If I’d relied on my government, I’d be dead,’ Shona’s life was eventually saved because she came to the United States for the care she needed.”
This Harry-and-Louise flummery is part of a last-ditch effort to persuade Americans that the choice of a public plan to, in President Obama’s words, “keep the insurance companies honest” is no less than a takeover of the entire industry.
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Those dastardly Republicans! How could they be so underhanded as to borrow from Michael Moore's play book?
And suggesting government-run health care might deny coverage just like those wicked insurance companies? Slanderous!
Rather than just boiling it down into yet another partisan attack on Republicans (that ground is covered by 90% of the posts on this site), why not actually engage with the issue and the potential problems of rationing?
It's already being rationed, gadfly.
GAdly,
The so-called progressives on this sight will never really discussed the real world version of government managed healthcare. Right now, government run, single payer healthcare is being sold as something for nothing. People will get everything they want and someone lese will pay the bill. Government managed healthcare is being sold that 50 million people has been given complete healthcare, everyone currently will insurance will never be told no, and the total expenditures will actually go down, no loss in healthcare jobs, and no effect on illegal immigration.
Of course, why the U.S. will really get is somehting different. Many procedures and treatments will be denied and the companies that developed them will close. Many people will lose jobs as healthcare contracts. The rich will never participate and there will be a large number of boutique hotels and will not participate in the government managed system. Research will become harder, there will shortage of capacities in many areas, and the costs will be much higher than any of the predictions.
You're right, Gadfly, it would be great to talk sanely about the rationing bogeyman. All goods and services exist in finite supply, and all are rationed through price or some other mechanism.
Health care is no different. There are only so many doctors who work only so many hours in the day, and we could probably keep them all busy doing just boob jobs. The question is not “might there be rationing?” but “how should rationing mechanisms work?”
The question is not “might there be rationing?” but “how should rationing mechanisms work?”
That is one of the very many questions that needs to be answered before any further government health plans go forward.
But it is not being sold as rationing. It is being sold that everyone will be able to get all of those procedures that the insurances companies have been denying. Considering that Medicare, instead of denying, just sets the reimbursement rates below costs and sends a signal to not do something.
Regardless of whether a nonprofit or for-profit source writes the check, that question has to be asked. It's irrelevant to the decision. As I've noted many times, the debate is not about “socialized medicine”. It's just about who does exactly TWO things: assess the claim and send the check. That's all the insurance company does. That's all Medicare does. The only difference is an extra dozen percent or so in profit, sales commissions, marketing expense, executive salaries and options, and inefficiency of the private option. (That's not speculation or partisanship. It's the insurance industry's own figure).
GreenDreams, the problem with the current system is that about the only thing going on is those two things you mentioned. Absent from that list is a critical third thing: being accountable that the patient is receiving value for the money.
And as I've said before, “can't compete with the government” isn't conservatives' worry. “Compete” isn't even a reasonable word to use for an organization that can (and does) take the ball and go home.
Gd,
The insurance company is also suppose to access risk, manage the fund and do the actuarial work. The problem is that Medicare/Medicad are not insurance programs but wealth transfer programs. Medicare take tax the amount that it wants, it can externalize any costs it wants and it can lower reimbursements below costs.
A good example of the failure of medicaid is dental insurance. The reimbursement rates are set so low that almost no dentist will take it. Will the push to control costs cause the feds to want lower reimbursemetn rates.
TWO things: assess the claim and send the check. That's all the insurance company does. That's all Medicare does.
You've said this many times GD but they do much more than that. The reason HMOs, PPOs, etc became successful is they control utilization, not just process claims. That is one of the discussions the US needs to have – how much restriction of utilization are US consumers willing to tolerate?
To start the debate, at least the Democrats should stop using the term insurance. If everyone can sign up and there is no control of risk, then it should not be called insurance. The real quesiton to ask is how can a system survive where everyone pays in $80K in a lifetime but expect a million dollar in coverage in the last couple of years. Do the Democrats really believe that they can grow the population fast enough to keep such an unsustainable situation going.
OK, neither insurance companies nor Medicare, Medicaid, VA or other federal, state or other government paid health benefits have been effective in controlling costs, as everyone has mentioned. None of the private programs have controlled costs, and controlling utilization is not exactly a blessing, when those who need care don't get it. As for “actuarial” and other things that insurance companies do, they don't serve either the patient or society. That's about making more profit. The fact is that single payer programs, worldwide, outperform our system at a fraction of the cost. SD, you keep talking about the costs. I'm saying it's cheaper to get better quality health care than we're getting. HMOs, PPOs etc are hardly an example of insurance company excellence in customer service, nor is it an insurance industry innovation.
We do need to control costs. That's going to be really tough. The easiest savings out there as I see it, are cutting out the 12% upcharge for profit and claims denial.
Questions about how much we as a society are going to pay for an individual or for specific procedures will be very difficult. But both private insurers and government insurers will have to deal with that.
I'm not suggesting mandatory single payer system, so the “taking the ball” comment is not relevant. Private insurance will be far better if it has to actually compete, and if they can't, who cares? My goal is to deliver the best health care to everyone at the lowest cost. I just don't see anyone making a convincing case that private insurance is the way to get there.
“The easiest savings out there as I see it, are cutting out the 12% upcharge for profit and claims denial.”
Profit is 6%, and it's only a one-year savings since that's what costs go up by every year. And eradicating claims denial will save a few headcount, but you'll be paying dramatically more in claims. These number seem so far from adding up, I can't imagine how you figure this is a tenable idea.
As for private insurance and government “competing,” could you please point me to a single case where the government has successfully out-competed private industry. And by competed I mean won fair and square on a level playing field. Not by making competition illegal (e.g. the postal service) or by operating at a taxpayer-funded loss (e.g. medicare or schools), but by operating more efficiently. If you can't, perhaps you'll agree that “compete” is an inappropriate word for describing what government does in markets it enters.
“I just don't see anyone making a convincing case that private insurance is the way to get there.”
Perhaps that's because no one is making such a case.
DJ, insurance industry estimate is 16.7% overhead and profit v.s. 5% for Medicare. They estimate 3.3% by 2010 for Medicare overhead. That's right. The insurance industry admits almost 97% of Medicare cost goes to benefits, vs 83% from them. Medicare does NOT have higher fraud rate than private. The claims denial increases profits rather than reducing costs.
Our government already processes many millions of claims annually and (for the most part) efficiently sends checks, for health care and payroll, disaster claims, tax refund checks etc. The main difference is that our government health care payers (VA, Medicare, Medicaid, govt employee health care) facilitate payment while private insurers attempt not to. The more claims they deny the more money they make. They also have high administrative costs including executive compensation, and they spend our health care dollars to market and sell policies, which government providers do not. They also pay handsomely to lobby (bribe) our representatives, another thing government providers don't.
By the insurance companies' own analysis, their costs are 8.9% overhead, plus profit and commissions, bringing the total to 16.7%. Medicare is 5.2% and headed down. The insurance industry projects Medicare overhead at 3.3% by next year, while theirs is not expected to vary “by more than a percent or two”.
What we need is the best health outcomes for the whole population at the best price. We compare poorly in terms of outcomes, with lower “health and life expectancy” (HALE) overall than any other industrialized country and at several times the cost as a % of GDP (HALE is an aggregate score). We have higher heart disease, cancer, infant mortality, low birth weight; and lower life expectancy and other measures of health outcomes, compared to other industrialized nations.
“The US should be particularly concerned about these findings,” says Gerard Anderson, director of the Bloomberg School of Public Health at Johns Hopkins University in Baltimore. “If I'm spending twice as much, I'd expect to have the better outcomes.”
“As for private insurance and government “competing,” could you please point me to a single case where the government has successfully out-competed private industry?”
Glad to. The electric power industry decided in the 30s that rural America was not profitable enough to wire. The government stepped in with municipal and co-op power. It's still a major factor in power generation, but more importantly, it convinced private utilities that they better sharpen their pencils and wire ALL the customers. We're in the same shape with high speed internet today. The monopolists don't want to bother increasing service to the level of, say, Korea.
Health care is another example of stuck monopolists. Why should insurers bother to contain costs when they have essentially cost plus contracts. The more the doctor pays and the more the patient pays, the more they make. Sure, our insurance is going up 3X the rate of inflation. Costs are up. What can they do but charge us more? That's no way to contain costs. It's a sure recipe for spiraling cost increases, and that's exactly what we have.
As to “taxpayer funded losses” which you mentioned, those are ALL included in that 5% overhead. You think the Association of Insurance providers intentionally UNDERESTIMATED the overhead of Medicare? Cmon, Doc. So it really is 12% difference and growing, according to the very people who would be expected to spin it the way you do, as half that. Plus, remember that Medicare already covers the highest risk, highest cost group, while private insurers have millions of working age, mostly healthy people. Even with that MAJOR advantage, they can't touch the efficiency of Medicare.
48% of Americans believe fundamental changes need to be made in our health care system. 34% say we should start from scratch. Only 16% say we just need to tweak it.
Finally, to put this in perspective, we pay 70% more than the median as a % of GDP. That was $650 billion last year. 100% coverage of all Americans under a single payer system would cost just 1/6 of that. As I mentioned, the excess cost attributable to private insurance overhead and profit ($150 billion) is more than enough attain universal coverage ($125 billion).
Covering The Uninsured In 2008: Current Costs, Sources Of Payment, And Incremental Costs. Health Affairs, 27, no. 5 (2008): w399-w415
GD,
Quoting polls where Americans are basically saying that they want a free pony is pointless. And you misrepresenting the overhead costs of Medicare (that five percent is made by comparing two lines in the federal budget. Besides, CMS pushes much of the administrative costs onto the providers themselves and also sets reimbursement rates at such a level that many procedures are not usually provided to medicare.
The Obama Administration is still pushing for open borders and unlimited immigration. HOw can the U.S. hope to ever contain costs if the U.S. will be providing free medical care to most of the residents of Mexico and central America.
I'd have to agree with SD here that one of the ways Medicare keeps costs down is by passing along costs to providers in what amounts to unfunded mandates.
Any discussion of Medicare needs to include that they are headed for bankruptcy. Holding them up as a financial template is foolish.
Providers and hospitals make their money on private insurance, break even on Medicare, and take losses on Medicaid. Providers can only absorb so much discounting. The proposals I have seen project the new public health insurance reimbursing at 110% of Medicare, which amounts to another heavy discount.
Given that we already have a primary care shortage, when you add another discount plan what do you think the result will be? Providers will stop participating in one or more plans. The likely victims will be first Medicaid, then Medicare.
I should add that private insurance plans typically reimburse about 130-150% of Medicare.
GreenDreams, you didn't finish your story. How much profit did government make from the electrification project?
Your Medicare numbers are missing the big problem. Medicare's red ink is not by any stretch of the imagination included in that 5%. Medicare notionally collects contributions from today's workers that go into a fund that will pay for their care after they retire. The problem is the federal government has raided the fund to pay for other things, so it's full of IOUs the government does not have revenue to pay. Medicare will not be able to cover today's contributors after they retire without big tax increases or coverage cuts.
In other words, the way the government is running Medicare amounts to a Ponzi scheme. It's racking up tens of trillions of obligations to today's workers and spending their money elsewhere. You're suggesting government will “compete,” but we send private entrepreneurs who “compete” this way to prison. Government gets away with it simply because they're too big to jail.
Well, folks, it's academic. Insurance companies have lost millions of customers to the recession. Expect the biggest of them to be coming for a bailout soon, AND increasing rates. Are you ok with that route, nationalization? Let them fail? Or what? So how's that for-profit model working out? Ready to keep them on life support forever? Oh yes, just like the bankers, they'll keep their fat exec bonuses and corporate suites and Vail vacations.
Meanwhile, Medicare has been around longer than most of them.There are no ambiguities about who's eligible, no examination to see if they can deny you or charge you more. The benefits are known to both patients and doctors, don't vary between states, there are no continually changing plan options and declining coverage. The so-called bankruptcy is very speculative, but the numbers I gave you are actual, and not contested by the insurance giants. They admit they can't compete. Why do you think they fight so hard to keep a public option off the table?
Uh, Dr. J. on rural electrification, you're making MY point. They are still strong and competitive, they make and distribute electricity, they employ people. That's what we want of them. Are they profitable? They're non-profit. Just what we want from them. I'm sure all those customers would love to pay more for power so they could provide a profit to someone, just like I'm sure people love to pay more for health care so insurance profiteers can be in a gleaming office building with a Mercedez in the parking garage.
No one has touched my point that every other civilized country does better (in health outcomes) for less money. Every single one. Right? The ONLY difference across all measures is our for-profit model. In other words, maybe you think the Japanese live longer because they eat better and have lower obesity, but what about Germans, French and Swiss? The only consistent factor between all the countries that have better health outcomes is they have single payer systems.
What I am hearing here is that you think the ACTUAL cost of care is higher than we're already paying, resulting in red ink. If that's the case, then costs can't be lowered, outcomes won't be better and we're screwed. Well thanks for enlightening me. Now, I've found the discussion over at Health Affairs Blog to be actually intelligent, thought provoking and fact based. You guys? Not so much.
Dreamer man, your definition of competitive is losing money in a market with no competition? I'm struggling to find a kinder word than “nonsense” for that, and I'm failing.
Yes, the ACTUAL cost of health care is too high, and rising. Not just here but in Switzerland (which has a private-centered system) and in all your other countries you're idealizing as role models. Reform needs to focus on reducing those costs, not just expanding government Ponzi schemes.
_J
Just one question. If a public option is such a untenable idea, why do all the private companies NOT want it offered?
I mean, if as you have said, that public system won't work, will cost too much, and not provide what only private insurance can, shouldn't they welcome the comparison?
Hemm, private companies (like everyone else) oppose anything they don't perceive as in their interests. And they're certainly right. The government is a gorilla that can print money, regulate them to death, and up its own accounting rules. It's hardly a level playing field.
The private insurers will lose a lot of power, which is fine by me, because they have way too much. They're trying to play a much larger role in the market than they can succeed at, and they're failing. They're doing that in large part because the government has encouraged or required it, but in any case they need to scale back to a genuine _insurance_ business model.
What I dislike is the government seizing more power for itself, because it has a track record of failure in health care as well. Folks in the give-me-my-pony contingent with GreenDreams will disagree, but they haven't taken a real look at the numbers.
I want to see power returned to the people. Not “health care choice” in the sense of Option A or Option B that some government bureaucrat decided you could be trusted with, but open-ended innovative choices like we get from, say, the consumer electronics industry. The entire system from insurers to doctors to unions to hospitals to pharmaceutical companies to equipment manufacturers to government regulators has turned into one big, unaccountable boondoggle. The only way we're going to drive accountability into the system is if people who control the purse strings have a real interest in the outcome.
Sheesh. Dr. J is back to insulting me. It appears that the entire world, except you, is in the “give-me-my-pony contingent” since they all have eschewed the pure profit all the time model of health care that you seem so fond of.
Hey, you started it, Dreamer Man:
“Now, I've found the discussion over at Health Affairs Blog to be actually intelligent, thought provoking and fact based. You guys? Not so much.”
I'd say it's your arguments that lack the facts behind them. You don't want to hear about medicare's trillion dollar problems, you don't even want to look hard at that 5% overhead number you keep quoting. You keep characterizing the rest of the world as socialized nirvana, without offering any specific data.
So yes, I don't think you're really engaging on the problem.
Well, how about some ideas then? so far you've suggested that sick people will get better prices negotiating directly with doctors. I doubt it. Maybe I'm lumping you in with the other staunch defenders of the status quo, but simultaneously you seem to argue that Medicare pays so poorly that doctors shun it. So which is it? Doctors are charging too much and patients should negotiate, or doctors won't accept any less than what is currently paid?
And that if they had to pay for it themselves, maybe they wouldn't spend so much, but is that the goal? to have sick people avoid care to lower costs? my comment about the generally lowbrow partisan bickering here is based on the more productive and enlightening discussions on other forums and not directed at you personally. I'm sincere about health issues and open to legitimate and fact based arguments.
I've seen figures as low as 1% for Medicare overhead, but I used the insurance industry's own 5.9% figure to give your side the benefit of the doubt. The figures are from the Council for Affordable Health Insurance (CAHI), “an Association of insurance carriers advocating for market-oriented solutions.” You can find their report here (PDF warning). According to the insurance industry itself:
(Note that without the “hidden costs” it's around 2%). Needless to say, the report also claims that private insurance overhead provides “significant value” to consumers. The CAHI report fails to mention
Having dealt with insurance companies all my life, both as an individual patient and as an employer, I have a wealth of personal experience with insurers who continually raise rates, reduce benefits and fight over every nickel of benefit they should be paying. /rant
So, personal experience aside, I have stated my position clearly. Healthcare is something that we should provide for all Americans, that is, no American should be without access to health care. In my opinion then, we as a nation should have as a goal to provide the best health care possible for all Americans at the lowest cost. Research by health policy groups, and by the World Health Organization, demonstrate that the United States performs poorly in measurable outcomes of medical care, yet we pay far more per person and as a percent of GDP than those countries that perform better in terms of health outcomes. This is an unacceptable situation. Those who argue for maintaining the status quo appear to believe that paying more for worse outcomes is compatible with their belief that we have “the world's best health care system.” The fundamental problem with a for-profit model of health care is in the very term “for-profit.” If our goal is better health care for all Americans, this model fails because of the central goals. Our goal is health care. Their goal is profit. They will never place our health above their profit.
Here are some of the savings that can be realized by offering free health care under a single-payer system. First we eliminate the profit, excessive executive salaries, bonuses, marketing expense, sales expense, sales commissions, broker commissions, lobbying expense and product development costs. None of these things contribute to health care. In addition, we eliminate the cost of determining eligibility because everyone's eligible. We eliminate the waste associated with multiple systems of billing, forms and other paperwork that vary between different insurance carriers. We eliminate the need to reapply for insurance when changing jobs, moving to a different state or simply shopping around for a better policy. And we eliminate the cost of raising capital, selling stock, shareholders reports, and of course, corporate taxes. A nonprofit, tax-exempt system for paying doctors and hospitals is simply less expensive all the way around than a for-profit model.
Thank you for those. That cost chart certainly encourages an Us-vs-Them view of the situation. We're the obvious outlier, with nothing to show for it, so we should simply join Them, right?
Trouble is, it's a misleading relationship. The US is an order of magnitude larger than European countries, and weird things happen when you lump them on the same chart. Unpack the US by state, though, and a different story emerges. We do spend more on health care than other countries, but we're mostly just a bit higher on the same curve, probably because their national systems ration more aggressively than ours, as the original post suggests.
I'm happy to dig into the overhead numbers, but I just don't think they're very important. Medicare probably does have lower overhead, not because they possess operational pixie dust, because they do less work. They don't make a profit (read: don't bother trying to improve), they don't spend on marketing (read: don't provide choices to consumers that need to be advertised), they don't deny claims as aggressively (read: don't root out fraud), so they're probably cheaper, if you don't count the financial cliff the system will be dragging the taxpayer over in the next few decades.
A June 1 New Yorker article illustrated the big problem. Medicare spends twice as much in McAllen, Texas–the second most expensive market in the country–as in El Paso, two cities of similar size, demographics, and health outcomes. Mostly because McAllen doctors do a lot of needless treatments.
What's being done about this? Well, Medicare is doing…<drum roll>…nothing. Not even notifying local hospitals that they'd placed second. The hospitals had no idea until the New Yorker showed up. The interviewer talked to some hospital administrators:
“It was a depressing conversation—not because I thought the executives were being evasive but because they weren’t being evasive. The data on McAllen’s costs were clearly new to them. They were defending McAllen reflexively. But they really didn’t know the big picture of what was happening.”
Please, go read the article, and then come back and tell me Medicare is doing a terrific job and should be expanded, because we can afford a lot more McAllens.
My ideas? I liked Regina Herzlinger's plan a couple weeks ago: give consumers the health insurance tax deduction the government gives only to corporations. That will force consumers to face the real numbers. They will in turn push insurance companies back into the insurance business and start putting brand-new pressure on providers to start publishing some success-per-dollar metrics and chuck the fee-per-treatment model.
Look what's already happening on Yelp: people are starting to review doctors and dentists the way they review restaurants, often rather critically. Those providers are so shocked at the consumers' temerity they don't know what to do and in some cases are suing. The New Yorker article suggests you shouldn't put the sheepish patients at the mercy of the woflish doctors, but I think they've misidentified the wolf.