Profit For Some Or Care For All
February 27, 2007
Diane Archer is the founder and past president of the Medicare Rights Center. She is an attorney and a national expert on Medicare.
The health insurance industry is full of surprises, but history and experience show that insurers will never surprise us with a good, affordable health care system for America. No cocktail of regulations, subsidies and tax credits will provide health security to the uninsured, underinsured and anxiously insured—virtually all Americans.
Two dirty little secrets about the insurance industry reveal why offering Americans a publicly administered alternative like Medicare is the only way to guarantee Americans good, affordable health care:
Dirty Little Secret #1: If for-profit insurers were forced to provide good health care coverage to all Americans, they would still try as hard as possible to avoid insuring the people with the costliest conditions and charge premiums even higher than they currently charge.
That’s why Medicare was established. The health insurance industry was either unwilling or unable to offer affordable coverage to half of America’s seniors. It’s too costly for them. So, to rein in costs and ensure every older adult had coverage, the federal government offered the coverage directly.
As predicted, Massachusetts is now seeing that requiring insurers to cover everyone in the state costs almost twice as much as projected. The way to reduce costs is not to eliminate benefits as some are suggesting , it is to eliminate insurance industry waste.
Dirty Little Secret #2: Eliminating insurance industry waste in our health care system—administrative waste and excessive prices—would cut our health care costs substantially.
Check out the health insurance systems in France, Germany and Japan. They spend half as much as we on health care and deliver better results by relying on a publicly administered integrated health care system that pools risk and negotiates rates on behalf of their entire citizenry. (To learn more, read Sager and Socolar, Durable Health Care for all Will Require Cost Conrol.)
Right here in the U.S., Medicare demonstrates that we can eliminate some 17 percent in administrative expenses alone through a publicly administered system. Medicare also shows the power of large group purchasing to achieve substantially lower health care prices; Medicare pays about 15 percent less than private insurers for the same services.
Unlike private insurance, Medicare works for older and disabled Americans because it pools risk and does not punish people financially because they need costly health care services. It works because it has predictable benefits and offers reliable coverage. And it works because coverage is automatic, unlike Medicaid and SCHIP, ensuring all eligible persons coverage and protecting them against the risk of losing coverage for failing to sign up or recertify.
Of course, every health policy expert out there knows that a publicly administered system would guarantee all Americans good, affordable health care at far less cost than we can ever achieve through private insurers, and they’ll say so at the dinner table. It’s time they went public.
The truth about the health insurance industry should be at the heart of the public debate, not the short-sighted and misguided calculus of what people think is feasible. While they keep silent, an ever-growing number of Americans are pushed into bankruptcy because of a medical need or, worse still, forced to forego necessary care. And employers who offer good coverage to their workforce see their ability to compete in the global marketplace, and their profits, eroding.
It would be un-American to force Americans to give up their private insurance coverage if they like it or to undo a multi-trillion dollar insurance industry in one fell swoop. But, it is inhumane and unconscionable to offer solutions that we know will not work and wish this health care crisis away, while tens of millions of Americans suffer. That’s why recent polls show that an overwhelming majority of Americans—including white, middle-class Republican men—favor health care reform that gives them the option of a publicly administered health plan as an alternative to private insurance.
That’s the route offered by Yale Professor Jacob Hacker in his Health Care for America plan: let the private insurers continue as they will for anyone who wants their coverage but force them to compete with a publicly administered plan that pools risk, negotiates rates and guarantees affordable coverage to the tens of millions of Americans who elect it. Through this American solution, we could rein in costs and ensure that everyone in the country has good affordable health care.
This is also what former Senator Edwards has proposed. In exchange for paying your fair premium share, you get coverage, choice of doctors and hospitals, reliable benefits at an affordable price and, if you would prefer, you can buy private insurance to cover your care. It makes so much sense.