National Health Insurance - 50 Million Reasons
Apr 16, 2012 | The HWN Team | Insider
image by: jennifrog
Despite the advent of Obamacare, most estimates indicate that about 50 million Americans remain uninsured. So, why can't the United States insure all its citizens like the rest of the industralized world?
The U.S. has a strong need to solve the problems with its health care system. Rising costs, rising numbers of uninsured citizens, negative impact on families and businesses, and poor outcomes make the debate over national health insurance one of the most important issues on the nation's agenda. The United States is unusual among industrialized countries; it is the only wealthy industrialized nation that does not ensure health coverage for all of its citizens.
The debate centers on whether there should be a single governmental payor for care, such as an expansion of Medicare or modifying the current private insurance system to place more responsibility on the individual to make decisions about purchasing healthcare in a free market setting. The national health insurance (NHI) debate is, at its roots, a debate about 1) the role of government in people’s lives and 2) money.
But the debate over National Health Insurance extends well beyond the issues of economics and political ideology. The problem of how Americans access medical care must also be viewed within the context of Americans' view of themselves and with the recognition that this need is fundamentally personal, affecting Americans at a most basic level. As a result, the arguments for and against national health insurance are deeply felt.
Those who favor national health insurance believe that government should play a role in safeguarding the health and safety of Americans. They further believe that every American has a right to a basic level of quality healthcare. Most proponents envision a system that extends the Medicare program to all citizens. They argue that reductions in the enormous administrative burden caused by many different insurance programs combined with an emphasis on long term preventive care will more than pay for the increase in coverage costs.
Those who oppose national health insurance believe that healthcare, like any other commodity to be purchased, will be made most effective and efficient by being subjected to the marketplace where competition will drive innovation and quality and efficiency. They further believe in limiting the role that government plays in people’s lives, preferring to provide money directly to citizens so they can make independent choices about healthcare, according to their own needs.
The current health care system is a competitive marketplace, paid for by a combination of private insurance and several national or quasi-national healthcare insurance programs.1
68% of Americans are insured by private healthcare insurers, either as individuals or individual families or in a group plan through an employer or association. Plans vary in terms of cost, coverage and financial incentives/disincentives for accessing care. Indemnity, PPOs and HMOs generally fall into this category.
8.2% of Americans, mostly those aged 65 and over participate in the Medicare program, a national health insurance program that pays for most but not all medical costs. Medicare participants often purchase supplemental private health insurance to cover costs that Medicare does not pay. Medicare income guidelines exclude about 4% of the elderly.2
14% of Americans are insured by Medicaid, state/federal health insurance programs that provide coverage for families who meet guidelines for low income. Medicaid covers most costs but, because the Medicaid program traditionally pays such low rates to providers, Medicaid recipients often find that doctors and other healthcare providers simply refuse Medicaid insurance, rendering them effectively uninsured.
3% of Americans receive veterans’ medical benefits. Unlike any other program, the Veterans’ Administration operates a separate system of medical care providers that exclusively treat veterans. Many feel that this parallel system is redundant and should be eliminated.
15.6% of Americans are uninsured. Of interest, the percentages add up to more than 100% because some people are counted in more than one category.3,4
One of the areas of confusion in the national health insurance debate is the difference between national health insurance and socialized medicine. Both systems are in operation in the U.S. today. Medicare and Medicaid represent forms of national health insurance, albeit limited to specific populations of people. In each case, individuals use their insurance to purchase care within a competitive healthcare system. The Veterans Administration’s separate medical care system represents the socialized medicine approach where the government owns and operates all medical facilities. The current national healthcare insurance debate does not include discussion of government-owned facilities.5
What's wrong with the current system?
Lots. Taken together, the following indicators suggest that the U.S. healthcare system is in chaos - too expensive and not effective enough.6
Cost - Medical care costs in the United States represent $2.6 trillion annually or $8,042 per capita. The cost of medical care has risen 75% over the past 8 years, outstripping inflation and per capita income increases by several multiples. U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.2 trillion in 2016, or 20 percent of Gross Domestic Product (GDP)
Inequities - Even though the United States spends almost 23% of its GDP on healthcare, millions of Americans are either uninsured or underinsured. At least 47 million - 50 million Americans have no health insurance coverage at all. 25 million adults are underinsured, up 60% from 2003.
Financial impact on businesses and families - Many major U.S. companies find that the high cost of providing healthcare for their employees is a strong factor in decisions to outsource American jobs to other parts of the world. For example, American-made cars carry a $1,000 to $1,500 healthcare cost per car, significantly higher than other auto producing countries such as Japan. As an aside, at the same time the high cost of medical care in the United States has fueled an explosion in medical tourism.7
As the United States loses jobs, workers become increasingly uninsured or underinsured, leading to huge personal financial problems. According to a study by Harvard University, 50% of all individual/family bankruptcies in 2001 were the result of medical bills. Almost three quarters of families that filed bankruptcy actually had medical insurance at the time of the illness that caused the financial crisis though 38% had at least temporarily lost coverage by the time of bankruptcy filing.8
Quality - Although the United States spends the most money on healthcare per capita of any nation in the world, the U.S.’s global indicators of health such as mortality, infant mortality and incidence of various diseases remain strikingly lower than many other industrialized and emerging economy countries.9
Most analysts currently rank the United States 28th in the world in infant mortality, far behind other industrialized nations such as Sweden, France, Japan and Germany. Rates range from 3.0 in Japan to 192.5 in Angola. The 2007 U.S. infant mortality rate of 6.4 deaths per 1000 live births is comparable to Croatia, Lithuania and Cuba.
The life expectancy for an American, calculated from birth, is currently 78 years. According to Nation Master data, the U.S. is ranked 44th in life expectancy compared with 220 countries in its database. This ranking is below countries such as Bosnia and Herzegovina, the Cayman Islands and in company with countries such as Taiwan, Albania and Kuwait. Mortality data ranges from age 32.2 in Swaziland to age 83.5 in Andorra.
Even in the area of heart disease, where the U.S. boasts world class physicians, hospitals and equipment, the United States’ rate of 106.5 deaths per 100,000 population is higher than almost half of the other 26 countries for which data was available.
Rate of deaths from heart disease
Source: World Health Organization
It's clear that the current U.S. system needs to improve. Despite spending the most on healthcare per capita when compared to countries with universal healthcare, its citizens are also the sickest. But adoption of NHI remains debatable and contentious.
The argument for and against NHI centers around the following issues.10-12.
- The global evidence shows that every country that offers some kind of national health insurance experiences lower costs and better outcomes than the United States.
Rebuttal: Lower costs may be due to lower wages and supply costs in other countries, not reflective of better spending strategies.
- The U.S. healthcare system is based on the free market model, treating healthcare as a commodity, available only to those who can afford to pay for it, rather than as a public good that should be available according to need. Health insurers and providers do not typically compete by driving innovation or becoming more cost effective. Instead, competitive advantage is sought by cost shifting and cherry picking the least sick patients.”
Rebuttal: The U.S. system acknowledges the American belief that every person has a right to make their own decisions such as purchasing the amount of healthcare they need at a price they can afford. Distributing healthcare creates entitlements that are subject to abuse.
- NHI will save at least $200 billion annually (more than enough to cover all of the uninsured) by eliminating the high overhead and profits of the private, investor-owned insurance industry and reducing spending for marketing and other satellite services. The current high cost of the bureaucracy associated with multiple insurers with differing rules, often designed to avoid payment, would be substantially reduced.”
Rebuttal: There is no good evidence that a government program would be more efficient; is there any government program that is more efficient than a similar, privately managed program? The current government system of Medicare and Medicaid imposes a huge burden of rules to follow and justifications required for reimbursement. This massive bureaucratic overlay would not disappear under NHI. Given that Medicare is the model for NHI and Medicare is a major producer of bureaucratic obstacles, it will probably get worse.
- National health insurance would make it possible to set and enforce overall spending limits for the health care system, slowing cost growth over the long run.
Rebuttal: The government would exert too much control; let the market exert the control.
- One of the factors that drives healthcare costs is the plight of the uninsured. These Americans typically do not receive preventive care and avoid seeking medical care until the need is acute. As a result, the cost of providing care for the uninsured is much higher than it needs to be.
Rebuttal: Once the uninsured do seek care, they get about the same amount of care as the insured.
- As the global experience shows, NHI would create a healthier America which in turn will create greater productivity and ability to compete in the world marketplace. Research shows that absenteeism results in an average 10% productivity loss in the workplace and the majority of absenteeism is related to personal or family illness or injury.13
Rebuttal: Any improvements in the healthcare system will improve productivity.
- NHI would reduce clinicians’ fears of the corporate dominance of medical care,
Rebuttal: The U.S. has an extremely poor track record of government being able to manage large scale programs effectively; in contrast, corporations have an excellent management track record.
- NHI would increase choice, highly valued by Americans, as opposed to HMOs which limit choice.
Rebuttal: Medicare, the model for NHI, uses HMOs as a cost containment strategy; choice will continue to be eroded under a NHI.
- NHI would help corporations by equalizing the burden of healthcare across businesses and allowing US corporations to become more competitive in the global economy.
Rebuttal: Many corporations use medical insurance programs as a recruiting and retention tool; NHI would marginalize that competitive advantage.
- Prevention is much more than immunizations and screening. Prevention includes education, incentives for managing risk factors for heart disease, early management of controllable problems to prevent more severe problems in the future. Today’s insurers must produce profits for today’s P&Ls so they use strategies that create short term gains such as co-pay schemes. A NHI program will invest in longer term prevention that will improve outcomes across populations.
Rebuttal: Childhood immunizations are cost-effective but many other preventive programs are not. Screening for early detection of diseases can be more costly. The cost of screening large numbers of individuals is greater than the cost avoided by identifying small numbers of early cases.
- Congress will need to put into place safeguards that require negotiation rather than monopoly decision-making.
Rebuttal: The U.S. government has shown that when it manages medical care, it reduces costs by making broad cuts across the Board, forcing physicians to be unwilling to accept Medicaid, for example.
- Not every country experiences rationing issues. It is likely that private insurance companies would sell n”ready access” insurance so that an individual who can afford it, could purchase supplemental insurance that would pay for a procedure that might be subject to some shortage. This scenario already exists in the form of concierge medicine where individuals can purchase the ability to receive a home visit from a physician within a few hours of request.
Rebuttal: Most national health insurance programs in other countries create rationing so American citizens will be forced to wait for necessary procedures.
- It will always be possible to have choice in the U.S. Today, Medicare recipients choose to buy supplemental coverage to bolster Medicare reimbursement, which does not cover all medical bills. Now that Medicare includes a prescription drug benefit, most elderly people are satisfied with the Medicare program.
Rebuttal:Many countries with NHI programs are experiencing the introduction of layers of privatization due to consumer demand for better access.
- When you are uninsured, you typically wait until a problem is acute before seeking care because you know you will have to deal with a bill that you typically cannot pay.
Rebuttal:Even though there are many uninsured American citizens, they still receive healthcare when needed.
- Given that the average health insurance premium costs over $12,000 annually, it is unlikely that most families would be able to purchase insurance on their own, even with the recently proposed $5,000 tax credit. Plus, to get the credit, you need to spend the money first. Many families can’t afford to make the investment so they will lose healthcare insurance as well as the tax credit.
Rebuttal: It is much better to put dollars in the hands of consumers and let them purchase the care that they need in the configuration that makes sense. For example, a relatively healthy person might choose a low cost plan with only catastrophic care and a high deductible. Since he is unlikely to use the plan, he saves money by choosing the minimum.
- NHI does not necessarily limit income. Physicians will still compete for clients and those who offer superior service will have the opportunity to reap financial rewards. Moreover, it may be healthier to attract people whose goal is to help people rather than choose the most lucrative subspecialty.
Rebuttal: The best students will be discouraged from becoming doctors because there earnings will be limited.
- Access to a minimum level of healthcare IS a right that every American should be able to count on; it’s a cost of being a part of our great society.
NHI will establish healthcare as a right. That status will make it very difficult to dial back the system if costs become unmanageable, like the social security situation.
- Limiting factors exist in the private insurance industry as well through the use of tiered co-pays, formularies and prior authorization for procedures. Similar obstacles to care exist in most countries, implemented with the goal of reducing unnecessary costs.
Rebuttal: “Research has indicated that Medicare and Medicaid patients face obstacles in getting the care they need, such as required prior approval for certain drugs, limits on prescriptions and co-payments that they can’t afford.”
- There is only so much money available for healthcare. This money is best used to support public health programs to limit environmental health hazards and the spread of infectious and communicable diseases, and public programs providing are for vulnerable populations, i.e., children, low income elderly, and the severely disabled.
- Government can be effective in an expanded role of providing basic care for all citizens.
Rebuttal: There is only so much money available for healthcare. This money is best used to support public health programs to limit environmental health hazards and the spread of infectious and communicable diseases, and public programs providing are for vulnerable populations, i.e., children, low income elderly, and the severely disabled.
- The underlying notion of insurance is to minimize risk by pooling resources. In the area of healthcare, an individual’s care needs are great at the beginning and end of life and fairly minimal in between. When you pool people of all ages together, you use the resources of the young and healthy group to fund other periods of life, recognizing that the young and healthy will eventually age and require care that they will receive from the ongoing pool of resources.
Rebuttal: Healthy, responsible people should not be penalized by subsidizing people who choose not to take care of themselves by smoking or overeating. Similarly, young working people should not need to subsidize the elderly. It’s also possible to incentive or disincentivize people for their behaviors, e.g., rebates for people who maintain the right weight or do not smoke, similar to lower premiums on car insurance if you take a safe driving course.
- The American Medical Association is in favor of national health insurance; they do not believe it will diminish their numbers.
Rebuttal: NHI would drive good doctors out of the system because their earning options would be limited.
Is there any middle ground?
Although many of the arguments represent polar opposite beliefs, there are three major areas of middle ground where a discussion can begin.
Both sides are in favor of reducing unnecessary costs. It’s very possible to review the administrative burdens that can be eliminated under NHI.14
Both sides are interested in some government role in matters of health. Although there are analysts who argue against an incremental approach, it may be possible to add another group to the Medicare program, people aged 55 and older, for example. This is the age where chronic diseases begin to appear and preventive measures can make an enormous difference in preventing acute illness and significant costs later on in life.15
And there is probably some value to increase programs of consumer-directed spending through health savings accounts within the current Medicare and Medicaid systems.
The Bottom Line
It’s time to move this debate back to the front of the line. Despite the advent of Obamacare millions of Americans remain uninsured or underinsured or uninsurable and many indicators are still registering in the negative.
NHI or single payer plan is merely a payment mechanism. Can't the U.S. have a single payer plan and still retain a fundamental competitive health care system providing choice and driving innovation? It is doable. 50 million Americans and the rest of the world are watching. Come on United States, there is a middle ground.
Originally published Oct 14, 2008, updated August 20, 2012
- Health Care Facts: Costs, National Coalition on Healthcare, September 2009
- Medicare Enrollment, National Trends, Centers for Medicare and Medicaid
- Schoen C et al, How many are underinsured? Trends among U.S. adults, 2003 and 2007, The Commonwealth Fund, June 10, 2008
- Poverty Threshold, The study defined underinsurance one of the following conditions: annual out-of-pocket medical expenses totaling 10% or more of income, or 5 percent or more among adults with incomes below 200% of the federal poverty level or health plan deductibles equaling or exceeding 5% of income, Wikipedia
- Veterans’ healthcare issues in the 109th Congress, 2006
- Wilson K, Healthcare Costs 101, California Healthcare Foundation, August 2012
- Crooks V et al, What is known about the patient's experience of medical tourism? A scoping review, BMC Health Services Research 2010, 10:266
- Medical bills leading cause of bankruptcy, Harvard study finds, ConsumerAffairs.com, Feb 03, 2005
- Health care in the United States, Wikipedia
- Davis K et al, Slowing the Growth of U.S. Health Care Expenditures: What are the Options, The Commonwealth Fund, January 2007
- Insuring America’s Health; Principles and Recommendations, Institute of Medicine of the National Academies, January 13, 2004
- Gorman L et al, State Health Care Reform: Key Questions and Answers, National Center for Policy Analysis, April 2008
- Absenteeism—the productivity leaking bucket, and four ways to plug it, HR WebCafe, 2006
- Berwick DM et al, Eliminating Waste in U.S. Healthcare, JAMA, March 14, 2012.doi: 10.1001/jama.2012.362
- Birnbaum et al, Medicare coverage for seniors: how universal is it and what are the implications? paper presented at the annual meeting of the APSA 2008 Annual Meeting, Hynes Convention Center, Boston, Massachusetts, Aug 28, 2008
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