A Medical Mount St. Helens Health care in the U.S.




I

n
the U.S. millions of workers and their children face the human and
economic devastation that can accompany a serious illness. They
go without paying their rent, buying clothes for their kids, or
even food on the table whenever a moderate illness strike.They face
the prospect of a six to ten hour wait in a hospital emergency room
for something as simple as a sprained ankle or common cold. 


The
official number of those without any health coverage in the U.S.
continues to grow, now exceeding 46 million—rising at a rate
of more than 1.5 million each year from 2000 through 2002 and by
2.7 million more in the last 18 months. 


During
2001-02 more than 75 million people in the U.S.—a third of
the population under age 65, 80 percent of whom were working families,
more than half of all Hispanic and 40 percent of all black Americans—went
without health care coverage at some point. More than 22 million
of that 46 million are employed in full time jobs. More than 10
of that 22 million work at companies with more than 500 employees.
More than a million a year with jobs are being added from households
with incomes between $25,000 and $50,000 a year. 


But
the 46 million are only the missing face of the medical Mount St.
Helens, the gaping hole of the millions without health care today.
Beneath the surface the pressures build, the forces still gather,
threatening to explode once again and reveal still further tectonic
dimensions of the crisis. 


Nowhere
has the crisis for those struggling to maintain their health benefits
been more evident than in the case of the current plight of grocery
and hotel workers who typically earn from barely above the minimum
hourly wage to a maximum of $12-$13 an hour in the higher-cost-of-living
big cities. Equally important, at most neighborhood food chain stores
and big city hotels, typically 70-80 percent are employed only part
time and 90 percent of them must work second jobs. 


After
management proposed a several hundred percent increase in their
premiums and deductibles in union negotiations in northern California,
one of 50,000 grocery clerks, Esai Alday, said: “We’re
all in the lower pay brackets. We live in little rooms in the city.
We can’t even dream about owning a house. Now they want us
to pay more. I work two jobs now. How are we supposed to pay for
health care, work three jobs? Why are they trying to put all the
burden on us?” 


No
less poignant is the situation faced by 4,000 hotel workers in San
Francisco, recently locked out by the 14 large international hotel
chains in that city. Susan Donahue, a young cook of 15 years at
one of the hotels, described the companies’ latest health care
offer as proposing to eliminate health care insurance coverage for
1,000 of the 4,000 union workers plus offering to shift monthly
costs for the rest up to $270 to $300 per employee. “If they
treat us this way this year, how will it be five years from now?”
she said. 





Costs Out of Control 



A

little more than a decade ago, during President Clinton’s first
term in office, an attempt was made to get a handle on the rising
costs and declining availability of health care. A modest National
Health Insurance plan was proposed. The corporate health care industry
quickly gathered its lobbyists, however, and launched one of the
most expensive lobbying campaigns in Congressional history to defeat
the bill. The big insurance companies, the multinational pharmaceutical
companies, the private hospital chains, and medical equipment providers
all rallied with record big bucks behind conservatives and others
more interested in their lucrative campaign contributions and defeated
this last serious effort at health care reform. In place of a National
Health Insurance plan was offered a stopgap measure called Managed
Health Care, which has since proved to be a debacle, not only in
terms of ensuring health care coverage, but also as a means to prevent
runaway health care costs as well.



Despite
Managed Care, health care costs since 1999 have consistently risen
on average more than 10 percent each year. Premiums paid to health
insurers have been rising even faster since Bush took office, in
the double digit range every year, and in the last 3 years between
13-14 percent each year on average. 





Shifting the Costs 



T

he
vice-president of the Health Research Education Trust, Jon Gabel,
pointed out, “Insurers are now adding to their profitability.
In fact, I believe profitability is as high as it’s been since
the mid-1990s.” One of the largest health insurers, Blue Cross-Blue
Shield, which covers one of every three people with health insurance
in the U.S., doubled its profits in 2003 with premium increases
ranging from 10 percent to 16 percent, in the process increasing
its surplus by $8 billion and reserves on hand another $32 billion. 


Premium
increases of 13-14 percent a year are, of course, at the low end,
charged to the largest companies with some leverage to negotiate
with insurance giants like Blue Cross-Blue Shield, Aetna, Cigna,
and others. Smaller companies with 100 or even 200 employees often
experience premium increases of 20-25 percent a year. The forecast
for 2005 is for the largest companies to pass on yet another 13.7
percent increase in premiums. 


The
annual 10 percent health care costs and the 13-14 percent for health
insurance premiums dwarf the rate of inflation or the gains in workers’
earnings—both of which have been averaging barely 1-3 percent
the past 4 years. But despite these minimal pay gains, the policy
of many companies during the Bush years has been to shift the costs
of the record double-digit increases in health insurance premiums
to their workers. 


As
reported by the Kaiser Family Health Foundation, premiums for workers
with families increased by 49 percent from 2001 through 2003, and
for single workers by 52 percent. Translated into real dollars,
a married worker with a family paid premiums amounting to $2,512
on average in 1988; a single worker $872 on average. By 2000 the
cost of the family premium had risen to $6,438 and by 2003 to $9,068.
For the single worker it was $2,471 and $3,383 respectively. 


A
recent survey by Fortis Health, a company that sells health savings
plans, showed that an average employee’s share of rising premium
costs has risen by more than $1,000 a year since 2000. 


Companies
who forego shifting health care costs directly to workers in the
form of higher premiums often use a more indirect approach to pass
on the rise in costs to their employees. The favorite means are
increasing co-pays, raising deductibles, hiking co-insurance charges
for spouses and children, reducing ceilings on payments, or otherwise
placing restrictions and limits on certain frequently used procedures.
All examples of what experts call targeting “first dollar”
health costs. 


The
preferred approach with regard to co-pays is to raise the employee’s
share of a doctor or hospital visit from what was typically 10 percent
or 20 percent in the past, to 25 percent or 50 percent today. Or
raising the dollar ceiling of out of pocket expenses before major
medical coverage kicks in, from the typical $5,000 in the past to
$10,000 before co-pays are no longer required. Or, in another typical
example, instead of paying a $10 co-pay for a drug prescription
written by a doctor for a 6 month period, making the employee come
in every month and pay the $10 for a month’s supply at a time
over the 6 month period. 


Among
deductibles the trend of late has been to raise what was once a
$100 per year deductible for employees and $150 or $250 deductible
per year for dependents, to the now more typical $250 for employees
and $500 for dependents. 


The
ceilings and limits game often involves putting a money cap—or
lowering the ceiling on a maximum annual payment—for a frequently
used medical procedure. Typical are limits on payments for MRIs,
CT scans, and blood tests. One-third of working age adults (57 million)
in the U.S., have some kind of long term illness such as heart disease,
diabetes, asthma, or other chronic condition requiring repeated
medical procedures. Thousands die each year when employers agree
to ceilings, or lower those payment ceilings for such procedures. 


An
increasingly favorite use of ceilings is the case of retirees’
health benefits. Ceilings on retirees benefits first became popular
in the early 1990s. Where ceilings on payments did not exist they
are now being applied; where they did exist previously they are
being lowered. Ceilings for retirees are particularly attractive
for companies. They allow a company not only to reduce spending
but also the amount saved (because of certain allowable corporate
accounting practices) becomes instant income added directly to the
company’s bottom line.





Any
combination of the above—higher premium payments, co-pays,
deductibles, limits on procedures, ceilings—can quickly add
up to a significant total shift of health care costs from employers
to workers. Any one of the devices for shifting costs easily more
than negate the annual average 2 percent increase in hourly earnings
workers have been getting the past 4 years.  





Deteriorating Quality of Health Care 



I

n
2004 the total bill for health care is estimated to cost $1.79 trillion.
The United States spends more than 15 percent of its Gross Domestic
Product (GDP) on health care, more than any other industrialized
country. Switzerland and Germany spend less than 11 percent. Canada
and France less than 10 percent. The average is 8 percent. 


A
study in

the Journal o


f


the American Medical Association

in the summer of 2000 reported, “Of thirteen countries in a
recent comparison, the U.S. ranks on average 12th out of 13 for
16 available health indicators.” Among some of the indicators,
the U.S. was 13th in years of potential life lost; 11th in life
expectancy for females; 12th in life expectancy for males; and 13th
in infant mortality. According to the study’s author, Dr. Barbara
Starfield of Johns Hopkins School of Medicine, by 2004 “It’s
getting worse” and, as she put it, “The findings are so
robust that I think they’re probably incontrovertible.” 


A
more recent study in October 2004 ranked the U.S. tied for 36 out
of 52 countries in the category of infant mortality, with Cuba and
Slovakia, and below Malaysia. Another study done in 2003, based
on data from a survey of 513 health care plans covering 71 million
Americans by the National Committee for Quality Assurance, found,
“More than 57,000 Americans die each year due to lack of health
care.” Still other studies estimate as many as 98,000 die each
year due to medical errors. 


Companies
not willing to absorb the cost of accelerating health care premiums—or
unwilling to bother to play the shell game of raising co-pays, deductibles,
lowering ceilings, etc.—are choosing to stop providing coverage
as a way to cut costs. 


More
workers, for example, are being required in recent years to pick
up the entire cost of their dependents’ coverage. Or in cases
where there is no union contract, companies are choosing to give
the employee a lump sum monthly payment equivalent to the health
insurance premium it once paid and then let the employee go and
find his or her own health insurance. The cost in terms of health
premium payments is thus frozen for the company at that last level.
The worker assumes all future premium cost increases. 


Another
significant area of declining health care coverage involves retirees
again. This particular trend is taking place predominantly within
larger corporations, those with more than 200 employees. In 1988,
roughly 66 percent of large companies provided health coverage to
retirees; by 1996 only 46 percent; by 2000, 39 percent; and in 2002
the percentage declined to only 34 percent. In smaller companies
with fewer than 200 workers, the coverage for retires fell by 2002
to only 5 percent. 


Where
employer-provided retiree coverage still remains, companies are
drastically reducing or even eliminating coverage for retirees,
such as recently announced in September by the telecom equipment
giant, Lucent Corp, and by major airlines like United, Delta, and
US Airways, by IBM, and soon by other major corporations like AT&T. 


The
number of retirees and their dependents thus losing, or about to
lose, coverage is likely in the tens of thousands. Moreover, the
pace of lost coverage for retirees is likely to quicken. Hidden
in the nearly 700-page corporate tax cut bill, recently passed by
Congress this past October 2004, are provisions for incentives that
encourage large corporations like Lucent and others to cut retirees
benefits and coverage even more. 





The
declining coverage problem is no less dramatic for workers still
on the job, not yet retired. From 1993 to 2003 the percentage of
full-time workers in the U.S. covered by an employer provided medical
care plan declined by 17 percentage points, from 73 percent to 56
percent. Only 36 percent of full time workers in companies of less
than 100 employees had any medical coverage by 2003. And only 9
percent of the more than 30 million part time workers in the U.S.
had any medical coverage. 


Expressed
in non-percentage terms, for the period since George Bush took office,
between five and six million workers lost their employer provided
health insurance. Of this total, approximately three to four million
still had jobs and either lost health coverage due to employer initiated
action, or else they dropped it themselves because of the inability
to afford the rapidly rising costs being shifted to them. 


Following
the 2004 elections the situation for active employees also promises
to worsen. Since the last decade there has been a rule in effect,
which allowed corporations to arbitrarily and unilaterally transfer
funds from their employee pension plans and use those funds to pay
for health care, in effect partially absorbing their rising health
care costs. While these transfers often served to undermine the
financial stability of employees’ pension plans, they were
successful in softening for a time the impact of rising health care
costs for many companies. However, the rule has limits. Companies
can only transfer funds to cover up to 20 percent of rising health
care costs and, once a transfer is made, they have to wait five
years before making another transfer. Many companies thus exhausted
this 20 percent transfer rule during Bush’s first term, 2001-04. 


According
to Hewitt Associates, a leading health care and human resources
consultant group, employee contributions to their health insurance
plans are projected to increase by 15 percent across all plans,
HMO or PPO. As even the

Wall St. Journal

recently admitted,
for 2005, “employers concede that they are shifting more health
care costs to workers and there is little letup in sight.” 





The Bush & Centrist Solutions 



G

eorge
Bush’s answer to rising health care costs is that “frivolous
lawsuits” by consumers of health care services are the primary
culprit behind rising health care costs. His solution, therefore,
is to reduce medical malpractice suits. The implied, erroneous assumption
is that health insurance companies, hospitals, and pharmaceuticals
will then pass on their cost savings in lower prices to consumers
and not continue raising prices and pocketing the profits—which
will likely be the case.





In
addition, Bush wants people to set up individual Medical Savings
Accounts (MSAs) with which to buy health care services—in effect
allowing another big middleperson, in this case the banks, the opportunity
to swill at the health care trough. MSAs are one of many recent
Bush initiatives designed to divert workers’ pay to banks,
Wall St., and other financial institutions that manage such accounts,
skimming lucrative fees and other charges off the top for their
services. MSAs are the forerunner to recent Bush initiatives to
set up similar Retirement Savings Accounts (RSAs) to siphon off
Social Security payroll taxes to the benefit of those same financial
institutions. Both MSAs and RSAs represent the on-going Bush-corporate
offensive to privatize both Medicare and Social Security. 


For
the Bush team the problem is not the price-gouging insurance companies,
greedy pharmaceutical companies with expensive bloated lobbies,
or the often corrupt for-profit hospital chains like Tenet Healthcare
or Health South, whose senior executives and ex-CEOs are currently
facing charges of kickbacks and fraud. The problem is the worker,
the consumer of health care services, who still has it too good,
who has too much health care and is still not paying high enough
premiums. 


The
story is similar in the related case of prescription drugs from
Canada. Bush continues to “study” the problem of ensuring
safety for the consumer—as he has done for four years now—when
in reality these are drugs manufactured in the U.S., already proven
safe, then exported to Canada where they are sold for half the cost
across the border compared to their price here in the U.S. While
not all the drugs imported from abroad are originally manufactured
in the U.S., in terms of their overall dollar value the majority
are from north of the border. Those products could, and should,
be available for purchase in the U.S. 


Bush’s
Economic Report to the Congress declared that the problem of rising
health care costs and premiums in the U.S. is that workers “have
too much insurance,” not too little, and that they “should
be encouraged to enroll in personal health care savings accounts”
with even higher deductibles that would promote less unnecessary
use of the healthcare system. 


The
centrist solution, unlike Bush’s, addresses the problem—but
only at the periphery. Centrists—i.e., DLC-type Democrats—propose
that the government assume some of the costs of catastrophic care,
a move that would provide immediate windfall profits for health
care insurers who would be left with the least costly subscribers
with the more minimal claims. Catastrophic coverage will also likely
encourage health care insurers and providers to actually raise prices
if there are no adequate price controls, which centrist’s adamantly
refuse to consider. 


Centrists
would also subsidize the problem, not resolve the crisis, by including
subsidized health care coverage for children, thus rewarding price-gouging
insurers, providers, and manufacturers with underwriting and government
guarantees at the taxpayer expense for their continued excessive
pricing practices. Like Bush, Centrists also take the position that
malpractice is a major contributor to the crisis, although they
admit at the same time that malpractice accounts for only one-half
of one percent of the annual cost increases for health care. 


To
their credit, and unlike Bush, centrists generally agree to allow
consumers access to Canada’s lower cost brand drugs. But neither
the centrist nor the Bush proposals address the fundamental problem
of the health care crisis in the U.S. 





Financing a Real Solution to the Crisis 



I

f
the U.S. today spends $1.79 trillion a year, or 15 percent of its
GDP, on health care, but countries like Canada, Germany, and others
with single payer universal health care systems spend only 8-11
percent, the U.S. should be able to reduce its current $1.79 trillion
cost by at least a third, from 15 percent to 10 percent, by moving
to a single payer system as well. That’s $600 billion a year
from eliminating the layers of unnecessary administrative costs
and profit gouging now plaguing the system. 


The
remaining $1.2 trillion a year could be raised in other ways. First
we could restore the stolen Social Security surplus. Twenty years
ago working people in the U.S. were burdened with the 12.4 percent
payroll tax on their incomes, plus the prospect that the income
base on which that 12.4 percent applies would rise annually to some
indeterminate level. Today that base is nearly $90,000 a year and
still rising. The promise at the time was that this tax, earmarked
to save Social Security, would guarantee Social Security until at
least mid-next century for them and their children. 


In
1992 politicians promised once again, as revenues and huge surpluses
began to appear from the payroll tax, that there would be a lock
box on these revenues to ensure their use only for Social Security
and not for other uses by the federal government. Once again, in
2000, presidential candidates Bush and Gore swore to the U.S. public
the surplus generated by the payroll tax would be locked away solely
for uses related to Social Security. But as they spoke, both candidates
knew, as had members of Congress since the early 1990s when they
first promised the lock box, that the surplus from the payroll tax
was being permanently “borrowed” every year and that the
$1.4 trillion surplus was being spent annually to pay for a growing
defense budget and tax cuts for corporations and high income individuals.





Were
the $1.4 trillion restored to the Social Security fund, as originally
intended by law, roughly $100 billion a year of earned interest
could be earmarked for financing single payer health care for everybody
in the U.S. All that is required is for the U.S. government to issue
bonds in the amount of the $1.4 trillion and place that amount in
a special fund within Social Security dedicated to universal health
care services. 


An
additional $350 billion a year in revenue could be raised by requiring
the wealthiest 10 percent of taxpayers, the 11.3 million who now
earn more than $103,000 a year, and the millions more earning between
$90,000 and $103,000, to pay the same 12.4 percent payroll tax on
all their gross income—just like the more than 100 million
taxpaying household now earning less than $90,000 a year pay on
virtually all their incomes. If more than 100 million working people
in the U.S. who earn virtually all their income from wages and salaries
now pay a 12.4 percent payroll tax on all their incomes, why shouldn’t
the top 10 percent income bracket, who earn more than $384,000 on
average, also pay the same? If all people in the U.S. paid 12.4
percent, another $350 billion a year could be raised and dedicated
to a special universal health services fund within Social Security. 


If
 those with earnings over $90,000 were also required to pay
the Medicare tax on all their gross incomes, the 12.4 percent payroll
tax figure would increase to 15.3 percent, and provide an additional
$75 billion a year in dedicated revenue. 


In
addition to the above $525 billion a year that could be raised by
reforming the payroll tax system by making everyone pay the same
percent of their income, and from restoring the $1.4 trillion Social
Security surplus, another $275 billion a year could be raised by
closing corporate tax loopholes, restoring historical rates on corporate
and wealth taxes, eliminating current corporate and individual tax
shelters, and for the first time strictly enforcing the foreign
profits tax that U.S. companies are required by law to pay, but
do not, on earnings from offshore operations. 


Various
independent sources estimate changes in these areas would conservatively
generate another $275 billion a year. 


Single
payer, universal health care should not necessarily mean government
payments for any and all services without reasonable controls. There
is thus a role for reasonable deductibles, co-pays, and similar
cost control measures in a universal single payer plan.  The
problem is that such measures are not being employed primarily for
cost control, but as means to shift costs and subsidize corporate
profits performance at the expense of employees. 


Another
$400 billion a year could therefore be raised by maintaining, at
much reduced levels, reasonable deductibles, co-pays, and other
cost control measures to ensure unnecessary wasteful use of the
system’s services did not occur. 


Health
care in the U.S. is a landscape of devastation and barrenness not
dissimilar to that gray, desolate, ashen-covered mountainside laid
bare by the eruption of Mount St. Helens in Washington State 24
years ago. Except now it is not millions of trees that have been
torn up, flattened, and scattered. It is the lives of tens of millions
of workers and their families. The magma rises. The mountain groans
and shakes, awaiting the next inevitable eruption.



 





Jack Rasmus is
on the national board of the Writers Union, AFL-CIO. This article
was adapted from his book,



The War At Home: The Corporate
Offensive in America from Reagan to Bush



.