Democrats Debate Universal Coverage




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he U.S. has entered a new phase in its everlasting debate about how to
fix the health care mess. As Drew Altman, president of the fastidiously
nonpartisan Kaiser Family Foundation, put it to the


Washington Post

in
March, “We’re at the beginning of the next great debate about health reform.”
We are entering this stage not because Americans have changed (they have
supported universal health insurance by large majorities since the Depression),
but because the nation’s economic and political elite have become much
more willing to call for universal health insurance or, as the more timid
of them say, “affordable health care.” America has not heard this much
chatter about health-care reform from business leaders, labor leaders,
the media, and politicians since the years 1992 to 1994 when universal
coverage through HMOs was all the rage. 


The health insurance industry itself is contributing to the chatter. This
industry—which has opposed universal health insurance since its inception
in the early 1930s, and which funded the Harry and Louise ads opposing
Bill and Hillary Clinton’s Health Security Act of 1993—has come to understand
that its survival depends on how state legislatures and Congress respond
to the growing number of uninsured. The industry correctly perceives that
it will collapse unless government can be persuaded to funnel more dollars
to insurance companies to replace the dollars the industry is losing as
employers flee the health insur- ance market. 


On November 13, 2006, the insurance industry executed what we might call
a 150-degree turn when its trade group, America’s Health Insurance Plans
(AHIP), released a proposal calling for universal coverage of children
within three years and 95 percent coverage of adults within ten years.
Not surprisingly, AHIP proposed that the taxpayers subsidize the purchase
of insurance from health insurance companies. In January of this year,
a coalition, including AHIP and a rogues’ gallery of establishment groups—
AARP, the American Hospital Association, the American Medical Association,
the Blue Cross and Blue Shield Association, Johnson and Johnson, Pfizer,
and the Chamber of Commerce of the United States— called on the U.S. taxpayer
to halve the number of uninsured by financing richer tax credits for people
who buy health insurance and by expanding Medicaid and the State Children’s
Health Insurance Program. 


The labor movement is also contributing to the renewed pressure for reform.
On March 6, the 47-member executive committee of the AFL-CIO endorsed,
at long last, achieving universal coverage by expanding Medicare to cover
the entire U.S. population. The AFL-CIO could not bring itself to use the
phrase “single payer,” but because a Medicare-for-all program is the equivalent
of a single-payer system, the federation’s announcement was an indirect
endorsement of single payer. Under a single-payer system, one government
agency, not hundreds of insurance companies, reimburses clinics and hospitals
and sets limits on what clinics, hospitals, and drug companies can charge.
The AFL-CIO’s endorsement of Medicare for all was hailed by single-payer
advocates around the country. “We recognize that the AFL-CIO is unlikely
to lead the charge for single payer without more grassroots pressure,”
said Dr. Ida Hellender, director of Physicians for a National Health Program,
one of the leading single-payer organizations in the U.S., “but we feel
this endorsement is a very important step for labor and a significant boost
for the single-payer movement.” 

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The Service Employees International Union (SEIU), the largest of the unions
to break with the AFL-CIO two years ago, has been much less helpful to
the single-payer movement, but it has worked hard to intensify the health-care
reform debate. Andy Stern, SEIU’s president, has made it clear he opposes
any system that continues to rely on employers fund it, as well as a single-payer
system. 


Stern made his dislike of single payer obvious at a forum sponsored by
the Brookings Institute in June 2006. After blasting the current employer-based
system as unsustainable, he criticized “people who say let’s just go to
Medicare for all…. There are not going to be single payers…in America,”
he told the audience. Then Stern uttered this spectacular non sequitur:
“I think the single-payer issue is a stalking horse for I am not sure what
because we are going to have a multi-payer system….” In an interview with
the

Los Angeles Times

on March 12, that is, six days after the AFL-CIO
endorsed Medicare for all, Stern conceded that “single payer would be the
most efficient system,” but then he repeated his claim that “Americans
want to have an American solution, not a Canadian solution.” Stern did
not explain why a universal system built on Medicare would be “un-American.” 


Although it is not clear what solution to the health care crisis Stern
supports, it is quite clear he intends to raise holy hell about the crisis.
On February 7 he held a news conference with Lee Scott, Wal-Mart’s CEO,
to announce yet another coalition for health care reform, this one called
the Better Health Care Together Campaign. The statement the coalition released
that day did not indicate what proposal, if any, it would support. It was
not even clear whether the coalition supports universal health insurance.
The word “universal” was conspicuously missing from the press release while
the phrase “quality affordable health insurance” appeared repeatedly. 



The Candidate Debate 



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he rising demand for health care reform from the insurance industry and
business and labor leaders is having an effect on politicians. This is
most apparent in the debate among presidential contenders. “Every candidate
[for president in 2008] is going to have to have a health-care plan, because
it is the number one domestic policy issue on the minds of voters,” said
Karen Ignagni, president of AHIP. For Democratic presidential candidates
having a plan for universal coverage, not just “a health care plan,” is
now a requirement. 


This was obvious at an unusual candidates forum hosted by SEIU and the
Center for American Progress (a think tank headed by former Clinton White
House Chief of Staff John Podesta) in Las Vegas on March 24. The forum
was unprecedented. It focused solely on health policy; seven Democratic
candidates participated (although Republican candidates were invited as
well); and it went on for three hours. Each speaker was given 20 minutes
alone on the stage—3 minutes to make an opening statement and 17 minutes
to answer questions from the moderator and the audience. This unusual forum
is worth reviewing in some detail because it illustrated the paradox of
the latest phase of the health care reform debate: that public yearning
for universal health insurance is now so strong that Democratic candidates
feel obliged to support universal coverage, but public pressure is not
yet strong enough to force most candidates to offer a plan that will achieve
universal coverage. 


As Sen. Hillary Rodham Clinton noted when her turn to speak came, all seven
Democratic candidates at the forum endorsed universal health insurance.
That, unfortunately, is where the good news ends. Only two of the seven—Rep.
Dennis Kucinich and former Sen. John Edwards— had detailed proposals to
present. Ku- cinich, a single-payer supporter, is not likely to win the
nomination and Edwards’s plan may not work. The other five participants
(Clinton, Sen. Christopher Dodd, former Alaska Sen. Mike Gravel, Sen. Barrack
Obama, and New Mexico Governor Bill Richardson) told horror stories about
the current system and outlined vague, sleep-inducing principles upon which
their health policy will be based: “all stakeholders must be involved”;
“we must fund prevention”; “we [must] make better use of the money we have
in the system”; “we must get costs under control”; “we must modernize the
way we deliver health care”; etc. Clinton claimed she wanted to hear more
ideas from the people before she developed a plan. Obama said he would
unveil a plan within a few months. Dodd and Richardson never promised a
plan. 

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Gravel was almost incomprehensible. He began by misusing the phrase “single-payer.”
He proposed a “single-payer health care voucher plan” under which Americans
could buy health insurance from five or six insurance companies. This is
an oxymoron. The essential feature of a single-payer is that one payer
reimburses clinics and hospitals directly; it does not reimburse insurance
companies. Then he said that “single-payer” means “all Americans pay for
it,” which is not accurate. By this definition, any universal plan paid
for by taxes would be a single payer, regardless of whether the nation’s
1,500 health insurance companies continue to exist. Then he announced that
Congress would never pass his plan and the only way we could get it enacted
was with a national initiative process which does not currently exist,
but allegedly will if Gravel becomes president. 


Because Kucinich has promoted single-payer for years and because he was
the only candidate supporting a real universal coverage bill in Congress
(HR 676, the single-payer legislation sponsored by Rep. John Conyers),
he was more articulate than any of the other candidates with the possible
exception of Edwards. He explained clearly why high administrative costs
generated by the current multiple-payer system would be reduced under a
single-payer system. Kucinich was also the most passionate. Without naming
the other six candidates, he lambasted them for assuming that it is impossible
to create a health insurance system that does not rely on insurance companies.
“It’s time we end the control that insurance companies have over health
care and our political system,” he said angrily. 


John Edwards, not coincidentally, was the only candidate other than Kucinich
who used the phrase “single-payer” correctly. He explained to the moderator
that he liked single-payer systems because they are so efficient, but he
thought many Americans would resist a single-payer proposal. “It is true
that single-payer systems dramatically reduce costs,” he said. “It’s also
true that people like the health insurance they have now.” Edwards then
explained that his proposal would divide the country into “health care
markets” and, within each market, consumers could choose between a Medicare-like
single-payer program and health insurance companies. He implied that the
Medicare-like programs, with their lower overhead costs, would probably
undersell the insurance companies and gradually end up being the only insurer—the
one payer left standing—in a given region. “This may gravitate toward a
single-payer system,” he con- cluded. “But consumers will decide that.”
 


Edwards’s statement that Americans “like” the insurance they have was wildly
off the mark. According to Harris Polls going back at least a decade, public
esteem for the health insurance industry is very low, comparable with tobacco
and oil companies. But Edwards’s larger point—that establishing a single-payer
system in one piece of legislation is going to be very difficult—is well
taken. No single-payer system in the world was installed overnight. (California
came close to pulling that off last year. The legislature in that state
enacted a single-payer bill last summer, only to see Governor Arnold Schwarzenegger
veto it in September.) 


The insurance industry and their allies have proven themselves adept at
keeping single-payer bills from getting hearings and defeating single-payer
initiatives (single-payer initiatives presented to Californians in 1994
and to Oregon residents in 2002 lost by large margins). So the question
of whether and how an American single-payer system could be phased in deserves
careful thought. 

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Achieving Single-Payer 



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here are several ways to achieve a single-payer health system in the U.S.
One could, for example, add all children under 19 to Medicare in year one,
add all people age 55 to 64 in year two, and so on. Edwards’s method—letting
market forces create a single-payer gradually—might work. (If it did, the
irony would be indescribably delicious.) And it might not. The critical
questions are whether the Medicare-like programs he has in mind would be
true copies of the existing Medicare program, and whether these programs
would start off with a large enough enrollee base to withstand “adverse
selection,” which means disproportionate enrollment by sick people. It
was impossible to tell from Edwards’s brief comments in Las Vegas, and
it is impossible to tell from the data he has made available on his website,
what the answers to these questions are. 


There is no question that the traditional Medicare program is more efficient
and more popular than any insurance company. It spends only 2 percent of
its expenditures on overhead and spends the other 98 cents on health care
while insurance companies spend 20 percent on overhead and 80 percent on
health care. In theory, if Medicare were forced to compete with insurance
companies, Medicare’s low overhead should give it a 15-to-20 percent price
advantage over private insurance companies. Moreover, the traditional Medicare
program (the original, single-payer Medi- care program in which 83 percent
of Medicare beneficiaries are currently enrolled, as opposed to the HMO
arm of the Medicare program in which the other 17 percent are enrolled)
is more attractive to patients because it does not attempt to control costs
by vetoing doctor-patient decisions. Because it is more efficient and more
attractive, a program truly modeled after the traditional Medicare program
should beat the pants off insurance companies. 


But for some reason Edwards is not proposing to throw open the existing
Medicare program, which now insures 43 million seniors and disabled people,
to anyone who prefers to be insured by Medicare rather than Blue Cross
Blue Shield or Aetna. He is instead proposing that smaller programs that
resemble Medicare, but which are separate from it, operate in numerous
“health markets” across the country (which he does not define) in competition
with insurance companies. Would these Medicare-like programs start out
with a sizable enrollment, say half a million to a million people, or would
they go through a growth phase in which they are quite small? If they start
out small, or never get to be very big, will they have to advertise heavily
to attract enrollees (something Medicare does not do now) and, if so, won’t
that drive up administrative costs and premiums? If they start out or remain
small, won’t they be vulnerable to adverse selection, especially if private
insurers deny health care to their sicker enrollees and encourage them
to switch to the Medicare-like programs? 


These and other problems caused by small size relative to the real Medicare,
and by the need to compete with private insurers, could cause programs
that bear the name “Medicare” to lose to the bloated insurance industry
even though the real Medicare program is far more efficient than any insurance
company. In that event, the single-payer movement will have suffered two
setbacks. It will not only have failed to build a single-payer system via
market forces, but a central premise of the single-payer movement—that
Medicare is more efficient than the insurance industry—will have been falsely
undermined. 


Edwards deserves credit for putting a detailed proposal in front of the
public and for being willing to describe single payer as good policy. But
he needs to explain why creating numerous mini-Medicare programs for the
non-elderly is a better idea than building on the existing Medicare base
of 43 million people. 



Appeasing Industry 



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iven her front-runner status and all the years she has studied health
policy, Hillary Clinton’s comments at the Las Vegas forum were the most
disappointing. Her remarks were a textbook illustration of the tension
between Democrats’ hunger to deliver universal coverage and their fear
of antagonizing the insurance industry and the other players that make
up the health care industry. Clinton made no mention of single-payer as
an option. She did go to great lengths to blister the insurance industry,
but then she implied that she intended to leave the industry in control
of the health-care system. For example, after telling a story of a woman
who was denied medical services by her insurer because her condition was
“pre-existing,” Clinton thundered, “We can’t get to universal coverage
until we eliminate insurance discrimination once and for all.” This statement
implies that Clinton intends to let insurance companies continue to run
the system. 


In addition to having nothing to say about single payer, Clinton endorsed
the claim that “prevention” and electronic medical records (EMRs) will
save money when in fact there is little evidence to support those claims.
She was not alone; only Kucinich and Gravel resisted mouthing these platitudes.
Preventive medicine can improve health, but as counterintuitive as it may
sound, there is very little evidence for the claim that making preventive
services more available saves money only on the grounds that good preventive
medicine improves health. There is no solid evidence that more preventive
services inevitably lead to lower costs. They may in fact lead to higher
spending. Teaching primary care doctors to identify depression in their
patients is a good example of a preventive measure that could very well
increase costs as more depressed patients get more therapy sessions and
start taking anti-depressants. 


The argument for EMRs as a cost-containment method is even weaker. Although
the insurance and computer industries have vigorously peddled hype about
EMRs for 15 years, the small body of research on EMRs shows mixed results
on quality and indicates universal adoption of EMRs will raise total spending
on health care by perhaps 2 percent. The evidence that EMRs can actually
harm patients includes, for example, a study published in a 2005 edition
of

Pediatrics

that found that mortality rates in a children’s hospital
in Pittsburgh doubled after introduction of an EMR. 


In stark contrast to the Democrats who attended the Las Vegas forum, none
of the Republican candidates supports universal coverage. The candidate
who comes closest to endorsing such a position is Mitt Romney. As governor
of Massachusetts, he signed a bill on April 12, 2006 that he and the bill’s
Democratic supporters in the legislature claimed would reduce the uninsured
rate in Massachusetts from 11 percent to 1 percent by 2010 without raising
taxes. (Today the law’s supporters say the law will get the rate down to
5 percent.) The law requires Massachusetts residents to buy health insurance
beginning July 1, and promises to provide subsidies to residents with incomes
under three times the poverty level. Because Romney’s law generates many
more customers for insurance companies, it is exactly the sort of law the
insurance industry supports. 


But the law Romney is so proud of is going to fail because it has no cost
containment in it. Romney and other supporters of the Massachusetts law
claim that costs will come down due to the provision of more preventive
medical services, the spread of EMRs, and the publication of “report cards”
on clinics and hospitals by a newly appointed state council using data
stored on EMRs. But this fantasy will never come to pass. As a result,
Massachusetts will face a choice, probably by no later than 2008, between
raising taxes in order to pay for the subsidies necessary for the uninsured
to buy insurance, letting insurance policies with shriveled coverage (including
enormous deductibles) count as “insurance,” exempting millions from the
new mandate to buy insurance, or some com- bination of the above. 


Readers should keep an eye on Romney’s law. We are going to see more laws
like it between now and the day when politicians find the will to enact
a single- payer system. Romney-like laws—laws that seem to insure all or
nearly all people but don’t—are likely because of the immense pressure
politicians now feel to vote for universal coverage and the immense pressure
they feel from the health care industry to do nothing meaningful to bring
health care costs down. 


We are indeed in a new phase of the American health-care reform debate.
The demand for solutions to the health care crisis is louder now than it
was even five years ago and much of the new demand is coming from the American
elite. But more talk does not signify that Congress and state legislatures
will enact effective solutions soon. With few exceptions, the talk is still
about goals we can agree on (extending coverage and reducing costs), not
effective means to achieve those goals. Until the public and the nation’s
leaders start talking in detail about real solutions, we will get, at best,
more Romney laws. The single-payer movement still has a lot of work to
do. 









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Kip Sullivan is the author of


The Health Care Mess: How We Got Into It
and How We’ll Get Out of It

(Author House, 2006).