Mad As Hell Doctors

The following is a response to recent questions about the new health care legislation’s potential benefits.  Mad As Hell Doctor Sam Metz provides a brilliant comparison when presented with this query:  ”Because the Netherlands and the U.S. have an individual mandate and use for-profit insurance companies to finance health care, can Americans expect to enjoy the same cost-effective results as do the Dutch?”

Almost every industrialized country providing universal cost-effective health care follows three rules:

1.     All citizens are in a single risk pool with a single schedule of benefits.

2.     Cost sharing to patients is minimal.

3.     Financing is provided by regulated, not-for-profit agencies.

There are three exceptions among industrialized nations. The US violates all rules. Consequently, we rank last on almost every measure of public health while spending twice as much as our average industrialized colleague.

The Netherlands (and Switzerland) comply with 2 ¾ of these rules. All citizens are in a single risk pool with a single schedule of benefits. Cost sharing is minimal. Financing is provided by regulated agencies. However, for-profit companies are allowed to compete with not-for-profit companies.

But the other two rules still apply in the Netherlands, making this brand of competition repellant to American insurance companies.

• Insurers must sell at the same price to all applicants, regardless of age, sex, or health.

• Just to be sure there is no cherry picking, the Dutch government taxes companies with healthier patients and subsidizes those with sicker patients.

• All policies must include a comprehensive schedule of benefits at a regulated price. Companies compete on service only.

• All policies have low deductibles and minimal out of pocket costs.

• Administrative costs are low, 5%, compared to the US costs of 15% to 20%

It is not only the Dutch insurance companies that operate differently, consumers do as well.

• All residents must buy insurance. No excuses.

• Failure to pay the required premium may precipitate a tax on the offender’s salary, disability benefits, or retirement income.

• Specialty care can be obtained only through primary care referrals.

What does this ostensibly competitive market look like? The top five plans in the Netherlands have 82% of the market. Most insurers still operate at a loss in hopes of gaining market share later. And 75% of health care is funded via the government. In the US, the figure is 45% and there is outcry about “socialized medicine” and “government rationing.”

It is quite the imaginative stretch to say our new health care bill puts us on par with the Dutch system.

Remember the three rules. The US has a long way to go before we can claim to be “going Dutch.”

References:

http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2010/Jun/1400_Davis_Mirror_Mirror_on_the_wall_2010.pdf

http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2009/Jan/The-Swiss-and-Dutch-Health-Insurance-Systems–Universal-Coverage-and-Regulated-Competitive-Insurance.aspx

http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2009/Jan/The%20Swiss%20and%20Dutch%20Health%20Insurance%20Systems%20%20Universal%20Coverage%20and%20Regulated%20Competitive%20Insurance/Leu_swissdutchhltinssystems_1220%20pdf.pdf

User Steve posts on MAHD home page:

“As a practicing physician for 20 years, I can’t believe that other physicians want a “medicare for all”. Medicare is a bloated government program that is barely functioning. Now I’m not saying that our system is perfect- far from it. However, throwing out WHO statistics that rank us just above Cuba is misleading. Statistics only tell a certain amount of truth. For example, it is a well known fact that african-american women have a higher infant mortality rate than caucasions- irregardless of socioeconomic levels.

As someone who has worked in other countries (albeit in 3rd world countries), I feel that our level of care in this country is extremely high. Also, I had a personal situation which made me realize how high our general medical care is. My friend (a physician) was skiing in Canada when his son had an accident and struck his head and had a loss of consciousness. They were in Kelowna (the 3rd largest city in BC) and were told that the only CT scanner in the city was broken and the closest CT scanner was in Kamloops, a 3 hr drive away. If the kid had an epidural hematoma, he likely would have suffered the same fate as Natasha Richardson (wether she would have died if she was in Vail is another topic).

Yes there are problems with our system, but to paraphrase our President, instead of taking out a hatchet to the medical system, doesn’t it make sense to take out a scalpel? Address the issues that make our system work and address the issues that don’t work. Tort reform, insurance companies (Blue Cross with 180 million in profits and the CEO making 4 million), and the general costs of running an office all need to be addressed.

I’m not willing to trust the government to run our medical care. Have you guys forgotten what it’s like to work at the VA or at a county hospital? Also, how do you expect to pay for this one payer program? I don’t know about you guys, but if I relied on medicare/medicaid payments, I would have to close shop.”

Dr. Samuel Metz responds:

I thank Steve for his heartfelt comments about health care reform. He raises critical points, each deserving of a thoughtful response. I’ll try to provide them.

Steve correctly observes the inefficiencies of Medicare. Its high overhead (relative to other single payer systems) and Congressionally-determined (i.e., lobbyist-determined) physician reimbursement rates produce nationwide inequities in cost and quality. Physician anesthesia, my specialty, would be eliminated at Medicare rates. “Medicare for All,” I contend, is a misleading slogan to sell single payer health care to reluctant Americans.

But for all its flaws, Medicare’s overhead is one tenth that of private insurance [1]. And it provides medical care to elderly citizens uninsurable in a free market economy. And being uninsurable in our country is a death sentence.

Steve is correct that American health care looks pretty good compared to third world countries. But the US is not a third world country. When we compare ourselves to other industrialized nations, the results are shocking.

It is not only WHO statistics that make us look bad. The Organization for Economic Cooperation and Development, the Commonwealth Fund, the Kaiser Family Foundation, and even the CIA confirm the sad fact that by almost any measure of public health, we rank last among civilized nations [2-6]. Ironically, one of our few high ranking areas is patient satisfaction with their physician, but not, notably, with their insurance, coverage, costs, results, or access.

Steve points out that our incredible density of MRI scanners enables some American trauma victims to survive what might have been a fatal accident elsewhere. In contrast, however, 44,000 Americans lose their lives every year even living across the street from a first class hospital because they lack money [7]. No other country can make that claim.

Steve remembers the same Veterans Administration hospitals that I witnessed 25 years ago. It was not pretty. But that was then. Today’s VA provides, hands down, the highest quality health care at the lowest cost to the sickest patients with the highest patient satisfaction [8-14]. If VA care were available to all citizens, costs would plummet and public health skyrocket overnight.

Steve worries about government inefficiency. As mentioned, Medicare administration costs are the highest of any single payer health care system in the world, running about 3.8% (that is, 96.2% pays for actual medical care while the rest goes to overhead)[15]. Other single payer systems, both in the US and abroad, enjoy lower administrative costs. In Taiwan and the VA, overhead is less than 2% [16-17].

However, compare this with the 18% administrative overhead of American private health insurance companies. Even this number is deceptively low. If we include costs to employers, physicians, and hospitals to deal with private insurance, administrative cost rises to 35%. That’s about $350 billion annually paid by Americans to have private insurance move their money, not to provide health care [16]. Redirecting that $350 billion through a single payer system would finance universal, no-deductible, low co-pay health care for every American without new taxes or altering physician remibursement [18]. While such a system would leave many insurance executives unemployed, at least they would have health care.

Steve suggests a scalpel to preserve what works in our current health care system. It will take a sledge hammer to excise private insurance from our health care system. And as long as we preserve private insurance, nothing else will change.

Health care reform is not synonymous with socialized medicine, or physician poverty, or eroded physician-patient relationships. Union medical trusts, the VA, Kaiser Permanente, the Mayo Clinic, and other private medical clinics are American single payer systems providing cost-effective health care with far better efficiency, patient (and physician) satisfaction, and public health outcomes than our private insurance industry. Once we let go of private insurance, the future of health care looks very bright indeed.

1.     Woolhandler S, Himmelstein DU. Costs of health care administration in the United States and Canada, NEJM 2003;349:768-772. http://content.nejm.org/cgi/content/full/349/8/801

2.     Organization for Economic Cooperation and Development (OECD) policy brief.  Private health insurance in OECD countries. September 2004. www.oecd.org/health/healthdata.  www.oecd.org/health/healthataglance

3.     Schoen C, Davis K, How SKH, Schoenbaum SC. US health system performance: A national scorecard. Health Affairs Web exclusive, November/December 2006; 25(6): w457-w475,

4.     Kaiser Family Foundation, http://www.globalhealthfacts.org/bytopic.jsp

5.     CIA. The World Factbook. www.cia.gov/library/publications/the-world-factbook

6.     World Health Organization. The World Health Report, 2000, Annex tables. www.who.int/whr/000en/report.htm

7.     Wilper AP, Woolhandler S, Lasser KE, McCormick D, Bor DH, Himmelstein DU. Health insurance and mortality in US adults. American Journal of Public Health, December 2009; Vol. 99, No, 12.

8.     Jha AK, Perlin JB, Kizer KW, Dudley RA. Effect of the transformation of the veterans affairs health care system on the quality of care. New England Journal of Medicine 2003;348:2218-27 http://content.nejm.org/cgi/content/abstract/348/22/2218

9.     Kerr E, Gerzoff R, Krein S, Selby J, Piette J, et al. A comparison of diabetes care quality in the veterans health care system and commercial managed care. Annals of Internal Medicine 2004;141(4):272-81 http://www.ncbi.nlm.gov/entrez/query.fcgi?cmd=Retrieve&db=pubmed&dopt=Abstract&list_uids=15313743

10.  Asch SM, McGlynn EA, Hogan MM, Hayward RA, Shekelle P, Rubenstein L, Keesey J, Adams J, Kerr EA. Comparison of quality of care for patients Veterans Health Administration and patients in a national sample. Annals of Internal Medicine 2004;141(12):938-45

11.  Selim AJ, Kazis LE, Rogers W, Qian S, Rothendler JA, Lee A, Ren XS, Haffer SC, Mardon R, Miller D, Spiro A, Selim BJ, Fincke BG. Risk-adjusted mortality as an indicator of outcomes: comparison of the Medicare Advantage Program with the Veterans Health Administration. Medical Care 2006;44(4);359-65

12.  The State of Health Care Quality 2004. Washington DC: National Committee for Quality Assurance. www.ncqa.org/communications/somc/SONC2004.pdf

13.  Perlin JB. The Veterans Health Administration: quality, value, accountability, and information as transforming strategies for patient-centered care. American Journal of Managed Care, November 2004, Table 2. http://www.ajmc.com/Article.cfm?ID=2767

14.  ACSI Scores for the U. S. Federal Government, American Customer Satisfaction Index I, December 15, 2005 http://www.theasci.org/government/govt-05.html

15.  Himmelstein D. The National Health Program Slide Show Guide. Center for National Health Program Studies. Cambridge MA, 2000. http://www.pnhp.org/news/2007/july/_health_insurance_fo.php

16.  Health insurance for the 21st Century – Upgrading To National Health Insurance (Medicare 2.0). The Case For Eliminating Private Health Insurance, PNHP website, July 17, 2009m by Leonard Rodberg & Don McCanne

17.  Reid TR. Five myths about health care around the world. Portland Oregonian, August 25, 2009. http://www.oregonlive.com/opinion/index.ssf/2009/08/five_myths_about_health_care_a.html

18.  Documenting this contention requires more references than is appropriate here. I would be happy to provide them on request.

Published on Monday, February 8, 2010 by CommonDreams.org

by Paul Hochfeld

What do we say to our more conservative friends, who genuinely think that the Single Payer solution to our health care crisis would be a disaster?  Try what follows. In the end, you may simply agree to disagree. That’s O.K., but what follows may give them pause to think.

Already, 60% of all our health care dollars come directly or indirectly (because employers insurance premiums are tax deductible) from the taxpayer.  The care of our oldest neighbors are financed by Medicare, i.e. the taxpayers.  The care of our disabled neighbors is financed by Medicaid.  Ditto the care of our poorest neighbors who, because health follows wealth, are also at greater risk of high expense.  Fourteen hundred insurance companies, at significant expense, stratify the rest of the population by “risk”.  Their top-secret formula results in them covering the employed people, small groups, and individuals who can prove that they are at low risk.   What about the others?  When those who can’t afford the premiums get sick, go bankrupt, and can’t pay their bills, “we” all pay for it in higher charges.   Furthermore, employer-paid premiums are tax deductible which means insurance company profits are subsidized by the taxpayer.

As near as I can tell, this is a big taxpayer rip-off.   Additionally, our non-system is fraught with numerous perverse incentives that result in more care, but not necessarily better care.  Physicians must share a significant part of the blame here, but that’s a different, though important, discussion.  Addressing these perversities is problematic because we don’t have a Health Care System we have For-Profit Sick Care Non-System that, to extent that it has any design at all, is designed to serve the for-profit insurance and the pharmaceutical industries.  Perverse incentives work for those who profit from them.  They don’t work for patients or those who pay the bills, i.e., taxpayers.

Single payer means one risk pool.  You’ve heard the slogan.  Everyone in.  Nobody out.  We gather all the money that employers and individuals are currently paying for health care.  It’s not more money.  It’s the same money, already being spent on health care, but by pooling it, we can save 20% right off the top.  Providers won’t have negotiate fee schedules with all the different payers.   Providers will only have to send  bills, electronically, to one place.  Furthermore, substantial savings accrue as the system matures.  When an ER Doctor in Oregon sees a patient passing through town, he will access her electronic medical record in Iowa, resulting in, not just less expensive care, but better care.  None of this is going to be accomplished until we have Public Health Authorities administering a health care system with the goal of health, financed publicly and delivered privately.

This isn’t pie in the sky.  Check out what the other developed countries are doing, but please don’t respond with anecdotes.   We have 45,000 new anecdotes every year that illuminate how real or perceived financial barriers to timely, appropriate care cause unnecessary death.

The real question is whose “system” produces the least number of unnecessary deaths and the least suffering for the dollars being spent?  Yes, other countries are struggling because of limited resources, but they are dealing with the problems maturely, they are making difficult decisions, and, by recognizing that health is a human right, they are getting a healthier population for less cost.

Is access to appropriate health care a human right?  If not, we can agree to disagree.  If so, it is a legitimate function of our government to make sure that nobody falls through the cracks.  Also, doesn’t the government have a fiduciary responsibility to make sure the taxpayer is getting value for its health care dollars?  Insurance company CEO’s have a fiduciary responsibility to maximize profits even if it means investing large sums of money in manipulating public policy… and that’s exactly what they’ve been doing.  It’s unfathomable to me that some people distrust “The United States” more than United Health Care.  That may be where we end up agreeing to disagree.

In any case, the taxpayer is being ripped off, big time.