I have long been passionate about health care reform, but that passion skyrocketed when I became a Sick Person myself. Suddenly, I was experiencing our system’s many shortcomings firsthand.
If you’re a regular reader of this blog and want to stick with the story of my personal journey, feel free to skip this post. Here, I am stepping up onto my soapbox to talk more generally about American health care: What is still wrong with it, and how we should fix it.
(Note that I am writing this post in September 2017, even though it’s dated October 2014–I placed it there so it would be situated after my post about finding health care in Portland. In About This Blog, I explain more about my funky system for dating posts.)
In 2014, just months after being diagnosed with ulcerative colitis, I moved to a new state. That meant that, due to the fragmented nature of the US health care system, I was subjected to a ridiculous gauntlet of insurance bureaucracy as I tried to enroll in a new plan and connect with new doctors. This gauntlet, of course, was laid out exactly when I was least physically and emotionally fit to navigate it.
I am extremely grateful to President Obama and the Democrats for passing Obamacare, which has saved my husband and me many thousands of dollars ever since I got sick. I developed colitis when Ron and I happened to both be in career transition–we were moving from Wisconsin to Oregon to be near my family, but neither of us had steady jobs around the time of the move. If Obamacare had never passed, this would have left me with a debilitating preexisting condition and only catastrophic health insurance at best. In our new state, before we landed jobs, with my diagnosis it would have been hard to enroll in any new plan at all. Potentially, we would have had to pay for all of my medical needs–for specialists, colonoscopies, MRIs, and expensive medicines–out of pocket.
But despite the progress of Obamacare, America’s health care system is still very broken. And this brokenness is not primarily because premiums have risen for some middle-class people (although that is a real problem that needs fixing), and it is also not primarily because President Trump and Congressional Republicans are currently trying to sabotage Obamacare. No. Even if the new system was working perfectly, it would still be quite broken, because millions of Americans would still be uninsured and thus at risk of death or bankruptcy due to lack of insurance. Now that is completely unacceptable.
Obamacare’s main success has been reducing the number of uninsured, from 48 million to “only” 28 million. But that is 28 million too many.
All other industrialized countries ensure universal health coverage, which means that the United States is the only wealthy country where anyone ever dies or goes bankrupt for lack of health insurance. And yet, in our country, tens of thousands of people die each year as a direct result of being uninsured–one oft-cited study found this number to be 45,000 people ages 18 to 64 per year. And hundreds of thousands of Americans go bankrupt annually due to medical bills (see this study and this article).
Perhaps, if it was common throughout the industrialized world for people to die or go bankrupt from health problems, I might accept this happening in my country. After all, humans have been dying without health insurance since the dawn of our species. However, considering that every other country has managed to prevent such calamity for its citizens and residents, I consider it violently, criminally negligent that we have not. In a rich country, there is no excuse for letting tens of thousands of people die preventable deaths each year.
Of course, everyone knows our system has problems, but the precise causes of those problems, and how to fix them, are much less clear. For that clarity, I turn to TR Reid’s The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. I cannot recommend this book highly enough, and I have heard it was widely read by US members of Congress in 2009 during the national health care debates. Most of the rest of this post is a summary of Reid’s reporting, although I do highly recommend reading his book yourself. (Below, all uncited quotes are from the book.) For another brief and excellent summary of his findings, see Reid’s 2008 FrontLine episode “Sick Around the World.”
Reid, a foreign correspondent who has lived in several other countries, traveled around the world in the mid-2000s to compare our health care system with those of other industrialized countries. The Healing of America was first published in 2009, during the national debates about what would later become Obamacare. The book’s latest edition has an afterword about Obamacare, and Reid is currently involved with health care reform efforts in western states.
The book starts with the shocking story of a 32-year-old American, Nikki White, who died of lupus. It was our health care system, Reid argues, that killed her: “If Nikki White had been a resident of any other rich country, she would be alive today.” Lupus is a treatable disease, but because she lived in the United States before Obamacare’s protections, White couldn’t get access to the care she needed.
So she died.
My own disease is autoimmune, like lupus. I can imagine that, were I uninsured and poor, I might die of my disease. With symptoms such as severe diarrhea and chronic pain, and without medication to treat those symptoms or doctors to diagnose or explain my condition, I could easily weaken and waste away to nothing, dying of malnutrition or a secondary illness.
In a chapter called “The Paradox,” Reid describes America’s strange juxtaposition of both excellent and terrible care:
The United States has the best-educated doctors, nurses, and medical technicians of any nation…For anyone with the money or the insurance policy to pay for it, American medical treatment ranks with the best on earth. But the fact is, we’ve squandered this treasure [by creating a system] that prevents millions from receiving the treatment they need.
Reid breaks our systemic problems into three categories: coverage, quality and cost. The gist: We pay more, to cover fewer people, at worse quality.
Twenty-eight million Americans don’t have health insurance; tens of thousands die per year due to lack of coverage; hundreds of thousands go bankrupt per year due to medical bills. Need I say more? In other developed countries, health care is provided for every resident. “This is the underlying moral principle of the health care system in every rich country.”
Reid points out that while “[s]ome Americans get the world’s best medical care,” overall our quality is “mediocre by global standards.” In 2000, the World Health Organization ranked the US thirty-seventh in terms of quality and fairness of health care compared with other countries, and this ranking has been consistent up through the present. We are worst by a wide variety of different measures. In Reid’s words:
The number of people under seventy-five who die from curable illness was almost twice as high as in France, Japan, and Spain. Americans with asthma die sooner than asthmatics in other rich countries. We’re ranked highest in terms of per-capita “Deaths Due to Surgical or Medical Mishaps.” We’ve got the highest infant mortality rate…
Despite our abysmal coverage and mediocre quality, the United States has, by far, the most expensive health care of any developed country. We have the highest health expenditure as a percentage of GDP (this, and this)–17.1 % in 2014; the next-highest was Sweden at 11.9 %. We spend $9450 per person per year on health care. Japan, in contrast, spends $3730, even though Japanese citizens visit the doctor almost three times as often as we do. We generally spend around twice as much as do other rich countries on health care.
T. R. Reid’s Proposed Solutions
What are some solutions to this health care nightmare? While the dozens of other rich, industrialized countries have created a myriad of successful health care systems, all those varying systems have several things in common. These are the changes we, too, need to implement. Reid again breaks them down into three simple concepts: UNIVERSAL COVERAGE, a UNIFIED SYSTEM, and NONPROFIT FINANCING. He also mentions UNIFIED PRICING as important, and to emphasize that idea, I am separating it into its own fourth pillar of a successful US health care system.
Together, these four, long-overdue pillars would bring our system in line with other countries’ superior systems. They would ensure that every American receives health care–and overall, that that care would be better and cheaper.
In all other wealthy nations, universal coverage is a key pillar of health care. Not only is everyone granted access to health care, but everyone is required to enroll in health care. This requirement, known as an individual mandate, is crucial. It is driven by basic economics: “If insurance companies have to cover everyone who applies, they need to have everybody in the insurance pool to cover the costs.” The only way to provide universal coverage is to require that everyone pay into the system, either through taxes or premiums.
As basic as this concept seems, US Republicans have managed to convince much of the public that it is a bad idea. House Republicans argued against Obamacare’s individual mandate during the 2017 Obamacare repeal effort, acting indignant that the healthy might have to “pay for the sick.” As pundits quipped in response, “Paul Ryan Doesn’t Know How Insurance Works.” With any insurance, the idea is, of course, that you pay in hopes that you will never need to file a claim. The healthy do indeed need to “pay for the sick”–but with the critical recognition that any of us, at any time, could become “the sick.”
All of that is why, just like car insurance in the US, health insurance is mandatory in other industrialized countries.
Universal coverage is patently fairer than our current system, in which simple bad luck can lead to death or bankruptcy. Universal coverage also has the potential to lead to a healthier population, because it creates an incentive for insurance companies to invest in preventive care:
One of the major reasons the United States ranks low…in standard measures of health care quality is that millions of Americans don’t get any care until they are acutely ill… [I]t is much cheaper to treat a problem early than to take heroic medical measures when the illness becomes life-threatening.
So, what would universal coverage look like?
Throughout his book, Reid takes pains to argue that Americans need not abandon our precious capitalism in order to fix our health care system. He emphasizes that universal coverage does not have to be “socialized medicine.” Different countries provide universal coverage in widely diverging ways. Some countries, like Japan, Germany, and France, rely on multiple insurance plans from which either the employer or the individual may choose. This closely resembles employer-based American health care, but with key differences that ensure universality. In France, for example, employers cover most of the premium for health care…but “[w]hen a French worker loses her job, she keeps the same insurance plan [and] the government pays the employer’s share of the premium.” Other countries, like Britain, do have nationalized systems wherein the government runs a single insurance program.
The bottom line is that ultimately, there are various options for universal coverage, but the concept simply means that there is some guaranteed way for everyone to be covered, whether through private or public insurance, and that enrollment is required.
If we had universal coverage, I would never find myself in danger of death or major financial difficulty due to developing an illness I could not afford to treat. I would automatically be covered, most or all of my appointments and medicines would be paid for, and coverage would be consistent across locations. That’s how it is in all other rich countries.
I know what you’re thinking, especially if you lean conservative. That’s all well and good, Katie–but how would we pay for it? Reid’s other three solutions deal directly with reducing the costs of health care so that we can pay for it. Ultimately, if all of these were implemented, he concludes that American taxpayers would pay LESS than we currently pay–even if universal coverage was funded largely out of tax dollars.
A UNIFIED SYSTEM
Reid’s second pillar of good health care is a unified system. Our own system’s outrageous costliness stems largely from its complexity–our system is far more complex than that of any other developed country.
Other countries tend to have one single system in place for all residents, regardless of age, employment status, or military background. As I mentioned above, some of these systems are more capitalistic and some are more socialistic. But regardless, what they have in common is their unity across the board, for all citizens and residents.
In contrast, in the US we have four different systems in place! The same person might even travel between all of our systems as her situation changes. They are:
- Employer-based health care. For working people under 65, “the worker and the employer share the premiums for a health insurance policy.” A similar system is available in several other countries, but is available to all citizens, as described above. For working, non-elderly Americans, “we’re Germany, or France, or Japan.”
- The VA. This is nationalized (socialized!) health care, with government-run hospitals and clinics. For military personnel, veterans, and Native Americans, “we’re Britain, or Cuba…Americans in these systems never get a medical bill” under the Veteran’s Administration system.
- Medicare. This is nationalized health insurance, a government-run plan available to older Americans and people with disabilities. For such people, “we’re Canada. U.S. Medicare is essentially a National Health Insurance scheme.”
- Out-of-pocket. For the uninsured, “we’re Cambodia, or Burkina Faso, or rural India. These people have access to medical care if they can pay the bill out of pocket…or if they’re sick enough to be admitted to the emergency ward…or if they have access to a charity clinic.” Otherwise, they are out of luck.
Because of our system’s ridiculous complexity, exorbitant amounts are spent in the US on health care administration. Hospitals, clinics, and other providers spend a great deal of time and money tracking who has which insurance plan, and is thus eligible for which medicines, treatments, doctor visits, etc. Typically, prior to Obamacare, each US insurance company spent around 10-20% of health care premiums on administrative expenses. Thanks to Obamacare’s 80/20 rule, American insurers are no longer allowed to spend more than 20% on admin and/or profit. This has been construed as a victory, since insurance companies lobbied fiercely against the 80/20 rule, not wanting their admin-and-profit dollars to be so limited. However, that “victory” is laughable when you realize that admin costs are consistently around 5 % in other countries! (The profit piece is addressed below.)
What would a unified system look like? Again Reid emphasizes that we could keep our capitalist values of competition and choice. “A unified health care system that works the same for everybody doesn’t necessarily equate to a single-payer system.” Some countries, such as Germany, “have several, or many, different insurance plans,” akin to the way US workers have different insurance plans tied to their different workplaces. “But these multipayer systems still provide the fairness and administrative simplicity of a single-payer structure…[because] all the payers follow a coordinated set of rules and forms, and all providers’ fees must adhere to a unified payment schedule.” (More on that payment schedule below.)
Still sounds too socialist for you? Again Reid offers an out: In all of these countries, “there is one group of citizens who are not bound by the unified health care system: the rich.” The rich can afford care above and beyond what their countries provide. “If all else fails, they just get on a jet to Rochester, Minnesota, and drop by the Mayo Clinic…Germany permits the richest 10 percent of the population to opt out of the health insurance system entirely,” although most don’t choose to do so.
A unified system would mean that even with multiple plans, certain standards would apply across the board; those standards would drastically reduce admin costs. In France, for example, “There’s no such thing as the ‘in-network’ and ‘out-of-network’ lists developed by U.S. insurance companies…Any patient can go to any doctor…in the whole country, and the insurance system must pay the bill.” As a result of this simplicity, “French hospitals generally have more doctors and nurses per patient…they have 67 percent fewer administrative personnel” than American hospitals. In countries such as France, Reid describes doctors’ offices without file cabinets: no stacks of confusing paperwork to fill out and keep track of, since the same rules apply to everyone.
We can see a hint of our system’s complexity on our paychecks, where we often pay for two different health care systems at the same time–Medicare and our employer-based health insurance premium. Reid contrasts this with Germany’s system:
Currently, Germans pay about 15 percent of their paycheck for health insurance, split between the worker and the employer. That’s almost exactly equal to what an American worker and his employer pay in Social Security and Medicare taxes. But the German worker gets a better deal. Most American workers also have to pay a health insurance premium, ranging from 2 to 10 percent of pay, in addition to those payroll taxes.
Bottom line: Unifying the system would slash administrative costs, thus lowering the total cost of any health insurance plan, and allowing for lower overall contributions by us, the taxpayers.
Along with directly reducing health care costs, a unified system would increase fairness. It is appalling that some Americans receive treatment while others die, depending on which categories (age, health, employment, etc.) they happen to fall into at the time of illness. In other industrialized countries, everyone is entitled to the same quality of care. It was precisely such unfairness that had me outraged when I moved from state to state. Having studied Reid’s book in the past, I knew that in any other wealthy country, I would not have been forced to spend months submitting paperwork, making phone calls, and re-enrolling in new plans just because I moved and my husband’s employment status changed. It is absurd and inhumane to put this burden of complexity onto the sick, who are least well-equipped to navigate a stressful, confusing, time-consuming system.
Reid points out that unification would lead to greater ease for doctors and patients alike:
A unified system makes it much easier to use digital record-keeping…These digital records cut administrative costs, and they make for better medical care as well, because the doctor or pharmacist can instantly see what other treatment, tests, and medications the patient has received.
Every time I’ve switched doctors or locations, I have diligently submitted release of records requests so that all my previous records are sent to my new doctor’s office. Each new doctor needs to see how my colitis was diagnosed, my medication history, etc. Imagine a world where doctors easily have access to your entire medical record.
…Or, just move to another industrialized country.
Price controls are an important element of a functional health care system. Generally, governments in other countries set the prices of health care services, and it is high time that our government do the same.
In our country, “the same operation in the same hospital on the same day can have ten different prices, depending on who is paying.” This variation leads to, you guessed it, huge expenses in administration. Standardizing costs would eliminate that problem.
Providers of drugs in the US charge more than they do in other countries, according to The Economist, “simply because they can.” The pharmaceutical industry is so powerful in the United States that, due to its phenomenal lobbying power, it was virtually the only industry left untouched by the Obamacare changes. Unlike European governments, which control drug prices, the US still allows pharmaceutical companies to set their own prices–so they often charge Americans two to ten times as much as people from other countries, Reid says, for “precisely the same pills made in the same factory.” The pharmaceutical industry is among the most profitable in the United States. According to Marcia Angell’s The Truth About the Drug Companies: How They Deceive Us and What to Do About It, “The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R & D.”
To put it bluntly, Americans are getting screwed by Big Pharma.
This is why I decided unified pricing should be its own pillar of a sound health care system. In order to accomplish this one, the formidable power of pharmaceutical companies will need to be reckoned with. That power seems to be the sole reason drug prices in America are so outrageously high.
There is a final major reason that the American health care system is far too expensive: for-profit health insurance. We are “the only developed country that relies on profit-making health insurance companies to pay for essential and elective care.”
As I’ve mentioned, some other rich countries do allow people to choose among various private insurers, just like many of us can in the US. But in other countries, the options are all nonprofit insurance companies. In contrast, around 80 % of non-elderly Americans get health insurance through for-profit companies. That means that for most of us, a portion of our premiums go not to medical bills but to marketing and profit (as well as the expensive administrative costs previously described).
Not only does our profit-based system result in elevated premiums, but this system operates on misplaced morals. Rather than prioritizing care, American health insurance companies prioritize profit. “In other developed countries, insurers are required to pay every claim. But U.S. insurance companies deny about 30 percent of all claims,” Reid wrote in 2009. That percentage has probably gone down since Obamacare was enacted, although insurance companies are notoriously secretive about their claim denial rates. When Vermont began compelling insurers to release these numbers in 2012, they ranged from 7-21% claim denial, with the state’s lone for-profit insurer denying significantly more claims than its non-profit insurers.
In contrast, “all other developed countries have decided that basic health insurance must be a nonprofit operation…”
Health insurance companies don’t have to be cruel to their customers if they don’t have to worry about paying dividends to investors. It may be possible to finance fair and cost-efficient health care through all through profit-making health insurance. It may be possible, but no country has ever made it work. For-profit health insurance clearly hasn’t worked in the United States, which spends more than any other country and still leaves millions without any coverage. And no other developed country wants to try it.
(For-profit health insurance does exist in some countries as an option–but only for non-essential health services.)
In response, once again, to the inevitable protests about the sanctity of the American free market, Reid points out that nonprofit insurance in most other rich countries still leaves room for fierce competition among insurers. “[E]very German,” for instance, “has a choice among some two hundred different private insurance plans, which compete vigorously even though the prices for insurance are fixed.” Insurance companies compete, in such countries, “because the executives earn more money, and higher prestige, if they have a larger pool of insured members.”
The difference is that insurers are not allowed to compete for profit.
[M]ost countries rely on free-market enterprise to provide health care–but not to pay for it…In most countries an insurance company or sickness fund that runs a surplus at the end of the year has to redistribute that profit to the funds that lost money during the year…
On paper…France is a multipayer health care system, with fourteen different sickness funds and a cluster of supplemental plans…In practice, France acts like a single-payer system, because the national Health Ministry essentially dictates what providers can charge.
Japan’s market for medical services is a competitive free market operating under the firm hand of government regulation. This is something like the market for home telephone service in the United States. The phone companies are private firms, free to compete in the market, except on price. The price for basic landline service is set by the local Public Service Commission or some other government regulator.
The result of all these models for nonprofit insurance, competition, and unified pricing? “[T]he insurance plans–sometimes run by the government, sometimes private entities–exist only to pay people’s medical bills.”
That’s the way it should be.
Reid has much more to say than what I have briefly described here. Please buy and read his book. It is every bit as relevant and urgent now as it was in 2009.
As polls show, a paradigm shift is happening: The majority of Americans now believe it is the government’s responsibility to ensure health care for all. (That majority is 60% as of 2017–up from 51% in 2016.) I agree. Especially because so many other countries have shown that it is possible to do so.
In this country, the debate about how to get there is still far from over. The Republican effort to repeal Obamacare keeps rearing its ugly head, and even Democrats are divided on whether to focus on shoring up Obamacare or push for a reformed, single-payer system that could, at last, provide universal coverage. (T.R. Reid is a leader in that reform effort.) Whatever course we take, it must be taken thoughtfully and transparently, with ample time for public debate, research, and input from patients, medical professionals, and insurers. It must not occur swiftly, behind closed doors. Health care is too important.
And it must occur. We must fix our still-broken system. As we do so, T. R. Reid has me convinced that we must aim for universal coverage (including the individual mandate), a unified system, unified pricing, and nonprofit financing. These are the four shared pillars of the many successful health care systems around the world.