Health Care Deconstructed
If there is one truism among policy makers and academics it is that the U.S. health-care system is broken. But for scholars speaking at a symposium hosted by Susquehanna University, the answer to these problems was clear: universal coverage.
Of the 16 speakers invited to present, only one argued that universal health-care and other methods of “reform” which expand government control would not benefit Americans.
“If I were king for the day I would without a second thought have a single-payer system in this country,” said Jonathan Cohn, senior editor at The New Republic, “and I encourage everyone to read up on it and learn about it because it’s a good thing to talk about and someday if we could get to single-payer health system I would be very happy about it.”
Cohn said he was “optimistic” about the potential for health-care reform for one reason: “the president of the United States is committed to it.”
However, Cohn’s presentation on American health-care was highly misleading. This correspondent will deal with just a few myths Cohn perpetuated:
Myth #1: The Health Care Market has “failed.”
“So, I mean, it’s not as if we can’t have a good for-profit health-care system on its own. The problem is competition,” said Cohn. “The problem is if you are running an insurance company, and you’re trying to do the right thing, eventually someone’s going to come in who’s not gonna try to do the right thing and you’re going to get undersold.”
Cohn later added that “Again, remember the problem with the commercial impulse, the story of the last 70 years is that you don’t get rewarded in the marketplace for trying to do the right thing.”
Actually, the story of the health-care market for the last 70 years has been one of increased government intervention, not unfettered markets. The Stabilization Act of 1942, passed 67 years ago, froze wages (among other things) but provided a tax break for employers who offered their employees insurance.
“The Order also makes clear the authority…to forbid the employment by an employer of any new employee except in accordance with regulations of the Chairman, the purpose being to prevent such employment at a higher wage or salary than that received by the employee in his last employment unless the change of employment will aid in the prosecution of the war,” read one 1943 statement by Franklin D. Roosevelt.
Since health-care benefits could be exempt from these limitations, benefits were used as bargaining chips to attract employees during the war.
Later the U.S. government established programs such as Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP).
According to the Organisation for Economic Cooperation and Development (OECD), the U.S. government paid 23 percent of health-care expenditures in 1960. As of 2006 the government paid 46 percent of these costs.
Myth #2: Medicare is an ideal government program.
Currently government officials predict that Medicare funding will exhaust their trust fund reserves in just 10 years. Social Security is predicted to reach this point in 2041.
“The financial condition of the Social Security and Medicare programs remains problematic…Social Security’s current annual surpluses of tax income over expenditures will begin to decline in 2011 and then turn into rapidly growing deficits as the baby boom generation retires. Medicare’s financial status is even worse,” wrote the Trustees of the Social Security and Medicare Trusts in their 2008 report (emphasis added).
“Growing annual deficits are projected to exhaust [Hospital Insurance Trust Fund] reserves in 2019 and Social Security reserves in 2041.”
Cohn told the audience at Susquehanna University to check out the Physicians for a National Health Program website for information about universal health-care. One thing he said they would find was that “They will tell you that overall the cost-cut reduction record of Medicare compared to private insurance in this country is better.”
The “private” option cited in this case, however, is bankrolled directly by the government.
A recent Government Accountability Office (GAO) study found that “in 2006, Medicare paid $59 billion to [Medicare Advantage] plans—an estimated $7.1 billion more than Medicare would have spent if MA plan beneficiaries had instead received care through” the traditional plan.
This is because MA was in the practice of enrolling healthy seniors rather than sick ones, since MA was reimbursed for the number of participants instead of fee-for-service.
The PNHP literature upholds this. However, what they don’t mention is that the Health Management Organization Act of 1973 required employers to offer a “dual option” for employees so that they could get insurance using HMOs, or managed care. Deborah Donohue with Mike Farrah Associates writes that “The HMO Act of 1973 encouraged formation and operation of HMOs by providing Federal grants and loans to support expansion over a five year period.”
In other words, the MA which is less efficient than the government-run Medicare was first expanded by the government and now bankrolled by it. It is hardly a free market example.
As for Cohn, he said that HMOs had “very noble origins” in the 1930s and “the problem was that the same commercial industry that had been screwing up the system for the last 30 years took charge of the HMO business” and focused on stockholders instead of patients.
Myth #3: Opponents to SCHIP expansion didn’t care about kids.
“You may remember the debate two years ago,” argued Cohn. “There was a big argument…of whether to expand the State Children’s Health Insurance Program (SCHIP).”
“Health insurance for kids,” he continued. “You would not think that would be so controversial but there were critics who said ‘we can’t have this because the program is growing and it’s becoming expansive, it’s covering middle-class people.’ Well yeah, it was covering middle-class people and there’s a very good reason: middle class people needed it.”
More recently, a 2009 Mathematica study found that “Population-based studies estimate that substitution of SCHIP for private coverage ranges from 10 to 56 percent” but that these studies had not analyzed the effects of adding higher-income children to the rolls.
The Children’s Health Insurance Program Reauthorization Act of 2009 passed this January, but along largely party lines. Funded by a 256% increase in tobacco taxes ($0.39 to $1.00), the new legislation raises income limits for applicants, covers pregnant women and eliminates time limits for legal immigrant mothers and children.
Bethany Stotts is a staff writer at Accuracy in Academia.
Bethany Stotts
