Physicians' Rx for an Ailing Healthcare System

An Interview with Claudia Fegan
Claudia Fegan is president of Physicians for a National Health Program (PNHP), which advocates a universal, comprehensive Single-Payer National Health Program. PNHP has more than 10,000 members and chapters across the United States. Fegan is the medical director of outpatient care at Provident Hospital on the South Side of Chicago. She is a co-author of Universal Healthcare: What the United States Can Learn from Canada (New Press, 2001).

Forty-five million people are uninsured. The majority of those people are either working people or members of their family. MM: How many people in the United States are without health insurance?
Claudia Fegan: Forty-five million people are uninsured. The majority of those people are either working people or members of their family.
MM: Why aren’t they eligible for Medicaid?
Fegan: The Medicaid requirements vary from state to state. But quite commonly people who are employed, even with minimum wage jobs, earn too much money to receive Medicaid benefits.
MM: So even a minimum wage job puts you above the income threshold for Medicaid?
Fegan: Yes, usually.
MM: Generally speaking, what happens to people who are uninsured who become sick?
Fegan: That also varies from place to place in the country, even from county to county.
For example, I work for the Cook County [Chicago] Bureau of Health Services. We provide care for people who don’t have insurance. We provide care for a lot of people; we’ve provided for over a million outpatients visits last year, the majority for people who were uninsured.
So we provide care for people who don’t have insurance. But uninsured people who are in surrounding counties may not find any kind of network willing to provide care. They may have to make use of a patchwork system, where, for example, private entities agree to accept a certain number of uninsured patients.
One of the classic examples is Washington D.C., our nation’s capital, where the only public hospital closed over a year ago. There, it’s a patchwork system where private practitioners and hospitals agree to take on so many of the uninsured. That is a difficult system for many patients to navigate. Most of those providers require patients to pay some portion of the costs of care. We know from an experiment conducted by the Rand Corporation in the 1970s that a co-payment of as little as one or two dollars will deter patients from necessary care as often as it will deter them from unnecessary care.
MM: If an uninsured person or a partially insured person goes to a facility which doesn’t have any special programs for the uninsured, what’s their experience? Are they going to end up getting care, or will they be turned away?
Fegan: COBRA, which is a federal law, mandates that a person who presents themselves to any healthcare facility — it used to just be the emergency room, but it was extended more than a year ago go to include outpatient care facilities — and says they need medical care must receive a medical screening exam. In other words, the healthcare facility must do some type of cursory exam to determine whether or not the person does indeed need care. And that exam should occur before it is determined how that care will be paid for.
Although it is true that you will receive an assessment about whether or not care is needed, that doesn’t solve the problem of how you will pay. Depending upon where you are in the country, you may be able to get care that you need, but you may receive a large bill for it — and the fear of that bill keeps a lot of people out of care.
What does that do for a person who, for example, has hypertension and needs to have their blood pressure checked on a regular basis and needs to receive medication for it? Or for someone who has diabetes? They may not have an emergency, but in order to maintain control of that condition they need to be seen on a regular basis. We know that it is more cost effective to control those conditions and prevent the complications than to wait until the person is sick enough to come to the emergency room. But uninsured people frequently won’t go to the doctor because they are afraid that they will be saddled with debt.
It becomes much more difficult for families with children. The federal SCHIP program [State Children’s Health Insurance Program] was supposed to provide insurance for children, with parents paying for that insurance to the extent that they can. But the program is very difficult to administer. Lots of people who are eligible don’t get enrolled. Or kids whose parents are getting divorced, or who have moved to another state, fall out of enrollment. We know that there was one month in 2002 where the state of New York dis-enrolled more kids than they enrolled. I know that in 2002 there was a month in Illinois where we enrolled 17,000 kids, but we dis-enrolled 14,000 kids. Someone may have coverage, but by the time they get an appointment, they are no longer eligible for that coverage.
Many people have insurance that is offered to them by their employer, but they can’t afford the amount of the premium. It used to be standard practice that employers would provide insurance for employees as a benefit, and they would charge employees less than 20 percent of the premium cost. But increasingly they charge employees larger percentages of the premium. And the premium may be the same whether you sweep the floors or are a high-level manager. So the amount of your paycheck that would go to the premium may be untenable for those lower wage workers.
MM: Why do services and pharmaceuticals cost more for the uninsured than for people who do have insurance?
Fegan: The insurance companies are able to negotiate discount prices for their enrollees, so the uninsured are the only people who are being charged the full price. Hospitals generally don’t expect to receive the full price from anybody, but if they don’t charge someone that full price, then Medicare says the price is not what the hospital says it is.
So you may price a service at $100 because what you really need is $80, and you know Medicare will pay you $80. Then someone comes in and says I have no coverage, and you say the price is $100.
MM: But for the uninsured it actually is $100, right?
Fegan: For the uninsured it actually is $100. It sure is.
MM: How does the insurance industry affect the kinds of care that people who do have coverage receive?
Fegan: If you’re talking about investor-owned versus other entities, their first responsibility is to their shareholders. The goal of the investor-owned insurance industry is to spend as little money providing care as possible, and they look for all kinds of ways to do that.
Currently, what we’re seeing is a lot more cost sharing because it makes people more skittish about receiving certain kinds of care.
Another common practice is that a lot of insurance companies will not contract with the huge academic tertiary hospitals because they cost more to provide care — they do things that are not available at the small hospitals. So you see patients being shifted to have their cardiac surgery to a smaller hospital, which may do a smaller number of those procedures, and therefore have a higher rate of complications. A lot of these small hospitals are doing cardiac surgery because the reimbursement is good; and what you see is the insurance companies driving business to those smaller entities which offer a lower price. This begins to impact the quality of care that people will receive.
MM: How does Physicians for a National Health Program propose solving these problems?
Fegan: We could take the amount of money that we’re spending on healthcare today, and provide coverage for everyone — including the 45 million people who are uninsured and an additional 50 million who are under-insured, people whose insurance status is tenuous at best. We could do that if we eliminated the 25 to 30 percent of every healthcare dollar that goes to overhead for the insurance industry. Publicly administered plans take less than 5 percent in administrative overhead, so by switching to a public insurance system, we could save enough money to provide care for everyone.
This would be a single-payer form of universal healthcare. When we say universal, we mean everyone. Nobody is left out. We are talking about the government collecting the money that people now pay in insurance premiums, and paying providers. We’re not talking about the government delivering healthcare, we’re talking about the private entities that currently deliver care, continuing to deliver that care — but the government paying for that care.
MM: So would this be roughly modeled on the Canadian system?
Fegan: It would be modeled on the Canadian system. The difference is we’re already spending almost twice as much as Canadians per person on healthcare, so we would have more resources available than the Canadians do. We have enough money to provide high quality, cost-effective care for everyone without the limitations that the Canadians have experienced because their system is being financially strangled.
People would have freedom to choose their provider and what hospital they go to. Patients and physicians could be more concerned about the clinical decision-making as opposed to now, when the kind of coverage you have determines who you can be seen by and what kind of procedure you can have.
MM: What exactly would people pay under such a system?
Fegan: The average consumer today would be paying less than they are currently paying for healthcare.
There would be a line item on their federal income taxes, so that people would pay to the government roughly what they are now, on average, paying to private insurers.
The system would be administered by local health planning boards. Different communities have different needs, and they would place the emphasis in their healthcare dollars in different places. Whereas in Miami it might be more focused on adult and senior care, in New York you might be more concerned about prenatal care for HIV-positive children.
MM: Would employers have to pay?
Fegan: They would still have to pay, roughly the amount that they pay now. Employers that don’t pay anything right now would have to pay. But businesses wouldn’t see a continuous ratcheting up of healthcare costs.
MM: How would the healthcare planning boards work?
Fegan: The healthcare planning boards would receive the dollars from the federal government, and they would receive it on a population basis.
It’s very different, if you’re planning for the healthcare of a community as opposed to what happens now, where a health maintenance organization may be planning for 30,000 people, but who do not all live in the same area. It frees you to address the needs of the area more specifically.
So a healthcare planning board is like a local school board. It is the community looking at its own individual needs. If we have a big problem in terms of obesity, maybe some of our dollars need to be targeted toward weight loss and exercise programs.
This is part of the system in Canada. It works fairly effectively for rural areas, enabling them to address their needs, which may be very different than urban areas. Dollars are allocated based on the needs of the area, and they get very creative. Maybe you don’t have a kidney specialist in your area, how are you going to provide that service to your area? Are you going to provide financial enticements for someone to come settle there? Or maybe there is someone in the next town who may be able to provide you with coverage. Or maybe some of your care can be provided via computer, with the patient only needing to travel periodically to be seen by the specialist in that town.
Various communities solve their problems differently, but at least they have the dollars to look at their needs and then decide how they want to allocate them.
MM: How would providers — doctors, hospitals — be reimbursed for the care they provide?
Fegan: Doctors’ fees would be negotiated by the various medical societies. The American College of Cardiology would say this is what is a reasonable fee for a cardiologist doing an office visit, this should be the fee for a cardiac catheterization. Then the health planning board would reimburse them for the care they have provided.
Hospitals would no longer have to keep track of every aspirin they dispense. The health planning board would say, this is the population; based on how many people you saw last year, this is how many people you will probably see in the coming year; based on how much it cost you to do it last year, and taking into account inflation, we will pay you “X” to provide the same service. No longer will hospitals have to pay a lot of staff to do a lot of bookkeeping. They won’t have to count how many times they had to stick this person to start an IV and charge him for each needle they have used.
MM: Is there a danger in such a system of creating an incentive for doctors to see too many patients and then give each of them too little care?
Fegan: Medical societies can set limits. In other words, if they say an orthopedic surgeon working reasonably for a given population should only replace “X” number of knees in a course of year, when the surgeon gets to that number and begins to do more than that, then they are going to get paid less for each procedure they do. That ceiling would be determined by the various specialty societies, by the doctors’ peers.
MM: Will there be rationing in such a system?
Fegan: We’re rationing care now. Right now we’re rationing care based on ability to pay for it. If you have enough money, you can get it.
We would allocate care based on need; so the people that need it the most get it first.
The dollars for healthcare are not infinite, and so we have to decide what is the most reasonable way to provide care.
Some people like the current system. They like the idea that if you are wealthy, you can purchase the care you need; and if you can’t, well, best of luck to you.
But some people believe that it is not unreasonable to decide that people that need care the most, deserve it. When a small child is sick, the question becomes, what child doesn’t deserve to receive the best care available? And how do we decide, because you had the misfortune to be born to blue-collar parents, that you can’t have the same care as someone who was born to parents who could afford to give you whatever care you needed?
MM: How is this kind of system received in Canada?
Fegan: It’s immensely popular. If Medicare is the third rail of U.S. politics, this is the Canadian third rail. It is the thing which Canadian politicians have learned not to toy with. It remains one of the most popular programs in Canada; and the public wants it expanded, not decreased, and they are willing to pay more taxes to expand it.
MM: How does business view the system in Canada, and how do you think large corporations would view the same proposal in the United States?
Fegan: We know that the cost of healthcare hurts American companies’ ability to compete internationally. It raises their cost of doing business in this country. So companies really like the idea of not having to fight over healthcare.
If you look at the strikes that have occurred in this country over the last few years, healthcare has always been one of the major issues, if not the major cause of the strike.
Unions are increasingly beginning to believe that this is not an issue they can win on in bargaining agreements with individual employers. In the long grocery workers strike in California last year, for example, the United Food and Commercial Workers finally were able to hold on to benefits for the veteran workers, but new hires do not get the same level of healthcare benefits.
MM: Given all these arguments about why the United States should have such a system, what’s the program to overcome the political roadblocks?
Fegan: Right now there is a lot of money with heels dug in to stay with the current system.
But this is one of those issues that stirs emotions in people and will eventually push aside the interests blocking change. When people become vehement about this, political will somehow occurs. And as more and more people are suffering in the current system, emotions are moving in this direction.
We don’t expect Washington politicians to lead the way. This is something that the public will demand, and then the politicians will get behind it.
The problem we have right now is that the lobbyist system is so dysfunctional and so grotesque it takes more people to overcome the interests opposed to change.
But we are slowly moving in the right direction. More and more physicians are signing on to the call for a national health plan, and more and more of the general public is becoming educated. They figure there has got to be something better than what we’re doing, because what we’re doing surely isn’t working for them.

Many people have insurance that is offered to them by their employer, but they can’t afford the amount of the premium.

We could take the amount of money that we’re spending on healthcare today, and provide coverage for everyone — including the 45 million people who are uninsured and an additional 50 million who are under-insured, people whose insurance status is tenuous at best.

This is one of those issues that stirs emotions in people and will eventually push aside the interests blocking change.

Forty-five million people are uninsured. The majority of those people are either working people or members of their family.	MM: How many people in the United States are without health insurance? Claudia Fegan: Forty-five million people are uninsured. The majority of those people are either working people or members of their family. MM: Why aren’t they eligible for Medicaid? Fegan: The Medicaid requirements vary from state to state. But quite commonly people who are employed, even with minimum wage jobs, earn too much money to receive Medicaid benefits. MM: So even a minimum wage job puts you above the income threshold for Medicaid? Fegan: Yes, usually. MM: Generally speaking, what happens to people who are uninsured who become sick? Fegan: That also varies from place to place in the country, even from county to county. For example, I work for the Cook County [Chicago] Bureau of Health Services. We provide care for people who don’t have insurance. We provide care for a lot of people; we’ve provided for over a million outpatients visits last year, the majority for people who were uninsured. So we provide care for people who don’t have insurance. But uninsured people who are in surrounding counties may not find any kind of network willing to provide care. They may have to make use of a patchwork system, where, for example, private entities agree to accept a certain number of uninsured patients. One of the classic examples is Washington D.C., our nation’s capital, where the only public hospital closed over a year ago. There, it’s a patchwork system where private practitioners and hospitals agree to take on so many of the uninsured. That is a difficult system for many patients to navigate. Most of those providers require patients to pay some portion of the costs of care. We know from an experiment conducted by the Rand Corporation in the 1970s that a co-payment of as little as one or two dollars will deter patients from necessary care as often as it will deter them from unnecessary care. MM: If an uninsured person or a partially insured person goes to a facility which doesn’t have any special programs for the uninsured, what’s their experience? Are they going to end up getting care, or will they be turned away? Fegan: COBRA, which is a federal law, mandates that a person who presents themselves to any healthcare facility — it used to just be the emergency room, but it was extended more than a year ago go to include outpatient care facilities — and says they need medical care must receive a medical screening exam. In other words, the healthcare facility must do some type of cursory exam to determine whether or not the person does indeed need care. And that exam should occur before it is determined how that care will be paid for. Although it is true that you will receive an assessment about whether or not care is needed, that doesn’t solve the problem of how you will pay. Depending upon where you are in the country, you may be able to get care that you need, but you may receive a large bill for it — and the fear of that bill keeps a lot of people out of care. What does that do for a person who, for example, has hypertension and needs to have their blood pressure checked on a regular basis and needs to receive medication for it? Or for someone who has diabetes? They may not have an emergency, but in order to maintain control of that condition they need to be seen on a regular basis. We know that it is more cost effective to control those conditions and prevent the complications than to wait until the person is sick enough to come to the emergency room. But uninsured people frequently won’t go to the doctor because they are afraid that they will be saddled with debt. It becomes much more difficult for families with children. The federal SCHIP program [State Children’s Health Insurance Program] was supposed to provide insurance for children, with parents paying for that insurance to the extent that they can. But the program is very difficult to administer. Lots of people who are eligible don’t get enrolled. Or kids whose parents are getting divorced, or who have moved to another state, fall out of enrollment. We know that there was one month in 2002 where the state of New York dis-enrolled more kids than they enrolled. I know that in 2002 there was a month in Illinois where we enrolled 17,000 kids, but we dis-enrolled 14,000 kids. Someone may have coverage, but by the time they get an appointment, they are no longer eligible for that coverage. Many people have insurance that is offered to them by their employer, but they can’t afford the amount of the premium. It used to be standard practice that employers would provide insurance for employees as a benefit, and they would charge employees less than 20 percent of the premium cost. But increasingly they charge employees larger percentages of the premium. And the premium may be the same whether you sweep the floors or are a high-level manager. So the amount of your paycheck that would go to the premium may be untenable for those lower wage workers. MM: Why do services and pharmaceuticals cost more for the uninsured than for people who do have insurance? Fegan: The insurance companies are able to negotiate discount prices for their enrollees, so the uninsured are the only people who are being charged the full price. Hospitals generally don’t expect to receive the full price from anybody, but if they don’t charge someone that full price, then Medicare says the price is not what the hospital says it is. So you may price a service at $100 because what you really need is $80, and you know Medicare will pay you $80. Then someone comes in and says I have no coverage, and you say the price is $100. MM: But for the uninsured it actually is $100, right? Fegan: For the uninsured it actually is $100. It sure is. MM: How does the insurance industry affect the kinds of care that people who do have coverage receive? Fegan: If you’re talking about investor-owned versus other entities, their first responsibility is to their shareholders. The goal of the investor-owned insurance industry is to spend as little money providing care as possible, and they look for all kinds of ways to do that. Currently, what we’re seeing is a lot more cost sharing because it makes people more skittish about receiving certain kinds of care. Another common practice is that a lot of insurance companies will not contract with the huge academic tertiary hospitals because they cost more to provide care — they do things that are not available at the small hospitals. So you see patients being shifted to have their cardiac surgery to a smaller hospital, which may do a smaller number of those procedures, and therefore have a higher rate of complications. A lot of these small hospitals are doing cardiac surgery because the reimbursement is good; and what you see is the insurance companies driving business to those smaller entities which offer a lower price. This begins to impact the quality of care that people will receive. MM: How does Physicians for a National Health Program propose solving these problems? Fegan: We could take the amount of money that we’re spending on healthcare today, and provide coverage for everyone — including the 45 million people who are uninsured and an additional 50 million who are under-insured, people whose insurance status is tenuous at best. We could do that if we eliminated the 25 to 30 percent of every healthcare dollar that goes to overhead for the insurance industry. Publicly administered plans take less than 5 percent in administrative overhead, so by switching to a public insurance system, we could save enough money to provide care for everyone. This would be a single-payer form of universal healthcare. When we say universal, we mean everyone. Nobody is left out. We are talking about the government collecting the money that people now pay in insurance premiums, and paying providers. We’re not talking about the government delivering healthcare, we’re talking about the private entities that currently deliver care, continuing to deliver that care — but the government paying for that care. MM: So would this be roughly modeled on the Canadian system? Fegan: It would be modeled on the Canadian system. The difference is we’re already spending almost twice as much as Canadians per person on healthcare, so we would have more resources available than the Canadians do. We have enough money to provide high quality, cost-effective care for everyone without the limitations that the Canadians have experienced because their system is being financially strangled. People would have freedom to choose their provider and what hospital they go to. Patients and physicians could be more concerned about the clinical decision-making as opposed to now, when the kind of coverage you have determines who you can be seen by and what kind of procedure you can have. MM: What exactly would people pay under such a system? Fegan: The average consumer today would be paying less than they are currently paying for healthcare. There would be a line item on their federal income taxes, so that people would pay to the government roughly what they are now, on average, paying to private insurers. The system would be administered by local health planning boards. Different communities have different needs, and they would place the emphasis in their healthcare dollars in different places. Whereas in Miami it might be more focused on adult and senior care, in New York you might be more concerned about prenatal care for HIV-positive children. MM: Would employers have to pay? Fegan: They would still have to pay, roughly the amount that they pay now. Employers that don’t pay anything right now would have to pay. But businesses wouldn’t see a continuous ratcheting up of healthcare costs. MM: How would the healthcare planning boards work? Fegan: The healthcare planning boards would receive the dollars from the federal government, and they would receive it on a population basis. It’s very different, if you’re planning for the healthcare of a community as opposed to what happens now, where a health maintenance organization may be planning for 30,000 people, but who do not all live in the same area. It frees you to address the needs of the area more specifically. So a healthcare planning board is like a local school board. It is the community looking at its own individual needs. If we have a big problem in terms of obesity, maybe some of our dollars need to be targeted toward weight loss and exercise programs. This is part of the system in Canada. It works fairly effectively for rural areas, enabling them to address their needs, which may be very different than urban areas. Dollars are allocated based on the needs of the area, and they get very creative. Maybe you don’t have a kidney specialist in your area, how are you going to provide that service to your area? Are you going to provide financial enticements for someone to come settle there? Or maybe there is someone in the next town who may be able to provide you with coverage. Or maybe some of your care can be provided via computer, with the patient only needing to travel periodically to be seen by the specialist in that town. Various communities solve their problems differently, but at least they have the dollars to look at their needs and then decide how they want to allocate them. MM: How would providers — doctors, hospitals — be reimbursed for the care they provide? Fegan: Doctors’ fees would be negotiated by the various medical societies. The American College of Cardiology would say this is what is a reasonable fee for a cardiologist doing an office visit, this should be the fee for a cardiac catheterization. Then the health planning board would reimburse them for the care they have provided. Hospitals would no longer have to keep track of every aspirin they dispense. The health planning board would say, this is the population; based on how many people you saw last year, this is how many people you will probably see in the coming year; based on how much it cost you to do it last year, and taking into account inflation, we will pay you “X” to provide the same service. No longer will hospitals have to pay a lot of staff to do a lot of bookkeeping. They won’t have to count how many times they had to stick this person to start an IV and charge him for each needle they have used. MM: Is there a danger in such a system of creating an incentive for doctors to see too many patients and then give each of them too little care? Fegan: Medical societies can set limits. In other words, if they say an orthopedic surgeon working reasonably for a given population should only replace “X” number of knees in a course of year, when the surgeon gets to that number and begins to do more than that, then they are going to get paid less for each procedure they do. That ceiling would be determined by the various specialty societies, by the doctors’ peers. MM: Will there be rationing in such a system? Fegan: We’re rationing care now. Right now we’re rationing care based on ability to pay for it. If you have enough money, you can get it. We would allocate care based on need; so the people that need it the most get it first. The dollars for healthcare are not infinite, and so we have to decide what is the most reasonable way to provide care. Some people like the current system. They like the idea that if you are wealthy, you can purchase the care you need; and if you can’t, well, best of luck to you. But some people believe that it is not unreasonable to decide that people that need care the most, deserve it. When a small child is sick, the question becomes, what child doesn’t deserve to receive the best care available? And how do we decide, because you had the misfortune to be born to blue-collar parents, that you can’t have the same care as someone who was born to parents who could afford to give you whatever care you needed? MM: How is this kind of system received in Canada? Fegan: It’s immensely popular. If Medicare is the third rail of U.S. politics, this is the Canadian third rail. It is the thing which Canadian politicians have learned not to toy with. It remains one of the most popular programs in Canada; and the public wants it expanded, not decreased, and they are willing to pay more taxes to expand it. MM: How does business view the system in Canada, and how do you think large corporations would view the same proposal in the United States? Fegan: We know that the cost of healthcare hurts American companies’ ability to compete internationally. It raises their cost of doing business in this country. So companies really like the idea of not having to fight over healthcare. If you look at the strikes that have occurred in this country over the last few years, healthcare has always been one of the major issues, if not the major cause of the strike. Unions are increasingly beginning to believe that this is not an issue they can win on in bargaining agreements with individual employers. In the long grocery workers strike in California last year, for example, the United Food and Commercial Workers finally were able to hold on to benefits for the veteran workers, but new hires do not get the same level of healthcare benefits. MM: Given all these arguments about why the United States should have such a system, what’s the program to overcome the political roadblocks? Fegan: Right now there is a lot of money with heels dug in to stay with the current system. But this is one of those issues that stirs emotions in people and will eventually push aside the interests blocking change. When people become vehement about this, political will somehow occurs. And as more and more people are suffering in the current system, emotions are moving in this direction. We don’t expect Washington politicians to lead the way. This is something that the public will demand, and then the politicians will get behind it. The problem we have right now is that the lobbyist system is so dysfunctional and so grotesque it takes more people to overcome the interests opposed to change. But we are slowly moving in the right direction. More and more physicians are signing on to the call for a national health plan, and more and more of the general public is becoming educated. They figure there has got to be something better than what we’re doing, because what we’re doing surely isn’t working for them.
Many people have insurance that is offered to them by their employer, but they can’t afford the amount of the premium.
We could take the amount of money that we’re spending on healthcare today, and provide coverage for everyone — including the 45 million people who are uninsured and an additional 50 million who are under-insured, people whose insurance status is tenuous at best.
This is one of those issues that stirs emotions in people and will eventually push aside the interests blocking change.