Multinational Monitor

MAY/JUN 2009
VOL 30 NO. 3


The Nationalization Option: Considering a Government Takeover of Citigroup
by Robert Weissman


The Wall Street Rip Off: Fees and Consequences
an interview with
John Bogle

Eyes on the Prize: Incentivizing Drug Innovation Without Monopolies
an interview with
James Love

New Directions for Government Motors
an interview with
Jerry Tucker

A BIG Idea: A Minimum Income Guarantee
an interview with
Karl Widerquist

Grassroots Power and Non-Market Economies
an interview with
Beverly Bell



Behind the Lines

Single Payer Sanity

The Front
Dying for Work - Radioactive Mining

The Lawrence Summers Memorial Award

Greed At a Glance

Commercial Alert

Names In the News



Single Payer Sanity

The healthcare debate in the United States has devolved into crazy talk about death panels, the rise of socialism (or fascism), and government rationing of care.

Lost amid the caricature of a policy debate is the reality that the current U.S. healthcare system is crazy.

The richest country in the world spends far more than other wealthy nations on healthcare (at least 50 percent more than every country except Luxemburg) but sports middling health indicators. It permits 45 million people to live without health insurance, denying them access to preventative and routine care, and resulting in the death of 18,000 people a year. It tolerates private health insurance companies making life-and-death rationing decisions for millions of people with only minimal accountability. It lets private health insurers refuse to take sick people as customers and engage in endless manipulations to discard its customers if they do become sick. It features a system in which medical bills and illness contribute to almost two out of three personal bankruptcies — even though three quarters of these bankrupt people had insurance when they became sick.

There is a cure all for these ills. It is a Medicare-for-All, single-payer system, in which everyone is guaranteed access to healthcare as a matter of right, and the government pays medical bills (thus operating as the “single payer”).

Instead of advocating for this approach — which President Obama supported as a state senator, and which he still says would be superior if the system was being designed from scratch — the Obama administration has sought to reach an accommodation with the insurance industry, hospitals and Big Pharma.

In a series of backroom negotiations, the administration has indeed obtained agreements from these industries to support its plan — or, more precisely, to support the idea of reform. The insurers, hospitals and drug companies have made those agreements not because they were imposed, but because they understand that the outlines of the administration’s proposal will leave them more profitable.

Business Week ran a cover story titled, “The Health Insurers Have Already Won.” Concludes Business Week: “The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable.”

The New York Times reports on a Tennessee Hospital Association study that finds hospital income will increase under the Obama approach more by more than $16 billion beyond the cost savings that hospitals promised the administration. The Times points out, as well, that most of those savings were likely to occur in any case. And the deal with Big Pharma commits the administration to sacrifice key cost cutting moves — such as negotiations over the price Medicare pays for drugs. In exchange, Big Pharma promised savings of $80 billion over 10 years — a trivial amount that itself will prove illusory and is massively offset by the increased sales Pharma will register under the administration’s proposal.

It is possible to expand coverage without a Medicare-for-All system, and the administration’s proposals seem likely to achieve that objective (albeit in part through the distasteful step of mandating that people buy coverage).

But the problem of poor quality coverage can never be addressed adequately with private insurance, because the insurance companies’ incentives are to deny care. And there is no prospect at all of addressing spiraling healthcare costs while private insurers remain in control. They waste too much money on marketing, elaborate bureaucracies with a mission in part of denying care, profit taking and outrageous executive compensation. Their bureaucracies also impose enormous external costs on care providers, and on patients who must struggle to obtain care at the moment they are most vulnerable.            

These problems do not plague Medicare, which extends coverage to everyone over 65, with free choice of doctor and minimal administrative burden.

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