Multinational Monitor

DEC 2000
VOL 21 No. 12


Enemies of the Future: The Ten Worst Corporations of 2000
by Russell Mokhiber and Robert Weissman

Raw Power: Plant-Closing Threats and the Threat to Union Organizing
by Kate Bronfenbrenner


Healthcare for All: The Campaign for Single-Payer Health Insurance in Massachusetts and the United States
an interview with David Himmelstein


Behind the Lines

Natural vs. Artificial "Persons"

The Front
Phasing Out User
Fees - Guatemalan Oil Debacle

The Lawrence Summers Memorial Award

Names In the News


Healthcare for All: The Campaign for Single-Payer Health Insurance in Massachusetts and the United States

An Interview with David Himmelstein

David Himmelstein is an associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program. The author of numerous studies and books, he is a leader in the movement for universal health care. He was also an author of the recently defeated Question 5, a Massachusetts initiative that would have delivered universal health care for the citizens of the Commonwealth.

Multinational Monitor: Why does the United States need universal health care?

David Himmelstein: Forty-three million people in the United States have no health insurance at all, and tens of millions more have such inadequate coverage that if they were seriously ill, they would be bankrupted. Millions of Americans don't get the care they need. And simultaneously, we are throwing away huge resources on useless bureaucracy, outrageous profits, outright fraud and unnecessary overtreatment for many patients. We need a thorough revision of our system to deliver the care to the people.

We now have the most expensive health care system in the world. We pay money to middlemen - private insurance companies and HMOs - who do nothing useful. These private insurers act on behalf of employers to limit care to patients and simultaneously extract profits for themselves and other health care providers.

MM: But the insurance companies do provide coverage to tens of millions of people in the United States, right?

Himmelstein: They pass some of the money paid in premiums along to the doctor or to the hospital, but they charge an extraordinary fee for doing that. The average private insurer in this country takes about 13 to 14 percent of the total premium dollar for their overhead.

By contrast, Medicare runs for about 2 percent overheard. The Canadian national health insurance program runs for less than 1 percent overhead.

In the sense that the private insurance companies spread risk and carry out the insurance function, that's a useful function. But they do it in an extraordinary inefficient way that enriches themselves and their business partners.

MM: You support a Canadian-style single payer system?

Himmelstein: Right, but a national health service like Britain's would be fine, also.

MM: What's the difference between Canadian and British systems?

Himmelstein: Canada has provincial health insurance plans. In each province, everybody is covered under a single government-run health insurance plan. You pay your taxes, and your taxes go to cover everybody. That plan then negotiates with all of the hospitals in the province on what each of their budgets is going to be. Instead of paying for hospital care band aid by band aid, aspirin tablet by aspirin tablet, they negotiate with the hospital their entire budget for the year, and they pay them one check a month for that budget.

Doctors submit all of their bills to the public plan, and get paid on a fee-for-service basis. The fees are negotiated between the doctors and the provincial health plan.

In Canada, the doctors have remained in private practice, though they are paid by the public system. Hospitals have remained mostly private, although again, they receive their payments from the public insurance system.

In Britain, the hospitals are owned by the government. The specialists are employed on salary by government as employees of the hospitals.

MM: Why not fix the system here in the United States?

Himmelstein: We ought to fix the current system, but there is nothing that will work short of national health insurance.

We have had a series of patchwork reforms over the last 20 years now, and we have more uninsured people today than we had 20 years ago. And despite the economic boom, we have made no dent in the number of people who are uninsured.

We passed the children's health insurance program two or three years ago, but there are as many uninsured children now as there were two or three years ago, because health care costs keep rising, and fewer people can afford private coverage. The public expansions don't keep pace with the cutbacks in private coverage most years.

Basically, as a private insurance firm, the way you make money is to avoid sick people. There has been no effective way of policing that.

The problem is that unless you require that either an employer buy coverage for an employee, or that an individual buy coverage, there is no way of making universal coverage in a private insurance system. Moreover, poor people are least likely to be able to afford medical care, and are often the sickest people in the society.

MM: How many uninsured people are there in the United States?

Himmelstein: Forty three million - that's about 15 percent of the population.

MM: What happens when an uninsured person gets sick? Who pays?

Himmelstein: It depends on where they are and exactly what they are sick with. It varies from community to community. If you are sick enough to be in imminent danger of dying, then a hospital is required to stabilize you or risk a fine from the federal government. Several dozen hospitals get that kind of fine every year, so it does happen that even very sick people are denied care.

If a hospital treats an uninsured patient, the hospital tries to collect from you, and if they can't collect from you, then they write it off as free care. In some states, there are some state funds available to subsidize that care, in others not. In some cities there are some public hospitals available to help subsidize that care and others not.

If you are not very ill, in some places, you may not be able to get any care. In other places, there are some systems of care for the uninsured, either locally subsidized or at reduced rates.

There are 300,000 people refused care in hospital emergency rooms every year because they can't pay.

MM: Under a system of national health insurance, what happens to the insurance companies?

Himmelstein: They are eliminated.

The total health budget in the United States is about $1.2 trillion. About $300 billion is administration, and you could probably eliminate about $175 billion of it with rational health insurance system.

It is very clear that if you streamline the system and took the administrative waste out of it, you could give Cadillac care to everybody in the country for what we are now spending. The General Accounting Office has studied the question, and confirmed that. The Congressional Budget Office found that. A right-wing consulting firm made estimates that are in line with that.

MM: Can national health insurance supporters in the United States overcome public distrust of government?

Himmelstein: Most Americans have some distrust of government. One of the organizations they like even less than government is private insurance companies. And those are the only two options for running our health insurance system.

Surveys show that universal coverage is enormously popular. If you give a reasonable description of a Canadian-style health care system, about 55 to 60 percent say they support that.

MM: So why doesn't the United States have a national health insurance system?

Himmelstein: First, national health insurance means a major redistribution of income. At present, the poorer you are, the larger the proportion of your income you spend for medical care. And if you go to a tax-funded national health insurance plan, presumably you are going to fund it out of a vaguely progressive tax. And rich people are going to pay a higher proportion of their income and poor people are going to pay a lower proportion of their income. It implies a substantial redistribution of income.

Second, national health insurance attacks a major concentration of corporate power. Some of the largest and richest firms in the country are health care firms. You are putting out of business HMOs and health insurance companies.

And you are severely affecting the profits of others. The drug industry, which has been the most profitable industry among the Fortune 500, would be faced by a single national purchaser of their drugs. And they wouldn't get away with the rip-off prices that are routine for them now.

The government will say to the drug companies, "We are not willing to pay for the $12 billion a year that you spend to miseducate doctors." That's the marketing and sales force, which they would presumably have to justify as a cost, if they were bargaining with the government. The drug companies would not be in a position to justify those costs.

MM: Question 5 was a universal health care proposition on the ballot in Massachusetts in November. What would it have done?

Himmelstein: It would have done three things.

First, it would have required our state legislature to pass universal coverage by July 1, 2001 and implement it by July 1, 2002. The system was required to eliminate barriers to care. It had to maintain a free choice of provider for patients. It had to minimize incentives for overcare and undercare.

Question 5 didn't specify how universal coverage should have been carried out. And clearly, if it had passed, there would have been a major debate in our state about exactly how to do it.

It would have set up a commission to advise the legislature on how it ought to have been done. And on the commission would have been several advocates of a Canadian single payer system.

MM: Why weren't you explicit about how the single payer system would have worked?

Himmelstein: Under the laws in Massachusetts, you can't appropriate money with a ballot initiative. We couldn't actually put in place a new tax structure to fund health care and specify that degree of detail. Second, specifying a system in detail would have required many pages of detailed text. We knew we were going to be tremendously attacked by the insurance industry and others. And we thought that the possibility of having a reasonable debate about the detailed structure of the system was almost nil given the political system in our state.

For tactical reasons, we decided that the first step was to say, "There needs to be universal coverage, and here are some broad outlines. Let's set up a commission that includes a majority of single payer advocates. And then within six months, let's proceed to the next step."

There were two other clauses. One would have banned conversions of hospitals and HMOs to for-profit businesses. The other would put in place some restrictions on HMOs immediately. They would have to spend at least 90 percent of premiums on medical care. It would also have required them to allow patients to go to any doctor licensed in the state. And it would have outlawed financial incentives to doctors to restrict care.

MM: Who in the state supported Question 5?

Himmelstein: Question 5 was initially proposed by an ad hoc group of doctors, nurses, psychologists and other health professionals. We went around and started to build a broader coalition with some friends and colleagues who had some more political sophistication that we did.

They rounded up a number of groups that were going to support it, including the AFL-CIO and some consumer advocacy groups including Health Care for All, which has Families USA as its Washington, D.C. counterpart.

The groups collected the signatures to get the thing on the ballot - 120,000 signatures. Those signatures were collected last fall. And this spring we collected another 15,000. Under Massachusetts law, you have to collect two sets of signatures.

The legislature started to panic about this initiative being on the ballot. And the HMO industry did as well.

A patient protection bill, which had been stalled by the HMO lobby in the legislature for three years, suddenly began to move. And it was clear the HMOs had instructed the legislative leaders that they needed that thing to pass, and they wanted the ballot initiative to be removed. A last minute deal was struck between the HMOs and the major groups that had signed on to the initiative. The patient protection bill would become law and in exchange, the initiative would be pulled off the ballot at the last moment.

That left only the League of Women Voters and the original ad hoc group of doctors, nurses and other individual professionals supporting it. We were left with no organization, no money and little political savvy.

MM: What did the patient protection act do?

Himmelstein: It put in place the right to appeal if an HMO denied you care. It put in place a structure to regulate for-profit conversions of hospitals and HMOS. It set up a commission to advise the legislature on universal coverage, although there was no mandate that the legislature had to do anything about it.

We rejected the deal because the patient protection act was more or less the same reforms they put in place in 30 other states, and those laws have had no noticeable effects on health care in those states. Instead of prohibiting conversions, it laid out how an HMO or hospital could be converted to an investor-owned organization.

Third, it set no deadlines, and no requirement for universal coverage. It just set up a commission that was not likely to act. So, we thought the deal was nothing but a sham and didn't effectively accomplish anything.

MM: But once on the ballot, the AFL -CIO and Health Care for All could not remove the initiative?

Himmelstein: They felt they could. The negotiations on the deal were being conducted right around the time when the final signatures were due earlier this year. Our allies turned the sheets with the signatures in because the patient protection act legislation was dragging. And they thought they were turning in the signatures as a stick to put over the heads of the legislative leaders to conclude the legislative wrangling.

They turned them in to the Secretary of State. Then they tried to withdraw them. At that point, the rest of us who had been involved said, "No, you can't withdraw them." And the Secretary of State ruled in our favor.

MM: So, you get on the ballot. At that point, who was supporting you and who was opposing you?

Himmelstein: Our major supporters were colleagues. The biggest organization was the Massachusetts Nursing Association. The League of Women Voters was important. And individual doctors and nurses. That's about it.

The opposition was the business community and particularly the HMOs in Massachusetts. The HMOs kicked in at least $5 million. Organizations like Raytheon and some other big businesses kicked in money. They saturated the television and radio airwaves.

MM: What was their argument?

Himmelstein: They argued that this proposal would raise costs tremendously. They commissioned a study that claimed that universal coverage would increase costs by 40 percent in Massachusetts. That is a fairly bizarre notion. We are already 30 percent above the national average in our state.

We are spending $6,000 per capita in Massachusetts on health care. The notion that we would raise that to something like $8,000 per capita is bizarre. There is no place else in the world that spends more than $2,500 per capita on health care. In the United States, we are spending $4,000 per capita.

There is no serious health policy person who believes that under universal health care we would be spending $8,000 per capita. But they commissioned studies that purported to show that and the news media covered those studies as if they were true.

There have been two serious studies of what statewide health insurance program in Massachusetts would cost. Both of those were commissioned by the Massachusetts Medical Society, by no means a left-wing organization. And both concluded that you either save money, or it might increase costs a little in the first year, and then you start to save money.

MM: They spent $5 million, you spent $60,000. They had ads all over the airwaves, you had no ads. You relied on free media. Did you get much publicity?

Himmelstein: A fair amount. The last week or two, when it became clear that we had a serious chance of winning this, the press actually began to cover it. The problem was that the folks working on the campaign for us were doing it in our spare time, after working full-time jobs. And we were not in a position to spend our days thinking up lies to tell, like the opposition was doing.

They would put out a raft of lies, which the press would report, and we would then try and counter those, but by no means have the time or resources to go after each one.

MM: What were you expecting in terms of percentage of the vote?

Himmelstein: We didn't know what to expect. The polls showed that we were ahead 75 to 25 at the beginning. We thought we would probably go down fairly fast from there, but a week before the election, the polls showed us at 60 to 40. We started to think that we might win it, especially after Senator Ted Kennedy said he was going to vote for it. And during the last week, a few politicians began to filter to the front of the parade, since they apparently thought the thing might pass.

If we had only a minimally competent campaign, it would have passed. We lost in the end 51 to 49.

If we had signs at half the polling places in the state that said - Ted Kennedy says vote yes on Question 5 - we would have won easily. But we weren't organized enough to do that.

MM: Are you bitter about this?

Himmelstein: No, we are tremendously energized by this. We made every conceivable mistake. We ran the most incompetent campaign possible. We were deserted by all of our allies.

And we still got 49 percent of the vote. We feel like all we need to do is do this right and we will win easily.

MM: Do you plan to do it again?

Himmelstein: Yes, in 2002.

MM: When is the United States going to get universal health care?

Himmelstein: We are going to have a major debate about this in the next three or four years. When we are going to get it is more difficult to say. We'll have opportunities for it in a major way. The system is becoming unstable. Costs are rising very rapidly. In the early 1990s managed care firms said to employers, "We will hold down your costs if you give us control of the system."

From 1994 to 1997, health care costs rose more slowly than they did in the late 1980s and early 1990s. And big employers closed ranks behind the existing health care system. While patients were dissatisfied, the system was fairly stable at that point.

Now, you have the re-emergence of health care inflation. And that is a major destabilizing force. Now it is clear that HMOs have not succeeded in containing costs and are not likely to. We are going to have to have some other major reform of our health care system to contain costs.

That creates divisions in corporate America and allows for an opening for debate that otherwise is difficult to create. The implementation of HMO control of the system in the early 1990s was quite brutal, not only for uninsured patients but for many insured patients. That spread a reaction among not just the poor, but many middle class people who are now dissatisfied with the system.

It creates an opportunity for a broad coalition for change. Surveys show that something like 55 to 60 percent of doctors now are in favor of national health insurance. The majority of all medical school deans in the United States have explicitly endorsed single payer health insurance.

MM: Why isn't that support being translated into political support in Washington?

Himmelstein: No firm in the U.S. has ever advocated the nationalization of any industry. General Motors is upset that its health care costs are going up, but they are not yet ready to say that the preferred solution is the elimination of a private capitalist industry.

MM: Has legislation been introduced in Congress?

Himmelstein: Yes, regularly since 1948. But it never goes anywhere. In the early 1990s, 70 or 80 members of Congress supported it. Now there are about 20 or 30 members who actively support it. If there were a serious organizing effort, we could get back to 50 or 60 members supporting it.

But, the Congress is going to be the last place to act. We are going to need to create a major groundswell for change before Congress acts.


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