One of the key battles over the future of American healthcare is being fought right now: should the government offer a publicly managed program to compete with private insurance?
The Senate Finance Committee spelled out alternatives for overhauling the U.S. health-care system, including a mandate that all Americans get health coverage and creation of a government-run program to compete with private insurers....Allowing people to keep their current coverage, if they wish, is one of the principles outlined in the proposal.
Obamaās administration says competition from a government- backed health plan will improve quality and lower costs.
Last week, Health and Human Services Secretary Kathleen Sebelius told the House Ways and Means Committee that Obama has no wish to āundermineā private health-insurance companies by supporting a government-backed alternative. She also said Obama would be willing to consider a requirement that everyone have health coverage, a proposal he criticized during his presidential campaign.
The so-called public option to purchase government-provided health care is a central issue. House Speaker Nancy Pelosi has said the chamber will include such an approach in legislation it considers later this year. Republicans and some insurers, including Aetna Inc., have opposed the creation of a new program modeled on Medicare.
Baucus and Grassley said one way to fashion a government plan would be to make it āMedicare-likeā and have it administered by the Department of Health and Human Services. Alternatively, it could be run by the states or by private- sector, third-party administrators, they said.
The insurance companies are fighting tooth-and-nail against any sort of government health care plan they'd have to compete with. For good reason. Private health insurance is a massive profit and bonus generating pit of unethical conflicts of interest. A typical, for-profit insurance company only spends about 50% of premiums on health care for subscribers. Medicare, the 100% public parts at least, spend closer to 90% on patient care, a mere 10% on administration*. [Please see below.]
Private insurers do nothing other than add grief, paperwork and financial doom to health care, strip mining profit out of illness and despair. Forget about the uninsured in the US. The insured are faced with an increasingly impossible task of getting insurers to live up to their obligations, as well as a growing list of scams and traps written into policies.
The situation would be as if the USPS didn't exist, with UPS and FedEx refusing to go at all to 1/3 of the country's households (declaring them too unprofitable to handle), routinely failing to deliver parcels on time or intact to the remaining 2/3s while pocketing a tidy profit. Part of the reason why these private alternatives are so good is the competition from the government-run program (mandated to provide service to 100% of households.)
Or consider the ridiculous (but successful) effort to prevent Metro from offering special service to baseball and football gamesāin the name of preserving private industry's right to "compete fairly" without governmental interference. The result is no service, private or public.
This industry campaign against a governmental-run health care plan is an effort to maintain these absurd profit margins. Even with such a governmental plan, private industry could "compete". Remind your representative and senators of this fact right now. Demand your right to opt out of private healthcare.
Updated:
* This 50% / 90% figure came from a series of lectures I attended on healthcare in 2001 at the University. The data, in turn, is from the mid-1990's and the height of the HMO movement when administrative costs proliferated. Belatedly, I've realized that this probably isn't accurate for right now, a decade later as HMOs have fallen to be closer to overall costs.
Nor are these easy numbers to calculate. Deductibles, co-pays and uncovered percentages all must be added to premiums to calculate the total costs charged by a plan to the end user for an amount of healthcare benefit received, with all but the last generally lacking high quality estimates.
I'll dig around for a contemporary estimate that I'd trust.
Updatedx2:
From a recent NEJM editorial:
A major reason why it is so difficult to reduce costs is that every dollar of health care spending is a dollar of income to someone involved in providing health insurance or health care. Administrative costs are undoubtedly too high, and insurance companies taking excess profits and executives with high salaries are frequently blamed. But they are only a small part of the story. The biggest part consists of payments to tens of thousands of telephone and computer operators, claim payers, insurance salespersons, actuaries, benefit managers, consultants, and other low- and middle-income workers.
And from a 2003 NEJM article:
In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada.Between 1969 and 1999, the share of the U.S. health care labor force accounted for by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, it grew from 16.0 percent in 1971 to 19.1 percent in 1996. (Both nations' figures exclude insurance-industry personnel.)