Health care, as we once knew it, has changed dramatically. While managed care techniques and market consolidation represent attempts to improve the efficiency and hold down the cost of health care, two factors work strongly in the other direction: the aging of the population and the increased prevalence of chronic illness.

Like all industrialized nations, the United States is graying. The first of the enormous cohort of Baby Boomers reaches 65 in 2011. As the population ages, so grows the incidence of chronic illnesses. Lifestyle factors, including obesity, poor nutrition, and lack of exercise, exacerbate the problem, and help make chronic illness a greater cost concern than the cost of treating most acute care conditions.

Americans clearly are not spending enough money on prevention. Despite allocating nearly 14% of our national income for health care, our average life expectancies are about 5 years lower than those of Europeans or Canadians, even though these countries spend less than 10% of their income on health care.

Fierce competition for market share has created a trend of consolidation of managed care plans. But the past 3 years have witnessed a series of setbacks for managed care as consolidations failed to result in the hoped-for efficiencies and health care management organizations (HMOs) have dumped their most costly populations, dramatically affecting the sick and elderly population.

The billions of dollars Congress voted for Medicare HMOs in December 2000 failed to lure them back into Medicare as lawmakers intended. In fact, on January 1, 2001, nearly 1 million beneficiaries lost their coverage when 118 HMOs pulled out of Medicare in 464 counties in 34 states, according to the Health Insurance Association of America.

The pullout of these HMOs leaves many Medicare beneficiaries in a precarious position. If they return to traditional Medicare, they could lose some of the benefits that they received from their HMO and they will need a Medigap policy to cover co-pays, deductibles, and other health care costs. If they choose another HMO, they have no guarantee that the company will not pull out of the market next year.

Most seniors can ill afford Medicare cuts. The average senior now spends 21% of his or her income out-of-pocket on health care. Republican and Democratic politicians alike contend that managed care can trim such out-of-pocket costs and at the same time yield savings in the Medicare budget. But managed care has not turned out to be a solution for the health care problems faced by seniors. A study last October in the Journal of the American Medical Association¹ concluded that elderly, chronically ill patients enrolled in HMOs had significantly worse medical outcomes than a similar population in traditional Medicare. Moreover, Medicare HMOs have failed to yield the promised savings for Medicare because these HMOs are adept at “cherry picking” to screen out sicker seniors. Since these HMOs are paid by Medicare for the “average” senior’s medical expenses in a given region, and whereas they enroll those who are healthier than average, they are in effect overcharging Medicare. As a result, every time a senior shifts to a Medicare HMO, Medicare must pay 6% more yearly, according to the Agency for Health Care Policy andd Research. This is an increase that the taxpayers must bear, providing more profits to the HMO and less available funding for traditional Medicare patients who are generally sicker. This, in turn, results in reimbursement cuts to home health care providers and unacceptable health outcomes.

We constantly hear from politicians that there is no escaping large Medicare cuts because the system is in a “crisis.” But this crisis is largely manufactured. Up to the year 2002, there is no shortfall requiring massive Medicare cuts, and the system can be preserved with minor adjustments through this period. In the long term, however, Medicare is definitely threatened by ballooning health care costs and the fact that 43 million Americans lack any form of health insurance and another one third of the population is inadequately covered, according the the US Census Bureau’s 2000 census.

The Solution
There is a proven way to contain costs and provide first-rate universal coverage: A single-payor national health insurance plan. Medicare is the first step in such a system, but we need leaders to do battle for the idea of a national health insurance plan in the general arena of public opinion and not politicians who pay lip service to that ideal only before receptive audiences.

While Congress continues to argue about what is wrong with our health care system, one thing is clear: consumers are making their mark both on the debate and on the system itself. The health insurance system has become complex and unfriendly to users. Increasing numbers of consumers are rebelling, voting against the most restrictive HMO policies. Surveys by the Kaiser Family Foundation and Harvard University demonstrated that 36% of Americans view managed care as doing a bad job serving patients, 33% report that they are worried that their health plan is more interested in saving money than providing them with the best treatment if they were sick, and 72% support patient protection legislation to hold their HMO legally accountable for its medical decisions that result in harm.

Health insurance was intended to protect us from financial catastrophe similar to home and car insurance. However, it has transformed into a monster that is eating us alive at the same time it is supposed to be helping us. We are paying larger and larger insurance premiums for smaller and smaller benefits. The system has also taught us to believe that we are entitled to see a doctor any time we want and have any kind of tests we want for free (or for a $10 or $15 co-pay). Because everyone wants to get their “money’s worth” for those huge premiums, many people end up overusing the system, visiting doctors much more often than they would if they were paying that first $500 to $1,000 each year out of their own pockets.

We are all willing and able to pay cash for our routine home and car expenses. We each control where our money is to be spent and trust free competition to regulate the marketplace. We spend our money with businesses that provide the best quality and service, and those end up prospering. Would you pay a little extra to have your car or home worked on by someone with a reputation for excellence and good customer service? I would.

Isn’t it strange, then, that when it comes to maintaining our bodies—the one thing that we cannot trade in for a new model—we trust a large corporate HMO to take our money, process it through their bureaucracy, and decide how much of it to give back in the form of rationed health care. There is no longer an extra reward in this system for doctors or providers who have earned a reputation for excellence and caring, because patients no longer have any direct control over how our health care dollars are to be spent.

A Case for National Health CARE
With access to health care for some 68 million Americans hanging in the balance, it is time to restate the case for a single-payor national health insurance plan. Health care providers are now paid by private insurance companies, employers who self-insure, government programs, and patients themselves. Switching to a single-payor national health insurance plan, like Canada’s, would simplify all this. One institution—the government—would pay the nation’s health care bills and remove all financial barriers to medical care. Everyone would receive a card entitling him or her to standard medical care, mental health services, long-term care, home care, dental and vision services, occupational health, physical therapy, prescription drugs, and medical equipment. Patients could visit the health care provider of their choice and the government would pay the entire bill eliminating patient deductibles, co-payments, and other out-of-pocket expenses.

This single-payor insurance plan would be federally funded and state administered to oversee the plan, set policy, and negotiate fee schedules, budgets, and goals. Under a single-payor national health insurance plan, all health care providers could continue to practice on a fee-for-service basis determined by binding fee schedules. Nonprofit HMOs could continue receiving a yearly lump sum from the national plan for each patient to cover operating expenses, but funds for capital acquisitions would be allocated separately. Neighborhood health centers, clinics, and home health care agencies would be funded directly from the plan on the basis of global budget. And the plan would pay pharmacists wholesale costs plus a reasonable dispensing fee for prescription drugs based on the national plan formulary.

In short, health care would remain largely private; health insurance would not. A single-payor national health insurance plan would radically streamline paperwork for all health care providers, simplifying provider communication through a universal electronic medical record, and saving more than half of the annual billing and administration costs. This simplification (welcome in itself) would generate billions in additional savings.

A single-payor national health insurance plan is, then, a simple idea and it also has a compelling rationale: that health care should be considered a right, not a commodity. In the 1960s, Congress and the Johnson Administration took tentative steps in that direction by creating Medicaid and Medicare. From then until the early 1980s, access to care improved, and morbidity and mortality rates dropped. For the population as a whole, the proportion of health care costs paid out-of-pocket declined, the infant mortality rate fell, and overall death rates decreased.

But during those same 15 years, inflation-adjusted per-capita health spending doubled. New and improved technology brought increased costs, and a needed expansion of medical care took place within the permissive boundaries of an unduly expensive, profit-based medical system. Beginning in the late 1970s, the focus in American health care policy shifted to cost cutting. Private insurers raised deductibles and co-payments, expanded exclusions from coverage, and intensified efforts to avoid insuring people with a high risk of illness. While these policies have not contained costs, their toll has been high in terms of restrictions on care and inequity in health care. Decades of improvement in health standards have been halted and, in many instances, reversed.

The 1993-1994 health care debate provided an extraordinary opportunity for reform. Unfortunately, that debate turned out to be a sideshow to the Clinton era’s main event: the accelerating corporate takeover of health care. When, early on, former President Clinton signaled that health care investors were safe on his watch, an unprecedented torrent of mergers and acquisitions followed. Ten firms controlled 70% of the HMO market, according to the Health Insurance Association of America, and some of them have since merged. Bowing to marketplace necessities, Blue Cross is going for-profit, so it can sell stock to raise the billions it needs to buy hospitals and clinics for its own managed care networks.

Meanwhile, as Congress debated coverage for the uninsured, the care of the insured was being transformed. The patient/doctor relationship gave way to the employer/health plan contract. Health plan administrators demanded industrial efficiency at the level of each doctor/ patient encounter.

Reversal of Fortune
The current health care crisis is a consequence of these changes. A Canadian-style single-payor national health plan would reverse these trends. Based on the premise that health care should be treated as a right of citizenship, not a commodity, the national plan would have people pay their insurance premiums by paying their tax bills. Within its framework, all Americans would be entitled to receive necessary health care, without incurring any out-of-pocket expense. Universal health coverage would lower system-wide health care costs. Fixed costs would be spread over a larger number of patients, lowering the overall cost per patient. Free care would cause a larger utilization increase than cost increase, which would be offset by administrative savings.

A single-payor national health plan would outlaw private insurance for most health benefits. The insurance industry must be beaten head on, and it can be beaten. It is unconscionable that managed care systems are second-guessing our doctors, particularly for treatments that are standard rather than experimental. If we want to spend our available dollars more efficiently, the first thing we need is a universal health care system. Such a system would be more cost-effective and more accountable. Moreover, any rationing would be explicit, not covert, and never based on the patient’s private purse or health predispositions. We need to make a health care budget for the country as a whole, cut out the HMO middlemen, and strictly limit health care bureaucracy to 2% to 3% of costs. (Medicare and Medicaid squander 25% on paperwork alone). We need to negotiate fees with all health care providers and bargain hard for the best prices from giant multinational drug companies. The savings on bureaucracy and corporate profits would allow us to fully cover everyone for what we are now spending. Increasing costs for families and the sick would cause millions of casualties. A national health insurance plan would cause just two: HMOs and drug company profits.

Mark A. Chmielinski, RRT, is vice president of clinical services for HomeCare of Michigan Inc, Allen Park, Mich.

Reference
1. Ayanian, JZ, Weissman, JS, Schneider, EC, Ginsburg, JA, Zaslavsky, AM. Unmet Health Needs of Uninsured Adults in the United States. JAMA. 2000;284:2061-2069.