Our Healthcare System: Too Broke to Fix?

According to a May 2007 CNN opinion poll, 64 percent of us think that ourgovernment should provide a national health insurance program for all Americans,even if it would require higher taxes. So what's in the works?

A group of 83House Democrats, led by Rep. John Conyers of Detroit and joined by an allianceof nurses, physicians, and labor unions, is sponsoring a measure to create anational health plan that would abolish private insurers and make all hospitalsnon-profit. It's called HR 676. And it's supported by a grand total of onepresidential candidate: Dennis Kucinich.

None of the other Democrats want to give the Republicans the chance to comparethem to Karl Marx, the way they did to Hillary Clinton when her health plan wascrucified in 1993. In fact, candidate Edwards even pooh-poohed the single payerconcept, also known as "Medicare for All," which would pay for doctors,hospitals, and other healthcare providers from a single fund. (The Canadianhealthcare system and Medicare are single-payer systems.)

In a comment worthy ofa Republican, Edwards told Rolling Stone, "Do you think the American people wantthe same people who responded to Hurricane Katrina to run their healthcaresystem?" Obama has said that if he were starting from scratch he'd support asingle-payer system, but given the morass we've got now, it's just not feasible.

The plans of the three front-running Democrats are all fairly similar: Obama hascome right out and said as much, and Edwards has actually accused Clinton ofcopying his health plan. The plans of all three pretty much agree to keepprivate insurance, provide tax incentives to make healthcare more affordable,and offer the uninsured a program something like Medicare. The idea is thateveryone would end up with some coverage somehow.

Republicans, who bleat about"socialized medicine" whenever the Democrats approach the issue, are all for taxincentives to help people buy their own policies. Some have called for doingaway with the employer-based system of health insurance and replacing it withtax breaks, so that people could use all that extra money to buy their owncoverage. Of course, those who don't make enough to pay big taxes might have aproblem there.

Clinton says that her idea won't need any new government agencies, which isalways a big bugaboo, and that people will be able to keep their current healthplans. She plans to fund her program by dumping Bush's tax cuts for the wealthyand by, optimistically enough, using electronic files, and she would cappremiums at a percentage of income. According to a speech by John McCain,Hillary's plan is "eerily reminiscent of what they tried back 1993. I think theyput some lipstick on the pig, but it is still a pig. And, second of all, it isthe liberal outline-let government do it." The insurance companies, of course,are pressing for a "public-private" partnership, apparently so they could coverall the profitable patients and leave the rest (like people with diabetes) tothe government.

One plan that's getting a lot of play is California's. Nineteen percent ofCalifornia's residents are uninsured, the highest in the nation. GovernorSchwartzenegger has proposed a plan that calls for a four percent payroll tax onbusinesses with ten or more employees that don't provide health insurance.Employers would also have the option of dropping their coverage for theiremployees and instead paying the four percent tax to the state. The planrequires that all residents buy health insurance or face a tax penalty, but onlypeople making under $25,525 would get help buying their insurance.Schwartzenegger's plan would also force insurers to sell policies to people withpreexisting health problems like diabetes, but the companies could set pricesbased upon age and geographic area.

So how do we measure up to the rest of the world? The United States has thehonor of being one of the only two industrialized nations in the world withoutuniversal coverage; South Africa is the other, and even South Africa is workingon it. Germany, for instance, has had a mandatory healthcare system sinceBismarck in the 1880s. Even India has partial universal healthcare, run by localgovernments.

As it stands now, around 84 percent of us have health insurance, about sixtypercent from an employer. In 2004, sixteen percent (45.8 million people) had nohealth insurance. Those who are covered usually pay 16 to 28 percent of theirpremiums, and they kick in for co-pays as well. And sometimes they just gounder: Medical bills are by far the most common reason for bankruptcy in theUnited States. Since 2001, premiums for family coverage have increased 78percent, while wages have risen 19 percent, according to a Kaiser study.

We spend more on healthcare than any other nation in the world: fifteen percentof the gross domestic product. New Zealand, for example, spends one third percapita of what we spend on healthcare, but beats us in every marker ofefficiency and care. Germany, the UK, Australia, and Canada also hammer us innearly all healthcare quality issues. But our system costs two to three timeswhat they spend. American employers, companies, and individuals will spend about$776 billion on healthcare this year, up 56 percent from 2001. And still onlyten percent of diabetics receive diabetes education.

Why do we spend so much for so little? Well, for one thing, insurance companieshave big offices and make big profits. In 2006, the five biggest health insurersreported a combined net income of $10.6 billion on revenues of $188.4 billion.Proponents of universal healthcare say that insurance companies use 31 percentof their revenue for administration and profit, more than a thousand dollars aperson every year. That's nearly double the administrative overhead in Canada.

Government contributes about 45 percent of all payments for healthcare already,making it the largest insurer in the land. Why not go a little farther?

Sources: San Jose Mercury News, October 2007; Wikipedia; Bloomberg.com;

Healthcare Table Courtesy of Wikipedia

Country Life
(a) (b) (c) (d)
Australia 80.5 5.0 2,519 9.5 17.7 67.5
Canada 80.5 5.0 2,669 9.9 16.7 69.9
France 79.5 4.0 2,981 10.1 14.2 76.3
Germany 80.0 4.0 3,204 11.1 17.6 78.2
Japan 82.5 3.0 2,662 7.9 16.8 81.0
Sweden 80.5 3.0 3,149 9.4 13.6 85.2
UK 79.5 5.0 2,428 8.0 15.8 85.7
USA 77.5 6.0 5,711 15.2 18.5 44.6

(a) = Per capita expenditure on health (USD)
(b) = Healthcare costs as a percent of GDP
(c) = % of government revenue spent on health
(d) = % of health costs paid by government

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