excerpted from the article

Health vs. Medicine

Where do we go from here with health care reform?

by Burt Laws

Z magazine, July / August 1998


Early in this decade, health care reform seemed the hottest political issue going. There was an effective popular demand for universal health care coverage, that helped to propel some comparatively liberal candidates into office and elect Bill Clinton President. We should have known that the medical-industrial complex-the drug companies, big insurance companies, and medical service conglomerates led by the vast criminal conspiracy then called Hospital Corporation of America (now Columbia/HCA)-would rise up to defeat reform. After all, we already knew how the military-industrial-political complex maintains itself. The Clintons did not help the cause by disappearing into secret meetings with a few hundred of their closest friends for several months, only to emerge with an impenetrable system of cycles and epicycles, laden with perverse incentives and antidemocratic features, that begged to be attacked as a bureaucratic monstrosity.

The debacle played into the hands of well-financed party organs and corporate PR firms masquerading as policy institutes that have been trying, with considerable success, to pawn off a self-serving ideology as "scientific" truth. This ruling ideology maintains that a mythical system called the "free market" has been scientifically demonstrated to be the most "efficient" way to allocate resources, to solve social problems generally and to maximize the "freedom" and power of consumers. These conclusions derive from the putative "science" of economics.

A Review Of The Problems

When Clinton took office, 36 million Americans had no health coverage at all. Today, that number is over 40 million. Sixty million more have inadequate coverage that would leave them devastated by a major illness - and that doesn't include more than 30 million Medicare recipients who aren't covered for long-term care or, in general, for basic needs like prescription drugs and eyeglasses.

But we had, and continue to have, comparable crises of homelessness, hunger, and a few other problems in our society, yet these have not created a crisis atmosphere in Washington. On the contrary, we have witnessed the federal government steadily withdrawing from its role in housing and nutrition, with little effective opposition. The crisis in health care, as far as Washington was concerned, was one of cost.

In 1940, the biomedical industry-"health care"-constituted 4 percent of the U.S. economy. By 1980, it had jumped to 10 percent, and now it is about 14 percent. Spending on health care in the U.S. is now half again or twice as much per capita as in all other wealthy countries. This created a crisis in that powerful institutions-the federal and state governments, and major corporations-had taken on responsibility for paying for medical services when that obligation was fairly modest. Now the price was much higher, and they didn't want to pay it.

Massachusetts, like others, was slashing funding for welfare, social services, and higher education. Yet the total of state spending continued to increase, because of the so-called "budget buster" accounts: Medicaid and health care for state employees. We were sacrificing much of what state government had traditionally done in order to pay for medical services. Massachusetts spent less than $1 billion on Medicaid in 1986 and more than $2 billion in 1992.

Employers faced the same problem. The U.S. has a unique system in which so-called health insurance (more properly called disease insurance) is provided to most people who have it through their employment. Private employers pay for almost 25 percent of medical goods and services. Most of that comes from Iarge corporations-small businesses typically can't afford coverage for their employees. Some of these corporations are obligated to provide this coverage by union contracts, or have obligations to retirees, although they have been trying to escape these requirements. So Lee lacocca, as Chrysler chair, supported national health insurance. Having to pay these costs made it harder for U.S. auto makers to compete with Japanese companies, whose employees are covered by government insurance.

At that time there was also an intense focus on Medicaid and Medicare in the debate over cutting the federal budget deficit. This was fairly disingenuous, since the deficits of the 1980s had not been caused by growth in such entitlements, despite Republican disinformation campaigns. Entitlement spending remained essentially flat throughout the Reagan and Bush administrations, as a percentage of GNP. The deficits happened because the Reagan tax cuts left the government without enough income to pay its expenses, and the problem was subsequently compounded by growing interest on the national debt. Still, the focus on Medicare and Medicaid was not wholly ridiculous because these programs were growing very fast. This trend threatened to wipe out any progress on the deficit in future years.

Because of this confluence of interests-workers who didn't have insurance or were worried about losing it, on the one hand; corporations, state governments, and deficit hawks who didn't want to pay for it on the other-we had a window of time in which it appeared as though some form of radical restructuring could be achieved.

Understanding the confluence of interests that favored reform helps us to understand the opposition. It may seem confusing at first look. The military-industrial complex, after all, wants the government to spend the most possible on weaponry. Why shouldn't the medical-industrial complex be in favor of an expanded federal role in health care? However, the Administration proposal aimed at driving down the prices paid to drug companies, medical equipment vendors, hospitals, insurers, and other participants in the medical economy. Some physicians, particularly in the highest priced specialties, would have lost income. This was the best thing about the proposal, and also its doom.

This also helps explain why attention to health care reform has largely died down since 1993, even though more people today are uninsured and those who are insured are increasingly unhappy with the kind of care they receive. The growth in medical costs has slowed temporarily, as both public and private payers move consumers into managed care arrangements; hence the powerful interests that made reform a viable issue in the past do not feel the same urgency today. ...


Now let me address an important question that may have been troubling some readers. How do those other countries manage to keep costs below ours while covering everybody, without creating the same problems? There are some variations in the details, but I'll use Canada as an example because it makes the main points clear.

Canada has what's called a single payer system. In every province of Canada, there is only one health insurer, which is a public authority. Immediately, that means there is no competition among insurers, with all of the problems we have seen. By law, the single payer covers every legal resident. (Non-legal residents who show up will get care, by the way, although they may get deported or, if they are tourists, they will get a bill.) The coverage is financed by tax revenues, which are as progressive as the province cares to make them, so it can be affordable for everyone, and in Canada, in fact, it is.

Since all providers are in the plan, by definition, there is free choice of providers. In general, primary care is not managed (though there have been recent experiments in this direction). For the most part, it's based on an indemnity model. You go to see your doctor, you and the doctor decide what needs to be done, the doctor sends the bill to the single payer. Utilization review exists but with a light touch. Basically, they look for patterns of billing that suggest fraud or malpractice. They can do this easily because all providers' billing records are in a single database.

Where they do most to control costs is where the greatest costs are located, that is hospital care and particularly high tech procedures. Hospitals are put on an annual operating budget, with a separate capital budget. Hospitals can't compete to have the most high tech equipment, and they don't all need a maternity ward, etc., because the single payer figures out what capital resources are really needed for the province, and authorizes only those. So the perverse effects of competition among hospitals are eliminated.

The hospital's annual operating budget is based on what it has historically cost to serve the population in its area, plus an adjustment for changing population, new technology, etc. This is negotiated between the hospital and the authorities. Then the hospital has the responsibility for allocating this money to best effect in terms of health outcomes and the amelioration of suffering.

Is this rationing of health care? Of course. But we have rationing here in the U.S., and our rationing is based on the insane criterion of who has what kind of insurance. The fact is, rationing of health care is necessary and inevitable. We can always think of more ways to spend a million dollars on a million-toone chance of prolonging the life of one individual, but that same million dollars could have fed 200,000 hungry people a good meal, or built housing for a dozen homeless families. We must make these difficult choices as a society. Other countries are making them, but we hide our heads in the sand.

Among the most politically powerful institutions in our country are the American Medical Association, the American Hospital Association, the Insurance Industry Association of America, the big drug companies. They are by far the largest contributors to poIitical campaigns, and the biggest spenders on lobbying. They're making sure we have a system that lets the people who run them get rich.

There is an analogy often used in public health literature. Suppose there is a steep cliff in the town, and people are falling off. At the bottom of the cliff are all the caring, compassionate people who make up the medical industry. As the people hit the ground, the medical workers rush in to stanch the bleeding, set their fractures, and rush them off to the gleaming new hospital for recovery and rehabilitation.

Meanwhile, at the top of the cliff, there is no warning sign or fence. Indeed, some people are being enticed toward the cliff by people from tobacco and fast food companies and other firms, who are selling them tickets to jump off. Other people are actually in chain gangs, being driven toward the cliff by overseers with whips.

What is the sensible thing to do in this situation? Spend more on the doctors and ambulances and hospitals, so we can get to more of the people faster? Or stop squandering all that money and put up a fence? We do the former because we depend on the market: individuals who have already fallen off the cliff will pay (or their insurers will pay) for treatment; but only society, through its government, will pay to put up a fence, and as a society we have not made this choice. No clearer example exists of the inability of the market to produce efficient allocation of resources.

The myth that the biomedical industry holds the key to health and longevity stands in the way of creating a just and humane society. We are not just biological entities, but also social, psychological, and spiritual. We are physically healthy only to the extent that we are socially healthy. Biomedicine, with its one-dimensional and mechanistic interpretation of the body, denies our very nature.

If we want a healthier society, we need to spend less on biomedicine, not more. Yes, biomedicine can cure some illnesses and reduce the symptoms o others, but it has side effects as well. I won't go through all of the harms that some people have ascribed to biomedicine-that's for another day-but I have identified one of the most important, and that is its opportunity cost. If we get so-called "health care" reform that appropriates an increased share of workers' income to pay for biomedicine, they will very likely be left less healthy. If we as a society have faith that the 14 percent of national wealth that we spend on biomedicine is the best possible investment in health, and if we let that share keep growing at the expense of meeting our important social needs, we will be less healthy.

Viewing the issues at stake in this way, I approach with skepticism most of the current piecemeal initiatives to extend "health insurance" to more of the population. Having lost the battle over the Clinton Administration Health Security Act proposal, activists retreated to a strategy of modest proposals at the state and federal levels. So the president got his proposal passed to provide funding to the states to extend Medicaid (now often called by other names) to a higher percentage of low- and moderate-income children, and now proposes to allow people 55 and older to buy into Medicare. In Massachusetts, Rep. Joseph Kennedy has suggested that the state (an entity which does not employ him in any capacity) should combine moneys from various sources, including the special excise tax on tobacco passed by the voters in 1993, to extend the expanded Medicaid program (called MassHealth) to everyone who is now uninsured.

The fundamental problem with such proposals is that they aim only at achieving expanded coverage. They do nothing to solve the fundamental problems in the system, and could even make some of them worse. There are at least two indispensable requirements of any reform proposal: it must have progressive financing, and it must address the profiteering and other destructive features of the medical marketplace, so that resources can be directed away from the biomedical industry and toward social welfare and public health.

Many popular schemes would actually force low and moderate income people to sacrifice resources for the sake of health insurance. The prototypical example is the perennial effort in Massachusetts to force employers to buy insurance for all their employees. Although this is usually sold as a free lunch for employees, the fact is that the funds would principally come out of wages, and to a lesser extent show up in higher consumer prices. This would be invisible to workers, since they wouldn't see it on their pay stubs, but the effect would be there all the same. The result would be to redirect more of society's resources to biomedical intervention-taken right out of the pockets of workers. At the same time, such a scheme would do absolutely nothing to reform the market for health care services.

Similarly, the Clinton proposal to allow people to buy into Medicare has little progressivity. To be sure, many people in the age group 55-64 are experiencing difficulty in the job market and have lost access to employer-provided insurance. Some would take advantage of this option. But without progressive financing, again, struggling people may be forced to direct resources away from other basic needs to pay for it. This is not progress.

The Kennedy proposal to use tobacco tax revenues for health care is outrageous. The measure approved by the voters specifically required that the revenues be used for public health initiatives, particularly to combat tobacco addiction but also for comprehensive health education for school-age children. To steal these moneys for medical services is to go up to the top of our metaphorical cliff, where workers have just begun to set up some warning signs, and toss the signs over and the workers after them.

These piecemeal reforms are in the air because of their apparent political viability. They attract the support of many physicians and even medical executives, and most provoke little or no opposition from insurers. Proposals that place obligations on employers tend to split the corporate community, which may give them some chance, though so far they have not gone very far.

However, there is no logic in reformers opting for proposals just because they may be politically viable, when these proposals are taking us in exactly the wrong direction. The right approach to building a movement for reform is to organize around health, not medicine. That includes much of the traditional progressive agenda-environmental protection, public transportation, job safety, community nutrition programs, full employment, peace and anti-militarism.

It also includes public health measures that have not received enough attention from the progressive community. Some of these are often defined as "social issues," such as health education in the schools and community HIV education; needle exchange programs; and replacing the hypocritical and counterproductive "war on drugs" with universal access to addiction treatment for those who want it. Unfortunately, the prison industry is becoming almost as powerful as the medical industry, so there is no time to waste.

When it comes to reforming the medical industry per se, nothing short of the real thing will do: progressively financed single payer national health care. No, it isn't going to happen any time soon, but most of the piecemeal reforms aren't really getting us any closer, in fact they are missing the point.

One reason the single payer idea has been hard to sell almost seems silly: the name. It isn't very inspiring, and most people don't understand it. The focus on financial structure seems to overlook the sources of most people's dissatisfaction with the system: lack of insurance or insecurity about keeping insurance or paying large bills, bureaucratic invasion of the relationship between physicians and patients, the huge cost of medicine. In fact, the single payer idea does address all of these concerns, but it isn't obvious enough.

So let's call it the People's Health Plan or the Health Freedom Plan or something like that. And let's put it in the center of a vision of society in which health flows from all the good things in life, from strength of community, and from social justice, not from an IV bottle.

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