The Elephant in the Room
Why is it that my students get it, attendees to my talks get it, readers of KQED get it, yet New York Times reporter David Leonhardt doesn’t get it?
Because, soon after my first posting was published on this website, explaining in very simple terms how every other industrialized economy in the world manages to guarantee at least a basic, often very generous amount of health care to all their people according to medical need and not ability to pay – at no more than half of what Americans spend collectively – here comes Leonhardt whining that without “political pain” on “ourselves,” we cannot achieve universal health care.
Leonhardt points out, correctly, that we cannot have reform without controlling costs, because otherwise we won’t be able to pay for everybody’s health care. However, he incorrectly concludes that we can only control costs (and get the $120 billion per year he estimates we need) by taxing employer-provided benefits (which he claims currently force government to forgo $250 billion in taxes). So, with the menu of imaginative options legislators are considering to reform our health care system, you might be able to keep the employer-provided health care you presumably like, as the President promised, but it will be taxed, and thus will be a lot more expensive. Ouch! Painful, no?
Honestly, I am at a loss. Didn’t Leonhardt read my posting? Maybe he consulted the wrong folks, like Jonathan Gruber, an M.I.T. economist (yes, M.I.T.!) who, as Leonhardt quotes, cannot imagine “where else you get enough money” to pay for universal health care. (How about asking bankers how they got the bailout money? Just kidding!). Can these folks seriously not imagine organizing a national health insurance program without the waste that comes from putting for-profit health insurance at the center of the game?
I am confused. I assumed that the New York Times, given its prestige and its huge role in shaping public opinion, hired reporters with good arithmetic, a basic grasp of logic and a reasonable amount of common sense – am I wrong?
Okay, whichever the case may be, let me give Leonhardt, Gruber and New York Times editors some ideas. And they don’t have to pay me. I gladly give them for free, because I did not invent them. And the “inventor” of social health insurance, whose principles I lay out in my first and second postings, is dead anyway, so he won’t complain. It was Otto Von Bismarck, First Chancellor of the German Empire, who sponsored the first social health insurance system in the world. Not, mind you, because he cared about equity, as my readers or I might, but rather to prevent the rise of socialism, which was gaining the upper hand with German workers, tired as they were of producing wealth yet receiving always the short end of the stick. And having seen the 1848 revolutions and the Paris Commune in 1870, Bismarck realized that workers meant business.
My apologies for following that tangent – it is so frustrating! David, how can you control costs in health care, a wholesome and necessary pursuit that I wholeheartedly share, without shortchanging workers? Let me repeat, especially for you (because readers of this blog are very sharp already) what all other industrialized economies do, and suggest that you consult the European Observatory or Health Canada websites.
Other countries more or less do at least one thing: they pool risks. That is, they put everybody in large plans, or better still, one single pool or plan. Yes, counterintuitive, David! One size DOES fit all, because all you want in a health care plan is for it to pay for all the medically necessary care you need, when you need it, from the doctor you like, and that it not break your financial back!
In our case, experts have estimated that pooling risk would allow us to cut around $400 billion in administrative overhead — and to think you were worried about $250 billion! And pooling risk would also allow us to purchase in bulk. Because, David, as prestigious economists figured out a long time ago, “it is the price, stupid!” Yep. They even wrote a paper with that title, showing that we use less health care than other countries, yet spend more, and concluded, applying simple logic and basic arithmetic, that if you pay more for the same thing and get less of that thing, you must be paying higher prices.
Now, they did not talk about cross-subsidizing, another critical feature of large pools, as I have. But, in fact, even private insurers – who are not terribly good at providing health care, yet are good at figuring out how to save a buck (by not paying for your health care) – could figure this one out. Alissa Fox, vice president of Blue Cross and Blue Shield Association, was quoted in the New York Times as saying that “Insurance works best when everybody is in the pool […] you need healthy people in the insurance pool to help pay for sicker individuals.”
So, David, there you go: just put everybody in one pool and you will control costs: you will cut administrative waste, get great prices and cross subsidize. And you will have all the money you need to pay for all the medically necessary care you need for the entire population! Because, in case you did not know, David, we are already paying for universal health care yet not getting it [pdf] (again, experts figured this one out long ago), because we pay more in taxes, even before we get any services, than other countries pay to cover 100% of their population – 10% of our income on average, David. As Joel Harrison wrote, “we pay more and get less.” And this even before you paid for your premiums, let alone your out-of-pocket costs!
At the federal level, single payer is called HR676, and if you are reading my posting (I hope you are, David), just click here and a 5-minute video will explain it.
You just have to think outside the box, David. And don’t worry about politicians. Sooner or later, they will realize that elephants in rooms cannot be ignored forever.
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6 Responses to “The Elephant in the Room”
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Thank you for your intelligent, logical, and easy-to-understand argument for universal health care. How much of that line of reasoning is getting support from Obama’s health care reform team?? I have been trying for months to figure out a better option for my own insurance than my Blue Cross policy that jumped $150 out of the blue (no pun intended!) – it’s hard, because all the options cost too much and offer too little – especially of the kind (alternative) health care that I use. Keep up the good work – we so desperately need real change!
Marti,
Unfortunately none of the principles I lay out (and which are truly not rocket science) are part of the Obama plan. I call it “hope it works” health care policy.
They want to convince Americans that what “we” want is to be able to “keep the plan we have” (presumably), so single payer is off the table.
This is because it would eliminate all plans, and put everybody in a non-profit, publicly funded one that covers all your comprehensive medical care when you need it and with the doctor you want. Of course the middle-man, who makes money from connecting doctors and patients, would disappear.
So the real answer to single payer is not part of Obama’s or most legislators’ plan is simple and sad as well: follow the money
Thank you for continuing “to speak truth to power” about the overwhelming benefits of Single Payer as the best way to achieve universal quality health care NOT tied to employment, that is accessible, affordable and equitable. My questions is how did we get in this mess of paying more for less health care than any other industrialized nation? When I was a little girl, no one had health insurance. It was pay for service, which did cause problems, but when and how did health care stop being for service and begin being for profit? What happened?
hi carol,
sorry it took me a bit to get back to you. how did we get into this mess? there are key moments in history, i think, one of which is the great boost that government policies around wwII gave to private insurers, when they prevented employers from raising salaries so then to attract good employees employers started giving “benefits” (which were becoming entitlements in other countries).
this created a huge and profitable market for insurers. but there were other moments as well.
at any rate, history is not like physics and huge revolutionary change can happen when we expect it the least. the fall of the berlin wall, obama’s election, etc. come to mind.
major economic turmoil opens windows of opportunity, whether it will be used towards, say, totalitarian options (such as germany after wwi), or progressive social change and greater democracy (such as britain’s creation of the NHS or national health services after wwII), depends to a great extent on popular mobilization, and to what direction the masses move.
an educated and demanding electorate is critical at this moment if we want true health care reform. any change we can believe in will not come from washington d.c.
and ultimately, legislators want your vote
long answer to a short yet complex question…
claudia
As I pointed out before, I’d be happy to answer whatever questions may arise from this discussion. We need educated and active citizens more than ever! And if I don’t know an answer I am sure we can find them together