========================================================== EVERYTHING YOU EVER WANTED TO KNOW ABOUT HEALTH INSURANCE ========================================================== How Canadians spend 3/4 of what Americans do on health care but receive much more -- and other useful things to know [Send the 1-line message GET HEALTH INSURANCE ACTIV-L to ] [LISTSERV@UMCVMB.BITNET for a copy of this file. ] [Send GET ACTIV-L ARCHIVE ACTIV-L to above address for a ] [listing with brief descriptions of other files available] ****************************************************************** CONTENTS: ========= * Excerpts from Jan/Feb 1991 _In Health_ article on Canadian, U.S. health care; * Stats from Walter Cronkite hosted TV program; * Jan. '91 "Hospital News," Vol. 4 No. 4, North. N.E. Edition Includes study on economic apartheid in treatment depending on what type of insurance one has (and whether); * Stats on where the U.S. stands relative the rest of the world; * Stats on decreased Medicaid coverage of the poor under Reagan/Bush; * Article from: _Health Letter_ (Public Citizen Health Research Group), "Should the Private Health Insurance Industry Be Eliminated?" * Charts from article in Business Today, Fall 1990 "America spends the most ... but gets the least" Comparison with France, FRG, UK, Italy, Canada, Japan ****************************************************************** ################################################################## "Health Assurance" -- article in _In Health_ by Anthony Schmitz ################################################################## "When pollsters asked U.S. citizens if they'd prefer Canadian health care over their own, 72 percent said yes. As for the number of Canadians who'd choose the U.S. system: 3 percent" "`You've got to remember, you've got a waiting list as well, but it's not as obvious. If you're poor and you don't have insurance, you don't go to a surgeon. In the States you ration by ability to pay.'" - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Would a Canadian umbrella leak in the United States? ==================================================== "Socialized health and medical services," said the politician, "are incompatible with the rights and responsibilities inherent in a free and democratic society." The year was 1959, and the speaker was J. Donovan Ross, Alberta's Minister of Health. Remarkably, Canada's citizens disagreed. By 1966 the government had declared itself the nation's only health insureer, and by 1971 every Canadian had full, free coverage. Now Americans are jealous. Anyone bold enough to endorse Canada as a suitable model, however, can expect an argument. Here are eight objections and the rejoinders. WOULDN'T NATIONAL HEALTH INSURANCE AMOUNT TO "SOCIALIZED MEDICINE," FULL OF BUREAUCRATS TELLING OUR DOCTORS HOW TO TEAT US? The thought of handing Washington power over everyone's health is indeed a little spooky. Who can forget the government's attempt to "simplify" our income tax forms by adding a mass of befuddling new instructions? But look at U.S. health care now. Our doctors already obey legions of intrusive bureaucrats: Insurance officials regularly demand that your doctor call for permission to go ahead with treatment. Medicare officials dictate precisely how long patients can stay in the hospital. The number of U.S. health care administrator has climbed 3.5 times faster than the number of doctors. In Canada, there are no meddling insurers, while the government's main power is in raising money and paying bills, with minimal monitoring for outlandish practices. "no one second-guesses me," says the president of British Columbia's medical association. "I've got clinical freedom." [While the answer doesn't say so explicitly Canada's system is not "socialized medicine" because [as the Cronkite program quickly pointed out to its audience of socialism (the word)-phobic listeners] the doctors are not employed by the state; the doctors and hospitals are *private*, but the state, being the sole "buyer", has been given a lot of power by Canadians to negotiate the prices with the doctors an hospitals for their services and care. Bite your lip before reading the next question.] DON'T WE ALREADY HAVE THE WORLD'S BEST HEALTH CARE? It's certainly the most expensive. In 1987, we spent $2,050 per citizen on health care. Canada spent an average of $1,480, most European nations even less. Unfortunately, spending the most hasn't made us the healthiest. Canada, culturally most like the United States, has an infant mortality rate 25 percent lower. Their rate of heart disease death is 20 percent lower. Their average life span --77.1 years-- is almost two years longer WHY NOT JUST FINE-TUNE OUR EXISTING SYSTEM SO IT REACHES ALL THE PEOPLE WHO AREN'T NOW COVERED? Many proposals for full U.S. health coverage would require all businesses ("except the smallest) to insure the health of their workers, with the government looking out for everyone else. Such fine-tuning can improve our system but won't really fix its biggest problem: the billions of dollars we waste every year on paper-shuffling. (Even the picky Consumers Union recently came to that same conclusion and endorsed a Canadian-style plan.) In Canada, according to the latest study, citizens each spent $18 a year for "administrative" costs," while each of us spent $95 -- for a total of $20 billion more than we would have with Canadian-style care. That's not all. Our doctors, hospitals, and nursing homes spend much more --$62.1 billion by a 1983 estimate-- filing out insurance forms, billing patients, and collecting. THERE'S NO WAY THE GOVERNMENT CAN PAY FOR EVERY AMERICAN'S CARE WITHOUT RAISING TAXES THROUGH THE ROOF. The federal government *would* have to come up with billions of dollars more than the $115 billion it now spends on its health programs for the poor and aged. Some could dome from income taxes, some from luxury taxes on cigarettes or cosmetic surgery. In Canada, several provinces charge a small monthly premium. But before you reflexively holler "No new taxes," consider what you're already paying. That grad total of $2,050 we spend per citizen doesn't come out of thin air. It comes in dribs and drabs out of your own earnings -- in existing state and federal taxes, insurance premiums, payroll deductions, deferred wages, deductibles, copayments, and ordinary cash transactions with doctors and hospitals. Canadians pay their once in taxes but get more care -- for $600 *less* out of each citizen's earnings. Last year our country spent $640 billion on health care. With a Canadian-style system, at Canadian rates, we could cover everyone for $365 billion. WOULDN'T NATIONAL HEALTH INSURANCE MEAN THAT AMERICANS WHO ARE NOW FULLY INSURED MIGHT HAVE TO SETTLE FOR LESS? In Canada, provincial insurance covers all health costs except dental care, eyeglasses, prescription drugs, ambulance service, and private hospital rooms, -- so many Canadians do end up buying some private insurance. A policy to cover all of these things runs about #40 to $40 a month. In fact, however, most people in the United States don't really have full coverage. Overall, American insurance now covers just 74 percent of the costs of doctors' services, 39 percent of dentists' services, and 25 percent of prescription drug charges. We pay the rest out of pocket. WOULDN'T FREE CARE ENCOURAGE PEOPLE TO RUN TO THE DOCTOR FOR EVERY ACHE AND PAIN? People who get free treatment *do* go to the doctor and hospital about a third more often than those who have to pay a share of their medical bills. Still, Canadians -- who pay nothing at the doctor's -- have a lower per-person health bill than we do. That's because, among other things, they've given their government power to bargain with doctors and hospitals over fees. An office visit that's $52 in Seattle is $18 in Vancouver. DOESN'T LETTING DOCTORS SEND PATIENTS' BILLS STRAIGHT TO THE GOVERNMENT LEAD TO MORE NEEDLESS TREATMENTS AND TESTS? When patients get free care and doctors can charge no more than a set amount per treatment, the tide does tend to run toward more and more treatment. Studies in Canada have shown jumps in the number of doctors' billings --and in their incomes-- after the government froze their fees. But the same thing's now going on in this country -- except here federal regulators *and* private insurers have been trying, with even less success, to keep a lid on physicians' incomes. Last decade American doctors increased their cut of the national income by 40 percent while Canadian doctors captured only another 10 percent. ISN'T THE PRIVATE HEALTH INSURANCE INDUSTRY JUST TOO BIG AND POWERFUL TO KILL? Dismantling the health segment of our insurance industry would be "politically thorny," in the quiet words of one advocate for a national plan. Some 1,200 firms now sell more than $192 billion in health insurance. They'd put up a hard fight. not only has the industry grown eightfold since Canada shut down its own health insurers, but our government leaves politicians more open to lobbyists than does Canada's parliamentary system. Still, there's no legal barrier to making health insurance an American public service. The states have broad powers to legislate business affairs and to promote citizens' health. Likewise, the federal government can use its control of tax revenues -- as it does with highway funds -- to set standards for the states. ################################################################## [Excerpted from TV program hosted by Walter Cronkite] ################################################################## The United States is the only Western/Developed country in the world other than South Africa which doesn't provide universal health care for it's citizens. ["The only such country other than South Africa" applies also to both countries' maintaining legal executions --HB] ------------------------------------------------------------------ Ranking of Total spending on health care Low Infant Mortality Rank U.S. 1st 20th Canada 2nd 5th ------------------------------------------------------------------ Each $1 spent on prenatal care saves: $3 during the first year of the child $9 over the child's lifetime The cost of one day of intensive care for a premature baby equal the entire cost of prenatal care. [Yet while in Canada prenatal care is free to all, in the U.S., millions of Americans who are poor, uninsured, or underinsured, go without prenatal care, at a staggering human and economic cost.] 2.5 Million Americans are "uninsurable" (insurance companies refuse to insure them because of their medical condition or history) [While mammograms are critical to the detection of breast cancer, a leading killer of women, and is recommended on a yearly basis for older women,] HALF of all uninsured women 45-65 have NEVER had a mammogram. HALF of Americans think that they couldn't afford adequate care if they were struck by a major medical illness. [Re over-use of expensive medical practices in the US:] 1,800 die from unnecessary open-heart surgery each year. ################################################################## "Hospital News, Northern New England, Jan., 1991" ################################################################## 1990 Health Care Costs may reach $660 billion ============================================= The U.S. will spend $660 billion on health care in 1990, twice as much per capita as nearly any other industrialized nation. But the U.S. lags behind those countries in such measures of good health as infant mortality and longevity. Sixty percent of the population receives health insurance through their employers, which has become the No. 1 bargaining chip between labor and management. Still, 30 million to 40 million American have no health insurance, not even the government's Medicare and Medicaid health insurance programs for the elderly and the poor. Study: Insurance affects cure ============================= Uninsured patients and those on Medicaid were less likely to receive three common treatment for heart disease than those with insurance, a study of 37,994 people in Massachusetts has found. The e study examined The care of heart disease patients admitted to more than 100 Massachusetts hospitals in 1985. Researchers looked at three common but expensive treatments: angiography, use to diagnose heart disease; and bypass grafting and angioplasty, procedures to treat blocked arteries. ################################################################## "Although the U.S. ranks 2nd in the world in per capita gross national product, the country ranks 19th in the world in infant mortality rate, and 29th in low birth-weight babies. Our child poverty rate is higher than Switzerland, Sweden, Norway, West Germany, Canada, the United Kingdom, and Australia. The U.S. in not among the 61 nations that provide health insurance or basic medical coverage to all parents and their dependents, nor is it among the 63 nations that provide a family allowance to working parents." [From: _Children of Crisis_, Sandy Carter, _Z Magazine_, January 1991] ################################################################## From The Nation, date unknown, but page 592 so only the year matters, (the the year is 1990 or 1989): A Kinder, Gentler Health Policy =============================== If George Bush really wants a kinder and gentler nation he should heed a report on Medicare and Medicaid put out by the House Select Committee on Aging, which documents the Reagan assault on those two programs. Between 1981 and 1987, Medicare funding was cut by $35.9 billion. But the "most telling part" of the Reagan legacy, the report says, "is seen in the percentage of America's poor covered by Medicaid as it dropped substantially from an already too low 53 percent in 1979 to closer to 40 percent currently." The administration "should have been pushing for Medicaid coverage for 100 percent of poor people, not cutting back in already woefully inadequate protection," says Representative Edward Roybal, who chairs the committee. ################################################################## From: _Health Letter_, February 1991 issue, of the Public Citizen Health Research Group. Page 8: ################################################################## "Should the Private Health Insurance Industry Be Eliminated?" Which "summarized internist Dr. Thomas Bodenheimer's article ``Should We Abolish the Private Health Insurance Industry.'' Dr. Bodenheimer is a member of Physicians for a National Health Program, and his article appeared in __The International Journal of Health Services_ last year (Vol 20, No. 2, 1990)" - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - According to Dr. Bodenheimer, there are five major problems with the private insurance industry: it significantly contributes to health care inflation, wastes billions in marketing and administrative costs, is unfair to many groups in society (particularly the sick, poor, and aged), undermines the positive features of HMOs, and has undue financial and political power, which it uses to influence legislation and to prevent the U.S. from adopting a single-payer national health plan. ----------------------------------------- H e a l t h C a r e I n f l a t i o n ----------------------------------------- For the last 40 years the private health insurance industry has fostered an unrelenting health care inflation (between 5 and 13 percent) unequalled in the world. The burden of inflation falls primarily and disproportionately on he sick, elderly, and poor -- many of whom forego necessary care because of prohibitive costs -- and on wage earners. Wage earners pay for inflation with higher social security deductions for Medicare, higher income taxes for Medicaid, higher health insurance co-payments, deductibles and premiums, and reduced wages as employers shift the rising costs of health care benefits onto workers. The insurance industry fosters inflation through its reimbursement mechanisms and pluralistic structure. Until recently, Blue Cross paid hospitals according to "reasonable costs," and Blue Shield paid physicians "usual and customary" fees. If a hospital wished to build a new wing or cardiac surgery unit, the loan payments for that capital expenditure were added to their "reasonable costs." The result was an inflationary overexpansion of the hospital sector to the point where nearly 40 percent of all hospital beds in the U.S. are empty. Physicians enjoyed the most generous reimbursement system in the world, and were even allowed by Blue Shield to charge higher fees to patients above a certain income level. The inflationary reimbursement principles of "reasonable costs" and "usual and customary" fees were later built into the Medicare and Medicaid programs, with the result that their cots quickly exceeded expectations. Commercial insurers also followed the Blues' lead and passed along in premiums whatever providers charged. Commercial insurers had little incentive to control costs because they benefitted from rising prices and premiums. Must of the profit of commercial insurers comes from investments, and inflation increased the flow of funds available for investment. Besides, with 1500 competing heath insurance firms, no single company could control inflation. ============================================================ Medical costs as percentage of Gross Domestic Product: 1980 1989 increase U.S.: 9.2% 12% + 30 percent Canada: 7.4% 8.9% + 20 percent ============================================================ Canada was able to dampen inflation (and insure all residents) because it eliminated private insurers and established a single public payer in each province 20 years ago, in 1971. In the 1980s there was a backlash against [rising costs]. In the absence of a single payer to control inflation, both private insurer and government payers instituted cost control policies that reduced access to health care, and increased bureaucracy... Insurers raised co-payments and deductibles to discourage people from getting care, and hired an army of utilization reviews to scour every episode of health care in an attempt to trim benefits. The percentage of the poor covered by Medicaid dropped from 65 to 37 percent over the decade, and Medicare now pays less than half of the medical bills of the elderly. ------------------------------------------------- H i g h A d m i n i s t r a t i v e C o s t s ------------------------------------------------- Our medical system is the most bureaucratic in the world if measured by the tons of paperwork generated per transaction. For every $100 in health care, we buy $25 worth of pluralism -- accountants, advertisers, marketers and financiers. -- Health Economist Uew Reinhardt The private health insurance industry dramatically increases administrative complexity in the U.S. health care system. ============================================================ Percentage of premiums consumed by overhead: Private Insurance Companies: 12% (overhead & profits) Public payers (e.g. Medicare, Medicaid): 3% Canadian provincial insurance plans: under 1% ============================================================ The U.S. also wastes more on billing and administration in hospitals, nursing homes, and physicians' offices, all of which are made exceedingly complex by the existence of 1500 different private insurers. ================================================== Billing, administration, and insurance overhead as percentage of total spending: U.S.: 22% Canada: 13.7% U.K. 11.1% ================================================== Since then, policies aimed at containing costs have increased the bureaucratic share of health expenditures in the U.S. to one-quarter of the total bill. Almost $90 billion could have been save in 1987 alone (enough to expand access to care to all Americans) if the U.S. was as administratively efficient as Canada. ------------------------------------------ Insurance Industry Unfair to Many Patients ------------------------------------------ Two possible principles: (1) The principle that health care is a right and all people should have equal access to appropriate care regardless of income, place of residence, or health status; or (2) The insurance principle that people get what they (can) pay for. If a society views health care as a right it establishes financing that insures access to care for the poor, by charging them less, and for the sick, by not charging them more than health people with similar incomes. If a society chooses the insurance principle, then people pay premiums based on their "risk group." Older adults, and persons who have experienced a major illness in the past, pay higher premiums than young healthy persons because they are at greater "risk" of needing health care. People with chronic disease such as AIDS or cancer are uninsurable. Lower-income families pay the same premiums as wealthier families, since premiums are set according to risk, without regard to income. As a result, the poor, sick, and the elderly have less access to health care than other in society. Although the "insurance principle" is dominant in the U.S., employer-sponsored group health insurance, Medicare and Medicaid have somewhat...expanded access to low-income workers, the elderly, and the impoverished However, inflation and changes in the economy have eroded these buffers...causing the number of people without health insurance to skyrocket to 37 million. Minorities, low-income wage earners, and the elderly are particularly hurt by the lack of a right to health care. "Should health care be a fundamental right?" 1968, 1975, 1978 polls: over 75% yes In a 1988 Harris poll 90 percent of the public responded that everyone should be entitled to care "as good as a millionaire could get." Yet, health care in the U.S. is increasingly a privilege. --------------------------------------------------------- Insurance Companies Undermining Positive Features of HMOs --------------------------------------------------------- The insurance industry is in transition. As health costs rose in the 1970s, many large employers...took over...health care benefits. By 1985 more Americans were directly insured by their employer than by either Blue Cross/Blue Shild or commercial insurers. In an attempt to control costs, employers also turned to "managed care" options, using utilization review, preferred providers, and HMOs to cap health care spending. On the lookout for new markets, the insurance industry is diving into HMOs... originally designed to improve the delivery of medical care... emphasizing primary care, prevention and quality control, [but] they are increasingly becoming "purely financial structures...nothing more than a second generation of private health insurers," according to Dr. Bodenheimer. ------------------------------------------------------- Financial and Political Power of the Insurance Industry ------------------------------------------------------- The insurance industry ahs tremendous financial and political clout in the U.S. In 1981, the assets of the U.S. insurance industry, over $700 billion (now $1.4 trillion), exceeded the combined worldwide assets of the nation's 50 largest industrial corporations. Scores of lobbyists influence legislation in favor of the insurance industry in every state; in 1981 there were 60 insurance lobbyists in Massachusetts alone. The insurance industry has a powerful influence on national legislation as well, and stands in the way of health care reform in the US. In the 1960s Blue Cross had a large impact on Medicare legislation and its administrative regulations. In the mid-1970s Senator Edward Kennedy was pressured to abandon his original proposal for a government-run national health plan, in favor of a plan with a major role for the private insurance industry. According to the polls, a majority of American (67 percent) now report they would prefer a Canadian-style national health program. Recognizing the problems inherent in financing health care with multiple private insurers, Canada largely eliminated the private health insurance industry when they established their single-payer nation health plan in 1971. Canada's reform has allowed it to provide care to all residents for far less that the U.S. currently spends on health care. In the 1990s, the largest opposition to adopting a Canadian-style health plan in the U.S. will be from the private insurance industry. ################################################################## From "Condition Critical" cover story, Business Today, Fall, 1990 ################################################################## =================================================== A m e r i c a s p e n d s t h e m o s t . . . =================================================== Country Percent GNP spent Health care dollars on health care spent per capita United States 11.2% $2,051 Italy 6.9% $ 841 West Germany 8.2% $1,093 United Kingdom 6.1% $ 758 France 8.6% $1,105 Canada 8.6% $1,483 Japan 6.8% $ 915 ============================================ . . . b u t g e t s t h e l e a s t . ============================================ Country Male life expectancy Infant mortality per at birth (years) 1,000 live births United States 71.5 10.0 Italy 71.6 9.6 West Germany 71.8 8.3 United Kingdom 71.9 9.1 France 72.0 7.6 Canada 73.0 7.9 Japan 75.6 5.0 [Chart by John Dunning. Source: Organization for Economic Cooperation and Development] ################################################################## For more information about ACTIV-L or PeaceNet's brochure, send inquiries to harel@dartmouth.edu ################################################################### # Harel Barzilai for Activists Mailing List (AML) # ################################################################### To join AML, just send the message "SUB ACTIV-L " to the address: LISTSERV@UMCVMB.BITNET; you should then receive a message confirming that your name has been added to the list. Other addresses to try (only) if the above fails are: "LISTSERV@UMCVMB.MISSOURI.EDU" or "ucscc!umcvmb.missouri.edu!LISTSERV"] List Administrator: Rich Winkel, MATHRICH@UMCVMB.MISSOURI.EDU / MATHRICH%UMCVMB.BITNET