Health, Education, and Housing

excerpted from the book

Against the Conventional Wisdom

by Douglas Dowd

WestviewPress, 1997


Health Care

The leading economies of the world are those of Western Europe, the United States, Canada, and Japan, followed by the other members of the Organization for Economic Cooperation and Development (OECD). Of those countries, the United States spends the most on health care (in the aggregate and per capita) at the same time that it provides the least coverage to its citizens. None of those other countries has a significant percentage of its population with no coverage or such inadequate or fragile coverage; all have higher longevities and lower infant mortality rates. Yet Americans have been told and most probably believe that ours is "the best health care system in the world": That is, we may pay more, but we get more and better health care.

Would that it were so. It is of course not so for the 15-20 percent of Americans who have no health coverage-private or public (including Medicare/Medicaid). Setting them aside, we will look into what we are getting for our money: "What America Buys for the Extra Money":

Amenities: impressive lobbies in hospitals catering to the well-insured (but not others), 2-bed rooms, compared with the more normal 4-bed rooms of the other countries.

Higher Incomes for Providers: doctors (whose high median incomes of the early 1980s rose even more, at a rate [1984-1990] of 12+ percent compared with 6 percent for full-time employed women and a decrease of 3+ percent for men); plus higher costs for drugs and equipment here than elsewhere.

More People Working in Hospitals: comparing Paris with New York, for example, New York had 40 percent more patient-care staff, 155 percent more non-patient-care staff, and 327 percent more financial and billing staff.

Extra Administration and Hassles: "the hardest to defend.... The General Accounting Office estimated in 1991 that the American insurance system created costs of $67 billion over and above what the United States would pay if it had Canadian-type institutions . . . about 1.2 percent of GDP."

White concluded his study: "Americans do not need more information. They do need the clarity of understanding necessary to overcome the obstacle course of the political system, the propaganda of entrenched interests, and above all the ideology that says that responsibility is fending for yourself, not standing up for each other." ...

Writing about fifteen years ago, the sociologist and health care scholar Paul Starr came to the following conclusion:

The failure to rationalize medical services under public control meant that sooner or later they would be rationalized under private control. Instead of public regulation, there will be private regulation, and instead of public planning there will be corporate planning. Instead of public financing for prepaid plans that might be managed by the subscribers' chosen representatives, there will be corporate financing for private plans controlled by conglomerates whose interest will be determined by the rate of return on investments. That is the future toward which American medicine now seems heading.

And that is the future where now we dwell.


The Nineties

When Clinton was elected president in 1992, the approximate size and distribution of the annual $1 trillion income from health care in the United States was as follows:

Hospitals, $410 billion; doctors, $200 billion; nursing homes and home health care, $110 billion; drug companies, $100 billion; insurance companies, $65 billion; others, such as dentists, optometrists, physical therapists and pharmacists, something over $100 billion.

Bill and Hillary Clinton wished to change that for the better; since then, however, deterioration has been rapid-for patients and doctors, that is. The insurance companies, most especially the Big Five, Aetna, Cigna, Metropolitan, Prudential, and Travelers, are better off. Unquestionably some of the intentions of the Clintons were admirable, but those were done in by the poisonous mix of political ambition into which they were stirred.

The result of the CHP was to weaken not only health care but the Clinton administration, and to facilitate the "Gingrich revolution" of the 1994 election. Clinton and the Democrats have recovered from that; an always dangerously inadequate health care system has been pushed further into a deep morass.

The old saying has it that there is no use in crying over spilt milk. True, if it is a cup or glass that has been spilt; but the CHP was a milk tanker; its spilling over not only halted health care reform but also placed the country on a track of retrogression whose end is not yet in sight. We cannot make believe that the disaster did not happen, nor can we let it pass without seeking to understand how and why it happened, if we are ever to reverse it.

The trouble began before the CHP came into the public eye. The idea of national health insurance (NHI) had been planted first in 1945. Well before 1992 there were many in the medical profession, untold millions in the general public, and a goodly number in Congress who saw NHI as the only acceptable path to follow. Perhaps-one is inclined to guess probably-the Clintons were of the same persuasion. But, to quote Colin Gordon in these respects:

" Let us speculate about a scenario that never emerged. Instead of his 1,340 page monstrosity, imagine if the President supported the McDermott-Wellstone single-payer bill. With perhaps 150 votes in the House and, maybe, a dozen in the Senate, he could have faced the voters on November 8 [1994] as the champion of a people's health care plan. Is it not possible that the reactionary triumph could have been avoided? Remember, exit polls found the voters still designating health reform number one among their concerns. More importantly, would not some portion of the 61 percent of the electorate who didn't vote be finally moved to participate?"

Instead, Gordon goes on to say:

"Finally [1995], the health issue has moved into a new phase. With the merger-manic corporations successfully taking over the hospital chains, HMO conglomerates, and doctors' groups, we are now living through a classic confrontation the market-driven solutions against the humane, socially-just premise of a not-for-profit, government-facilitated insurance plan."

Be it remembered that when the president first began to proclaim the need for health reform, it was with the express goal of universal coverage. The promises soon became compromises, and well before the time the public was let into the backroom debate, what had been four possibilities had been reduced to three; the single-payer possibility was dropped with absolutely no comment. The remaining three, with varying degrees of improbability for achieving universal coverage, were called "employer mandate," "individual mandate," and "no mandate."

All the "mandate choices" as they then were discussed had an element presumably directed toward universal coverage but-unlike the single-payer plan-none guaranteeing it. The employer mandate, which would have built on the existing system of private coverage, was simultaneously the linchpin and the major compromise of the CHP. However, as James Tobin (one of the few genuinely deserving Nobel prize winners in economics) and law professor Michael Graetz pointed out, "The biggest flaw in the Administration proposal is the requirement that employers pay the premiums-a mandate whose awkwardness and unfairness stand out starkly in a system dedicated to universal coverage . . . [, a requirement] that no one would choose now if given a clean slate."

Like the other two mandate plans, the CHP made it into but never out of committees. All the plans, in Gordon's image, were "dead on arrival." Gordon also underscored the unhappy truth that after the single-payer plan was silently shelved, the CHP came to be seen as the "plan of the Left," with all subsequent compromises veering to the Right. For diverse, mostly opposing, reasons, neither political party was willing to support a full set of compromises; the whole notion of health care reform, sagging under its own weight, finally expired from compromise poisoning.

For the main beneficiaries of the rising costs of health care, however, reform had not so much died as been successfully assassinated-by them. If we add up only the admitted amounts spent by health care interests to sway Congress and the public in 1993-1994 (political action committees [PACs], TV ads such as "Harry and Louise," lobbying, and the like), it comes to over $120 million.

Once the NHI disappeared into the mists, the public debate was over one form or another of what stood as the center of the CHP, "managed competition." The defects of such an approach were pointed out by numerous health care experts; what was not discussed was what would happen if-and when-the whole effort collapsed into a black hole of dithering and finger-pointing. What has happened is clearly worse than the CHP itself for the important reason that after the failure of the administration's effort at reform (and the way it failed), the gates were opened wider than ever for private interests to speed ahead on their own terms.

The health care industry, now clearly dominated by the Big Five insurance companies, has since 1994 been experiencing mergers in all its dimensions. The most important consequence has been that the main unhealthy tendencies in the system before 1994 have been exacerbated: Assured excellent care for the rich (as ever) and little and declining care for the poor-with rising uncertainty and fears for those in the middle, who see their costs rising for the same or fewer services, whose quantity and quality are both at increasing risk.

Those risks are rising most especially for the old and the poor who have been covered by Medicare and Medicaid. The pressures on and by Congress to cut both have been strong-for the old in part because of misinformation about the incomes of Medicare's beneficiaries, for the poor because-it is tempting to say-well, because they're poor, that being much of the attitude behind "welfare reform" legislation. Again, a look at some facts: The strong public impression is that a high percentage of Medicare beneficiaries are mostly well-off people who are taking advantage of a bumbling system. Earlier, the economic condition of the overwhelming majority of Social Security beneficiaries was shown to be weak; ditto for Medicare recipients (they are, after all, very much the same people): The number of Medicare beneficiaries with annual incomes over $50,000 is only 5 percent; those with incomes below $25,000 number 78 percent. And the average out-of-pocket spending on health care by those sixty-five and older in 1994 was $2,803. Nothing enviable there, and no sensible margin for reductions.

As for Medicaid (the health coverage for those under sixty-five and also poor), its fate is in the same dark region as AFDC and other forms of relief: Federal monies are now delegated in block grants to the states, which have substantial discretion as to how to dispose of those grants. Many states have already made clear that cuts in Medicaid are likely. The undoubted decrease in Medicaid is occurring just as other developments have increased the need "From 1992 to 1993 an estimated 3 million children lost private health insurance" when their families lost jobs or employers stopped providing health insurance; although in 1988, 66 percent of all children under eighteen had private coverage through family employment, that had dropped to 39 percent by 1994, raising the Medicaid need from 16 to 26 percent.

None of that occupies the attention of the expanding insurance giants, as they briskly gobble up or crush the smaller companies-as was to be expected even had there been (as part of the doomed CHP) a governmental overview. As Woolhandler and Himmelstein argued in 1994, the giants have the capital to assemble the sprawling provider networks demanded by big employers and regional health alliances, and the clout to extract discounts from hospitals and doctors by threatening to withdraw a large chunk of business . . . [shifting] costs to smaller plans, driving their premiums up and subscribers away.... Already, 10 insurers control 70 percent of the H.M.O.s.

"Managed competition" there is and will be: between the mammoth companies on one side, and the patients, doctors, and hospitals (even the drug companies) on the other. Among the insurers themselves, however, there will be what economists call "oligopolistic competition"-that is, not the cost and price-reducing presumed to accompany competition, but constrained rivalry among the few for a larger share within defined limits. Those limits collectively safeguard the interests of the giants (spending on advertising instead of cutting prices and passing on the costs while increasing profits).

There is a ray of sunshine in that cloudy sky, although a feeble one: Now that an always larger majority of Americans will have agonizing health care fears and realities, now that doctors find themselves simultaneously losing income and professional dignity (diktats from insurance companies replacing their medical judgments), now that hospitals and even pharmaceutical giants find themselves up against a variety of ceilings set by profit policies-all that happening to the clear and sole benefit of giant insurance companies and their allies - perhaps a coalition of injured parties will be patched together to work toward a system that, though containing imperfections, will have more health care, not more profits, as its chief goals. Perhaps.

Against the Conventional Wisdom