Obamacare: No Friends in Free-Market, Single-Payer Camps
It's the president of the free-market-minded Galen Institute versus a pediatrician/activist for a single-payer system in spirited debate on improving American health care.
You might think in a debate over President Barack Obama's Patient Protection and Affordable Health Care Act would have one side arguing in support of it. But when Miller-McCune.com moderated a debate between an advocate of free-market approaches and one for a single-payer system, neither endorsed what's come to be called Obamacare.
Which is not to suggest that Grace-Marie Turner, president of the Galen Institute, a nonprofit research organization advocating a free-market approach to health care, and pediatrician Margaret Flowers, a congressional fellow who directs the Maryland chapter of Physicians for a National Health Program, found much common ground elsewhere.
Except for some sporadic head nodding — both want patients and doctors to have more choice, for example — there was only one significant source of agreement: that the country will be in worse shape once the legislation is fully enacted. Perhaps more troubling, what emerges during the 50-minute exchange is a labyrinth of viewpoints so hopelessly out of sync that any real, practicable resolution seems near impossible. But don't take my word for it, read the tête-à-tête below (edited for clarity) and listen to the podcast of the extended interview and decide for yourself.
Miller-McCune: Let's start with the good and bad points of the Obama plan?
Margaret Flowers: As you probably are aware, Physicians for a National Health Plan does not support the Obama plan. We see it as the further privatization of our health care, forcing people to purchase private insurance without guarantees that that insurance will be either affordable or will cover their medical needs when they have a serious illness of accident.
One of the positive points of the legislation is that it does increase funding for community health centers, and that's important particularly right now in this economic downturn since that's where many people are going for their medical care.
I'd have to say that we don't see a lot of positives in the Obama plan. It continues to leave tens of millions of people out; it will not end medical bankruptcy; it uses more of our tax dollars to subsidize private insurance corporations; and so we continue to advocate for a real solution.
Grace-Marie Turner: I think there was some little disagreement about the goals of health reform. We really do want to get coverage to everybody. We want to get costs down. We want to improve the quality and the access to care in our health care system, so there was broad and wide agreement on that issue and I think interestingly, Margaret and I agree also that Obamacare is not the solution. But I see it from the opposite side in believing that it has way, way, way too much government control, too much centralization, too many rules and regulations and mandates. Its costs are going to absolutely explode once it is fully implemented. And I believe that we could have gotten to these goals much more economically by building on our current system rather than so dramatically overhauling it. One hundred fifty-nine new agencies are having to be created, many of which, remain unproven. So I believe there are some good points. I do want to see portability of health insurance; I want to see tax credits so individuals can choose for themselves the coverage they want. But I think the proposed legislation has gone too far in the direction of government control of our health care system. In poll after poll, the American people have said this is not the direction they want to go.
Margaret Flowers: I agree that it would've made sense to build on what works and unfortunately that was done in this most recent health care reform process. If we really had a debate, if we compared the three systems we have — the VA system, which is a true health system, traditional Medicare, which is a hybrid since it's publicly financed but privately delivered, and our market-based private insurance — we'd have found that the VA is the highest quality, most efficient and lowest cost. That's partly because the VA has a long-term investment in patient outcomes since it does better when it keeps its population healthy. Private insurers really have no incentive to keep clients healthy because their investment is short term. Most patients have a turn around time of three years on their insurance policies. As for the market-based financing, we see that as the least efficient, most expensive and least universal type of system because it perpetuates this process of offering care based on the ability to pay. This prices people out of that market and creates an environment where it's extremely difficult to find information — where the best doctors are — and to do the things we need to do to coordinate our care.
So we advocate for the middle ground, the common sense approach, which combines public funding, the most efficient way to pay for health care and the ability to deliver it.
Miller-McCune: Grace-Marie, since you advocated a market-based approach, can you tell us why you believe Margaret is wrong?
Grace-Marie Turner: One of the big advantages of our American health care system is that it gives people choice. Some people want a much more closed network, like HMOs, the VA is closest to that. And there are a lot of other people who want a lot more choice. They want PPOs, health savings accounts. In a society of 300 million Americans that want and need health insurance, we need to give them choices.
We need better incentives to make the market respond to them. Right now the tax treatment of health insurance in particular is a central flaw in our health care system; it's very invisible. But it ties health insurance to the workplace, and for tens of millions of Americans that does not work. In our increasingly mobile society, that's not going to work. In addition, that means employers are making choices for individuals, not individuals and their families. They're telling them here's the health insurance policy you need. Take it or leave it.
People have no idea how much that policy costs, how much of their pay is going to help finance it. More importantly, when they lose or change their job, then they often lose their health insurance. If we had health insurance owned by individuals, they would be able to own that policy over time. I propose refundable tax credits, which means you get their money even if you don't owe taxes or as much in taxes as you're eligible for with a credit. There's no reason it can't be both income- and risk-adjusted so people will be able to buy a policy, particularly if you were able to add in the money that people get through a Medicaid benefit so that Medicaid beneficiaries would not be subjugated to a system that really makes it almost impossible for them to get to see a private physician, especially a specialist. They wind up having to go to hospital emergency rooms and often wait for hours and hours. This system absolutely desperately needs fixing, but I believe we need to fix it by giving people more choice, more control, more options and importantly, giving the market an incentive to respond to them for better options and more affordable health insurance. The system is not set up to do that right now.
Margaret Flowers: I agree fully that people should have a choice, but the choice we find people want. I speak as a physician who's worked in this industry seeing patients, but also for the last two years traveling the country speaking to individuals and health professionals. The choice people want is not a choice of health insurance. People don't understand what health insurance is. It's very difficult to figure out what your policy covers or even to know what your health care needs are going to be. But people want choice about where they go to get health care and what treatments they're able to receive. And private insurance restricts both of those. In publicly financed systems, people will have complete choice where they go for care, no matter where they live and complete portability — it's not tied to employment. We find that the incentives of the private insurers is again, to make a profit, whether they are for-profit or nonprofit. It's just that nonprofit is called capital reserves rather than profit.
Miller-McCune: Grace-Marie, you see the whole profit issue differently.
Grace-Marie Turner: I absolutely see it differently, and I also believe it's important to recognize that even the most prosperous nation on the planet has limits. We cannot possibly afford to pay for all the health care that everyone in this country demands at any time. The question is who imposes those limits: the government, health insurance companies over which we have no choice or do we do it? I believe we are the ones who should be charged with deciding how our resources are spent, both on health care and insurance, which people do know they need if they have health expenses beyond their ability to pay. And that's different for virtually everyone.
In a world of limits, we must give people the ability to make those choices and decisions for themselves, which involves a complex network of options — everything from health savings accounts to PPOs to health maintenance organizations. People have different tolerances for risk. I don't think the government should be making that decision for all of us. In a properly functioning market, which we do not have now, the profit motive is what gives companies an incentive to get to faster, better and cheaper. One problem with Obamacare is that it's going to take away the incentives to get the best return and replace it with the need to jump through all these government regulations and hoops, so that physicians and companies are responsive to government, not to us as patients.
Margaret Flowers: First, those tax credits and HSAs are really designed to benefit the wealthy, not the most vulnerable in the population. The profit motive works great when talking about something that's a commodity, but health care is not a commodity. Look at the pharmaceutical industry. Europe has leapt ahead of the U.S. in producing new pharmaceutical entities. About 10 to 15 percent of the new drugs created here are actually new entities. That means 85 percent are current drugs whose chemical structures have been tweaked. They don't need to prove they're better than the original drug; they just have to prove they're better than a placebo. This results in a tremendous profit, three to four times higher than our typical Fortune 500 companies. So the profit motive isn't working to improve health, it's working to improve profit for those companies. The best research we have coming out this country, actually the best in the world is through the publicly funded NIH. In that system, they're prioritizing based on what our health needs are, not on how much money can be made.
Miller-McCune: So Grace-Marie, what about this notion that Big Pharma has a big profit incentive that may not be in line with the public's benefit?
Grace-Marie Turner: I do believe it is in the public's benefit. First of all, refundable tax credits are basically cash, vouchers that can be assigned to any insurance company or health plan an individual may want, so it's not just for the wealthy. That refundable tax credit would help those at the lower end of the income scale even more than the current system that is highly progressive and subsidizing health insurance for the richest people that have job-based coverage. These credits would actually benefit lower income Americans the most. As for the pharmaceutical industry, their profits are very much in the mid range. Coca-Cola for example, makes a higher profit than the pharmaceutical industry, which invests those profits back into new research. And that's how we get the new drugs.
Margaret Flowers: Going back to the tax credits, let's examine what a wise use of our public dollars would be. Because of our fragmented, multiple-payer system, a third of our health care dollars go toward marketing and administration of hundreds of different health policies. So using your tax dollars to subsidize private insurance, means subsidizing a system in which a third of these dollars are being wasted on things that have nothing to do with health care.
Regarding research money used in the pharmaceutical industry, it's simply not true. This country uses over 50 percent of the world's research dollars, but we only produce 43 percent of the drugs, so we're overusing those resources. I also neglected to mention in my last comment that the one area pharmaceutical companies excel is in their abilities to control the political process to create profit for themselves, and that's harmful to us as well.
Miller-McCune: Let's shift to the health insurance exchanges. You're both opposed to them. Why?
Margaret Flowers: We've tried for years in this country to patch together this market approach to health care, and it simply doesn't work because the insurance companies have been able to game the system to their advantage. So on one side, health insurers are still going to be able to market their products outside of the exchanges — and that's where they'll make their money. We haven't seen any evidence that selling insurance through an exchange actually reduces the cost. In Massachusetts, costs are continuing to rise and remain unaffordable, so they're simply not gonna work.
Grace-Marie Turner: I also am very, very concerned about the exchanges because they are a vehicle for the federal government to get in the business of regulating the health insurance market over which it has virtually no experience. The states have been doing this for decades and are basically pawns for the federal government. And within the exchanges, people have a choice of four different plans which are really just different names for similar plans, that are really government-defined packages, which we're all going to have to have because of the mandate that we all purchase health insurance.
We have so many rules and restrictions within these exchanges that the health insurance companies are going to become virtually regulated utilities offering no choice, being responsive to government, not to individuals. This gets back to this central question about the profit motive. Do we really want health insurance companies, physicians, providers, hospitals to be answering to regulators, rather than to individuals? Consider England, when the government said people should not have such long waits in the hospital emergency rooms. The result: Either people were driven around in ambulances around London until the hospital could admit them, for hours sometimes, or they took the wheels off of gurneys in the emergency room so they could technically be hospital beds. Patients are not getting any better care; people are just trying to figure out how to jump through the hoops of the regulators. I just don't believe people are gonna tolerate that here.
Margaret Flowers: First, I just want to mention one other thing about the exchanges. I find it interesting that Ms. Turner says that people don't want to be pawns of the government because right now we're all really fond of the health insurance industry and they're the ones that are playing both patients' side and the health professionals' side. But the other problem with the exchanges, one that is currently happening in our individual insurance market, is that in this fragmented system where we can't control health care costs because we lack a unified system, health care costs are gonna continue to rise uncontrollably. More people are being thrown into the under-insured category and that what we see in the exchanges, the lowest-tier benefits. The Obama plan is going to leave most people financially vulnerable if they have a serious accident or injury. We're the only industrialized nation in which people go bankrupt due to illness or injury, and 62 percent of our bankruptcies are due to health care costs.
What we're talking about is really not an experiment; it's really been proven to work around the world and here as well with our traditional Medicare system. We need two types of basic things: The two most basic steps we need to take in this country is that, first, we need to have a health "system" so we can allocate our resources rationally. The most efficient way to pay for health care is through a single-payer system with one set of rules. The money goes into one pool and most of that money can be used for health care, not this complex administrative mess. I'd love to see Ms. Turner substantiate the stories about the U.K. because she's not really telling the whole story. These countries around the world have health systems that perform much better than ours. On a macro level, their health care costs are half of what we spend per person, per year with better health outcomes and higher satisfaction rates amongst their patients and health care professionals.
Grace-Marie Turner: My goodness. A lot of facts have been thrown around here that are just incorrect. A third of health care funds going to administrative costs is absolutely not true. It may be true in some small markets in individual health insurance, but generally studies show that the overall administrative costs between private health insurance and Medicare, for example, are very similar. In addition, 62 percent of all bankruptcies though medical costs? That is a really, really sloppy study that a number of people have pulled back on. People were asked: "What did you spend money on?" If medical care costs were even on the list then it was a counted as a bankruptcy to do medical costs. That is a bogus statistic. If you are sick, the U.S. is where you want to be. If you've got cancer, our survival rates are significantly better than they are in the U.K.
Miller-McCune: So Margaret, what about that? When foreign dignitaries get sick, they don't go to England; they don't go to France; they come here.
Margaret Flowers: How do you know that? We only really know about the ones that come here. I did my training at Hopkins here in Baltimore. They have a department designed to attract patients from around the world. They do this because it's a huge moneymaker for the hospital since these patients pay cash. Here in the U.S., we have about three-quarters of a million people who leave the country, go to Canada or Mexico to get care every year because they can't afford it here. We also have medical refugees, people who have gone abroad and become too ill to get care, and they simply can't come home because they wouldn't be able to get the same treatment here because of their pre-existing condition etc.
Regarding what Ms. Turner was saying about the admin costs. It is a fact that the most recent review of Medicare shows that it spent 2 percent on admin costs, which means 98 percent can actually go to care. And if we look at the big picture of having multiple private insurers, insurance companies are complaining that we're requiring them to not spend more than 15 to 20 percent of their health care dollars on administrative costs. Some of these plans have medical loss ratios of 55 percent, which means that they're keeping 45 percent for themselves. That piece alone, that 15 to 20 percent that health insurers set aside for administration and marketing, is very high. But if we look at the providers' side as well, at how much physicians are having to spend in order to interface with all these multiple insurers in not only money but time, it detracts from face time with your patients. It's a very inefficient, wasteful system. The bankruptcy study used solid research principles; it was done by a group out of Harvard and published in a peer-reviewed journal. I don't think we could see anyone effectively refute that study.
I think it's important to give some background on where groups like Ms. Turner get their funding and who they're really speaking for. Whenever I give the grand rounds, I have to give a disclosure. Physicians for a National Health Program, we are frontline providers; we are the ones who are doing the research; we are the ones who have the degrees in public health. Our funding comes from ourselves. We're doing this because we want to create a system in this country that works for everybody and improves the health of our population.
Grace-Marie Turner: We get our funding from a broad range of people, companies and philanthropic foundations inside and outside the health sector. Our primary goal is to represent patients and doctors to get bureaucrats out of the treatment room and to allow patients and doctors to make decisions. I know that people who believe in a single payer system as Margaret does, think that somehow we're going to get bureaucracy out of this system if we just turn it over to the government. But we can only look at the programs the government runs now, Medicare and Medicaid. There are at least 130,000 pages of regulations governing those two programs. We know that they're going to be incredibly more bureaucratic and we see what happened with this new legislation.
The trend in this country is toward more and more regulation, more and more documentation and more and more government control, not giving doctors and patients the control. We cannot put everyone in this country into the same box. With this Congress, we had the largest number of Democrats in both the House and the Senate, a president who said he ultimately believes a single-payer system would be best. This was the closest they could get. I believe that it's important if we are going to make progress that we recognize the values and freedom-loving sense of the American people and build on that system to make our current system better, not to transform it to a European system, which the great majority of Americans do not want.