The Case For National Health Insurance

John R. Battista, M.D.

President, Connecticut Coalition For Universal Health Care

Member, Physicians for a National Health Insurance Program (PNHP)

Address to the Connecticut League of Women Voters, New Britain , CT March 26, 2007

As is well known, the United States is the only industrialized country that does not guarantee health insurance to its citizens through a national health insurance system.  As a result, comparing the American health system with the health care systems of other industrialized countries provides a valuable means of evaluating national health insurance and what would occur if the United States were to enact it.

It is commonly stated that the United States has the best health care system in the world.  While it is certainly true that the best health care in the world is available in the United States this does not necessarily mean the United States has the best health care system in the world.  It order to evaluate if the United States has the best health care system in the world it is necessary to evaluate the American health care system in comparison to the health care systems of other countries.  There are three basic ways of conducting such an evaluation.  The first way involves efficacy comparisons which involves comparing countries in terms of their ability to achieve the two generally accepted measures of  health: low infant mortality and extended life expectancy.  The second way involves efficiency comparisons which involves comparing countries in terms of their ability to improve health care outcomes per dollar spent.  The third way involves comparing countries in terms of the satisfaction of their citizens with their health care system.

When the United States is compared to other industrialized nations in terms of efficacy the United States ranks is the lower third.  Of the 27 industrialized nations the United States ranks in the 20’s with regard to both infant mortality and longevity.

When the United States is compared with other industrialized countries on efficiency it comes in last.  This results from the fact that the United States spends around twice as much per capita as other industrialized nations on health care but ranks in the lower third of them in terms of health care outcomes.

Finally, when the United States is compared to other industrialized nations in terms of satisfaction it again places last.

As a result one could more persuasively argue that the United States has the worst health care system in the industrialized world rather than the best.  In fact, when the World Health Organization ranked all health care systems in the world according to factors similar to the ones we have discussed, the United States ranked 37^th, the lowest of any industrialized nation.  France ranked first.

This conclusion is further strengthened by comparing the health care outcomes of industrialized nations relative to the United States in the years following the passage of national health insurance in those countries.  The results show that in the years following passage of national health insurance health care outcomes improved relative to the United States while their cost increases relative to the United States declined.  Canada is the most compelling comparison to make because prior to the passage of national health insurance in Canada it had a health care system identical to the United States and spend the same amount per capita as the United States .  In addition, Canada has a population most similar to the United States among all industrialized nations.  Prior to the passage of national health insurance in Canada it had poorer health care statistics relative to the United States in terms of infant mortality and longevity.  Now, some thirty years later its health care statistics are substantially superior to the United States .  Similarly, it’s current spending is about one-half of what the United States spends per capita, and its rate of growth in health care spending is about half that of the United States.

Let us now turn our attention to understanding why the United States does so poorly on efficacy, efficiency and satisfaction relative to the other industrialized nations with national health insurance programs.

The poor health care outcomes in the United States are not a function of the quality of the American health care system, but access to it.  There are two basic reasons for this.  First, about 15% of our population is without health insurance.  The uninsured avoid preventive health care and tend to approach the health care system later in the course of an illness when it is more difficult to treat.  In addition, the Medicaid system, available for the poor in this country, reimburses health care providers poorly, not even covering overhead in many situations.  As a result the vast majority of health care providers refuse to participate in Medicaid leading to severe access problems among the poor.  Also, because the system is typically managed, this makes obtaining approval for services difficult to obtain, resulting in the services not occurring and driving health care providers from providing services due to their frustration in trying to provide quality health care services.

The inefficiency of the American health care system is a direct function of the large number of insurers involved in the American health care system relative to other industrialized countries and the failure to negotiate the price of prescription medications in many sectors of the American health care system  unlike any other industrialized nation.  The United States consumes at least 25% of total health care spending in administrative costs.  Other industrialized countries spend 10% or less, and this involves a good deal of preventative and educational outreach which is absent from our health care system.  The private sector of our health care system is least efficient.  For profit insurers spend 25 to 30% of the premiums they receive on marketing, salaries, and profits.  On the other hand, Medicare, for example, spends about 3%.  For profit companies were allowed to provide services for Medicare beneficiaries some years ago in order to hold down the cost of Medicare.  However, it has been shown that the services they provide would have cost 19% less had they been provided by traditional Medicare.  This story is repeated in all aspects of our health care system.  For example, the same procedure in the same hospital the year after it was converted from not-for-profit to for-profit costs anywhere from 15 to 30% more.  The other substantial factor in increasing the cost of medical services in the United States relative to other industrialized countries is the lack of negotiating the cost of prescription medications in many sections of our medical system, such as traditional Medicare.  In those situations the cost of prescription medications is about twice as much as it is in other industrialized countries such as Canada .

The dissatisfaction with the American health care system is the result of the high cost, financial insecurity, and widespread frustration associated with our health care system.  As stated previously, the cost associated with the American health care system is generally twice that of other industrialized nations and at least 25% more than the next most expensive system, which is Switzerland .  The high cost of health insurance is the main reason that 15% of our population goes without health insurance.  Because the cost of health insurance is based on age, illness and employment rather than income, as in other industrialized countries, health insurance is often too expensive for people of limited means and people who are ill.  The result is that people are locked into jobs they do not want but are forced to keep to continue health insurance benefits contributing to job dissatisfaction and lowered productivity.  The financial insecurity associated with the American health care system can be seen from the fact that health care is a substantial factor in at least half of all bankruptcies in the United States, a situation that does not exist in any other industrialized nation.  This is a function of underinsurance.  About 25% of all people with health insurance are at risk for bankruptcy if they were to suffer a major medical illness.  Frustration with the American health care system is typically most acute with people who seek to access health care through a managed health care insurance system which is typical of the 40 to 50% of our population who have health insurance through their employers and all of the Medicaid population.  People who become ill commonly find the procedures or treatments recommended by their health care providers are frequently delayed or unavailable to them.  Furthermore, they find that determining how much they owe is a nightmare to understand and determine.  The result is substantial frustration with our health care system.   

It is thus reasonable to conclude that national health insurance for the United States would improve the health of the nation, lower costs and improve satisfaction with the American health care system.   Why then isn’t this done?  First, I will discuss the myths and disinformation associated with national health insurance before getting to the real reason, at least as I understand it.

The first myth is that national health insurance would cost too much, which is often expressed in terms of causing a massive tax increase.  In truth, repeated studies have all concluded the same finding: converting the United States health care system to a Canadian style system would decrease costs by about 10% while providing free prescription drugs, no co-pays, covering all the uninsured, as well as providing long-term health insurance.  This is possible due to decreasing administrative fees from their current 25% to less than 10% and negotiating the price of prescription medications, saving an additional 3 to 5% of total health care costs.  However, in my opinion, increased demand could potentially negate these savings and it is possible that a national health insurance system would cost about the same as the current system, particularly in the first several years when the unmet demand for deferred health care services would be encountered and the long term savings resulting from preventative health care and early intervention would not have taken place.  It is true that taxes would have to be increased to pay for national health insurance.  However, insurance premiums would no longer exist.  For the average person, the cost of health insurance would be substantially reduced.  This is not only a function of reducing the total cost of health insurance, but more importantly, altering the way in which insurance is paid for.  Under the current system people pay for health insurance independent of their income.  As a result the wealthier you are the smaller percent of income you pay for health insurance.  Under a publicly funded system, health insurance funding would be based on an income tax so that the more you earn the more you pay.  HR 676, the current national health insurance bill under consideration by Congress would be paid for by a tax increase on the top 5% of income, a small (about 3.3%) excise tax on payroll and self-employment income, and a small tax on stock transactions.  Under this payment mechanism close to 95% of Americans would pay less for their health care despite tax increases.

The second myth is that national health insurance would be an ineffective, inefficient, unresponsive and unpopular government run system resulting in a spiraling escalation of health care costs.  However, it is not true that a national health insurance system must be a government-administered program.  In fact, many health care advocates, myself included, have argued that a national health insurance program should be run as a not-for-profit trust under the control of health care providers, taxpayers, and health care advocates.  This approach is partially realized in HR 676 which mandates a consultative board of health care providers, taxpayers and health care advocates which would play an active role in setting fees, determining the breadth of insurance coverage, and quality assurance standards, something which does not exist anywhere in our current health care system.  However, even if national health insurance were to be run as a purely government-administered organization along the lines of Medicare there is still no historical basis for thinking such a program would be inefficient, ineffective, or unpopular.  Medicare is the most efficient insurer in the United States spending less than 3% of administration.  In addition, when traditional Medicare was compared with private, for-profit Medicare it was shown to be much more effective than private Medicare, statistically superior on all 26 quality of care indicators recognized by the government.  Finally, Medicare is a very popular program particularly with its beneficiaries, just as it is in Canada where 95% of Canadians state they would oppose replacing their Medicare system with an American style system.  Finally, as mentioned previously, national insurance programs have been shown to be much more efficient in constraining long-term health care costs than our current American health care system.  When an entire population is covered, disease is prevented or treated earlier in its course when it is less costly to cure and treat.  In addition, utilization of expensive emergency services is minimized.  Finally, the health care system becomes more coordinated making it more efficient and less costly.  It is realistic to expect a national health insurance program to cut the rate of growth in health care expenditures by 50% over the long term while constraining growth to a more limited extent in the short-term.

The third myth is that national health insurance would result in government control of  health care, making our citizens see providers determined by the government, take treatments determined by the government, and take medications determined by the government.  This is not the case.  National health insurance bills such as HR 676 support free choice of any willing provider and would do away with managed care.  The necessity of seeing providers in a health care network and pre-approval of medications is characteristic of the private, for-profit health care insurance system; not national health insurance.

The fourth myth is that national health insurance is socialism or socialized medicine.

Although, national health insurance would publicly fund health insurance, health insurance would actually be less socialized than publicly funded education or police services as health care providers would continue in private practice, not be salaried employees of the government.  National health care insurance is a national insurance funding system, not a socialized health care delivery system.

The fifth myth asserts that national health insurance would decrease quality of care and access to care, resulting in long waiting lines.  We have already seen that national health insurance results in improved long-term health for a population.  When national health insurance programs are compared with the United States in terms of health care outcomes for the treatment of acute illness such as appendicitis, sepsis, pneumonia, spinal meningitis, acute myocardial infarction the results are comparable.  Health care outcomes could realistically be expected to improve, particularly for the uninsured and the poor in our country, but also for large percent of our nation that is enrolled in managed care health insurance programs.  Canada utilizes waiting lines for elective surgeries and diagnostic procedures as a means of constraining cost.  However, the intention of national health insurance legislation such as HR 676 is to keep the American health care system fully funded and functioning as it is.  As a result there would be no lines.  Thought of another way, if Canada were to double its per capita spending on health care to reach the levels which would be funded by HR 676 there would be no waiting lines in Canada .

The final concern is that national health insurance would injure American business and destroy the insurance industry and pharmaceutical industry, resulting in an abrupt halt to medical progress.  In general, national health insurance would greatly improve the competitiveness of American corporations internationally as it would level the playing field with the corporations of other industrialized nations who contribute to national health insurance through a public funding mechanism.  It is true that the private health care insurance industry would be severely curtailed, or no longer exist, as a result of national health insurance legislation such as HR 676.  Many of these workers will find employment in the national health insurance program, but provisions should be made to retrain the remainder of these insurance industry workers.  On the other hand, there is no evidence that the pharmaceutical industry will be severely injured.  In the last thirty years the pharmaceutical industry has had the greatest return on investment of all industries despite the fact that it has been selling medications to industrialized countries with national health insurance programs for all this time.  Also, the majority of new drugs are developed in countries with national health insurance undercutting the argument that national health insurance will stifle innovation and medical advances. 

Overall, the choice is a fairly clear one.  Would you like to continue our current health care insurance system which results in high costs, poor outcomes, frustration and financial uncertainty or switch to a Canadian style system which offers comprehensive health insurance at reduced cost for the vast majority of Americans while offering the reasonable expectation of improved health care outcomes, greater administrative simplicity, full choice of health care providers, and relieved financial uncertainty at the cost of doing away with the private health care insurance industry in the United States?  For years, the majority of Americans have supported a Canadian style health care system for the United States .  Most recently, a New York Times poll indicated that 64% of Americans support the government providing health insurance to all Americans. 

Why then do we not have national health insurance?  Why has no major candidate of either of the major political parties endorsed national health insurance?  Why have none of our Congresspersons in Connecticut signed on to HR 676 as cosponsors?  

In my opinion, the reason is clear and simple.  In order to get elected to public office under the current system it is very difficult to do so without the support of the pharmaceutical and insurance industries, two of the top contributors to political campaigns.  The result is our publicly elected officials are hesitant to oppose the financial interests of those that put them in office and can be expected to keep them in office should they seek re-election.  However, this reality is often hidden behind an irrational assertion that the private health care system is more efficient and effective than the public health care system and we need to sustain the private, for-profit health insurance industry to sustain the American way of life and the greatest health care system in the world.  If you do not believe this, I urge you to join the vast majority of health care advocates who support the public funding of elections as the surest way to pass national health insurance.  In the mean time, write to your Congressperson and our state Senators and tell them you support HR 676, the United States National Health Insurance Act, and encourage them to become co-sponsors of this important legislation.