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Ask Auntie Pinko
July 24, 2003

Dear Auntie Pinko,

I was recently watching the movie "Bulworth." In it, the claim is made that health care is one of the most profitable industries in the country because the insurance companies take 24 cents out of every dollar that is spent, while it takes the government 3 cents out of every dollar to do the same thing with Medicare. This sounds like a pretty darn good argument against the Republican mantra that "anything government can do, corporations can do better." Is the claim true? And while we're on the subject, can you enlighten me about socialized medicine?

Daniel
Akron, Ohio


Dear Daniel,

You just had to ask, didn't you? Auntie Pinko was afraid someone would bring up the health care issue sooner or later. Fasten your seat belts, readers. It may be a long and bumpy ride.

Speaking ex cathedra from my little chintz-covered armchair in my quiet country town, Auntie has only one truly authoritative and definitive statement to make about the issues surrounding health care in America:

The simpler someone's explanation sounds, the more they're leaving out.
You bring up the example of the movie character's statement about the comparison between insurance companies' costs versus the government's costs for Medicare. While it sounds good (and simple - so beware!) there is inevitably more to it than a simple point-to-point comparison. For one thing, Medicare generally delivers different services than private insurers provide. Through governmental regulations such as Health Care Financing Administration rules, the government can implement cost controls targeted especially at the kinds of services that Medicare provides. And while these controls also benefit private insurers in many ways, they don't address many costs that Medicare doesn't cover.

Now, while one should always take such simple generalizations with a large block of salt, that doesn't mean that they are entirely worthless or untrue. During the late 1980s, I participated in a coalition of non-governmental organizations that studied the cost for one state to provide Medicaid services, versus the costs of private insurers providing similar services. We did find that per dollar spent, the state's share of administrative costs was much lower than the same costs for private insurers.

But we also found that clients covered by private insurers had better access to the same services, expressed in a wider range of choice in providers (even among HMO clients,) shorter waiting times for appointments and procedures, etc. Medicaid clients were faced with long searches for a provider who would accept new Medicaid clients, longer waits, and generally less agreeable care experiences that they perceived as lower in quality than private insurance clients.

Health care issues are vastly complex, ranging from broad policy considerations such as how to ensure an adequate supply of well-trained health care professionals, to narrowly-focused but emotionally intense issues of how much control an individual consumer can exercise over their own care choices. And frequently a strategy that can solve one problem will end up worsening another problem.

The central dilemma that many policy analysts have identified seems to be this conundrum:

Americans want universal access to the highest possible quality health care services at low cost.
But the three elements in this conundrum (universal access, highest possible quality, and low cost,) are mutually exclusive. No business model or social administrative system has ever been devised to provide all three of these elements in full measure for any product or service, much less something as complex as health care.

Americans are going to have to choose how to balance three equally unattractive strategies to solve this riddle:

1. Limiting access. The idea that everyone can't have everything they want, from any provider they choose, immediately upon demand, offends our sense of fairness and rightness. And from a practical standpoint, we know that any time we impose any limits at all upon access, some costs escalate, because some people will forego preventive and early treatment options - even if they are available. And when we're all in a cost-sharing pool, that affect everyone.

2. Compromising quality. We'd all like to be seen by a Mayo-trained or Hopkins-trained specialist in the precise ailment that troubles us. Is a "Nurse Practitioner" really as good as a board-certified Internist? Can we trust them? The real and perceived costs of less than "the best" health care are enormous. Most of the tragic mistakes and omissions that end in costly lawsuits can be traced to cost-cutting that compromised the quality of care. And the more medical technology advances, the higher our quality standards rise, and the costlier it is to maintain them.

3. Paying the price. Everyone familiar with the basic principle behind insurance - the cost-sharing pool - understands that the more people you have participating, the lower the costs will be for each individual participant. This is the system that has broken down in the private market, as a cycle of rising costs and increasing competition forced many employers out of sharing health benefit costs, shrinking the cost-sharing pools ever further and spiraling the costs upward exponentially. The only way to address it is to expand the cost-sharing pool, and use the leverage of one (or a small coalition of) payer(s) to balance cost control and quality assurance. But expanding the cost-sharing pool means paying for the coverage of millions of Americans who are uninsured or underinsured now. The initial investment will be staggering. Are we prepared to pay it?

Which brings us, by a roundabout road, to your final question, Daniel, about "socialized medicine."

This highly imprecise term is used, usually pejoratively, to describe systems adopted by countries who elected to expand their cost-sharing pool by implementing a single-payer system, in which the payer is the government. It's imprecise because these systems differ greatly in how they are implemented and managed. In some countries the provider market remains private-sector, serving the single-payer government insurance program. In some countries, the government "owns" the health care provision system, and employs all the doctors and technicians and clinic administrators, etc.

Naturally, these systems vary widely in the real and perceived quality and convenience of the care they deliver. They differ greatly in the level of access they restrict (although almost all restrict access to some extent.) Yet when the best of these systems are examined, many of them manage overall to provide far better access and quality of care to the overwhelming majority of their citizens than millions of Americans experience with our broken-down mess.

So why is "socialized medicine" such a pejorative term? Well, partly, I'm sure, it reflects the American disdain for anything that restricts a perceived "freedom." (Never mind that this "freedom" is illusory for millions of us, and costs unconscionably in dollars and human tragedy.) But the real answer is more likely to be that maintaining the existing system is still in someone's vested interest. And vested interests are usually willing to spend lavishly (Auntie has to wonder how much those "Harry and Louise" ads cost) to keep their benefits.

As the old Romans used to say, "cui bono (who benefits?)" Or, as an anonymous American of more recent vintage put it: "Follow the money."

There's no way Auntie Pinko (or anyone, I bet) can adequately explore and explain all the issues connected to health care in one short column, Daniel. But thanks for giving me the chance to sketch in a few broad outlines!


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