Fixing Our Healthcare System

Arrow pointed out several big reasons why healthcare can’t work like ordinary free enterprise, including an unavoidable lack of steady demand, lack of knowing for sure what will work, and lack of transparent prices. Take a case like mine: You go for years with such perfect health you might assume you have no need for insurance at all. Then, out of the blue, you become ill with a devastating disease that will cost hundreds of thousands of dollars to treat. You may be so stricken when it hits that you can’t make any judgments about costs, and no matter what, you can’t really know what outcome a particular treatment will have, how much it will ultimately cost, or how much it would cost from a different doctor or hospital. Meanwhile, the system encourages your doctors and medical facilities to order more and more tests and services for you, and gives insurers every reason to refuse to pay for whatever they can avoid covering. As a patient you’re trapped not only by terrible illness but also by an insurance set-up you can’t possibly stay on top of. It’s as bad for doctors as it is for patients, too. A recent survey of 24,000 physicians found that only 54 percent of them said they would choose medicine again if they were starting their careers over. David Korn, a former dean of medicine at Stanford University, blamed a lot of that frustration on the nation’s lack of a single-payer healthcare system. The flood of paperwork every doctor faces is “a crushing burden that no doctor enjoys,” he said. Howard Forman, a professor at Yale, added that “the transformation of the field from independence and professionalism to being commoditized and feeling like you’re just another worker is disheartening to some.” And doctors worry the Obamacare, with all its intricacies, will only make things worse. Obamacare, the latest attempt to fix the ever-worsening mess, was signed into law in 2010. The Act aims to extend insurance coverage to every American. This is an extremely complex law, but it is possible to reduce it to a few basic principles.

• Spreading the costs equitably by requiring us all to buy insurance or pay a penalty—the much debated “individual mandate.”

• Requiring every insurance company to sell insurance to anyone who wants it, regardless of pre-existing conditions.

• Offering subsidies to help the needy pay for their mandated insurance, so the cost doesn’t burden anyone excessively.

• Setting up “exchanges,” state-based marketplaces where people can shop for insurance and compare plans and prices, to make the system as transparent and fair and economical as possible.

Obamacare is, of course, as controversial as anything about American health insurance has ever been. Supporters point out that adding coverage for tens of millions of uninsured Americans and removing the threat of losing coverage for millions more like me with preexisting conditions, is a huge accomplishment. Critics complain that, like the failed Clinton plan, the new law is much too complicated, that it does far too little to rein in costs, and that the individual mandate is un-American in its almost socialist coerciveness. Furthermore, Obamacare does very little to end the crushing conflict between doctors and insurers and patients.

What has allowed other countries to insure more of their citizens at lower costs and with better health results than us? That story begins in Europe way back in the late 19th century. Germany, under Chancellor Otto von Bismarck, instituted compulsory healthcare coverage for workers in 1883; a main reason was a desire to win the sympathies of left-leaning workers before they rose in open revolt at a dangerously unsettled time. Most other northern European nations followed Germany’s example and had some form of broad, if not universal, coverage by the time of World War I.

Canada is often held out as an example of both the advantages and disadvantages of such nationalized systems. There, individual provinces, and then the national government, instituted universal healthcare beginning in 1947. It all began when a working-class boy named Tommy Douglas had to have a leg amputated and got it done for free by a surgeon who wanted to show his students the procedure. Douglas was inspired to set out to make free healthcare possible for all, and he got the first plan launched in his home province of Saskatchewan. Canadian Medicare, as the set-up is now called, covers everyone in the country with tax dollars, with almost no deductibles or premiums from the patient. Doctors bill the government without patients even being involved in the paperwork. The total cost of healthcare per person is roughly two-thirds of that in the U.S. More than 80 percent of Canadians prefer their system to the U.S.’s. They like it so much that in 2004 the national broadcasting system held a poll to pick the greatest Canadian of all time, and the winner was Tommy Douglas. The biggest complaint about Canadian healthcare is that patients have to wait from several weeks to several months for care that isn’t urgent. However, the government has been working to address that problem, and in any life-threatening situation, care is given right away.

What hope is there for real improvement of the healthcare mess here in the U.S.? Marcia Angell, M.D., a Harvard Medical School faculty member and former editor in chief of the New England Journal of Medicine, argues that Obamacare can’t possibly do it. The Massachusetts health plan that it is modeled on doesn’t do nearly enough to fix the system’s bad incentives and hold down costs. She writes that Obamacare “requires people to buy a commercial product from investor-owned companies at whatever price the companies choose to charge. In short, people are required to contribute to the profits and corporate salaries and marketing costs of companies like WellPoint and UnitedHealthCare.”

As it happens, the chief executive officer of UnitedHealth Group Inc. was the single highest paid executive in the U.S. in 2009, taking home an astounding $102 million. Angell writes, “A few years ago, in a private discussion with a senior executive of America’s Health Insurance Plans, the industry’s trade association, I was told that if the [Obamacare] regulations did squeeze the profits of the insurers, they would simply raise the premiums. There is nothing … to prevent that.”

Marcia Angell’s prescription: “A single-payer system is the only way to [cover everybody] while containing costs. Polls have shown that most Americans favor it, and a Massachusetts survey showed that physicians there prefer it to the state’s current system. I’ve advocated extending Medicare to everyone by dropping the qualifying age one decade at a time, and delivering it in a nonprofit system, something I believe the public would enthusiastically accept.”

That sounds revolutionary in a country so wedded to a would-be free-market approach to healthcare. But if and when we finally get there, we’ll only be catching up with the rest of the world.