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Consensus Commentary

Apr 27, 2003

A Revolution Looking for a Leader and a Way
San Francisco Chronicle

by Jamie Court - Executive Director - FTCR

The following commentary by Jamie Court was published in The San Francisco Chronicle on Sunday, April 27th, 2003.
Double-digit premium hikes every year. Forty-one million uninsured. Overflowing emergency rooms. Doctors and nurses pressured to do less. Insurers and drug companies making more.

Have so many Americans ever been so angry at their health care system?

Skyrocketing costs, compromised quality and restricted access could be the fuel for a new revolution, but only if the fatal faults of health care reform can be transcended.

The recurring health care crises of the last 30 years are like a Greek tragedy. The same characters are led through the same story time and again, forgetting each time the forces that brought them there and that will sweep them back.

A fresco of today's crisis would show the main characters -- patients, nurses, doctors, hospitals, employers, government -- each so absorbed in their own narrow view of their crisis that they cannot step back to see the common condition.

Distorted costs, quality and access have plagued all the actors in the health care system for the last 30 years. The real crisis has not been the absence of a policy to fix these problems (many exist on paper), but lack of the right politics to do so. The leading players have yet to reach a consensus that their common problems are greater than their differences -- the prerequisite for any overhaul.

As a policy, lower costs, higher quality and universal access go hand in hand. The more patients who are insured, the lower the cost for everyone. An insurance pool that covers all risks means each pays less.

It's also far cheaper to treat the uninsured preventively than in the emergency room, when their illness is most acute and treatment is most expensive. In California's overcrowded emergency rooms, patients are seen based on their condition, not their insurance status. If the uninsured patient's only access to medicine is the ER, all patients there are at greater risk.

Such views are gaining ground among California labor unions, doctors, hospitals, nurses, consumer groups and even HMO executives. They have all recently called for universal health coverage. The devil, of course, is in the details.

Conspiring against a consensus are the political motives of narrow self-interest by the industries and professions that profit from health care. Each has traditionally been more interested in fighting over the size of their slice of a half-baked pie than in changing the recipe.

Fearing reduced profits, insurers and drug companies torpedoed President Bill Clinton's universal health care plan more than a decade ago. They teamed with employers to rout a 1994 California ballot initiative for a Canadian style "Medicare for All" system. In 1992, labor groups defeated a California Medical Association ballot initiative for universal coverage. As far back as the 1950s, doctors stopped Gov. Earl Warren's effort to create universal coverage.

State proposals made in recent months will face similar opposition.

Blue Shield CEO Bruce Bodaken called for a state mandate that all able patients and employers pay for insurance to achieve universal coverage -- to be paid for by a dedicated 1 percent sales tax or a 0.7 percent hike in the state income tax -- but refused to submit his industry to regulation of premiums and profits.

Doctors similarly support a requirement that employers pay for workers' insurance or be taxed to publicly subsidize universal coverage -- called a "pay or play" plan -- which is in place in Hawaii. But will physicians open their books and support regulation of the fees they charge? Labor unions announced legislation for this "pay or play" plan in February, but will it cover nonunionized workers at smaller companies?

Health care is fundamentally a social commitment in an American society that has increasingly emphasized only commercial contracts. The commercial interests of health care providers and employers over the last 30 years have outweighed the social interest of better insuring all patients. That is the reason the United States is the last industrialized nation not to have universal health coverage. Forty-one million Americans, including 7 million Californians, are currently without health insurance. Most of them work.

The United States has the most costly and least efficient system in the world. The World Health Organization ranked the United States 37th of 191 countries for "overall health system performance"; 72nd for "level of health," and first for "health expenditures per capita."

Will this country ever get it right?

At the federal level, the GOP plan is to further commodify health care through individual medical savings accounts, which will dilute the insurance risk pool, and through greater use of HMOs if Medicare recipients want prescription drugs.

By contrast, California could be at the forefront of a pioneering societal solution. At town hall meetings across the state over the past year, patient advocates, doctors, nurses, hospitals, employers and government representatives have acknowledged a critical truth: There is enough money in the health care system to better care for everyone, but it is being mismanaged.

The question is how to redivide the health care pie.

Unfortunately, absent imminent solutions, the blame game over cost inefficiency is already under way.

Drug companies blame rising costs on hospitals. Hospitals point to escalating prescription drug costs. HMOs and insurers finger doctors and hospitals, who in turn blame the insurance industry. Employers fault workers for using benefits but not understanding the cost. Unions blame employers for being cheap.

Avoiding the next Greek tragedy for health care reform will require serious self-examination by the key players about their plight and their illusions. Enough must recognize that without sacrifice there can be no salvation in health care.

-- Patients. They have long been accused by health care's industries of being the root of the problem, since they are health care consumers but not always its payers. The average patient does not have a good understanding of the health system, but does know he or she is paying more for less. Increasing cost-sharing requirements by employers and insurers require patients to shoulder a greater burden for all medical services and drugs. That's in addition to the reduced benefits and restricted access by managed care companies.

The least fortunate are forced to choose food over insurance. The more fortunate suffer from similar anxiety that their insurance coverage might not actually be there when they or their family need it. That shared sentiment across class lines is a potentially incendiary -- as well as unprecedented -- political force.

Polls and focus groups show cost is the central concern for the public in health care today. In 2002, HMO enrollment fell under 50 percent in California.

The favored plan now is the Preferred Provider Option, or PPO, which has fewer restrictions on access but entails greater cost-sharing requirements. With pocketbook issues front and center, Californians may be more ready for political solutions than when they defeated ballot initiatives for universal health coverage in 1992 and 1994.

The public still suffers, however, from many illusions about health care. First, many in the middle class (particularly white men, according to focus groups) do not understand that they are paying more for the uninsured now than they would if the system was more rationally structured. Second, government is still seen by many as a greater evil than the corporation, but its hand will be needed to better direct resources. This last illusion is nurtured by those on health care's Olympus -- drug companies, HMOs, hospital chains and insurers, which do not want to see government regulate their profits.

-- Doctors. Patients, for better or worse, look to their doctors to tell them what is right and wrong in health care. Many physicians are angry, but the medical establishment is of two minds.

For years, doctors have complained about being bankrupted, coerced, and turned against their patients by HMOs. Many have suffered financially, but some at the head of large medical groups (called HMitos for their mimicry of HMO ethics) have also made a killing by becoming the HMOs' hatchet men. The medical establishment is often split between those who believe the current market has failed and those who are true believers in the status quo. The question remains whether physicians will be ready to submit to the cost efficiency needed from all providers to make universal coverage work. In other industrialized nations with national health coverage, physicians' salaries are about half of those in America.

-- Nurses. Having witnessed abuses at the bedside, nurses are even more ready than doctors for radical change. The current nursing shortage was precipitated by unconscionable conditions in downsized hospitals. The question is whether society will ever be ready for what nurses are.

-- Hospitals. They are divided. California has lost about one-quarter of its hospitals over the last decade due largely to HMO downsizing. The result is not only overcrowded emergency rooms and too little capacity during public health epidemics. Smaller hospitals affiliated with large hospitals in order to gain bargaining leverage with HMOs and insurers. The resulting consolidation into rival hospital chains, like Tenet and HCA, has created hardball negotiating tactics that more resemble the Mafia's than a hospital's. Ironically, HMOs and insurers now complain they are being leveraged into paying exorbitant rates by chains that have a lock on all the hospitals in an area.

Catholic hospitals, community and public hospitals say they care for a disproportionate share of the uninsured. They are most ready for a universal coverage solution. The for-profits, like Tenet and HCA, do not see much of a problem. The morass creates opportunities for unlikely alliances among those who wish to see standardized hospital rates for all services -- the cornerstone of global budgeting for real universal coverage.

-- Employers. They are the missing link in the debate. Many small businesses have seen their health care premiums almost double in the last three years and are increasingly forced to drop health coverage. They would likely welcome laws that make health care more affordable, but not ones which provide them with unaffordable mandates. Large employers have seen their costs rise too, but many think they are in the best negotiating position with insurers because of their size. They tend to resist government intervention for fear it will limit their choices.

Large businesses' response to rising costs has been to shift costs to employees. This is, effectively, a wage reduction. Absent universal coverage, employers with health coverage will also continue to worry about competitive advantage over companies that are less generous. The Chamber of Commerce has been a leading opponent of universal health plans, largely because insurers are among their most loyal members. If the heads of a few large California corporations break ranks, however, universal health coverage will become more viable than ever in the state. Employers might support "pay or play" if guaranteed it would result in reduced costs for them.

-- Insurers, HMOs and pharmaceutical companies. They have ruled the health care roost forever. Their profits, overhead and marketing are fat that reformers can target. The industries will resist, but survival still dictates they will have to change with the will of the majority. Canadians and Mexicans pay a third of the cost for drugs that Americans do because of national purchasing at bulk discounts. HMOs and insurers are coming around to universal coverage out of survival instincts. They realize if they are not part of the solution, they will be perceived as the problem and removed from the equation.

What may be most needed for this crisis to have a happy ending is a hero to lead these forces out of the dark ages. State Senate President Pro Tem John Burton, D-San Francisco, wants to fill this role. Burton is co-author of the unions' "pay or play" approach (scheduled for a first hearing on Wednesday in the Senate Insurance Committee). He must work to balance all players' interests. State Sen. Liz Figueroa, D-Fremont, has introduced a bill aimed at protecting consumers and employers by reining in unfair health care premiums. State Sen. Sheila Kuehl, D-Santa Monica, has an even bolder plan to insure all Californians through a single state-run insurance pool detached from employment. Gov. Gray Davis is missing in action.

The legacy of Clinton's failed national health care plan is that few politicians want to pin their future to the issue. The fate of health care depends on whether politicians like Davis find the courage to prevent history from repeating itself yet again.

If not, the people of California may get the chance for a final say at the ballot box, provided health care's main players find common cause to give them the opportunity to turn crisis into change.
Jamie Court is executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights and co-author of "Making a Killing: HMOs and the Threat to Your Health" and the soon-to-be-published "Corporateering: How Corporate Power Steals Your Personal Freedom and What To Do About It."