The Health Care Crisis in America

An Interview Dr. David Himmelstein

Originally Published: October 30 / 31, 2004

By NANCY WELCH

Dr. David Himmelstein teaches at Harvard Medical School and is a cofounder of Physicians for a National Health Program.

THE MEDIA often claim that health care is so expensive in the U.S. because Americans overuse their benefits or insist on the best when it comes to care. Is it true that U.S. consumers are the ones driving up the cost of health care?

AMERICANS DON'T actually get very much care by world standards. We don't stay in the hospital more often or longer. In fact, on average, we have shorter stays than people in most other developed countries. We don't visit the doctor more often than people in most other countries to which we compare ourselves.

We don't even get more of most kinds of high technology care. The Japanese get many more MRI scans and CT scans, and the same is true for many European nations as well. I'm not sure if more scans are a good thing or a bad thing, but it's clear that you can't explain our extraordinarily high health costs based on the amount of care that Americans get.

The fundamental cause of the high cost of health care in the U.S. is the deranged structure of the health care system.

There's something like $50 billion a year in profit extracted from the health care system, and that's only about one-sixth as much as the bureaucratic costs of actually extracting that profit. In fact, we spend each year about $320 billion or $340 billion on useless bureaucratic work in order to apportion the right to health care according to ability to pay, enforce inequality in care, and enforce the collection of profit by insurance companies, for-profit hospitals, the drug industry--a whole panoply of players.

It's the bureaucracy to enforce inequality and extract profits that drives up the cost, and then, to a lesser extent, the profits themselves.

IN THE early 1990s, Bill Clinton promised health care reform that would expand care and lower cost. We wound up with rationed care and skyrocketing costs. What happened?

CLINTON ACTUALLY rejected a straightforward national health insurance system in favor of a system that would have virtually required every American, except for very upper-class people, to enroll in corporate-dominated HMOs. He didn't think he could take on the HMO industry.

I say that not only on speculation, but based on meeting with Hillary Rodham Clinton. When I presented the case for national health insurance to her, she said to me, "Can you name any force capable of taking on the $300 billion dollar-a-year HMO and insurance industry? You make a convincing case, but where's the power to do that?" When I said, "How about the president of the United States leading a crusade of the American people?" she asked me for something real.

So I think it was clear that Clinton made a political calculation in not championing national health insurance and in trying to strike a deal with the private insurance industry. And the end result of the deal was two things. One is that the Democrats abandoned their four-decades-long commitment to national health insurance, so that by the time Al Gore ran for president, national health insurance was struck from the Democratic Party platform for the first time since the 1940s.

The second is that the Democrats endorsed managed care as a strategy for health care, which said to investors that investment in managed care was safe, stimulating an enormous growth of the power of the HMOs and a reconfiguring of the health care system to one dominated by corporate giants.

Clinton, maybe inadvertently, gave the go-ahead for the corporate transformation of the health care system.

THERE WAS a lot of controversy surrounding the Bush administration's Medicare "reform" legislation, with the limited prescription drug benefit. Who wound up benefiting?

THE DRUG industry is a huge beneficiary. They won big in getting through a structure that forbids the government from negotiating prices with them, minimizing price pressure. They also won big because there's a huge infusion of new money for drugs under the program.

The insurance industry won big because the new benefits will virtually all flow through the insurance companies. For them, this is a huge new revenue source that's collected by the government, but out of which they'll get their cut. HMOs got some $45 billion or $50 billion in new subsidies outside of the drug benefit, just to sweeten the pot for them.

So those are the winners. The program provides a tiny bit for seniors with very high drug costs, though it's designed so that they could really get screwed as well. You have to choose a plan, and if you sign up with a plan in large part because it's covering a particular drug you need, the plan at its discretion can stop covering that drug.

For most seniors, the plan does little or nothing. Also, drug prices are going up at such a rate that if you say the program would cover roughly 25 percent of seniors' drug costs, that 25 percent will already be eaten up by drug cost inflation by the time the program is implemented.

JOHN KERRY seems to be promising even less when it comes to health care than Bill Clinton did. What's your assessment?

CLINTON PROMISED universal coverage. He obviously didn't deliver it. Kerry has promised to cover two-thirds of the uninsured--that leaves 17 million uninsured and tens of millions more with inadequate coverage--so the promise is clearly less than what Clinton ran on.
Kerry is also offering little or nothing for those who currently have insurance--nothing to slow premium increases, nothing to address rising drug prices.

The biggest piece of the Kerry plan is a partial subsidy for low-income individuals to help them buy private insurance. What he's saying is we will use federal money to dump into the private insurance industry to pay part of your premium. So it's a direct subsidy to the private insurance industry and an indirect subsidy to individuals.

Kerry's plan would actually boost bureaucracy, funneling hundreds of billions of additional public dollars into wasteful private plans--wasteful because for every dollar you spend on private insurance, you get 85 cents of care, while for every dollar spent on Medicare, you get 97 cents of care.

But it's also speculative if the federal money would even be available for his plan, given his war budget, and how many people could actually afford to take up the offer.

Look at the subsidy plan that's already in place for workers who lose their job because of foreign imports. Of half a million workers eligible for the program, only 8,000 or 9,000 have signed on, because with private coverage costing around $10,000 for a family, the government subsidy still doesn't make coverage affordable if you're low income or out of work.

YOUR RESEARCH with Dr. Steffie Woolhandler consistently shows that a government-administered, single-payer universal health plan would provide care for everyone in the U.S. for much less money than is being spent now. And opinion polls show that about two-thirds of people in the U.S. want to see such a plan. But with for-profit hospitals, drug companies, and HMOs organized to block such a plan, what can happen to make national health insurance a reality?

WE NEED a real uprising of the American people. Going up against a $300 billion-a-year industry is no easy matter.

Corporate interests themselves may play a role. For employers, rising health care costs are a cost of production. Hence, some may be motivated to support national health insurance even against their interest in being able to deny health care to striking workers, low-wage workers and so on.

But that's only one small piece of what's needed. It's also possible that a politician will discover the populist appeal of the health care issue and lead that national crusade. Or that we'll have a breakthrough in one state, showing the others that it can be done, and then [begin] spreading universal coverage state by state.

But as Henry Sigerist, known as America's greatest medical historian, put it when he appeared on the cover of Time magazine back in the 1940s, only when the U.S. has a party of labor will we have a national health program. A party representing the interests of the working class was the precondition for universal health care in Germany, in Britain, in Canada.

Maybe we can win national health insurance even before we get such a third party, but it's going to take a broad strengthening of the left.

Nancy Welch writes for the Socialist Worker.