The Uninsured Are the Symptom, Not the Disease

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by
KQED (California)

The Uninsured Are the Symptom, Not the Disease

by
Claudia Chaufan

I was invited to join the health care reform debate by addressing a set of questions falling under the general theme "Covering the Uninsured". The problem is that to answer these questions I have to challenge fundamental assumptions underlying them - if one asks the wrong question or misunderstands the nature of a problem, the chances of getting the right answer or solving the problem are slim.

And this is precisely what happens with the three questions I was asked, namely, should all Americans be required to purchase health insurance; what options for coverage should the uninsured and underinsured have; and how do you assess when coverage is affordable. They all assume that the problem is the uninsured or the underinsured. But these are only the "symptom". The real "disease" is the financial organization of our system.

In all industrialized economies, but ours, individuals do not "purchase" insurance as you "purchase" shoes or cell phone plans. Rather, they contribute to a system whose goal is to eliminate financial barriers to health care. Those systems, to varying degrees, pool risks and are financed by compulsory cooperative contributions.

What does this mean? Well, pooling risk simply means putting everybody into large pools, the bigger the better, and budgeting for people's medical needs in the same way families budget for their members' nutritional or educational needs. And why would they do this? They do this because given that the goal of the system is to eliminate financial barriers to care universally and according to medical need, these systems seek to optimize the use of members' money.

And pooling risk does so in three ways. First, it allows the system to cross-subsidize, which means that at any given moment the healthy or least costly majority pays for the medical care of the less healthy and most costly minority. Cross subsidizing is critical for any insurance system to be sustainable: if a system includes only sick people it will quickly go bankrupt (this, incidentally, is the problem of our American Medicare, because it enrolls only the elderly, who tend to have higher medical costs, and the disabled, whose costs are the greatest. This problem would be resolved by putting all of us into Medicare, and of course getting rid of all the private middle-men that have corrupted it, e.g. "private fee for service Medicare", "part D", etc.).

The second thing that pooling risk does is to dramatically reduce administrative overhead, i.e., waste that comes from pushing paper around - to separate people into plans, to market those plans, or to underwrite policies (essentially to deny paying for care). While paper-pushing is the lifeblood of private or liability insurance, because it helps it achieve its ultimate goal, which is not to provide a social service but to make a profit, from the point of view of systems whose goal is to eliminate financial barriers to healthcare paper-pushing is waste.

Third and last, pooling risks gives those systems important market leverage, precisely the leverage Americans lack, which is why we pay the highest prices on the planet for services and goods (e.g. pharmaceuticals) that cost a fraction elsewhere. (And don't worry: doctors and pharmaceutical companies elsewhere do just fine!).

What about cooperative compulsory financing? Well, this means that participation is not optional and is based on cooperation, or solidarity, if you will. And by making participation compulsory those systems have a guaranteed supply of money. But the cooperative dimension means that nobody is forced to pay what they cannot afford, because that would defeat the very purpose of the system. So contributions are a proportion of income, a mix of taxes or payroll deductions, and align, more or less, with the World Health Organization (WHO)'s requirement pertaining to "financial fairness". For the WHO, a system that forces you to forego healthcare, or to have to choose between healthcare, rent or food, or that pushes you to bankruptcy (as we do) is decidedly unfair. The rule of thumb is that any system into which people pay over 10% of their income in medical bills (including monthly contributions and out of pocket, extra costs) is "financially unfair". And mind you, we pay at least that much to finance an extremely dysfunctional system, even this system leaves you on the cold when you need health care (Remember that your taxes foot the bill of all public programs, for the elderly, the disabled, or those who qualify as "poor", even before you are eligible for any services yourself. In truth, you are "cleaning" the market of "bad customers" and leaving all the "good customers" to the private health insurance sector).

But what about the questions posed by KQED? Well, let me rephrase them. Should Americans be required to purchase health insurance? As I said, the concept of "purchase" does not fit the systems I just described, which is the one I believe we should have in America, because people elsewhere do not "purchase" health insurance the way we do.

And what "options" should the uninsured and underinsured have? Again, others do not "shop around" for "options", which implies that you need to second guess if you will need an appendectomy, diabetes care, or one week rather than two days in a given operation. Whatever expenses others have for care that the system has considered "medically necessary" will be paid for out of the common pot. If they want over and above that, they pay for it as you do for that pair of shoes that no reasonable person considers is your "right" to have, or is a "basic human need" (especially if like me, you have more than you will ever be able to wear!).

And last, how do you assess your coverage is affordable? Well, if you consider that unpaid medical bills are our first cause of personal bankruptcy, you know where we stand in that one.

Last, will the Obama plan solve our mess? I wish I could believe so, but I do not. For one, it sticks to the wrong conception about how to finance a health care system, assuming of course that the goal of the system is to eliminate financial barriers to health care universally rather than to create a profitable "illness market" or appease the folks who finance your political campaigns. And any system that sends people "shopping around" for policies while leaving the for-profit motive at the center of the system intact is likely to fail. It has repeatedly, for reasons studied ad-infinitum (yes, health policy is not rocket science!) and we have no reason in the world to believe it will be different this time.

 

Claudia Chaufan, MD, PhD, is an Assistant Professor of Sociology and Health Policy at the Institute for Health & Aging in the Department of Social and Behavioral Sciences at the University of California San Francisco

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