THE HEALTH CARE CRUSADE
Here is our purpose:
A. To protect all Americans from being financially abused by greedy drug companies, greedy insurance companies,and greedy hospitals . B. To bring down medical costs for all Americans-- by price controls, not by higher deductibles or copayments. C. To relieve all Americans of unfair, unpayable medical bill s. We want to help the people who described their medical lives in a 2005 study called "Consequences of Medical Debt"- Rf hadto move a lot because I had so many medical bills. I keep moving into cheaper andcheaper places, just so Icould pay my medical bills." · "I tried to get an ear infection treated, but the clinic refused to see me until I paid my bill. They saidI could go to the Emergency Room." "I applied for the hospital charity program, .but-was denied because I had things of value." "The health care provider said I should pay using acredit card. I then made payments of $50 amonth, but the balance never went down because they told me I was just paying the interest." "I was-denieda mortgage, because I had too many medical bills. I then asked for a Joan to pay themedical bills, and I was denied that tqo." n 1 would like to start fresh and live a pleasant life, without having someone calllng my house orknocking on my door to pay medical debts". We advocate the following programs: 1. Medicare Part A as payer of last resort for hospltallzatlon. It will pay hospital bills for the uninsured, at any age, with an income -based deductible; 2. A Pharmacy Price Review Board, with the authority to set maximum prices for: Drugs Therapeutic Equipment 3. Health Courts, which provide binding arbitration of medical bills; Anyone can challenge an unconscionable bill, and a board of experts will have the authority to reducecharges. No medical debts can be sent to collections, or counted as late payments, if the bill is being challenged in Health Court. 4. Medical Hardship payments, offered to anyone with existing medical debts; Again, with an income-based deductible. 5. Aggressive regulation of insurance premiums and claimsconduct; Premium increases will be denied unless justified by claims data. Claims must be paid in thirty days, or the next year's premiumis free. 6. Federal grants to local communities: to subsidize emergencyrooms, so they can charge lower fees;free ambulance service, and sliding -scale urgent care clinics. 7. Medical food stamps: for individuals with low incomes who cannot afford insurance coverage, but do not receive Medicaid . 8. Admission to Medicare for those who are unlnsurable due to serious, expensive chronic conditions: such as MS, Parkinsons, congestive heart failure, addiction, Crohn 's, leukemia, cardiomyopathy, hepatitis , lupus , etc. PROGRAM #1 - MEDICARE {PART Al FOR ANYONE When a hospital patient is uninsured , the bill will be covered by Medicare Part A. The deductible will be 10% of annual family income; i.e. if family income is $50,000 then the deductible will be $5,000. (Income can be measured by last year's tax return - with special consideration if one's income drops due tounemployment, etc.) There will be no coinsurance on hospital bills - just the deductible. Medicare will pay the doctors and sp ec_ialists involved in the hospitalization - according to the Medicare fee schedule. Medicare wlll also pay for rehabllitation· from severe injuries. All claims will feature 'mandator y assignment ' - i.e. the provider or drug company must accepts what Medicare pays. When medical bills reach the insurer's limit, the bills stop. No one needs to "sign up " fo r anything. No one makes too much money to get help from Medicare Part A. There will be no recission problem, and no pre-exist ing conditions problem. No one will need to fear medical bankruptcy for the following condition s:
Broken Bones Burns Respiratory Failure Heart Attacks ar;id Strokes Kidney and Liver Failure Spinal Cord injuries Brain Tumors . Shock and Sepsis AIDS ALS Lymphatic Cancer Joint Replacement PsychosisChildbirth Bowel Blockage
With the expansion of Medicare Part A: Hospitals will get paid on every single patient- removing much of the'cost shift : Noone will leave a ho sp it al with massive debt. No one will be turned away because they owe the hospital money. Hospitals will not be allowed to use collection agencies - and should not need to. Medicare will pay promptly according to its fee sc hedule.Medicare will advance the deductible, if request ed; Therewill be no coinsurance and no balance billing. Currently there are approximately 2.5 million hospital admissions a year for persons who are uninsured. If the average admissi on and rehab costs $1 8,000,and the average deductible is $3,000, then Medicare Part A wouldpay out $37.5 billion over and above its costs today. However: Anyone who is uninsured will pay higher taxes. During the year, insurance companies w!II submit payment records for each insured to the IRS.The IRS will know how many months of coverage we had in the past year. Anyone who did not have coverage will pay an extra 3% of their income in Medicare taxes. (Employers can cover all or part of the 3%.) This will bring in about $15 billion in new revenue. So in the end, the net cost to all other taxpayers would be $22 billion ayear. This is less than what the government spends on the health of the elderly every three weeks. We do not think that $22 billion is too much to help younger workers. As things stand today, a 75-year millionalre getsexpensive heart surgery virtually for free, financed by taxes on $8-an-hour busboys. Medicare will be the same in every state - unlike Medicaid, which is carved up, mis-regulated , and underfunded by .ideology or budget necessity. With social Insurance, we get a bedrock of protection against extre me financlal risk. We charge people according totheir income, not by their medical history or their genetics. Medicare increases the social wage. It is a benefit (like the library or the fire department) that you do not need to buy. Thesocial wage is a sign of respect - if you are a citizen, you will be protected. Medicare Part A will not make private health insurance any cheap er, though. What it will do is to make privateinsurance less necessary . After all, 3% of a $40,000 salary is $1,200. That is $100 a month- and you will actually get catastrophic coverage - youare not just paying a fine . Medicare Part A is a major improvement over high-deductible, individual policies for persons over 50 - i.e., themonstrous contracts where you pay $5,000 a year and have a $7,500 deductible. In effect we will let people stay uninsured -- but we will support them when they are very sick. lt does require a smallamount of money from all taxpayers- - and why is this wrong? We pay almost all the premiums for wealthy senior citizens; why not also help the people of working age?
PROGRAM #2 - PHARMACY PRICE REVIEW BOARDS From now on, whenever the FDA approves a new drug, a Pharmacy Price Review Board will also set a maximum price.The ceiling price would be based on the cost of production and a reasonable profit margin . The Board would examine theresearch history, the production process, and prices in other countries. The Board can also set ceiling prices for existing drugs, if those drugs have no substitutes. Cancer drugs and otherspecialty items that now cost over $1,000 a month would be reviewed immediately. The drugs for Crohn's Disease,Hepatitis, Cystic Fibrosis, growth deficiency, immune disorders, pulmonary hypertension, and AIDS can all be sold formuch less money. The Pharmacy Price Review Board could order a manufacturer to reduce its price, and it could alsorequire refunds to patients. Most countries use their national authority to reduce drug prices. America, unfortunately, has used public power to defend high prjces. America expects drug companies to recover their overhead from those who will use the drugcome hell or high water. The patient is expected to pay the entire cost of any innovation that saves their lives. They had better buy insurance, or theycan be financially ruined. It is flke making the astronauts pay for the space program! Actually, the drug industry works reasonably well when there are no monopolies. Aspirin, eyeglasses, and nonprescription drugs have all fallen in price due to competition. (Walmart has driven generic prices even lower than thesocialist nations.) We just need to extend this regime. We must constantly shorten the patent protection periods. Drug companies can get back all their research costs plus a 15% profit with much lower fees. (Even today,one can buy a month's supply of Prozac for a dog for $5.00. ) The cost of materials in a $350 supply of Zocor is about $8.63.The cost of materials in a $220 supply of Paxil la about $7.60. Any additional costs for packaging and mailing the drug are miniscule. A blockbuster cancer drug like Avastin is priced $4,400 a month. It may have cost $500 milliqn to develop, but the drugmaker could get back all of Its costs and still make a profit by charg ing $120 a month. Or look at Folotyn, which costs $30,000 a month to treatT-cell lymphoma. The company's own annual report Iists the total cost of research as $26.8 mi llion.This cost will be recovered if just 75patients use the drug for just one year! Worst of all, the drug has been shown to extend the life of just 27% of cancer patients - and for an average of nine months!Yet insurers and government feel that they have to pay for it. We must stop taking medical prices for granted. Every medical manufacturer should be approached the way that Walmartconfronts toothpaste companies... "How much do you really spend for raw materials?""How much could you save on containers?" "What if we cut out the wholesaler?" etc. This will be a huge disappointment for the companies that make drugs and equipment --but they have had their way foryears, and they will still make money. In 2008, pfizer had $48 billion in sales and $19 billion in profit. IfUS drug prices weremade level with Canada and Europe, pfizerwould still have made approximately $8.5 billion in profits. The Board review procedure could wind up being cumbersome, and so riddled by lawsuits that regulation becomesimpossible. If so, we should consider simply buying off the patents, A drug company might receive $200 million up-front forIts product, and then the drug would go generic immediately. There would be no more legal tricks that drug companies use when their patents are about to lapse.
Another alte rnative : Dean Baker suggests that we just give the drug industry about $30-$40 billion a year for research - which is what it actually spends now --and scrap the patent system altogether. Drug spending would fall from about $220 billion a year to $80 billion, a massive public savings. We can also shorten the FDA testing requirements , so that it is cheaper to bring a drug to market. Drug company defende rs will argue that there must be rewards for innovation . That's fine - give each inventor $5million, after the drug is approved by the FDA -- and then send the drug out for generic production. This will cost thegovernment less than $500 million a year, and the savings to the public would be enormous. PROGRAM #3 - HEALTH COURTS These would be specialized administrative courts, with the author ity to conduct hearings and reduce medical bills. Anyone could use the courts to challenge an unconscionably high medical bill - whether from a hospital, doctor, or drugcompany. Attorneys will not be required in this venue. The courts will operate on evenings and weekends, so that patients have full access. (In the non-health economy, people find out about high prices and can fight back. New suppliers come in, charge a lower price, and steal the business. This does not require court hearings, pic keting, or federal laws; it just happen s.Unfortunately, in health care, the patient needs extra protection.) Health Court proceedings will be available on the Internet. Most doctors and hospitals will dread being named on the Net,and this alone will moderate medical costs. Many of today's overcharges will likely disappear in Health Court, such as:Hospital 'room charges' of $10,000 for outpatient surgery $1 5,000 for neck pain injections $2,000 for single chemotherapy sessions . $7,000 for a suction pump that cost $50 to produce PET scans or CT-scans for $2,000, whereas amortizing the machine over 10 years might cost $150 per scan; $4,000 in bills from a radiologist or anesthesiologist. The court arbitrators will be able to reduce medical bill s, based on nationwide cost information. The arbitrators willhave access to the actual reimbursement rates paid by major insurers. If the court rules for the patient, then thepatient's liability is re -set. When a bill is challenged, all collection efforts must cease. No 'late payments' will go onto your creditreport while a challenge Is In process. Within the Health Courts : Very few patients will owe more than $1,500 to $2,500 a day, in total, for hospital care. If MetroHealth in Cleveland charges $1,598 for vaginal delivery or $1,198 for a stress echo, why should your localhospital charge drasticall y more? ◇ Why should any procedure cost $2,000 to Blue Cross, but $10,000 for someone who is unemployed? 0 Why should an outpatient procedure be priced at $5,000 in a hospital , but only $1,000 in a free-stand in g clinic? 0 Why should MRl's cost $98 each in Japan (which is certainly not a cheap-labor country), versus $1,200 in the USA? ◇ Why should some drugs cost $9 per dose in Spain, versus $350 per dose in the USA?
HERE IS A SAMPLE OF WHAT WILL HAPPEN IN HEALTH COURTS:
Any insurance contract which requires a hospital to charge higher rates to the uninsured, will be null and void.
In addition: If anyone is holding bake sales to pay for medical care, the providers should be investigated. The prices that cause a bake sale should be published in the newspaper. There is no form of medical care - short of spendingmonths in a hospital bed, which is very rare- that should cost more than $20,000. Normally the surgeon's fee is not the problem on bake-sale medicine. Is it the drugs? This calls for price controls on li e-saving drugs. Is the gouger an academic hospital? Is that hospital already getting large amounts of taxpayermoney? · All states should have the program now available called"Medicaid for the Medically Needy''. Bake-sales can even affect persons who have insurance, i.e. when medical bills exceed the annual limit of aninsurance com pany, i.e. $100,000. The Obama reforms went after this problem the wrong way, by mandating that insurers have no annual limits. (This willonly raise premiums.) The right way is to institute mandatory assignment. When the insurance policy is done paying, the patient is done payingalso. No actual medical care other than three to six months in a hospital actually costs over $100,000 a year. Based on the above examples, hospitals are likely to lose many of the hearings in Health Courts. They have been allowed toload theirfull overhead onto simpleoutpatient procedures, so that a $150 heart scan may get billed at $1,20 0. Hospitals will complain that lower fees will not 'cover their costs' - but they leave out any mention of how bloated theircosts have become. Over the past forty years, hospital volumes have gone down steadily. A long list of diseases no longer require lengthy stays ordangerous operations. Technology and prescription drugs have been "sold"in part, by their ability to reduce hospital admissions. And yet, hospital costs are higher than ever. We have allowed hospitals to 'recovertheir costs; even when their costs areoutra geous. Despite 25% fewer admissions, the number of hospital employees has gone from 3.4 to 4.6 million, and hospital wageshave increased almost 3 times faster than industrial or retail pay. Administrators and doctors frequently make astronomical salaries. Many hospitals have undertaken unnecessary const ruction, just as a place to hide their surpluses. Between 1970 and 2006, Medicare spending alone on hospitals went from $5 billion to $192billion - all of this during atime when new drugs, new devices, and high-tech equipment in clinics were supposed to reduce hospital costs. This expansion has propped up theJob market in many cities, so it is not all bad. Hundreds of cities would be plunged intoa depression if we started closing underused hospitals. Any money saved on health insurance would be lost several timesover in unemployment benefits and shuttered stores. Health care in general has been our solution to what I call the'productivity paradox' of manufacturing - i.e. the trend foref ficiency and automation to make working people poorer, because they lose their jobs. If health care did not e ist, wemight have had to invent it - whereelse would we have gotten new high-paying jobs in the last twenty years? So it is not all bad for us to keep hospitals open.If we are going to subsidize any industry, then payments to hospitals arenot worse than defense spending, or amusement parks, or even agriculture. But hospitalsmust be stopped from exploiting patients. Hospitals can learn to break even on Medicare-level payments.
PROGRAM #4 MEDICAL HARDSHIP PAYMENTS Anyone who cannot pay old medical debts can also turn to Medicare. It will not matter if they incurred the debt by be inguninsured, or simply cannot afford their deductible. Medicare would pay off the portion of existing bills which exceeds 10% of a family's annual income. Here is the process: • The patient submits a request to Medicare. • The amount they owe is reduced to the Medicare fee schedule, less payments already made. Medicare would first reduce the total to Its national fee schedule. (This may result in significant alterations. For example, the Medicare fee for an emergency room admission ls about $350 to the hospital, and $250 to the attending physician. The Medicare fee for knee surgery is $1,526 to the surgeonand $2,108 to the facility .) If a family's Income was $40,000, then any balance over $4,000 could be paid off by Medicare.If someon e's adjusted debt was $13,000. Medicare would send the provider a check for $9,000. The patient would owe $4,000 , and nothing more. Most patients have some asset, and/or some family member, that canhelp them come up with the $4,000. This is not a bad deal for ho spit als. They typically collect less than 10% of overdue bills, even when they use collectionagencies. For many hospitals, the amounts they receive in cash and by harassment are a tiny fraction of their revenues. Medicare can also pay off bills that are embedded in credit cards. In these cases, the provider has already been paid. So Medicare will send funds to the credit card company - however,any accrued interest that exceeds 6% would be cancelled. Medical debt must be recognized as involuntary debt, and not subject to ordinary charges and collectiontac tics. Medical debt should be removed from all conventional credit reports. While statistics are hard to come by, we can assume that at least two million households are struggling with medical debtsin excess of $5,000. If Medicare paid as described above, the outlay would be in the range of S15 billion. This is not some radical giveaway. Conservative governors are always willing to accept federal assistance for hurricanevictims - even those who failed to buy insurance. Likewise, the financial sector is certainly willing to take federal bailout money, in order to cover their own failures. If we can extend $180 billion in aid to one division of one insurance company -AIG (whose employees continue to getbonuses) - then we can give $20-30 billion a year to ordinary people who are enslaved by medicaldebt. ·
' PROGRAM #5 - INSURANCE COMPANY REGULATION Regulation of Claims If an insurer does not pay valid claims in thirty days, the government can Issue a payment order.Insurers c;annot complain that 'they lost the forms:' or they will be fined. If an Insurer still does not pay your claim, the next year's premium Is free. If insurers decline a claim, the patient will only be liable if they were told, in advance, that coverage might not beavailable . If the insurer denies the claim arbitrarily or for flimsy reasons, the doctor can take the Insurer to Health Court.The patient will NOT be charg ed. The provider cannot transfer the costs back to the family. ◇ if there is no disclosure, there should be no liability. Regulation of Premiums Few people really know why health Insurance premiums go up 20% a year, with many carriers . This is not caused by health care Inflation - which rs far less than 200Ai - or too much emergency room use, or newmedical technology. It is usually a deliberate pricing plan by predatory insurers, especially in the individual and smallgroup markets. They want to take your money for two or three years, but then incentivize you to drop their planbefore you file any large claims. If you stubbornly stay with the carrier, the premium increases virtually forces you toraise your deductible. In that way, even if you do file a claim, the carrier has reduced their liabilit y. Health insurance,like term life insurance, is actuarially designed not to be in force at the time of claim. These carriers make money by getting rid of old customers. Anyone who pays for three years and then goes awayyields a profit of about $10,000 apiece. The carriers' goal is to purge their book of business on a regular basis. Turnover rates of 25% a year are Just fine with them. These carriers refuse to cover pre-existing conditions - or elsethey turn down 20 to 40 per cent of new applicants, for reasons that include weight, allergies, jock itch, varicose veins, or having once taken an anti-depressant. Individual claimants are often denied through 'fine print:in hopes they will give upand go away. The carriers are delighted if they can collect years of premiums, but can still deny a large claim due to a trumped-up 'lack of disclo su re: The insurance industry does not care if 40% of Americans are uninsured, so long as they can reach the profitablesegments and grab a few years of premiums. In fact, private health Jn su rers got their start in the 1950's by creamskimming the old Blue Cross groups, and destroying their social insurance nature. Short-term health insurance with ruthless underwriting has proven to be a somewhat profitable product. Whether it does the country any good is another question. For example, we could probably design insurance that gave its buyers an annual subscription to the local fire department. Unfortunately, those who were turned down by underwrft fng, plus those who had no money, would still have fires - and those fires would spread. The community would bewo se off, even as its insurance industry prospered by cherry-picking good risks. The severe limits of private insurance companies are nothing new. We have private disability Insurance that covers lessthan 5% of Americans. We have private long-term care insurance that covers about 10% of eligible Americans. Evenlife insurance, which is the cheapest coverage, is inadequate for at least 30% of our population. Without Social Security,millions of Americans would have no personal insurance of any kind. If health insurance becomes 11fully competitive across state lines;' we will eventually have men under 40 with great insurance but no need to use it, and everyone over SO being priced out of coverage. Private American health insurance is temporary and discriminatory in nature. It is a business that requires churning, and the shedding of unprofitable customers.
Although a 'free market' offers lower premiums to the healthy, it only does so by ruthlessly avoiding sick people. Thiscreates constant pressure to exclude anyone who might file a claim. In other countries, insurance on a young woman that excluded maternity would be illegal. (Some companies even declineexpectant fathers, because they might add a sick child to their policy.) Although not covering childbirth saves money, the prospect of an uninsured pregnant woman having to bargain withhospitals strikes other nations as repulsiv e. Childbirth is virtually free in most wealthy nations - talk about 'family values'!We let carriers get away with financial murder, In order to say that we do not have socialized medicine. Americanswould rather pay $5 to an insurance company than $3 in taxes. Many of the conservatives who want us to buy individual coverage have never had to own the product themselves. Guiliani, McCain, Huckabee, Rush Limbaugh (as wellas Dick Cheney) would all be denied coverage in their own health reform plans. If Congressmen had to buy their owninsurance, we would have thorough health reform in about three weeks. France, Germany and Switzerland do allow multiple insurance companies - but their carriers are highly regulated nonprofits. They have uniform fee schedules, and no underwriting is allowed. Companies with healthy lives are forced to share profits with carriers that have higher claims. Their insurers are not allowed to beat down what they pay todoctors, yet still raise their premiums, and then pay their CEO over $20 million a year. They cannot earn a profit byrejecting insureds, denying claims, squeezing employers and beating down providers Health insurance inflation is not caused by the cost of care, nor It will not be moderated by making medicine more efficient. Insurance premiums will not be affected if people lose weight and stop smoking. Canadians smoke- more than Americans - Sweden and Germany have a higher percentage of senior citizens, the French have moreoperations, the Japa nese have more doctor visits and far more MRl's - and yet all their health costs are lower, because they pay lower fees. These countries all try to control health costs without using huge deductibles and huge coinsurance. They do not usepatients as the kamikazes of cost control. They do not force patients to make financial decisions that can jeopardizetheir health. They economize by price controls on providers. In any event, America's premiums do not go up because some workers who have it too good - instead, we shouldblame price-gouging insurers, greedy pharmaceutical companies, and often-corrupt hospital chains. In the future, insurance premium increases should be subject to full governmental examination . If claims- ha ve actually increased, AND if a carrier spends 90% of its revenue on medical costs, then premiums can goup. There will be some unavoidable increases, especially when the insurer's risk pool is small and old, and when nearlyevery policyholder seems to have a chronic condition. This is called an 'actuarial death spiral; and there is no cure except to bring the participants into a larger, younger group of insureds. Most increases will involve just price-gouging, however, and the new rates should be denied by a federal reviewer. In fact,if a carrier has been spending under 80% of revenue on claims, they should be forced to pay refunds to policyholders.
PROGRAM #6 - FEDERAL FUNDING OF EMERGENCY CARE Ambulances and emergency rooms should become much more like public services, similar to fire or police departments. A patient should be charged no more than $100 for an ambulance, or $250 for a workup in the ER. This will require federal subsidies of approximately $30 billion a year. We should also subsidize sliding-scale primary and dental clinics, with at least$10 billion in federal funds. These can be located right in the hospital, if that is most efficient. Right now, a patient must be 'stabilized' in the emergency room, but they may not have any money for followup and medications. The total spending for trauma care would be approximately as follows: ◇ $9 billion would make ambulance rides inexpensive; ◇ $10 billion would enable hospitals to charge $250 per ER visit; ◇ $6 billion would help to fund sliding-scale clinics in many cities. Trauma care should be a right of citizenship. We do not make people buy legal insurance to call the police. The dispatcher for the fire department does not need to check your insurance coverage before calling inassistance. Policemen and firemen do not need to send out large bills to victims, in order to get paidthemselves. No one is denied protection because their house is too old or has a 'pre-existin gcondition: Fire insurance is voluntary, because it replaces personal property - but paying for the fire departmentis not voluntary. We could probably "save" billions of taxpayer dollars by closing the public schools, and then hope thatcorporations would provide'school insurance' to their employees. Of course many companies would provide no insurance at all, and the unemployed would have no coverage either. One of every six childrenwould have intermittent schooling, and many would have no education at all. Some children would be denied admittance because they had a 'pre-existing condition: such as lack of kindergarten. We wouldhave vigorous but pointless debates about whether parents had a 'responslbilrty'to buy'schoolcoverage:We might even offer'tax credits' to incentivize school insurance, without really providing it. Although the the employees of Dunkin'Donut s cannot afford health insurance, at least they can send their children to free public schools - because schools rely on broad-based taxes, not user fees or employergenerosity. It certainly 'costs' t he_ fire deparment $5,000 to come·out to your house for a major fire, if you factor in overhead, facilities and equipment. But the poor desperate homeowner does not have to write a check for $5,000, ever. Instead every resident of citypays in about $200 a year, according to their property and their income. (From each, according to their ability- and to each, according to their need. Sound familiar?) We must begin to experiment with global budgets for entire hospitals. The institutions would get one check ayear, and would care for everyone in their city for free. No one would know or care if the hospital performed 2 EKG's per hour, plus MRl's on everyone, or only 2EKG's a week on its patients. The hospital would get one large check a year. The hospital would have the same budget if they were busy or quiet - just the same as a library, fire station, orpolice department. There would be no bills, no claims, and no collection agencies.
A hospital would neither make money on heart surgeries, nor lose money on pregnancies. Its revenue would be determined by the local population that it served. (i.e. if a hospital served a city of 10,000, theInstitution would get one check a year for $15 million, or whatever the formula called for.) No one would face a bill or be in debt.No billing clerks would be needed. Insurance agents would not be needed. No bondholders or shareholders would demand that the hospital turn a pr ofit. If the same elderly person was re-admitted four times with congestive heart failure, it would not matter. With globalbudgets, there is no moral culpability for illness. In global budgets - which I also calf facillty based funding - a person with congestive heart failure is not 'costing'society anything. The hospital's cost to the community would be the same, with or without him. What America has now is claims-based funding. The annual cost is unpredictable, based on the number of claims andtheir size. A vast insurance industry essentlally lays bets on the volume of future clalms. This gambling is a profound waste ofmoney and time. Just build the hospital, pay for its staff, and give them one check a year. Note: Global budgets are not perfect. Public facilities in some countries are shabby and outmoded, and there are plenty ofstories about employees who are lazy and uncaring. Deaths are not always prevented in the public hospital model. There are no special funds with $300,000 to pay for the re covery of one person. And sadly, there can be nightmarish errors and accidents in public hospitals just as anywhereelse. The point is not that global budgeting will improve our health. The point is that global budgeting may become all that wecan afford. PROGRAM #7 - MEDICAL FOOD STAMPS The Health Care Crusade is focused on waitresses, cab drivers, store clerks, farm workers, the self-employed, part-timers, and the unemployed................................................. in other words, people who are not organized, who frequentlydo not vote, and who certainly do not make campaign contributions. All they do is work hard for low wages, and also fight our wars. American business owners benefit every day from having an unprotected, undemanding pool of workers. Many businesses would collapse without a ready supply of cheap labor. People who are wealthy receive low-priced services every day from nannies, drivers, gardeners, et al. The least they cando is to pay their Income taxes. In that way, the government can provide public health for underpaid employees. Millions of people have two or even three Jobs ,and still not make ends meet. They have zero money for health care - not 10%, not 8%, not 2% of income . They cannot afford any co-pays either. In theory we could have a free nationalhealth service for the poor. We could certainly afford it. But this would take years to organize, and would duplicate facilities and personnel who are here now and would like tohelp. The simplest solution might be to copy the food stamp program for health care. If your Income was low -and you did not qualify for Medicaid -you would get a medical debit card for your entire family.
Call it'Medical Food Stamps: A family of four might receive $200 a month, to help them get strep throat tests, etc. whenyou needed them. (The stamps would be phased out as incomes rise.) The government's liability would be fixed. No one would file a claim. No one would regulate the fees charged by doc torsor minute -clinics (any more than food stamps try to regulate the price of food.) This would be a tremendous relief to doctors. They could spend far less time and money asking for authorizations, approvals, participation listings, etc. They could just charge their $50 or $100. If the 30 million people who get grocery food stamps also got $50 a month in'medical food stamps;the cost to the federalgovernment would be $18 bllllon a year. This is about one-third of one percent of payroll. We can surely afford that muchfor a small me·asur e of solidarity. In Addition: All health systems have some people who 'fall between the cracks: • They are too young for Medicare;not poor enough for Medicaid; buttoo sick to obtain insurance. We must help the Individuals who have a permanent, expensive chronic illness, such as MS or Parkinson's, whichneeds frequent procedures and legitimately expensive drugs. If they fall out from group coverage, we should enable them to get onto Medicare. (Right now a person under age 65 must be completely disabled to get Medicare, frequently with longwaiting periods.) We might indeed have to add two million persons to Medicare. We would expect them to pay $3,000-$6,000 a yearthemselves for Medicare; and the new public outlay would be approximately $15 billion a y ea·r. ANSWERING OBJECTIONS TO THE HEALTH CARE CRUSADE Objection #1 - This sounds like socialism. That's because it is socjalism. So are the public libraries, public schools, fire and police, the court system, and interstate highways. We use these 'socialist' Institutions every single day, without destroying 'the American character' or thefree enterprise system. The government has been 'invading our lives' and giving us more protection ever since the Great Depressio n . We haveadded crop insuranc e; flood insurance, mortgage insurance, deposit insurance, bankruptcy protection, and pensioninsuranc e. (Social Security is a "life insurer of last resort" right now - it pays over $80 billion a year in survivor benefits to widows and dependent children.) What Americans like to praise as 'self-reliance' has frequently been underwritten by the government. The Homestead Act created small farms; . • The Land Grant Acts and the GI Bill expanded college education. The Old West pioneers cqnstantly wanted extra government, to protect themselves from financial specu lators,railroads, fraudulent banks, mining companies, and outright thugs. Since World War II, many prosperous businesses have depended on government contracts and payro l_ls. Most members of the Tea Party owe more economically to Franklin Roosevelt and Lyndon Johnson, than to RonaldReagan. There has always been some resistance to public programs, though. Public Schools were bitterly opposed before 1850,mainly by farmers who wanted the labor of their children all year round. The business community fought hard against
the eight-hour day, workmen's compensation, unemployment, and the end of child labor. Economic doom was alsopredicted after the passage of Social Security, and then Medicare. And yet business has survived, and thrived, despite payroll and income taxes at so-called socialist levels. The Europeannations survive and thrive with even higher payroll taxes. If higher taxes are supposed to bring unemployment, lowerwages, or ruined foreign trade, this will be quite newsworthy to Canadians and Northern Europeans. Objection #2 - Health Reform requires coercion. Actually, all national health systems require some level of coercion - and this includes the so-called 'free market'systems that conservatives admire. Singapore, for example, does rely greatly on Health Savings Accounts - but catastrophic insurance is mandatory inSingapore, and everyone is 'coerced'to fund their HSA. Switzerland does have competing insurance companies - but there is a binding national fee schedule, and insurancecompanies are 'coerced'to give most of their profits over to risk adjustment pools. (Actually the larger American Insurance companies love 'Medicare Advantage' --it is their greatest source of profits. The same companies which turn down a 25 year-old for taking acne medicine are busy signing up 80 year-olds withpacemakers. The reason of course is that Medicare has a risk adjustment system. Tax money that is collected by coercionis reserved, to protect carriers from extreme adverseexperience............................................................................................... So much for the glories of free enterprise.) Paying medical bills is a form of coercion also - just ask anyone who has to guess which provider will garnish their wages. The coercion debate is not just about health insu rance. It is about paternalism vs. individualism. When health insurance is voluntary, some people will buy it and some won't. Some employes will offer it and some won't. Of those who do not have insurance, some portion will get sick. and then they will be faced with very ugly decisions. Theymight go broke, or they might be denied care altogether for lack of cash. The uninsured are making a gamble (usually because they are broke). If they get sick, they lose the bet. Libertarians accept this as the price of freedom. People are left free to choose their insuranc e, while the wealthy are free to choose their role in charity. But a paternalist does not want to allow people to bet on their health. Paternalism wants people to be secure In this area of life, even if requires taxes. Paternalism does not allow us to save money by going without insurance. It is the same rationale behind making people pay taxes for the fire department. If fire department fees were voluntary, a lot of people would gamble that maybe this year, they won't have a fire, so let 's take a chance and not sign up. A paternalist be°lieves that this degree of risk-taking is stupid. It is safer to just tax everyone and pay for the firedepartment with an annual budget. Paternalists actually prefer the Canadian brand of coercion. There you pay an extra dollar on each bag of groceries, butthen health care is free at the point of delivery. It is the taxpayer who is coerced, not the patient. Individuals are not forced to put their health at risk for financial reasons.Paternalists do not cut costs by persuading people not to see the doctor (due to their deductibles.) Instead of higher deductibles - which in effect, ask people to ration their own care - other nations rely mainly on price controls. For example: Say that MRl's are priced at $1,200 each, and doctors are using them for many more headaches,backaches, etc. This Is a major factor in growing health care costs. One answer is to raise everyone'sdeductible to $2,500 or more. Then some will choose not to have the MRI. But why not cram down theprice of the MRI to $200? That is all It really costs to amortize a machine. Now there will be effects -the price of MRl's wlll go down, the wages of MRI technicians will go down, both doctors and hospitals willlose a profit pool.... .......but so what? Objection #3 - Price controls will create shortages. This is actually true..... but then, how perfect can we afford to be? We can live with a shortage of new blockbuster drugs---- f all they do is extend life for 3 months and cost $200,000. We can live with a shortage of hospital construction - .sinc e the average American hospital is just nine years old. (inCanada, the average age is 50 years.) According to Lichtenberg, the doubling of imaging procedures from 1991 to 2004 - which has cost the USA at least$1 trillion - Is r sponsible for boosting average US life expectancy by 0.71 years. America still has the best life expectancy in the world for persons over 80. If we slip a little, to stave off health carebankruptcy, we are not being inordinately cruel. As Richard Lamm has said, we cannot continue to make health policy by saving one life at a time, and hang the expense. At some point, the greatest good for the greatest number must take over. Objection #4 - We will drown in waiting lists. This is also a key issue, but many of the warnings are exaggerated. Be especially cautious of language such as this: "I heard a co-worker's brother's girlfriend's mechanic say that he heard on talk radio about a guy in Canada who got his . arm chopped off on. a farm, and he had to carry it around for six months in a burlap sack because there was a waiting list to have it reattached:' "With socialized medicine, all research Into new drugs and therapies will stop immediately:' "Our problem is too much health care, and people who are slightly sick abuse the system by going to the doctors with justsniffles:• "If the health care in other countries is so great, then why does everybody want to come to the US for treatment? Iknow someone who knows someone who's related to someone from Canada, who had to come to the US for surgeryand it saved his life." In America, by and large, you get cancer and heart and injury treatments right away, even if you have poor insurance. Inquite a few cases, you get decent treatment even if you have no Insurance. While you are trying to recover from the illness, it may take years to recover from the bills.
PAYING FOR OUR PROGRAMS Neither Democrats nor Republicans have shown the courage to raise taxes to pay for health care. The EMTALA law of 1996, which mandates emergency care, had no tax money behind it - yet how hard would it havebeen to raise income taxes by one percent? George Bush 's expansion of Medicare Part D was accompanied by no revenue either - yet how hard would it have been to raise the payroll tax by one percent? Every nickel we have spent on Part D has been added to the national debt. The Obama administration at least discussed the need for new revenue. Yet in general it has resorted to funny-money ,regressive mandate s, and imaginary reduct ions in Medicare rather than openly raise taxes. They could have said:"We know that sick people need help buying insuranc e, so let 's put them on Medicare, and raisethe payroll tax by 1%:' This would be st raightf orward social insurance, based on statutory entitlement and progressive taxes.Instead, the Democrats have created what John Goodman describes sa rcast ically as 'Private sector socialism : Their plan uses forced partic ip at ion by h ealthy peop le, hopefu lly to drive down premiums (t hough this is taken onfaith}... but then, since this amounts to a wildly regressive tax on the young, there has to be a compensatory subsidy toadjust premiums to income. but then, the subsidies may be difficult or impossible to admin ist er, plus the subsidies will have many caps andexclusions . If you add up all the bureaucracy, and all the fines, and all the subsidies that will be needed --- the to tal cost Is almostcertainly greater than simply expanding Medicare. In our view, new programs require new progressive taxes. We need the following new revenues for our programs: Medicare Part A as payer of last resort - needs $22 billion, net of taxes paid by the uninsured Pharmacy Price Review Board - m in imal cost for a national bureau , i.e in the millions Health Courts - these will need staff in each la ge city, so assume $1.5 billion total Regulation of Insurers - minimal cost for a national bureau, i.e in the millionsMedical Hardship paymenst - $15 billion Subsidized Emergency Rooms and Ambulances - $25 billion Medical food stamps - $18 bill ion Admitting more severely-Ill persons onto Medicare - $15 bill ion TOTAL REQUIRED - $100 Billion We shouId raise taxes from all of the following sources: Extend the 2.90% Medicare tax to non-wage income (rents, interest, dividends, pensions, and Sub-Sbusiness profits) . This would raise about $40 billion a year; Add 1o/o to the r egular employee Medicare tax, for persons who earn over $100,000 a year. (This group has been getting off scot-free on paying Social Security tax for many years.) This would raise at least $30 billion a year, Transfer $35 billion immediately from the bloated military budget; Increase the Medicare payroll tax, as needed, on all workers and all employers. After all, just raising the Medicare tax by one half of one percent on employees, and by the same amount onemployers, raises $60 billion a year. THE NEXT STEPS IN HEALTH REFORM It is obvious that new federal spend ing is very hard to pass, and that new federal taxes are very hard to introduce. Thebottom 90% of Americans cannot outvote the top 10%, a condition that has been nurtured over several decades byRepublicans. HOWEVER: Many of our Health Care Crusade programs could be enacted virtually on executive orders. None of the following requireany massive spending whatsoever: 1. The Pharmacy Price Review Board 2. The Health Courts 3. Insurer Regulation These items will cost a lot of money to providers - but not to taxpayers. The items we want that cost real money - like Medicare Part A for anyone, or medical hardship payments or medical food stamps - may indeed have to wait. But in the meanwhile, we can add the Courts and Review Boards, and in additionadd new laws such as the following: EXAMPLE#1 The entire nation should have a Hospital Uninsured Patient Law- sim i lar to what is already on the books in Illinois,Connecticut, New York, and Minnesota. Under these statutes, hospitals must reduce what they charge anyone who is uninsured, underinsured, or unable topay full charges. In New York, the following restrictions apply: For individuals under the poverty level, there are no charges - just a nominal hospital fee. For invididuals up to 150% of poverty ($ 15,315 for one person, for a family), the maximum charge is 20% ofMedicare's fees. For individuals between 150% and 250% of poverty ($25,325 for an individual, for a fam ily), fees are still capped atMedicare levels, with a sliding scale up to Over 250% of poverty, the maximum fee is 25% of income. A family whose income was $60,000 would owe no more than $15,000 for hospital care. A law like this does not cost the taxpayers a dim e.
EXAMPLE#2
The proposed Medical Debt Relief Act would wipe off a medical collection account from one's credit repo r t, once itwas paid in full.
This would result in an immediate improvement to the credit scores of millions of Americans.
If we add to this a provision that corrects the amount of the debt to the Medicare fee schedule, that would be realprogress - and it would not cost the t axpa yers a di me.
CONCLUSION
The goal of the Health Care Crusade is lower prices.
Those aspects of health care which are physical products (like drugs) are for the most part already affordable, ifthere were no price gouging .
Those aspects of health care which involve ambulatory tests and consultations are already affordable tomiddle class persons, if there were no price gouging. (The decency and generosity of doctors helps millionsof Americans survive, by charging them less than retail.)
Hospitals are not affordable to the individual pat ient, never have been and never will be.
Until we unde rstand this and get away from user fees, we will need price controls, debt forgiveness , and publicinsurers of last resort.
All I request of reade rs is that you watch for legislation that does any of the following:
Sets ceiling prices for drugs Setceiling prices for tests
Sets ceiling prices for hospitals Expandspublic insurance