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We’re #1 But We CAN Change That!

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We’re #1 But We CAN Change That!

by Stan Gold, Petaluma; Member PHNP, Sonoma County Chapter

Part 1

The United States indisputably ranks #1 in the world -- in healthcare costs. Over 17.3% of our Gross Domestic Product (GDP) is sucked up by the American healthcare industry. No other industrialized, democratic country in the world even comes close. 

In contrast, many countries that have had multiple decades of successful experience with “Single Payer Healthcare”, a.k.a. “Expanded, Improved Medicare for ALL”, allocate only 8% or less of their national GDP to healthcare. The difference amounts to hundreds of billions of dollars of wasted money each decade, yielding nothing for the insurance premium payers.

Unlike Single Payer/Expanded Medicare countries, in the U.S. a substantial portion of every premium dollar never reaches any actual provider of healthcare. The wasted money is consumed by the superfluous health insurance industry for sales staffs; dollar-gobbling, advertising programs (magazines, TV, radio, newspapers, direct mail, etc.); marketing departments; and eight figure pay packages (salaries and stock options, plus outrageous annual bonuses) for their CEOs.

Prior to the Affordable Care Act (ACA), a.k.a. “Obamacare”, an individual Californian could lose approximately 30% of his or her premium dollars to the overhead costs and profits of the insurance corporation. Thus, only 70 cents of each premium dollar would eventually find its way to an actual healthcare provider, such as a doctor or a hospital.

Under Obamacare, health insurance corporations must now pay-out fully 80% of each health insurance premium dollar for ACTUAL healthcare. Thus, the loss to our individual policyholder drops from 30 cents on the dollar to 20 cents on the dollar. There is no reason to cheer.

Contrast that 20% loss with the reality of a national healthcare program that has NO sales staff, NO advertising, NO marketers, and pays civil service wages to all employees. That would be our 49 year old Medicare Administration. Its total overhead costs are a just over 2%. Hence, almost 98% of all dollars allocated to Medicare are actually spent on healthcare. No one can manage the taxpayers’ money more efficiently than that.  Note that no “profit-first” health insurance corporations are involved.

Our wasted hundreds of billions of insurance dollars have not affected comparative medical outcomes. All the while, the problems of uninsurance, under-insurance, and medical bankruptcies remain unresolved. 

Many decades ago, some industrialized democracies concluded that the good health of their residents was a valuable national asset. They set about to develop comprehensive, affordable, national healthcare systems. A common element in all of these systems was the recognition that health insurance corporations are definitely an economic barrier to delivering affordable healthcare coverage to people. At times, they are even a barrier to delivering good quality medical care.

No health insurance corporation ever wrote a single prescription for anything, set a broken bone, removed a gall bladder, delivered a newborn baby, managed a case of diabetes, or did anything in actual healthcare. The main function of the insurance company was to act as a broker, a third party, who put the patient and doctor in touch with one another.

Such brokerage services are needed in real estate or stock market transactions, but not in healthcare. Under Single Payer/Extended Medicare, patients are free to contact ANY doctor. No insurance corporation restricts them from doing so. Likewise, doctors are free to serve ANY patient, without restrictions by a third party, insurance corporation.

There are over 3,000 health insurance companies in the U.S. Each has its own  policies, rules, forms, and billing process. Dealing with all of this requires doctors and hospitals to maintain their own large staffs of workers, just to process the horrendous amount of paper work. This large, wasteful, overhead expense adds nothing to the quality of patient healthcare, but definitely adds to healthcare cost.

“Single Payer” sets up just ONE government office per area, with a uniform set of rules and forms, where all medical practitioners send their bills, and from which they all get paid, -- without the gut-wrenching insurance hassles.  

Future Parts of this LTE series, will examine issues for families and businesses. ‘Till next month check out the website of Physicians for a National Health Program (PNHP), www.pnhp.org.

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Part 2

In the December issue of the GAZETTE, we pointed out that the U.S. is #1 in the world in healthcare costs (17.3% of our GDP), and that the U.S. health insurance industry is a barrier to the delivery of affordable, comprehensive, healthcare to the American people. We also noted that “Single Payer Healthcare”, A.K.A. “Expanded, Improved, Medicare for ALL”, is a tried and tested solution to our healthcare problems. It has had many decades of successful performance in a large number of the world’s industrialized democracies.  U.S. travelers to European countries, Australia, New Zealand, Canada, etc., can happily attest to this.

If Single Payer/ Expanded Medicare was currently available in the U.S., everyone could receive his/her lifetime Healthcare I.D. Card at birth (just like getting a Social Security Card today). That Card could be used to obtain medical care from ANY medical provider in the U.S. who is selected by the cardholder.  The Cardholder is not subjected to any insurance company’s “approved list of physicians”, or “out-of-area” restrictions. Likewise, any physician or hospital could provide care for ANY patient and submit the medical bill to the government area-office for timely payment, without costly, time consuming hassles over what part of the medical treatment is not covered under a particular insurance policy.

Further, all Americans would have equal access for all their necessary healthcare needs, without any income distinctions. This is NOT the case, today.  Under the Affordable Care Act (“Obamacare”), Covered California lists Bronze, Silver, Gold, and Platinum insurance plans! The more expensive the metal (Plan) one chooses, the higher is the premium, and the lower is the deductible.  

Consider a person whose income is just above the point of receiving any government subsidy.  If such a person purchases a Bronze Plan, because he/she cannot afford a more expensive Plan, isn’t it likely that he/she may find it difficult to pay this highest deductible (thousands of dollars) of any of the Plans?   The deductible is the out-of-pocket medical costs that must be paid by a patient, BEFORE his/her insurance policy begins to pay anything. The prohibitively high deductible may cause this individual to delay getting timely medical attention.  

In contrast, a person who can easily afford the higher premium for a Platinum Plan probably has no problem in paying the lowest deductible of any Plan, -- thus accessing timely medical attention without delays for financial considerations. 

Single Payer/ Expanded Medicare assures the SAME level of access to healthcare for all people at all income levels.  There is no fragmentation of the population into segments, with multiple policy types, in order to guaranty the profits of insurance corporations. Insurance companies are prohibited from selling coverage in basic healthcare, which is covered by the nation’s universal healthcare law.  Insurance corporations are free to sell other “none basic healthcare” policies such as coverage for cosmetic surgery (e.g. non-medically indicated breast enhancement, liposuction, teeth whitening, etc.), private hospital-room coverage, etc. 

Single Payer/ Expanded Medicare would have No deductibles, No co-payments, No pre-existing conditions restrictions, and No annual or lifetime caps. Some of these terms as well as an explanation of how Single Payer/ Expanded Medicare is financed are the subjects of future LTEs.

We now use “Single Payer Healthcare” and “Expanded, Improved Medicare for ALL” interchangeably.  Since these are new terms to some people, clarification may be helpful. Single Payer Healthcare is fully comprehensive.  It covers everything in basic healthcare, including in-patient (hospital), out-patient (office), pharmacy, lab. tests, Xrays, blood transfusions, ambulances, dental care, eye glasses, hearing aids, physical therapy, hospice care, etc.

Medicare is somewhat limited. It excludes everyone under the age of 65, and does not cover important medical conditions above the neck. There is no coverage for dental care, eye glasses, or hearing aids.

Medicare is an effectively run 49 year old national medical system with astonishingly low overhead costs (just over 2%). Since the Medicare infrastructure is already in place, it can be adapted to a national Single Payer Healthcare system by expanding Medicare to commence at birth, and including Single Payer coverage. Thus we get “Expanded, Improved Medicare for ALL”.

Next month we will focus on the big advantages of Single Payer/ Expanded Medicare to American businesses. Tell your business friends to read the Gazette in February. They will be pleasantly surprised. ‘Till then check out www.pnhp.org .

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Part 3

Yes, - Big Benefits for Business, Too

In the first column of this series, we stated that the U.S. is #1 in the world in healthcare costs. We pointed out that hundreds of billions of dollars that are allocated to healthcare, never reach an actual healthcare provider, i.e. a doctor, hospital, etc..

We indicated that these lost healthcare dollars are vacuumed up by unproductive, overhead costs of the insurance industry, including the obscene bonuses of their CEOs. This situation persists because we in the U.S. are unique. No other industrialized, democratic country in the world permits a powerful, politically influential, corporate health insurance industry to dominate the accessibility, affordability, or quality of its population’s healthcare. Decades ago, many of these countries realized that their health insurance industries were much too costly to allow them to meddle in basic universal healthcare.

Having previously discussed some of the benefits of a “Single Payer Healthcare” System, aka “Expanded, Improved Medicare for ALL”, - for individuals and families,-- the rest of today’s column is devoted to how businesses also can benefit greatly from such a unified, national healthcare system.  Variations of Single Payer/ Expanded Medicare can be found throughout Western Europe, Canada, New Zealand & Australia.

1. The Employer as Coverage Provider vs. International Market Competitor.--  Burdening U.S. employers with direct responsibility for their employees’ health insurance tilts the commercial marketplace unfavorably against American employers who compete with foreign businesses from the many countries where some form of universal Single Payer/ Extended Medicare is the norm.  Such foreign competitors have very much lower employee health insurance costs, since there are no insurance corporation “middlemen” involved. It follows that an inferior competitive position of U.S. employers cannot possibly be good thing for their American employees.

2. Optimum Producers vs. Passable Producers. – It also can’t be a good thing when an employee may hate his/her current job, but hangs on to it only because he/she dare not let go of the favorable health insurance that comes with it. This has two possible negative outcomes. It can stifle an employee who may desire to leave his/her job for another one, perhaps even to become an entrepreneur, or it can saddle an employer with an employee who is not likely to ever produce at that employee’s optimum capacity.  Would any employer knowingly want to have such an employee?  With Single Payer/ Expanded Medicare, all employers offer identical healthcare coverage.

3. Best Employees vs. Average Employees. – The best capitalized employers can usually attract the best and the brightest workers because, other things being equal, that’s where those workers can usually get the best healthcare deal.  Employers who are less well funded, e.g. smaller or newer businesses, can’t compete against their peers who have more money to cover higher health insurance costs. Result: the less well capitalized firms don’t usually get the best and brightest workers.  Should the deck continue to be stacked against smaller or newer firms in the labor market –- because of healthcare? With universal, national health insurance coverage, this problem vanishes.

4. Negotiation Nightmares. – Wages and benefits negotiations are a trying, time consuming period for both employers and employees. Would it not be far better for both sides to drop the Healthcare discussion from the agenda, permanently, -- just as in other developed, democratic nations where Single Payer/ Expanded Medicare is well established?

5. The Annual Insurance Company Hassle. – Is there any employer, anywhere, who does not wish that he/she could be permanently freed from the miserable aggravation of having to spend so much time and effort in annual negotiations with health insurance companies, regarding changes to employees’ health insurance policies and unpredictable cost increases. With Single Payer/ Expanded Medicare, the policy coverage is always fully comprehensive and cost increases are reasonably predictable. That’s because the “profit first” motivation does not exist.

6. The employer’s cost of employee health insurance may actually be lower, because there is no “profit first” insurance company to come between an employee and his/her doctor.

These six points do not exhaust all of the potential benefits that an employer gains over the current corporate health insurance system. Future columns will revisit this subject. Until next month, check out the national website of Physicians for a National Health Program (PNHP), www.pnhp.org.

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Part 4

Let’s Talk Drugs:  

By Nicholas H. Anton, M.D..  Dr. Anton is on the Board of Directors of Physicians for a National Health Program (PNHP), Sonoma County Chapter.

No! Not those drugs. The ones your doctor prescribes. Currently those drugs represent 10% of the money spent in the U.S. on health care, $300 billion, annually. Why are drugs so expensive? Why do we pay 40-50% more for our prescription drugs than Canada and European countries? Why are generic drugs (supposedly the cheapest) going up in price?

If you ask the drug companies why their drugs are so expensive, they will tell you that: research and development (R & D) is very costly ($1.3 billion/ new drug developed), there are too many government regulations, and that stockholders demand a profit. Yet a 2011 study showed that the actual cost of developing of a new drug is about $98 million and that 84% of R & D costs are paid for by public sources.  The real reasons costs are so high are:

 • All drugs approved by the FDA and prescribed for Medicare or Medicaid patients, must be purchased at full retail prices.

 • An expectation by the public that every new drug must be made available.

An international study showed that out of 946 new drug products, 76 showed a major advance, 13 showed a significant clinical advance, and 61 showed some added therapeutic value. The rest showed minimal to no value, or a risk of more harm than benefit. During the last 25 years, the pharmaceutical industry has been the most profitable sector of the economy. A typical drug company spends 34% of its revenue on marketing and 13% on R & D.

In Canada and European countries with universal health care, governments negotiate with drug companies on prices and spend 50% less than in the U.S. Those countries reject new expensive drugs that offer little or no benefit over existing drugs. Gleevic, a leukemia drug, sold for $4,540 in 2001 (in 2014 $’s) and now sells for $8,488 in the U.S. Today in Germany, Gleevic costs $4,500 and in France $3,300.  When Part D of Medicare was passed in 2003, it was stipulated that Medicare could not negotiate drug prices and that it was illegal to import drugs from foreign countries.

Patients have noticed recently that their generic drugs (drugs whose patents have expired) have gone up dramatically in price. Captoril, for hypertension and heart failure, was 1. (in 2014 $’s) 4 cents/ pill in Nov. 2012 and 40 cents/ pill in Nov. 2013. Doxycycline, an antibiotic, was 6 cents/ pill in 1967 and is now $3.36/ pill. How have the drug companies managed this? First, they paid generic drug makers to delay production of generics that competed with their trade-name products (this is now being challenged in the courts). Next, they purchased the generic drug makers to become a monopoly producing these same drugs.  Since they were the only manufacturers of the drug, they could raise the price without fear from the Federal Trade Commission because there was no collusion with other companies.

To get all these advantages, the pharmaceutical industry employs 1,500 lobbyists (3 for every member of Congress) and spends billions of dollars to influence legislation.  As a result of these factors and a change in the insurance industry that makes patients pay a % of their drug cost rather than a fixed dollar co-payment, many are unable to afford their medications. They are not filling prescriptions or are taking their medication less often than prescribed.

The solution is Improved and Expanded Medicare-for-All. Under such a system, the single payer (the Federal government), like its counterparts in other industrialized countries, can negotiate for fair and equitable drug prices saving $150 billion/year. While this article has focused on the cost of medications, it is just one of the many money-saving aspects in a Single Payer, universal health care system that insures everyone has guaranteed, comprehensive health care.

‘Till next month check out or national website: www.pnhp.org