Health Care's Continuing Crisis

President George W. Bush’s low-key call in his State of the Union speech for an expansion of health savings accounts has momentarily put America’s simmering health care problems back in the spotlight. At last count, in 2004, more than 45 million Americans had no health insurance—an increase of six million since 2000, caused mainly by the erosion of employer-sponsored health benefits. At the same time, the cost of health care has continued to rise rapidly.

Several articles by noted specialists in Boston Review (Nov.–Dec. 2005) offer a good overview of the current state of the debate in the field. John Geyman, a professor emeritus of family medicine at the University of Washington, Seattle, argues that after all the failed reform efforts of the last 30 years—from managed care to health maintenance organizations to preferred provider organizations and consumer-directed health care—the time has come for national health insurance.

Under such a plan, every American would be covered for “all medically necessary services.” There would be no copayments or deduct­ibles. Though insurance would be publicly financed, perhaps by a payroll tax, health care delivery would remain private, and individuals would be free to choose their own physicians and other providers. Hospitals  and other institutions would negotiate their compensation with the government. Bulk purchases of prescription medicines alone would save $50 billion annually. In essence, says Geyman, establishing a national health insurance system would be equivalent to extending the Medicare program for the elderly to all Americans. With 41 million highly satisfied customers and adminis­trative costs of only 3 percent (versus 26.5 percent for investor-owned Blue Cross), Medicare is hard to beat.

Surveys over the last half-century typically have shown that most Americans favor national health insurance, “even when they are told that taxes will be raised and the program will be ‘government-run.’” He thinks that businesses hurt by ever-rising health care costs will soon be ready to sign on too.

Wishful thinking, say Ezekiel J. Emanuel of the Magnuson Clinical Center, National Institutes of Health, and Victor R. Fuchs, a professor emeritus of economics at Stanford University. The single-payer method has some virtues and at least one big problem: Its one-size-fits-all approach, along with its prohibition against individuals buying additional insurance and services on their own, runs counter to “deeply entrenched American values.” Unlike Canadians and Europeans, Americans value individualism and personal choice at least as much as they do equality. And, as a practical matter, conservatives and business will never consent to a single-payer plan.

Single-payer plans are also “bad policy.” For one thing, they would institutionalize the costly and inefficient fee-for-service reimbursement of doctors. And by promising comprehensive benefits while lacking the private market to restrain rising costs, single-payer plans invite “financial disaster.” Medicare, far from being the model program Geyman claims, illustrates the problem. By 2020, the Medicare Trust Fund will be empty and the program will be devouring five percent of gross domestic product; in 75 years, costs are projected to exceed all of the federal government’s tax revenues.

But there is a practical way to extend health care coverage to all, Emanuel and Fuchs say: a universal voucher system. All Americans under 65 would get a federal voucher (financed by a new value-added tax or other levy) for “basic” health services underwritten by a qualified insurance company or health plan of their choice. Providers would not be permitted to exclude individuals because of their medical histories, and people who wanted to buy more than the basic services would be able to do so.

“By guaranteeing everyone a basic benefits package but not comprehensive services, the program would be able to offer  universal coverage without opening the government piggy bank to every intervention  devised by pharmaceutical companies or device manufacturers,” Emanuel and Fuchs argue. Those companies would still have plenty of customers among those who carried their own supplementary insurance. A federal health board, modeled on the Federal Reserve Board and aided by regional boards, would manage and oversee the voucher program.

Jill Quadagno, a sociologist at Florida State University, is skeptical that the insurance industry would accept the needed regulation. Without it, “insurers would reject high-risk individuals, just as they do today.” That would send costs for those people through the roof.

Barbara Starfield, a professor at Johns Hopkins University’s Bloom­berg School of Public Health, is also pessimistic about prospects for a comprehensive solution. She urges more modest measures. Only about one-third of U.S. physicians are in primary care, for example, and that is one explanation for Americans’ relatively poor health. (The United States ranked 23rd in the world in 2000 for both male and female life expectancy.) Specialization has become a plague with extraordinarily high costs. One-third of surgical and medical interventions today are thought to be unnecessary; an estimated 275,000 people die each year from adverse effects of medical treatment. “There is lots of evidence that a good relationship with a freely chosen primary-care doctor, preferably over several years, is associated with better care, more appropriate care, better health, and much lower health costs.”

But there’s still no getting around the problem of health insurance. “If primary care is to improve signifi­cantly,” writes Starfield, “the health insurance system must also be reformed.”

What about the Bush proposal? It falls into the category of consumer-oriented reform, working on the premise that people who have a more acute awareness of the costs of health care will be shrewder shoppers. Some three million Americans currently have health savings accounts, which were launched in 2004.

Under the plans, consumers must buy relatively inexpensive health insurance with a very high deductible while placing up to $5,450 (for a family of four) into tax-advantaged savings accounts to cover some of the potential costs before insurance kicks in. Among other things, the president wants to increase the amount people can save.

Bush’s proposal has received the usual criticism from liberals and applause from conservatives, all of it delivered almost ritualistically. Whatever the fate of his ideas, both camps know that the larger debate will go on for years.