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Dear Auntie Pinko,
I recently read an article that stated that the number of Americans without health insurance has been steadily going up, and is now 41% (up from 25% in 2001).
When these uninsured Americans need medical care, they may be unable to pay the outrageous medical bills without insurance. In response, to make up for the unpaid services, hospitals or clinics may charge insurance companies more for their services. This in turn drives insurance premiums up, which means that even less people may be able to afford insurance, therefore fueling a health crisis that is spiraling out of control.
This presents a bleak scenario where only the very wealthy in this country will be able to afford adequate health care. Am I wrong in my assumptions, or should I be worried about the future of health care in this country?
Alfredo
Atlanta, GA
Dear Alfredo,
Auntie is always reluctant to tell anyone just to worry. Worry alone is unproductive and can be bad for your health. But you’ve summarized the problem in a nutshell, and if you can get past just ‘worrying’ to actually doing something, it might help you sleep better.
The issue of access to health care is now one of the most complex and intractable problems facing our society, and it is mortally terrifying to our elected representatives, who are well aware that no matter what they do, they will enrage some important part of the mix of votes and money that keeps them in office. So they’ve been doing nothing substantive for twenty-five years now, letting the problem fester and spread. And whenever some ordinary voter like Alfredo, or Auntie Pinko, brings it to their attention, they express sympathy, remind us how complex it is, and continue energetically doing nothing.
They are correct about the problem being complex, as far as there not being one easy, fast thing they could do that would reliably “solve” it. However, it’s not as complex as they let on, either. The point you’ve made about the escalating spiral of uninsured people driving up the costs of insurance and creating more uninsured people is a valid one, but the reverse is equally true. And that’s one huge factor in how we got into this mess, and how we can get out.
You see, forty years ago, health insurance was much easier to get, and much cheaper. Almost all large and medium size employers, and a great many small employers, offered health care as a matter of course among their employee benefits. The costs to the employee were minimal, even if you factor in the impact the cost of benefits might have had on base wages and salaries, not to mention increases. This worked, because of the basic principle of insurance: risk-sharing. The larger the pool of insured, the more broadly shared the risks. An insurance company collecting premiums from twenty thousand people could easily absorb the costs of the catastrophic illnesses of a few dozen, not to mention the routine and preventative care of the whole group, and still show a modest return on investment for the insurance company’s shareholders.
It helped a lot that forty years ago the backbone of the healthcare system was largely non-profit by intent—public and denominational hospitals carried a big share of the burden, and hadn’t yet been privatized. They had to break even, but not return a profit to shareholders, and through charitable support could absorb some cost of care for the comparatively small number of uninsured individuals. What changed?
There were two main trends that blew the system as it was out of the water. One was the quantum leap in medical technology that began in the 1960s and 1970s. New diagnostic tools, new drugs, new medical devices, new surgical techniques, all combined to raise costs. And the publicity surrounding these various ‘miracles’ raised peoples’ awareness of what was possible, and, more importantly, their expectations of what should be possible.
The second trend was the ‘profitization’ of the entire healthcare sector. The rising costs increased the cash flow of the health care sector, which brought it to the attention of the investor class, who began the slow process of destroying the nonprofit system and eliminating or preventing any inconvenient regulation. New enrollment and premium structures were aimed to drive out high- and moderate-risk patients, leaving only the minimum-risk, high-profit patients insured, and nonprofit institutions were subsumed in corporate structures where “margins” (profits) were integrated into their cost structures, forcing them to divest themselves of costlier functions and concentrate increasingly on the “high-margin” functions.
This strategy, combined with pouring money into developing and marketing patentable new drugs and therapies targeted only at the most lucrative market segments, has reaped the investor class huge profits. But it has also destroyed large parts of the health care infrastructure, setting off a spiral of collapse that now threatens even the upper middle income quintile of the U.S. population, while locking out many in the lower quintiles. (A ‘quintile’ represents one-fifth (20%) of the population, based on income. So the “bottom” quintile would be those 20% of Americans with the lowest incomes, and the “top” would be the highest 20%, with three more representing the middle groups.)
In order to fix the problem, we have to look at rebuilding that whole infrastructure, in such a way that it will be sustainable for the long term, even with new arrays of technology opening up all the time. That’s a considerable challenge, and it certainly can’t be achieved quickly. But it is possible, and some things we can do right away. One thing would be to go back to the basic principle of insurance: broadening the risk pool. This can be done by enrolling everyone and collecting premiums from everyone, even if some of those premiums have to be tax-subsidized.
My personal bias is to create one large public-private partnership monopoly similar to the old regulated utilities, producing a modest (3-4%) but consistent and reliable return for investors, and enroll everyone under that system. If that’s not practical, either a public entity or a small group of closely-regulated private companies could take on that role.
Another thing we can do is target new technology development incentives in the direction of technologies that decrease overall system costs. An inexpensive-to-produce technology that greatly lowered the risk of stroke, or prevented the transition of type 2 diabetes to type 1 diabetes, or provided constant, low-maintenance therapy for asthma and other chronic respiratory conditions, would relieve system costs substantially. By providing positive incentives for such research, and decreasing or eliminating incentives to create yet another expensive ‘new’ therapy for baldness, or indigestion, or itchy rashes, we could go a long way to rebuilding the infrastructure.
We could also examine new ways to structure how health care professionals are trained, licensed, and compensated. Offering subsidies or incentives for the professionals most needed, and charging premiums for training and certification in the highest-profit/revenue specialties and fields, would help direct the flow of professionals and reduce costs. There’s much that is excellent in our system of training health care professionals, as evidenced by the many skilled, competent, caring nurses, technicians, doctors, etc. who serve Americans every day. But the system evolved over the last two centuries, in times when conditions were vastly different than they are now. It’s past time to look at a major overhaul.
We can’t let the undeniable complexity and difficulty of the problem prevent us from making the hard decisions, Alfredo. If you can channel your worry into holding your Senators’ and Representative’s feet to the fire, and getting your neighbors to do the same, you’ll not only be earning yourself a better night’s sleep, but meriting the gratitude of all Americans who suffer from the collapse of the old health care system and the chaos of the current mishmash. Thanks in advance for your efforts, and thanks for asking Auntie Pinko!
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