By Dave Lindorff

When it comes to reforming America’s disastrous health care
“system,” there are two issues that need to be considered: access and
cost.

The so-called reform proposals being offered by the Obama White
House, the House and the Senate, are failing on both counts, and
deserve to die.

No progressives should allow themselves to be suckered into promoting one or the other.

Here’s the problem. As long as the health insurance industry is
permitted to be the primary paymaster, the cost of medical care will
continue to soar, not least because the insurance industry is so
concerned about minimizing its own outlays that it is forcing the
system to devote nearly 30% of every health care dollar spent to
administrative costs (compared to 3-4 percent for Medicare, and even
less for single-payer systems like Canada’s). That’s true whether there
is a so-called “public option” government-run health insurance plan or
not. Note that 30 percent of America’s $2.5-trillion health care bill
per year is $750 billion a year, a sum which does absolutely nothing to
make a single person more healthy or less ill. Even if one were to
assume that the lion’s share of those administrative expenses were only
for the private funded portion of America’s health care system, and for
Medicare, the state-run but partly federally-funded portion that is
famous for its paperwork mess, and the uninsured, who also consume a
lot of paperwork when they do get treated at hospitals under mandated
free-care provisions of at the expense of local governments, we’d be
talking about 30% of $1.5 trillion, or about $450 billion going to
administrative costs every year—still a staggering sum.

Medicare, the health program for the elderly and the disabled, and
Medicaid, the federally and state-funded program that funds medical
care for the poor, together cost some $850 billion a year. Add to that
the $150 billion that hospitals and local governments spend annually to
cover the uninsured poor who don’t qualify for Medicaid, and the $50
billion the federal government spends for veterans’ care. That’s just
over $1 trillion in government spending to cover the health care of
roughly half the population of the United States.

The rest of us—working people and our families—rely on private
insurance, some of it paid for by employers, some by us, either as our
share of the cost of company plans (growing every year), or as the
deductible and co-pay portions of our medical bills. That privately
funded medical care costs us about $1.5 trillion a year—50% more than
the government spends on the medical care for a roughly equal number of
people. If you do the math, it turns out that we who rely on the
private sector are spending about $10,000 per person per year on health
care, either directly out of our own pockets, or in the form of money
our employers are paying into insurance plans for us—money that could
otherwise be coming to us in the form of higher wages or lower-priced
goods.

What this means is that right off the bat, if the politicians in
Washington were to simply thumb their noses at the insurance industry,
and at the greedy docs and drug companies who are paying millions in
legal bribes to protect their stake in the lucrative medical game, and
if they were to extended Medicare to all of us, we could immediately
eliminate $500 billion from the nation’s collective medical bill,
because that’s how much more cheaply Medicare, Medicaid and the VA are
able to treat patients than the private sector. But the savings would
be far more than that. The cost of treating the uninsured--$150 billion
a year—would be dramatically reduced, because it is currently almost
entirely for emergency care at hospitals, the most expensive possible
way to deliver medical care. My guess is that at least $100 billion
would be saved simply by switching all those people over to Medicare,
so they could walk into a doctor’s office for treatment instead of into
an ER. The VA, with its separate government-owned hospital system,
would become largely redundant if all veterans were simply treatable
under Medicare, which would probably save a considerable portion of
that $50 billion-per-year expense. Furthermore, by switching
private-pay patients over to Medicare, most of the $450 billion a year
currently wasted on administrative costs would be eliminated—a savings
of perhaps $3-400 billion a year. While some of that would be reflected
in the cost differential between privately financed and Medicare
financed care, most is not. The main reason Medicare’s per-patient cost
for care is much lower than for private pay patients (who, remember,
are younger and healthier on average than Medicare patients, and so
should be cheaper to treat, not more expensive), is that Medicare sets
out payment schedules for doctors and hospitals, and negotiates
payments for medicines—all at much lower levels than do private
insurers, who often just set reimbursement rates, and let their insured
patients cover the difference out of pocket.

Taking all these savings together, it’s a good guess, I would say,
that by simply expanding Medicare to cover all Americans without
exception, the nation as a whole could save upwards of $900 billion on
its current $2.5 trillion annual medical bill.

Now that’s not to say such a change wouldn’t involve a tax
increase. The current publicly funded share of that $2.5 trillion bill
is about $1 trillion, when you add together federal, state and local
outlays, all funded by the taxpayer. An expanded Medicare that covered
everyone would, by my reckoning, cost about $1.4 trillion, once all the
costs were added, and the savings implemented, including lowered
payments to doctors, hospitals and drug companies. So we’d have to
cover an extra $400 billion a year through tax increases.

But remember, there would be no more local revenues going to pay
for uninsured care at local hospitals, no more state taxes going to pay
for Medicaid for medical care for the poor, no more out-of-pocket
payments by families for co-pays and deductibles, or for employee share
of insurance premiums. And companies would no longer be paying anything
for employee health insurance. The net gain to the average person would
be enormous.

That’s the point that the medical industry lobby conveniently
ignores. It’s a point also conveniently ignored by the politicians
they’ve bought in Washington and the White House, who only talk about
the increased taxes that a single-payer government takeover of health
care finance would entail.

And, to get back to the beginning of this article, there would no
longer be an issue of Americans going without access to medical care.
Everyone would be on Medicare. And not one of the costly “reform”
proposals being pushed through Congress today can say that. Every
proposed “reform” plan leaves millions uninsured.

Note too that, under basic Medicare (as long as you don’t get
suckered into one of those HMO rip-offs like Humana and other insurance
firms advertise), everyone gets to choose his or her own doctor and
hospital. There is no gatekeeper system—another bugaboo raised by the
health industry lobbyists.

With a universalization of Medicare, at one fell swoop, America
would have a single-payer system—one that its elderly citizens already
have, and by all accounts are very satisfied with—and one that would be
substantially cheaper than what we have now.

For everyone.

Socialized medicine? Maybe, but it’s a socialism we already know.
Call it “socialism with American characteristics,” if you like. Or to
crib from a comment President Obama made to the fat cat docs at the
American Medical Assn. convention recently, it’s a socialism that is
“part of the American tradition.”

So, want to have some fun? Tell your congressional delegation to
demand that the Congressional Budget Office, which just came up with an
estimate that the Senate’s health “reform” bill would add $1.6 trillion
in costs over 10 years, do a study of what expanding Medicare to all
would cost, after netting out the savings to individuals and
employers of having their insurance payments and out-of-pocket health
expenses eliminated.
___________________
DAVE LINDORFF is a Philadelphia-area journalist. His latest book is
“The Case for Impeachment” (St. Martin’s Press, 2006). His work is
available at www.thiscantbehappening.net