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Stones & Bones / volume 10 number 7, July 2008 DOSE OF REALITY Recent conventional wisdom has been that health care will be a major issue in the upcoming November election, but now that issue seems to have slid to no better than second place behind worries about the economy and increased energy costs. I get the feeling that both the presidential candidates are happy to see the health care issue fade a bit, because neither of them has logically defensible positions on health care, nor do their proposals have any hope of reducing health care costs. While claiming to have viable health care programs in mind, both Obama and McCain have primarily evaded discussion of health care itself, and instead have talked mainly only about health insurance. They have been able to do this because many Americans do not distinguish between health care and health insurance. There is widespread failure to realize that health care is the actual delivery of health care services, but that health insurance is merely a mechanism to pay some portion of the cost of those services. Health care does not come for free, and health insurance policies typically pay only part—and sometimes a very small part—of the cost. The full cost of health care to an individual or family includes not only the cost of health insurance premiums, but also the cost of policy deductibles, co-pays, and any other out-of-pocket expenses needed to cover the cost of any health care excluded by health insurance policy limitations. In any given year, most families need very little health care, so the major cost to them is for health insurance policy premiums—nowadays quite a bit of money, about $12,000 for a family of four for traditional major coverage. However, the family needing a lot of health care has to pay even more in deductibles, co-pays, and out-of-pocket expenses. To make this point more real, I cite the situation of one family I know. This family of four bought a health insurance policy for $8,000 per year. Unexpectedly high health care costs of near $300,000 this past year far exceeded the policy limitations, with the result that the family is now on the hook for a total of more than $180,000. This is not an isolated incident, either; this past year some three million Americans had to lay out more than $40,000 each to cover their total health care costs, and many thousands of them a lot more than that. That is why so many American families are going bankrupt—few can afford such outlays. Obama’s and McCain’s proposals give no relief to families with major health care needs, and they do little or nothing to help reduce overall health care costs. The reason is that both proposals deal only with health insurance, not health care, and they both retain the private health insurance industry as a key player in the system. The candidates and others tout the value of “affordable” health insurance, while ignoring the need for affordable health care. Senator McCain’s proposed program is by far the worst of the two. Not only does he propose to retain the major role of the private health insurance industry in the system, he touts increasing that role by allowing the industry to sell across state lines, thereby avoiding the regulations of some states requiring insurance coverage of those with pre-existing health conditions. That change will allow the insurance companies to avoid insuring the 56 million Americans having pre-existing conditions. (It has been noted that McCain, himself a cancer survivor, would be uninsurable under his plan.) McCain proposes eliminating the tax break to employers for buying employee insurance and instead giving each taxpayer a $2,500 ($5,000 for a family) refund on taxes for insurance purchased. So if a family pays the now-going rate of $12,000 for annual insurance premiums, it really will cost the family only $7,000. Of course a family too poor to pay any taxes will get nothing. By promoting that Americans buy insurance directly instead of getting it through their employers, McCain is pushing “individual responsibility” to its highest level. Each individual will get plenty of opportunity to exercise that responsibility by fighting with the private insurance companies for payment of a portion of their health care costs. You can be sure that the companies will not pay the full bill. But perhaps McCain’s biggest sellout of the public is his stated intent to destroy by privatizing the Veterans Administration health system, now acknowledged to be the country’s finest, most cost-effective health care system. That sellout is guaranteed to increase the cost of veterans’ health care and reduce its quality. Private industry has already proven in various ways that it cannot do the job effectively. Like McCain’s plan, Senator Obama’s health care plan is not really about health care; it’s about health insurance. He proposes to allow more Americans to participate in the Federal Employee Health Benefit Program. That means that they can choose among 350 various private insurance plans, with the government paying part of the cost. While retaining the major role of the private insurance industry in paying for some fraction of health care costs, Obama at least would limit the profitability of that industry by preventing the companies from denying coverage to those with pre-existing conditions. He also would put a floor on industry “loss ratios”—the actual portions of premiums that goes to pay for health care. Currently, the average private industry loss ratio is about 74 percent, and it goes as low as 45 percent for traditional policies sold to individuals. That the industry actually uses the term “losses” to describe payouts for health care is a telling indicator of where this industry is coming from—losses are bad because they detract from the profits this industry racks up and which burn up a big chunk of the health care dollar while contributing nothing to paying for health care. Obama clearly is taking a more socially responsible stance than McCain, as is demonstrated by his proposals to expand Medicaid and CHIP (Children’s Health Insurance Program) that aid people of low income. Furthermore, he also is expressing willingness to take on the pharmaceutical industry by proposing legalizing the import of drugs and allowing public health programs like Medicare to negotiate drug prices. More questionable is his proposed requirement that all children to have health insurance, because in many cases it would still be purchased through the highly profitable, wasteful, insurance industry. The bottom line is that Obama’s plan is far better than McCain’s. Neither of them wants to rock the boat by challenging the powerful health insurance industry very much. McCain, in fact, clearly is on the side of private industry, and his proposal constitutes a backward step. Obama at least proposes moving in the right direction—toward accessible, affordable health care for all Americans. Of course that will not be achieved until we dump the health insurance industry altogether and adopt a program of universal health care like that proposed by HR 676, “The United States National Insurance Act.” Introduced into the House of Representatives by Representative John Conyers (D-MI), the bill now has ninety co-sponsors, and also has just received the backing of the US Conference of Mayors. This is an excellent bill that, if enacted, will provide all Americans with affordable health care—not just health insurance. I will discuss it more in the next column. Neil Davis is a retired geophysicist and author of several fiction and nonfiction books. His most recent book is Mired in the Health Care Morass. More on health care issues can be found at his blog, http://healthcaremorass.blogspot.com. Neil can be contacted at neildavs@mosquitonet.com. | ||
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