The NewStandard ceased publishing on April 27, 2007.

States Push Healthcare Reform While Activists Demand Overhaul

In healthcare debate, single-payer still elephant in room

by Shreema Mehta

*A correction was appended to this news article after initial publication.

Aug. 1, 2006 – Across the nation, states have made headlines this year for innovative approaches to expanding residents’ access to health insurance. But when the publicity has cleared and the reality sets in, the uninsured are finding these plans fall short of the fanfare that surrounded their announcement.

Email to a Friend
Print-friendly Version
Add to My Morning Paper

What was billed in Massachusetts as the nation’s first universal healthcare plan turned out to be legislation strong arming moderate-income residents without employer-funded health insurance into buying expensive healthcare plans.

A plan touted in Arkansas to help small businesses extend insurance to low-wage workers lacks clear incentives for employers and provides workers with scant coverage: six clinician visits and seven hospital days per year, two outpatient or ER visits per year and two prescription fillings per month.

While some healthcare advocates praise these and other attempts to widen access, others are calling for a more fundamental overhaul of the nation’s healthcare system. Instead of plans that rely on increasing enrollment insurance offered by for-profit companies, they would like to see these companies replaced with a progressive tax system that pays for everyone’s health care.

San Francisco recently passed a measure that would provide access to healthcare for uninsured residents, which the city has estimated to be 82,000. The plan would require businesses with 20 or more employees to either provide health insurance to workers or contribute to a fund that would pay for healthcare services within city limits to uninsured residents.

As health costs increase, employers are ever-more reluctant to provide health insurance.

The plan will take effect on January 1, 2007. Jim Lazarus, vice president of the San Francisco Chamber of Commerce, told the San Francisco Chronicle that members of the business community will likely sue the city in an attempt to block the measure.

Don Bechler, director of the San Francisco chapter of Healthcare for All, supports the plan.

"It’s good that 82,000 San Franciscans have some form of healthcare access," he told The NewStandard. "It holds the line on employers dumping health coverage."

According to an annual survey on employment-based insurance released last year by the Kaiser Family Foundation, the percentage of businesses of all sizes offering health insurance has been on a "steady decline." While 69 percent of all firms offered health benefits in 2000, 60 percent offered benefits in 2005.

The San Francisco bill, however, only gives people who enroll in the program access to subsidized healthcare at facilities within city limits. "If I drive ten miles out of the city, I’m not covered," said Bechler. "It’s not as good as a nationally paid healthcare system."

Like the Massachusetts and Arkansas plans, the San Francisco scheme looks to employer-purchased insurance as the preferred method of coverage. Rachel DeGolia, director of the Universal Health Care Action Network, said ideally, governments should not rely on employers to meet health needs. As health costs increase, employers are ever-more reluctant to provide health insurance.

"The fewer people insurance companies cover, the fewer benefits they pay out, the more money they make ... It’s a disincentive to provide benefits."

"That system is really crumbling," she said. "There’s a lot of people who don’t have jobs."

For instance, "children don’t have jobs," she said, adding that many people are delaying retirement to stay insured. "To have an insurance system based on jobs doesn’t make sense."

Still, with states seen as taking the lead in experimenting with new ways to address the insurance crisis, some health advocates are pushing for "partnership projects" that would provide federal funding for states to design their own method of universalizing healthcare coverage.

Senator George Voinovich (R-Ohio) has proposed a bill that would enable states to pursue their own plans to bring healthcare to all residents. The proposal would set up a commission of governors, mayors and other government officials to determine which states should receive federal funding.

DeGolia said allowing states to create their own health-insurance plans is the most politically feasible way to increase access to health care. But she also predicted that giving states wide leeway would likely encourage them to pursue plans that coverage advocates find ineffective, such as funding "health savings accounts" tied to high-deductible insurance plans.

Instead, DeGolia and other universal-healthcare advocates would like to see the abolition of insurance companies, which they see as the main reasons behind millions of Americans lacking coverage and millions of dollars lost in the bureaucratic costs and profits.

"The fewer people they cover, the fewer benefits they pay out, the more money they make," she said. "It’s a disincentive to provide benefits… They only try to cover people who are healthy, and they want the government to cover the chronically sick."

Many healthcare advocates would like to see insurance companies replaced by a single payer system in which the government would use tax money to pay healthcare providers directly for patients’ care.

Many healthcare advocates would like to see insurance companies replaced by a single payer system in which the government would use tax money to pay healthcare providers directly for patients’ care.

Bills that would enact a single-payer system have been proposed in both the US House of Representatives and the California state senate.

George Savage is director of Healthcare for All-Los Angeles, which helped draft a California bill to implement a single-payer system. Savage said most healthcare facilities, both public and private, would stay intact under the overhaul proposed by his group.

The bill requires both employers and individuals to pay a health tax in lieu of insurance policies and co-payments. Private and public healthcare providers would both stay open in the system and would bill the government rather than different insurance companies for healthcare costs.

In addition to providing medical coverage for everyone, advocates say healthcare costs would be far lower because the government – not numerous, competing for-profit insurance companies – would "negotiate" prices with hospitals, drug companies and other healthcare providers.

According to the Kaiser Family Foundation, the cost of healthcare has consistently grown at a higher rate than the Gross Domestic Product and makes up 16 percent of the national economy, up from 7.2 percent in 1965. Out-of-pocket expenses have increased alongside overall health costs. In 2006, healthcare expenditures are expected to reach $2.6 trillion.

At the same time, insurers and big providers’ profits have taken big leaps in the past few years. According to Weiss Ratings, a financial analysis firm, HMOs experienced a 21 percent increase in profits during the first few months of 2005 over profits made during the same period the prior year. Other recent first-quarter jumps include 153 percent in 2002 and 61 percent in 2003.

Advocates say that with an increase in government funds, a single-payer system would distribute more funds to often-troubled health clinics in low-income communities. They also insist patients would be free to choose any physician they want without the restrictions most insurance companies enforce.

But Mohit Ghose, a spokesman for the Health Insurance Association of America, says that a single-payer system would restrict patients’ prerogative to choose a healthcare plan that works for them, and he took issue with groups that blame insurance companies for driving up the cost of healthcare. Instead he blamed state regulations mandating coverage of certain treatments.

"We do not believe that a one-size-fits-all answer is the answer," he said. "If I’m purchasing healthcare as an individual, I may not want coverage for 30 different things that are mandated by that state, so as a result, the mandates can price me out of the market," he said. "Americans continue to want to preserve choice. It’s based on the idea that I should be able to make decisions for myself… [and] find the coverage that suits me the best."

Supporters of a single-payer system say it would save taxpayers millions of dollars by eliminating the high administrative costs of private insurance companies.

According to a 1991 report released by the Government Accountability Office, 14 percent of the typical private insurance company’s budget goes to administrative costs. Just 3 percent of government-run plans, such as Medicare, is spent on overhead.

"This is the biggest bureaucracy buster," Bechler said.

Savage noted that insurance companies spend many healthcare dollars on advertising and promotion, expenditures that a single-payer system would totally eliminate.

Considering the political power of insurance companies and the public’s view on universal health insurance, however, DeGolia says bills such as Voinovich’s and the San Francisco initiative are positive despite their flaws.

"There’s a huge amount of money invested in maintaining the status quo," she said, referring to lobbyists for insurance companies. "Because the federal government has not acted, states and cities are exploring ways to cover more people."

DeGolia said measures to expand access should be based on "current political realities."

But Savage said such steps were not productive. "There’s almost hundreds of incremental plans," he said. "That doesn’t add efficiencies to the system. We need a holistic change, and [single-payer] is a system… that [would] provide real benefits to everyone and not just a segment of the population."


Clarifying Note:

In the 27th paragraph of this article, the phrases "and he took issue with groups that blame insurance companies for driving up the cost of healthcare. Instead he blamed state regulations mandating coverage of certain treatments" has been added to better place the quote the follows in context.

 | Change Posted August 3, 2006 at 11:10 AM EST

Send to Friends Respond to Editors or Reporter

The NewStandard ceased publishing on April 27, 2007.

This News Article originally appeared in the August 1, 2006 edition of The NewStandard.
Shreema Mehta is a staff journalist.

Recent contributions by Shreema Mehta: