Column: Health care finance in America
By Scott Walker, M.D.
From the perspective of a medical practitioner of a certain age, I can say with authority that health care does not fit into a capitalist system. We must provide health care for all our citizens.
Actually, we almost do that, but in the most expensive way possible: Under the law (search EMTALA), emergency rooms cannot turn away a patient unless they’re dangerous. We cannot afford to see minor illnesses in the emergency room, or to treat major illnesses later that were minor illnesses earlier.
We cannot afford the profits, retained earnings, TV advertising and CEO golden parachutes that come with the commercial health insurance system. Of the world’s 33 largest economies, 32 have adopted universal health care, and one has not. Why?
Early in World War 2, in order to prevent the inflation that normally accompanies a war-time economy, the Roosevelt Administration enacted wage and price controls. In a time when so many men were in or about to join the military, employers were desperately competing for workers. One consequence of wage controls was that businesses could not offer higher wages as an incentive to lure workers from other jobs. Instead, they turned to fringe benefits like “health insurance” to make their employment offers more attractive.
Health insurance thus became a form of currency but escaped wage controls. The U.S. economy created health insurance because the need existed then, in just the way that it is not needed now. In a nation where Medicare operates with an overhead of less than five percent, it took the Affordable Care Act to get insurers to limit their profit and overhead to 20 percent. Even with that restriction in place, health insurers are making record profits, and insurance ratepayers just can’t afford it any more.
The health insurance finance industry has become a Godzilla acting in a self-interest that may never have been intended. The for-profit entities have to be transparent about it: their concern is for the shareholder first, and patient care is a byproduct of the profit-making process.
The non-profits are more obtuse, but their top executives and board members live well on the “retained earnings” that accrue in the finance arm but not the patient care delivery arm of health care in America. As one commentator put it: the most striking feature of the health insurance industry is that it seems to fill no essential function.
So, let’s be rid of it.
Let’s enroll everyone in Medicare, raise the Federal taxes to pay for it and abolish private health insurance and health insurance premiums. Eliminate “disaster only” insurance, with its $5,000 deductible. We can then be alarmed when administrative expenses “skyrocket” to six or seven percent, from the current five. We will put an end to “uncompensated care,” that unfairly burdens hospitals, some more than others.
In 2023, the Federal Department of Health and Human Services spent just over $15,000 per person enrolled in Medicare, on health care delivery and administration. If you have shopped the commercial market or Obamacare recently, this would be a competitive premium. The actual cost per new enrollee will actually be lower, as some fixed costs will not increase, and some enrollees (young people) will need (consume) less health care in a year than their older peers. The cost of adding our young people to Medicare for the screening and preventive medicine they may need is low, but it will save our society hundreds of billions of dollars in the long run.
Instead of providing some health care as a byproduct of profit-making, let’s provide health care for all, while saving money.
