SENTIENT TIMES October/November 2002

Free To Choose: Health Care for All Oregon

Measure 23 on the Ballot this November

By Gerald Cavanaugh

Oregon voters will finally have a chance to cure the sickness known as the “for-profit health care industry.” The remedy is the Oregon Comprehensive Health Care Financing Act, 2002, which will be on the November ballot. The following essay will describe and explain what this health care financing initiative entails.

In anticipation of the lies and distortions that “free market” ideologues and insurance and pharmaceutical company opponents will spew against the measure, and to reassure citizens concerning the fairness, rationality, and true merits of the plan, it is perhaps best to approach the issues by clarifying what the initiative is definitely not about. Bear with me: there is no simple way to enable citizens to see the virtues of the Plan and to be armed against the opposing counterfeit arguments.

This Plan is not about socialized medicine. (Although, as Jerry Seinfeld might say, “Not that there is anything wrong with socialized medicine.”) What in America is commonly called “socialized medicine” takes many different forms in democratic, civil libertarian states such as Great Britain, Spain, Finland, Ireland, Japan, Norway, Denmark, Sweden, and Italy, among others.

Some of these programs are financed solely by progressive income and payroll taxes with medical costs, such funds being collected and disbursed  by a “single payer” government agency: the HCFA-Oregon Plan is such a single-payer mechanism. Other such universal health care systems are financed by these taxes and also by funds from union, employer, and mutual help societies. In some of these systems all the hospitals are publicly owned and operated, and physicians are salaried civil servants; in others, public and private and religion-linked hospitals are available and doctors may or may not be in private fee-for-service practice. The essential point is that health care coverage is universal. In all of them, citizens overwhelmingly prefer their system to anything remotely like the American market-oriented debacle.

In the year 2000, the World Health Organization (WHO) ranked the United States at the disgracefully low level of 37 among the nations of the world in terms of health care for all citizens in regard to such health and medical outcomes as life expectancy, infant mortality, rate of vaccinations, hospital stays, access to a primary care physician, and morbidity rates: America has more sick people than any other industrialized nation. They are the walking sick and wounded because they cannot afford to see any doctor. No wonder that the WHO ranked America even lower (at 59) in terms of “fairness” because too many people are simply left out.

This initiative is not about government standing between you and your doctor. Or what treatment may be prescribed—in contrast to today’s too common situation in which insurance company and HMO junior clerks tell you whom you may see and what medical practice must be followed. Under this initiative you, the patient, are free to choose your (willing) health care provider and it is entirely up to that provider to decide what “medically necessary treatment” is to be applied. Remember, this is a “single-payer financing” initiative. All it does is get rid of the 800 insurance companies licensed to sell health care insurance in Oregon (talk about redundant bureaucracies replicating each other’s work!). The plan has no provisions con-cerning anything other than where the money comes from and to which licensed, certified, or registered health care provider any proper legitimate payment goes. It will be administered by a democratically-elected, accountable, responsible Health Care Finance Board and doctors will be allowed, finally, to practice their profession.

This initiative will not drive doctors from the state. One of the most common lies about other advanced countries’ so-called “socialized medicine” is that the doctors in such systems are unhappy and wish they could practice in America. In fact, those doctors in general are happier and have higher professional morale than do their American counterparts. There is no shortage of highly-qualified doctors in those “socialized medicine” countries, nor is there a “brain drain” of doctors from the advanced industrial nations to America. Yes, well-qualified, English-speaking doctors from India and Pakistan, for example, who intern in America would love it if we allowed them to stay but that, of course, is a different matter and the American Medical Association is dead set against any such competitive pressure.

This plan will not be prohibitively expensive. Quite the contrary. Even with universal coverage for all Oregon residents, every objective analysis of the single-payer financing mechanism unequivocally concludes that such a plan will in fact cost less than the current systemic mess. There have been at least ten of these studies, including a 1991 Physicians for a National Health Program report, a 1993 Congressional Budget Office study, a 1998 Economic Policy Institute analysis, and three recent statewide studies for Massachusetts (2000), Maryland (2001) and California (2002) prepared by an independent consulting firm, The Levin Group.

How can this be so? Look at the numbers: Combined administrative costs of for-profit insurance companies and providers ranges between 25% and 50% of every medical dollar. Since private insurance companies and for-profit HMOs have as their first duty the care and feeding of their shareholders, with their executive officers running a close second or, apparently, even first, devotion to net profits all too often means denial of services and deferment of payments. “Provider costs” are those entailed when doctors and hospitals have to hire thousands of clerks to handle all of the demands and delays of the  insurance companies. In San Diego, the director of clinics for the poor has to spend $165,000 every year just for clerks whose sole job is to determine who is eligible for various programs.

In contrast, the single-payer Medicare system spends between 2% and 3% of medical program outlays on administrative expenses such as overhead, salaries and computers. Think about it. Administrative burdens are lower for Medicare than for private insurance plans because Medicare bases eligibility for benefits mainly on age and offers a single, basic benefit package. Unlike private plans, Medicare does not pay insurance commissions or most sales and marketing expenses—and these, too, are costly. In seeing how the single-payer approach to health care financing is so much more efficient and inexpensive, citizens must understand that, except in a universal single-payer system, administrative costs can be staggering. Medicaid, for example, which has an “income and assets” requirement (which must be checked and rechecked continuously) has a higher administrative burden than does Medicare, based as it is only on age. Even so, the combined administrative force of both Medicare and Medicaid totals just a bit more than 4,000 employees, one employee per 9,500 beneficiaries. Now that is efficiency and cost effectiveness.

Beyond the reductions in administrative expenses, there are other significant cost containment and cost reduction factors. The initiative emphasizes preventive care and enables patients to have a close relationship with a primary care physician which not only contributes to personal health but also cuts down on the ruinous costs of emergency care, which for many Oregonians today is the only time they see a doctor. The Plan also has provisions for continuous education on health, diet, medical, and life style issues, all of which programs are demonstrably effective in improving health outcomes and facilitating cost reduction.

Take the current prices on prescription drugs, please. And then think, “Buying in Bulk.” This initiative will create a prescription drug market of over 3.5 million Oregonians. Instead of charging whatever they think they can get away with, as they do today, pharmaceutical companies will have to sit down and bargain with our health care agency on fair prices for their commodities, just as they now do in places like Canada, Mexico, and Western Europe.

The initiative also envisions cost controls on the purchase and construction of capital equipment and medical facilities to insure that taxpayers’ money is spent on what patients really need. Similarly, there will be oversight concerning the reliability and cost effectiveness of modes of treatment so that, for example, the present practice of paying for new and more expensive drugs with no real clinically proven enhanced benefits will end.

In short, as the 1998 Economic Policy Institute analysis concludes: “Even more important, with the single-payer system, greater efficiency and improved cost containment would become possible, leading to sizable savings in the future. The impediment to fundamental reform in health care financing is not economic but political. Political will, not economic expertise, is what will bring about the important change.”

One other important point: The anticipated financial outlays in this Plan are based on federal projections of health care expenditures in years to come. Moreover, the funding level for the Plan has also been scrutinized and accepted by expert economists using conservative state revenue projections. The initiative mandates a balanced health care budget and includes guidelines for provision of care that requires conformity to the budgetary constraints. In other words, the financing of the Plan is empirically well-founded, prudent, and sufficient to cover the expected costs.

This Plan will not place an excessive burden on small business. The payroll tax paid by employers is a graduated tax, from 3% to 11.5%, based on total wages paid, that is, in general, the smaller the business the lower the tax. A small business employer with a worker earning $7.00 an hour will pay only 21 cents an hour on such a wage or $33.60 a month for a full-time worker. Most small business people want to be able to afford health insurance for their workers but less than one-half of them can do so. This initiative will allow all of them to provide for their workers, with the proven concomitant increases in worker productivity and morale and reductions in personnel turnover. All businesses will pay the tax and thus no business can gain a competitive advantage by not insuring its workers.

Those business people who already provide health insurance will be relieved of the yearly grind of selecting and administering employee health plans—the premiums of which have been rising at double digit rates for years—and their own costs will be lower, while they and their families will also be covered. Finally, this payroll tax is also a business expense and thus a deduction from business income for tax purposes.

This initiative will not be a heavy income tax burden on individuals. In the first place, those whose taxable income is less than 150% of the Federal poverty level—for a single person, this is about $14,000, for a family of four, about $30,000—are exempt from the tax. Only after individuals and families have exceeded this level will the graduated tax begin to affect them and that will start at a 3% rate.  The richest 5% of Oregon’s taxpayers may pay as much as 8% of taxable income but, in any case, their payment is capped at $25,000. With the federal tax deduction the actual outlay would be about $15,000. At an Oregon taxable income level of $312,000, that is a bargain. (Your taxable income in general is 60% of your gross income.)

And keep in mind that this tax, whatever your income level, will replace your current health insurance premiums, your co-payments and deductibles, your prescription drug costs, and, if you have such benefits, your dental and vision care premium costs. The vast majority of Oregonians will be far better off financially, as well as having excellent health care coverage, when this Plan is adopted by the citizens.

All of the preceding will certainly not answer every question concerned citizens may pose. It is to be expected that this initiative will generate much heated discussion, and one may hope that much light will be thrown on the issues in the process. But, given the domination of our political system by powerful corporate interests seeking to maintain a status quo that primarily benefits themselves, and given a corporate media that most often selfishly serves those interests, citizens must work hard to get an objective picture of reality. For the entire text of the initiative visit the website of the grassroots organization behind this ballot, www.healthcareforalloregon.org. See also the excellent website of the “Physicians For a National Health Program” at www.pnhp.org, and that of the Public Citizen Health Research Group, www.citizen.org/hrg.

I close with two necessary caveats: Do not be fooled by the propaganda against the Canadian health care financing system, such lies and distortions most often used as a club by opponents of single-payer reform in America. Ninety percent of Canadians support their system and resist efforts by profit-seeking interests to move it toward an American-style system. Similarly, be very skeptical about stories concerning the British National Health Service which, according to certain American economic interests is facing collapse. As the capitalist market-oriented periodical, the Economist, wrote recently: “Prime Minister Blair must preserve the two things that the National Health Service has done very well. One is delivering near-100 percent health coverage for the population. As several countries, most notoriously the United States, are discovering, this universal coverage is more easily said than done. In systems that depend largely on private insurance, it is especially hard. The second is the NHS’s basic cost efficiency: it delivers health care of high quality at far lower cost than other rich countries have managed.”

Oregonians should seize this opportunity to make universal health care a reality. After all, we want to live in a decent society, one in which the answer to the question, “Am I my brother’s and sister’s keeper?” is YES!

Gerald Cavanaugh is a member of Health Care For all-Oregon and Physicians for a National Health Program. Health Care Meltdown: Confronting the Myths and Fixing Our Failing System by Dr. Bob Lebow, is a splendid explanation of what this struggle is all about, and how to solve it. Send $19 to JRI Press, 5398 N. Cattail Way, Boise, ID 83703-1778, or call (208) 853-3087.

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