What Ails Us

It pays to take your medicine, especially beforehand. That’s what some employers who provide their workers with medical coverage have discovered. Groups like Pitney Bowes, Mohawk Industries, and the State of Maine now supply free prescription drugs-without copayments-as part of their health-benefit packages.

By better managing chronic health conditions like high blood pressure, asthma, and diabetes from the start, businesses avoid far more expensive outlays later. Preventive medicine saves money even as it saves lives.

However, there is also a great deal of not-so-sanguine news when it comes to employer-provided health insurance. Once the bedrock of medical coverage in the United States, such insurance is becoming increasingly rare, and by 2010 only half of adult workers will be covered by job-related insurance. At that point, most Americans will have to find insurance on their own or go without. Already there are more than 47 million uninsured Americans, 7 million in California alone, and the number grows each month.

Adding to the coverage problem, every year health-insurance costs outpace inflation and private insurers become more restrictive about whom they cover. Increasingly, people with preexisting medical conditions are told that they need not apply.

Americans now spend roughly $2 trillion annually for health care, about twice as much per person as other developed countries, and with less to show for it. The insurance crunch and accelerating health-care costs are helping to create a perfect budgetary storm for many state governments. Not a few already spend more on medical care than they do on education, a trend that will only worsen as federal Medicaid assistance to states dries up.

Yet the situation also presents opportunities. Not only are states being forced to reexamine how to pay for care, they are rethinking priorities. Will health-care policy now move toward a more comprehensive system, one serving the needs of all? Or will it continue to treat fewer Americans well, bankrupting many in the process, while providing lavish profits for a select few?

For the first time in over a decade, there are political rumblings that indicate a shift in how Americans think about medical costs and coverage. States like Massachusetts and Vermont have passed laws that increase significantly the numbers of insured there. Last year Governor Arnold Schwarzenegger vetoed a single-payer plan to cover all Californians, but he subsequently proposed an “individual mandate” system, one more friendly to the insurance industry, that would require all Californians to purchase medical insurance. Democratic presidential hopeful John Edwards has outlined a mandatory federal system to cover all Americans, based on higher taxes for the wealthy and “Health Markets” to control costs. Such insurance pools, modeled after Medicare but separate from it, would allow negotiators to bargain with providers for lower prices and improved services. Edwards says his model might eventually evolve into a single-payer system, once the public saw the advantages such an option offers.

Under the present system, private insurers spend up to half their revenue on administration, advertising, and stockholder reimbursement, rather than on actual medical services. Health markets would deliver greater bargaining power in dealing with hospitals and drug companies, just as the Veterans Affairs Administration and the Canadian health-care system do today. According to one recent report by the consulting firm McKinsey and Company, Americans pay $66 billion a year more for drug costs than they would under a Canadian-style system. That money could go a long way toward funding universal coverage, or helping insurance companies as they turn to other forms of investment.

The political will to address the health-care crisis may finally be maturing. Last month a New York Times poll indicated that 64 percent of respondents favored health coverage for all adults, and a majority of those polled said they would be willing to pay higher taxes to provide it.

A single-payer system would not prevent individuals from buying added insurance. But the larger insurance pools would spread out the liability risk and allow the system to cover those who are now excluded. It would also facilitate preventive care.

In the past, Americans have said no to a national health system out of fear that it would lead to long lines and restrict choice in services. An evolving single-payer system like the one proposed by Edwards could allay those fears by providing greater efficiency, lower costs, and ample choice. The challenge will be to convince enough voters that the higher taxes required for such a program really would lead to better-and cheaper-health care.

March 27, 2007

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