Healthcare: Part One. The American Healthcare System.

Healthcare: Part 2. Congress’s Healthcare Bill

“At present the United States has the unenviable distinction of being the only great industrial nation without universal health insurance.” This quote comes from Progressive Magazine, and was published in 1917. At that point, one attempt to reform the American healthcare system by President Theodore Roosevelt in 1912 had already failed. Since then, three Presidents have tried to pass an overhaul and all have been unable to secure the progress they sought. As a result, that quote above still holds true today. The Census Bureau estimates that about 46 million Americans went without health insurance last year. A Harvard University study published in 2009 found 44,800 deaths could have been prevented with proper insurance. For the first time, Democrats and Republicans have agreed that the status quo is no longer an option.
President Barack Obama made healthcare reform a central theme of his campaign last year, at the insistence of Senator Ted Kennedy. The Senator had called the issue the “cause of my life,” and had long been seeking an ally in the White House who mirrored his commitment. In his address to Congress soon after taking office last winter, the President said, “we can no longer afford to put healthcare reform on hold.” Since that declaration, it has become the most prominent issue of the year and 70 different interest groups have spent $114 million in television spending trying to influence the outcome. Debate and arguments over the bill dominated the news during the summer, with proponents and opponents making numerous claims for their respective factions and factcheckers struggling to keep up.

Now, as the last of the Congressional committees working to tackle the issue, the Senate Finance Committee, has passed it version of the healthcare bill, the issue will be taken to the floors of both houses of Congress for the first time. We will examine American healthcare, the debate over the issue, and the bills seeking to finally reform the system after almost 100 years of trying, in this three part series on Healthcare.

The American Healthcare System: The Need For Reform

American healthcare is a striking discontinuity between expenses and results. We spend more on healthcare than any other nation in the world, and more as a percentage of total income than anywhere except the Polynesian island state of Tuvalu. Yet, the World Health Organization ranks our healthcare system 37th in terms of total effectiveness. Our immense spending does not mean we are more effective. A Wall Street Journal Article published in September estimated that wasteful spending accounts for “one-third to one-half of the $2.2 trillion Americans spend annually on health care”.

Certainly there are positive benefits from our system of care. One study in the medical journal The Lancet found that American survival rates for many common cancers were the best in the world. However, this quality of service is not available uniformly throughout the nation. Geographically, there are immense inequities. Care varies widely throughout the country, with better access in the Northeast and Midwest compared with overall worsening care in the Deep South and Southwest portions of the nation. According to the Commonwealth Fund, who grades the American healthcare system yearly by state, “where you live within the United States makes a difference in your access to care, quality of care, and experiences with care providers.”

Most noticeably, access and quality of care are limited by income. About 46 million Americans cannot afford health insurance, and as a result their access to medical services is severely limited. According to a study published in the American Journal of Public Health, “[u]ninsurance is associated with mortality,” and contributes to 45,000 deaths annually, or one preventable death every 12 minutes. The benefits of the system, then, are reserved primarily for those wealthy enough to afford them, while many others are left behind.

With such high medical costs, many patients are unable to pay their bills and fall into debt. About six in ten bankruptcies in the United States are the result of medical debt, according to the American Journal of Medicine. This is not a problem limited to those lacking medical coverage. 78% of those filing for bankruptcy had a form of health insurance, and 60% reported having private coverage. Those with insurance had an average of $18,000 in medical debt, while those without medical coverage owed $27,000. These days, possessing health insurance, even private health insurance, does not protect one from the ever-growing cost of care.

Health insurance companies are often characterized as the main culprit behind the flaws in this system. As for-profit enterprises, they have a financial incentive to deny or limit care whenever possible. They are responsible for the well-being of their shareholders, not their policy-holders. Between 2001 and 2007, profits for health insurance companies increased by 400%. Even with the current recession, they are seeing revenue levels double that of eight years ago. Meanwhile, health insurance premium for families have also doubled over the same period, according to the Kasier Family Foundation.
Despite the increase in prices for coverage, insurance companies are still limiting coverage to patients. They deny coverage based on pre-existing conditions, believing such customers would be a greater risk and are therefore uneconomical to insure. Pre-existing conditions range from childhood cancer to other factors, often including domestic abuse.

Though America’s Health Insurance Plans, the trade group for health insurance companies promised to end discrimination based on domestic abuse during the healthcare reform debate of 1994, they have not done so. Of the nine insurance companies found to be denying coverage in 1995, only State Farm has changed its stance. “we became aware that we were part of the reason a woman and her children might not leave an abuser. They were afraid they’d lose their insurance. And we wanted no part of that,” said KC Enynatten, spokesperson for the company.

Besides denying coverage, insurance companies often ‘dump’ patients–those who do have insurance and have been paying their premiums–when they get sick. One anecdote told by the President in his healthcare address mentioned, “A woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne. By the time she had her insurance reinstated, her breast cancer more than doubled in size.” Insurance company review boards take the decision of treatment out a doctor’s hand by denying claims they, though a doctor has stated otherwise, do not feel are medically necessary.

Finally, insurance companies often pay only ‘usual and customary costs,’ which are often far below the actual cost of a procedure, and the difference is passed on to patients. There are also conflicts of interests that undermine the fairness of these rates, as they are often not determined by the free market. For example UnitedHealth Group, a major insurance company, bases its usual and customary reimbursements on the advice of billing service provider Ingenix, like many other health insurance companies. UnitedHealth also wholly owns Ingenix. This relationship was investigated by New York Attorney General Andrew Cuomo for intentionally deflating these rates. A settlement was later reached.

“We believe there was an industrywide scheme perpetrated by some of the nation’s largest health insurance companies to deceive and defraud consumers . . . this is a conflict of interest. We have to replace Ingenix with a fair and independent entity,” the Attorney General stated. “It is not an overdramatization to say that it is a matter of life and death.”

Images courtesy of: Salem News

http://www.flickr.com/photos/rwhitlock/ / CC BY-NC-ND 2.0

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