Health Care Debate: Who Will Pay the Way?

Times Staff Writer

Bryan Redfield gets up from a kitchen chair slowly, awkwardly using his arms to help maneuver his partially immobilized lower limbs, the result of a horribly broken pelvis suffered in a car crash.

With a severe limp, he propels himself into the living room of the tiny West Hollywood apartment where he lives alone, struggling past a set of braces and a pair of aluminum crutches discarded haphazardly on the floor next to a physical therapy table until he reaches a plastic shopping bag stuffed nearly full with hospital and doctor bills.

The bills are a result of the Dec. 6 accident, in which Redfield's car was broadsided by a drunken, uninsured driver. Redfield escaped with scars no higher than the unmistakable tracheotomy on his throat, but he suffered such massive internal injuries that he needed more than 100 units of blood, spent seven months in three hospitals and is only now learning how to walk again.

Rummaging through the bag with a slight, ironic smile, he finds what he is looking for: a single yellow sheet sent him at Rancho Los Amigos Hospital, from which he was discharged in June. The sheet is from Hollywood Presbyterian Medical Center, where he was a patient for more than a month after the crash. It says:

"This is to notify you that you still have an outstanding balance of $165,737.41. As a convenience to you, payment of the balance can be made by cash payment, check or by use of your Visa or Mastercard."

There is not much Redfield can do about this except laugh. A sporadically employed actor before his accident, Redfield was earning less than the $2,900 annual minimum to qualify for Screen Actors Guild health insurance. The tavern where he bartended offered coverage to its workers only if they paid for it themselves. But Redfield, 36, and otherwise healthy, couldn't afford the $90 monthly premium.

In all, he is a classic example of someone who has fallen--crashed might be a better word--through the cracks of the American health care delivery system. In part because of uninsured and under-insured people like Redfield--as many as 60 million others nationwide, by some estimates--a discussion suspended some time late in the 1970s has quietly resumed.

The topic: national health insurance, a concept sporadically bastardized and discredited for decades in the United States, where its opponents have equated it with "socialized medicine." The idea has emerged and disappeared from public policy debate on at least half a dozen occasions in the last 75 years. Bumper stickers have warned: "If you like the U.S. Postal Service, you'll love national health insurance."

There are signs all this may be changing:

- Intense economic pressures on the health care system--brought on by the AIDS crisis, a nationwide nursing shortage and a fundamental shift in the American employment profile--could make a nationalized program an unavoidable alternative to economic collapse of the existing system.

- There is growing concern among health economists and policy experts with the number of people who either have no insurance or grossly inadequate insurance, a number that may be larger than previously known.

- A new public opinion poll conducted for The Times finds that, despite conservative drift in the 1980s, a federally run national health insurance remains a concept supported by nearly two out of three Americans.

This resumption of the debate has not, thus far, propelled national health insurance to the top of anyone's list of urgent items for the American agenda. By and large, politicians are not yet involved; the issue has not become that critical. Yet a cadre of experts on the nation's health care system is slowly coming to the position that some kind of national health insurance plan--one that will significantly alter the way the average American receives his or her medical care--is almost inevitable by the turn of the century, and more likely by the mid-1990s.

Dr. Paul Ellwood, the Minneapolis-based architect of the movement toward prepaid care in health maintenance organizations, has always been identified as a conservative who opposes the type of government intrusion fundamental to national health insurance. Today, he says the concept appears to have a certain inevitability.

What's changed his thinking, Ellwood says, is a perception that it is now possible to fashion a national health insurance system that would take advantage of innovative new ways of providing and financing care. The process, he added, has been hastened by altered demographics of American society in which an aging population is being forced to come to grips with providing health care for everyone, not just the elderly and poor.

"The constituency is different now," he said. "It's much older. There's also the AIDS plague, the question of whether that, too, creates a reason for having national health insurance.

"At first, I thought we should just try to fix Medicare. But I don't think that exercise, at this point, would be worth it. I think much of the ideological conflict about national health insurance is gone. A liberal health policy researcher could sit down with a conservative one, like me, and write a bill."

Uwe Reinhardt, a Princeton University economist long known as an expert on national health insurance issues, predicts that, within less than 10 years, financial pressures from the increasing cost of health care and the declining effectiveness of the existing insurance system may prompt an alliance between members of the Baby Boom generation--which starts to turn 50 in 1995--and physicians, who, he says, will support a government takeover as the only way coverage can be assured.

Reinhardt and Dr. Philip Lee, head of the Institute for Health Policy Studies at UC San Francisco, believe physicians will be leading advocates of national health insurance because they will see it as the best way to assure they will be paid. This will occur, they said, because rising health costs will be greeted by mounting pressures to control costs, government and private insurance programs will become ever more restrictive, and physicians will face lower reimbursements and new paper-work barriers to receiving compensation.

In a broader sense, what may be developing is what Stanford University health economist Victor Fuchs calls a "counterrevolution" in medical care. Under this theory, the American health care system could succumb to a combination of emerging economic pressures. When this occurs--"possibly within five years, certainly within 10," Fuchs wrote in an essay published in April--there will be possibly irresistible pressure for more government control of the health care system.

The form this might take, says Fuchs, remains to be seen--though he and other experts agree it would probably not resemble what exists in England. A uniquely American national health insurance system, he said, would probably preserve the decentralized nature of U.S. health care, guaranteeing payment, setting fees from a national schedule but leaving doctors and hospitals otherwise alone--with reduced incomes but less paper work and red tape, too.

Certainly, the public continues to support the concept. Though American politics and popular political thinking over the last 10 years is supposed to have undergone a demonstrable drift to the right--away from large, federal social programs--a new poll conducted for The Times by SRI Gallup Hospital Market Research found 63% of those polled believe a government-funded national health insurance program should be developed; 24% opposed it and 12% had no opinion.

The overall support was similar to public opinion polls on the issue conducted periodically over the last 10 years. The new Times-SRI Gallup survey found clear preferences for the kind of national health insurance system that should be devised: 48% of those who support the idea favor guaranteed total coverage from comprehensive insurance programs, with government programs for anyone left out. Another 25% favor a program similar to Canada's, in which the federal and state governments cooperatively finance and regulate a national system--but with independent doctors and hospitals.

The telephone poll, completed in June and conducted nationwide among 922 randomly selected adults interviewed, found only 16% preferred a system like England's, where the government runs the health facilities and also employs the doctors, nurses and other workers as part of a national health service. The poll also found the concept of a central government health service to be essentially without support.

The new poll was discounted by some experts because respondents weren't asked how they would pay for national health insurance. Some experts were cautious about the significance of the results, wondering whether the respondents had thought through the tax-increase implications of any such plan. "You have to say to the people that, if you want one of these, it will involve a 5%, 10%, 15% tax increase," Columbia University economist Eli Ginzberg said.

But still other economists say such doubts about opinion measures seriously underestimate the sophistication of the American public. Harvard University's Rashi Fein, perhaps the best-known advocate of national health insurance among economists specializing in the health care delivery system, said general understanding of economics is at least good enough in the United States that "people, when asked, know a few things.

"They know there is no such thing as a free lunch."

The traditional way American health care has been financed has always taken certain account of the Bryan Redfields. Hospitals and physicians set fees so people who could pay--through insurance or their own resources--underwrote those who couldn't. It's what economists call a cross-subsidy. Because--in comparative terms, anyway--the health care economic system was rich, insurers tolerated it. Medicare and Medicaid (Medi-Cal in California) took up a great deal of the slack, but payment even under these programs was effectively augmented by unofficial subsidies.

For most people, the system works fairly well, though millions are excluded. Today, by most estimates, there are about 35 million people with no health insurance. Ginzberg estimates there are also as many as 25 million with inadequate insurance. In all, says Ginzberg, one in six Americans has either no coverage or dangerously little coverage.

Employees' Higher Bills

On top of this, employers who historically provided most health coverage began, within the last five years, to pressure insurance carriers to abandon the cross-subsidy system. Corporations began to demand that their premiums pay no more than the actual cost of care for their workers and workers' family members. Employees have had to deal with ever-higher deductibles and co-payments, cost overruns when bills are not fully reimbursed and the bureaucratic maze of pre-admission authorizations and other roadblocks to care.

Added to this has been a trend toward a practice commonly called "cost shifting" in which insurers, often by declaring unilaterally that a medical bill exceeds payments standards, refuse to pay for care a worker or family member has received. The practice often leaves even people with full insurance holding the bag for hundreds--or even thousands--of dollars in physician and hospital bills an insurance company has refused to pay.

The Medicare and Medicaid programs have clamped down similarly, leaving even socially concerned hospitals and physicians hard-pressed to continue to provide for people whose costs have traditionally been absorbed by the system at large.

Growing Percentage of GNP

The root of change in the system was in the mid-1970s, when it became clear health care as a proportion of the total gross national product was increasing at a rate likely to mean it would be difficult--if not impossible--to continue to provide the standard of care Americans had traditionally enjoyed. In 1975, the health care system consumed 8.3% of the GNP, up from 7.4% five years before. By 1986, the proportion was up to 10.9%. Most economists think it will go above 11% this year and pass 12% by 1990.

Dr. William Schwartz, a Tufts University expert on health cost trends, noted that inflation has been so rapid that rationing of health care is almost inevitable. Some savings may be realized by reducing or eliminating unnecessary care--useless lab tests, unnecessarily long hospital stays and the like--but Schwartz says the reductions, about $20 billion a year, represent a one-time opportunity. After that, the costs of AIDS, an upward drift of wage scales and ever-increasing reliance on high-cost new technology will continue to drive costs upward, he predicts. He also sees a possible necessity for an increase in nursing salaries by as much as 20% to 40% in the next five years.

Schwartz, who doesn't think a national health insurance plan is inevitable, believes rationing is inevitable, as is mandatory health care wage and price controls. "The issue of the uninsured and the under-insured is going to become a more and more common problem," he said. "It is going to become socially offensive to have this great disparity. The issue is going to be a major one."

Three Key Factors

To Ginzberg, what makes this period in history unique is a confluence of three factors:

- The economic pressures of the growing surplus of physicians.

- Cost-control pressures on the hospital industry, which have forced larger hospitals to new competitive strategies to hold onto their market share and which threaten the survival of many smaller health centers.

- The changing nature of American employment, in which more workers are shifted from the ranks of full-time to part-time, non-staff or contract status--often with no or reduced health insurance. That combined with an economy in which three of every four jobs will be in the service sector--where health coverage has either been nonexistent or minimal, Ginzberg said, is bringing about a disintegration of the employment-based insurance system.

"As I see things developing," Ginzberg said, "we are in a no-win situation. I never thought national health insurance was a live subject in this country from the day I began to look at it seriously until about two or three years ago, when I began to get worried about the state of our delivery system.

"I don't think we will get any kind of national health insurance until we get in more trouble. It's got to get worse before something happens. But at the moment, I see warning signs that the extant system is weak and getting weaker. It is losing its attractiveness to the employer community, and that is the single most important thing."

Ginzberg is far from alone in this interpretation. Indeed, most of the economists interviewed by The Times agreed business frustration with the system may be the single most important factor.

'Like an Open Sieve'

"Our system is so pluralistic that it's like an open sieve," said Princeton's Uwe Reinhardt. "There's no way to control anything. The (corporate) rhetoric, of course, is motherhood and patriotism and quality, but what they're really after is a vehicle to cut costs. I have always said I cannot imagine an American corporate executive who really gives a damn about what happens to the quality of care received by their truck drivers."

"I think the corporate sector is going to get pretty angry before too long," Reinhardt said. "Either they will form really powerful coalitions and get doctors on their knees or they will (recognize) that in other countries, business is not stuck with this uncontrollable line item."

A key motivation, Reinhardt believes, may be the aging of the baby boomers, who start to turn 50 in 1995. "Boomers are poor. They seem to live so well, but it's very shallow," Reinhardt said. "Lots of things happen when you're 50 and the first real deficiencies in your body become apparent.

"(Boomers) will see that (our health care) pluralism is wonderful, but it's so expensive. In Canada, spending 8% or 9% of the GNP on health, the people have very good care. They're taken care of if they get sick, and here you struggle and your parents' sickness bleeds you to death and the same is true if you have a problem yourself. (Boomers) will come to the notion that national health insurance isn't such a bad idea."

AMA Opposition

There is much opposition to the concept, of course.

Dr. Jerald Schenken, an American Medical Assn. trustee and spokesman on national health insurance issues, said the AMA does not see such a program as inevitable.

In fact, Schenken said, the AMA even believes the disaffection with the number of people left uncovered by the safety net Medicare and Medicaid programs may actually spur anti-government backlash. Far from being a prelude to national health insurance, he said, Medicare and Medicaid may come to be perceived as the reasons why such a universal program should not be established.

"The AMA and others did comment at the time (Medicare and Medicaid were being debated in the mid-1960s) concerning the problems of a central operation," he said. "I really do not see anything inconsistent in relooking at the federal role in this and moving away from it just as the general public has relooked at the federal role and moved away from a lot of other things in the past decade."

The AMA's position on such questions has changed little since 1965, Schenken added. The organization still believes large government bureaucracies are anathema to maintenance of high quality in the health care delivery system.

"In the near future--the next five or 10 years--I do not see this (national health insurance) taking shape," Schenken said. "I don't sense doctors moving toward a centralized federal response to the issue. But beyond the next decade, there are just too many variables. I can't predict the future."

Economists and other experts agreed the final decision about any national health care plan will be rooted in politics. Harvard's Fein and Princeton's Reinhardt both believe the issue would inevitably be forced if one state either adopted--or even seriously studied--the idea of abandoning traditional health financing concepts on a state basis and adopting a version of national health insurance.

Such a step would require exemptions from federal laws that spell out details of the Medicare and Medicaid programs and would, almost certainly, be vigorously resisted by private insurance companies and the AMA. But Fein and Reinhardt agreed that states with progressive health care regulatory systems and innovative political leaders may be increasingly tempted to at least establish study commissions to ponder such a program. New York, Texas, Florida and Massachusetts may be likely candidates for such a first move, along with Wisconsin, Maryland and Minnesota.

"I have a litmus paper test," Fein said. "I will take this issue seriously and I will know it's really on the Washington political agenda when the President, at three consecutive press conferences, is asked a question about it."

No announced presidential candidate has embraced national health insurance. And even Sen. Edward Kennedy (D-Mass.)--for at least 15 years the most visible politician identified with national health insurance--has retreated from concepts he espoused in the 1970s, when he co-sponsored a variety of national health insurance bills characterized by total government insurance coverage, paid for by a variety of taxes.

Legislation Introduced

Today, Kennedy talks far differently. He has introduced legislation to expand employer-provided health insurance--an incremental step that would affect 24 million of the 35 million people currently totally uncovered. The incremental approach, Reinhardt and several other economists agreed, may postpone the point at which a coordinated national program has to be considered, but the economists agreed such proposals only buy time--perhaps five years at the most.

"I've been around here long enough to say we ought to make what progress we can," Kennedy said in a telephone interview. "At another period of my life I felt incremental progress was not the way to do it, but I believe now that there is so much need that we ought to try to make progress . . . in a practical way.

"The idea of a big ticket item passing the U.S. Senate today is out of the question. The idea of mandating the states to provide health insurance is not possible."

A radical fix is out for now, Kennedy says, but that reality could change, depending on results of the 1988 presidential election. "I believe that national health insurance is coming back to (the) front burner," he said.

"I think the current situation's unacceptable. You have millions of families playing Russian roulette with their health. Every American should have access to health insurance."

U.S. Rep. Henry Waxman (D-Calif.), the only other major national political figure closely identified with national health insurance for any significant period of time, said he believes the changing American employment scene, AIDS and other factors will combine to force a radical departure.

Sees Debate Beginning

"I think the debate is starting," Waxman said. "We have to attempt to improve health care for the elderly now (a bill to extend Medicare coverage to catastrophic illnesses recently passed Congress), But I think all these things (the various pressures on the system) are pushing in the direction of reexamining the way this nation is going to provide health care."

Fein, who talked about his longstanding passion for bringing change in the health care system, likes to tell a story on himself that illustrates the current climate for the issue.

"I had an image of myself, retired from Harvard," he said, "someday walking across the campus and having a couple of students notice me and one of them would say, 'Who's that?' And the other one would say, 'He's an anachronism. He's in favor of national health insurance.'

"Now I find that I'm not considered a joke, anymore."

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