Finding a Cure for the Health-Care Crisis
The only sensible thought to have about the creaking American system of medical care and health insurance is that the problems can be solved--and possibly will be solved in the next few years under pressure from stricken businesses and with an assist from European thinking.
Because if you don’t think positively about American health care--on which the nation spends $650 billion a year, more than double the cost of defense--it’s easy to despair.
In the latest issue of the Journal of the American Medical Assn., Dr. George Lundberg, the editor, lashes out in an editorial: “It is no longer acceptable morally, ethically or economically for so many of our people to be medically uninsured or seriously under-insured.”
Lundberg is referring to the 33 million Americans without health insurance and frequently with no access to medical care. His editorial got attention on front pages and on television newscasts because the problem goes beyond the poor. Health insurance has become a middle-class worry as years of corporate restructuring have made more people vulnerable to bouts of unemployment. That’s when employees find out that medical insurance, which seemed so cheap when employers provided it, can cost $500 a month.
American business is petrified by health-care liabilities. It’s not only that the bill for current health insurance is going up 20% a year. It’s that under a new accounting ruling, companies have to count retiree health-care benefits as liabilities. We’re talking real money. The six California electric utilities face a liability of $8 billion and are petitioning the Public Utilities Commission to allow them to put the $8 billion in their rate base--meaning that everybody’s electric bill would go up to reflect the cost.
IBM took a $2.3-billion charge in the first quarter to reflect liabilities for retiree health care. All other companies, public and private, will have to take a charge.
And small companies are up against it. They can’t afford expensive plans for their current employees and they see retiree liabilities as the kiss of death. So, more businesses are declining to offer health insurance, meaning that more employees are going without--and more hospitals are overcharging insured patients to pay for the uninsured.
Yet Washington seems paralyzed. President Bush is sending Congress a program today to cut the costs of medical malpractice insurance. But that’s narrow. Congress talks more ambitiously of insurance for all employees and of a tax-financed medical system such as that of Canada. But talk is cheap; nobody is coming forward to advocate higher taxes to pay for it all.
“We’re going into an election year,” says Michael Bromberg, director of the Federation of American Health Systems, which represents 1,400 hospitals. “Nothing will be done on health insurance until 1993, if then.”
Bromberg is being realistic, not cynical. He knows the problems are complex. American medical technology is wonderful and saves lives. The problem is how to pay for it--and keep its costs from rising.
The challenge is financial, and so will be the response. First, corporations will begin to set aside funds for medical insurance--just as they set up pension investment funds. Some companies are already doing it, says Fred van Remortal of Brown Bridgman Retiree Health Care Group, a New York consulting firm. “Bell South, Bell Atlantic, Pacific Telesis and others are setting up tax deductible funds under the existing tax code.”
As they set up such funds, the companies will demand more of a share from employees--as they now do for retirement--and attention to containing medical costs will grow even stricter.
But the principle of setting up medical investment funds may reach far beyond the corporations to the larger society, as is the case in Germany.
In Germany, companies, villages, groups of all kinds set up sickness funds, based on an income-related family premium. The attraction of the system for the United States, writes Bradford L. Kirkman-Liff in the AMA Journal, is that the philosophic values are the same--health care financed by insurance rather than taxes and a wide variety of medical facilities. The sickness funds negotiate care and fees with doctors and hospitals.
And it seems to work. Germany has as many doctors proportionate to its population as the United States, but it treats more patients, including many in long-term care--at a much lower cost per patient. It also makes provision for advances in technology.
But the difference in the German system is that employees put up 50% of the premiums, with employers--or unemployment insurance or retirement funds--paying the rest. This makes everybody more conscious of the real cost of health care, says Kirkman-Liff, who is a professor at Arizona State University.
And perhaps the most newsworthy thing to say about the German system is that the House Ways and Means Committee is going to Germany to study it. We’ll be hearing more about it, and perhaps about a solution to our health-care problems. You gotta believe.
