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News

America poised on the precipice of health reform

Janet Brooks
CMAJ November 06, 2007 177 (10) 1170-1171; DOI: https://doi.org/10.1503/cmaj.071453
Janet Brooks
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  • © 2007 Canadian Medical Association

Americans without health insurance shouldn't sweat it, according to US President George W. Bush. “I mean, people have access to health care in America,” Bush proclaimed in Cleveland, Ohio, over the summer. “After all, you just go to an emergency room.”

Americans aren't buying it. A recent poll indicated 90% of Americans believe their health care system needs fundamental change, if not a complete overhaul. Business titans like Safeway's Steve Burd and Wal-Mart's Lee Scott are forming unlikely partnerships with union leaders to push for universal health care. A year before voters choose a new president, Democratic and Republican candidates alike are under pressure to roll out plans to cover more, if not all, Americans.

Figure

Americans appear on an inexorable march toward universal health care coverage as corporate and citizen anger over the cost and inefficiency of the system has eroded blanket faith in private health care. Although the United States now spends 15.4% of its gross domestic product on health, it's projected that as many as one-third of Americans aren't covered by health insurance for at least a portion of each year. Image by: David Freund / iStockphoto

It might be the perfect storm. The confluence of middle-class anger, corporate readiness for change and a tight presidential race may finally lead to reform of the world's most costly and inefficient health care system Box 1. Largely employer-based, it leaves 1 in 6 Americans uninsured and millions more underinsured, with minimal coverage and high deductibles, according to the 2006 US census. A recent study by the advocacy group Families USA says that number soars to 89.6 million Americans (over one-third) when measuring those who are insured for a portion, but not all, of the year.

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Box 1.

As the lone industrial nation without universal health care, the United States ranks 37th on the World Health Organization's quality of care index, despite accounting for one-third of global health care spending. Americans shell out almost twice as much per capita for health care as Canadians, but lag behind in such health measures as infant mortality and life expectancy. A recent Institute of Medicine study found that 18 000 Americans die annually because they lack health coverage.

Americans lucky enough to be covered face mounting premiums, co-pays and deductibles. The average American family spends 20% of its income on health care, up from 7% two decades ago. Indeed, Americans spend more on health care than on food. Some are squeezed out entirely: the average premium for a family of 4 ($11 480) almost matches the gross annual income of a minimum-wage worker ($12 168; source: Kaiser Family Foundation).

While Bush advises the uninsured to go to emergency rooms, 3 landmark reports by the Institute of Medicine recently warned of dangerously overburdened and underfunded emergency departments. Forbidden by law from turning anyone away, emergency departments end up providing non-critical care to the uninsured. Cash-strapped hospitals have responded by closing hundreds of the departments over the past decade.

Still, the myth of private-sector efficiency persists, although US for-profit insurance companies spend far more on administrative costs than single-payer systems in other countries. The excess bureaucratic costs of US insurance companies was calculated at about US$98 billion by the management consulting firm McKinsey. The cost of covering uninsured Americans, by contrast, is set at $77 billion.

Companies now say health care costs threaten their survival. General Motors paid more for medical benefits in 2004 than for steel. Starbucks spends more on employee health care than it does on coffee. Safeway's Burd became a convert to universal health care when his firm's annual health expenditures topped $1 billion, exceeding its net profit.

The unique American system resulted from labour shortages during the Second World War. Pre-war health insurance plans were run by hospitals, which insured all comers at the same rates. War-time wage controls prompted companies to compete for scarce workers by offering health benefits. By the late 1940s, tens of millions were enrolled in Blue Cross plans, descendants of the early hospital plans. Their success attracted commercial insurers, who focused on relatively healthy groups, while charging individuals with pre-existing conditions more. As the Cold War deepened, private health care was deemed patriotic. State medicine “is contrary to American tradition and is the first and most dangerous step in the direction of complete state socialism,” railed the Journal of the American Medical Association in 1948, when Britain introduced universal medical care.

By the 1950s, Blue Cross enrolment trailed that of commercial insurers, forcing the abandonment of identical-rate coverage. Starting in 1954, US companies were allowed to deduct health insurance costs, a benefit worth $189 billion by 2004. But when unit labour costs came under pressure in the 1970s, companies began to cut benefits and cover fewer workers. Today, Wal-Mart, the country's largest private employer, provides health benefits to less than half its employees.

Now activist CEOs like Burd are touting the virtue of universal coverage to their corporate colleagues, some of whom helped torpedo the Clinton health care initiative over a decade ago. Unions and business leaders are becoming strange bedfellows as they jointly lobby for health care reform under the rubric of umbrella organizations like “Divided We Fail” and “Better Health Care Together.”

Patients, meanwhile, look to alternative means of obtaining treatment, like signing up for clinical trials or travelling abroad to obtain surgery at cut-rate prices. Blue Cross and Blue Shield of South Carolina now cover treatment at a Bangkok hospital. Others bypass insurance company co-payments by buying drugs directly from discount stores like Target and Wal-Mart, which introduced $4 generic prescriptions this year.

Employers, meanwhile, now offer weight-loss incentives to overweight workers, levy charges on the obese or reduce deductibles for non-smokers. Supermarkets and discount stores now rent space to low-cost health clinics.

With the National Coalition on Health Care projecting that spending will reach 20% of gross domestic product by 2015, America may have moved past the point where inaction is an option.

Footnotes

  • First of a 2-part series on American health care challenges. Part 2: Dec. 4, 2007

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Canadian Medical Association Journal: 177 (10)
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America poised on the precipice of health reform
Janet Brooks
CMAJ Nov 2007, 177 (10) 1170-1171; DOI: 10.1503/cmaj.071453

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America poised on the precipice of health reform
Janet Brooks
CMAJ Nov 2007, 177 (10) 1170-1171; DOI: 10.1503/cmaj.071453
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