Policy expert challenges effectiveness of lesser reforms at House panel
With President Obama and congressional leaders vowing to pass a health reform bill by the end of the year, a prominent Harvard-based health policy analyst warned a House subcommittee Thursday that the leading incremental models for reform, including those patterned after the Massachusetts plan, are incapable of containing skyrocketing health care costs or providing quality, affordable care to all.
Dr. David Himmelstein, an associate professor of medicine at Harvard Medical School and a primary care doctor at Cambridge Hospital in Cambridge, Mass., told the House Subcommittee on Health, Employment, Labor and Pensions that only a major overhaul of the existing system, one which replaces the wasteful, for-profit, private insurance industry with a publicly financed, single-payer program similar to Medicare, can rein in costs while guaranteeing universal, comprehensive coverage.
“A single-payer reform would make care affordable through vast savings on bureaucracy and profits,” Himmelstein said in his statement. “As my colleagues and I have shown in research published in the New England Journal of Medicine, administration consumes 31 percent of health spending in the U.S., nearly double what Canada spends. In other words, if we cut our bureaucratic costs to Canadian levels, we’d save nearly $400 billion annually – more than enough to cover the uninsured and to eliminate co-payments and deductibles for all Americans.”
A national health insurance program would slash the enormous paperwork burden on hospitals, doctors and patients, Himmelstein said, resulting in hundreds of billions in savings that could be redirected to patient care.
Half-measures like those proposed by the Obama administration and key lawmakers like Senators Max Baucus (D-Mont.) and Edward Kennedy (D-Mass.), many of which mirror aspects of the Massachusetts reform of 2006, can’t match the savings of a streamlined, publicly financed system, he said.
Even if a “public plan option” emerges as part of the House and Senate reform bills, Himmelstein said, it won’t be sufficient to challenge the inefficiencies and wastefulness of a multi-payer system: “A health reform plan that includes a public plan option might realize some savings on insurance overhead. However, as long as multiple private plans coexist with the public plan, hospitals and doctors would have to maintain their costly billing and internal cost tracking apparatus. Indeed, my colleagues and I estimate that even if half of all privately insured Americans switched to a public plan with overhead at Medicare’s level, the administrative savings would amount to only 9 percent of the savings under single payer.”
Citing his direct experience with the Massachusetts plan, which is facing critical financial problems, Himmelstein commented: “Prevention, disease management, computers and a health insurance exchange were supposed to make reform affordable. Instead, costs have skyrocketed, rising 23 percent between 2005 and 2007, and the insurance exchange adds 4 percent for its own administrative costs on top of the already high overhead charged by private insurers. As a result, 1 in 5 Massachusetts residents went without care last year because they couldn’t afford it. Hundreds of thousands remain uninsured, and the state has drained money from safety-net hospitals and clinics to keep the reform afloat.”
While the conventional wisdom in Washington is that single-payer national health insurance is “not feasible” and therefore “off the table,” public opinion polls have shown solid majorities continue to support such an approach. In a survey published by the Annals of Internal Medicine a year ago, 59 percent of U.S. physicians said they favored government action to establish a national health insurance program, a 10-percentage-point leap from only five years prior.
In addition to their pioneering research on the high administrative costs in U.S. health care, Himmelstein and his colleagues have also published other groundbreaking studies, including one that shows medical bills contribute to half of all personal bankruptcies in the United States and another that shows how taxes already pay for more than 60 percent of U.S. health spending.
A co-founder and national spokesperson for Physicians for a National Health Program, Himmelstein regularly writes and speaks about health policy issues before a diverse national audience.