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The High Cost of Health Care (Part 3)

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The High Cost of Health Care (Part 3)

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We continue our 5-part series on the high cost of health care in America.

The High Cost of Health Care (Part 3)
Wednesday, August 5, 2009

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh and you're listening
to These Days on KPBS. The past two days in our series on the High Cost
of Healthcare, we've heard about a lot of problems. People have told
personal stories about their health being threatened because they can't
afford either insurance or medical care. And we've also heard from the
healthcare and insurance establishment about a wide range of
overlapping costs, from administration fees to doctors' paychecks that
they say make our health care increasingly expensive.

One thing we haven't heard is that our healthcare system is all
right just as it is. Skyrocketing costs and the growing number of
uninsured seem to have convinced most people that the American system
of providing medical care needs some fixing. But it's what kind of
fixing that is at the center of the healthcare reform debate in
Washington. Practical solutions are slamming right into political
realities and have created a ideological divide over healthcare reform.
Is decent medical care the right of every citizen, or is it a privilege
that must be earned, like owning a house or a car? Should healthcare be
a business, or is it like the nation's defense, too important and
expensive to place into the hands of the private sector? Today we talk
about the healthcare reform plans being debated in Washington, D.C. and
the political mindsets that are shaping that debate. And I’d like to
welcome my guests. Len Nichols is Director of the Health Policy Program
at the New America Foundation, a non-profit public policy think tank.
And, Len, welcome to These Days.

LEN NICHOLS (Director, Health Policy Program at New America Foundation): Glad to be here, Maureen.

CAVANAUGH: Mike Bardin is Senior Director of Public and Government Affairs for Scripps Health. Mike, welcome.

MIKE BARDIN (Senior Director, Public and Government Affairs, Scripps Health): Good to be here.

CAVANAUGH: Dr. Jeoffry Gordon is a family physician and member of Physicians for a National Healthcare Program (sic). Dr. Gordon, hello.

DR. JEOFFRY GORDON (Physician): Good morning.

CAVANAUGH: And Vince Mudd, president and owner of San Diego Office
Interiors, and board member of the San Diego Regional Chamber of
Commerce. Welcome, Vince.

VINCE MUDD (President/Owner San Diego Office Interiors): Thanks for having me.

CAVANAUGH: And we invite our listeners to join the conversation. You
can give us a call with a question or a comment at 1-888-895-5727. Len,
during the discussion about healthcare reform, we’ve heard a lot of
comparisons between America’s system and the government based systems
in Europe. And I wonder if we might start our discussion with an
overview of how those two different models of providing healthcare
emerged. As I understand it, after World War II, most European nations
began various forms of national healthcare to provide coverage to all
citizens. In the U.S., health insurance began to be offered by
employers as a benefit to attract good workers. I’m wondering, why
didn’t we go in for the national healthcare approach originally?

NICHOLS: Well, mostly because we’re American and we…

CAVANAUGH: Umm-hmm.

NICHOLS: …we believe in a lot more individual choice and stuff like
that. But I think it’s also true, frankly, our economy was stronger,
let’s not forget. We were the one standing economy of the world that
had not been bombed. We were producing at great rates in all forms of
industrial capacity and so it looked like a natural thing for our
employers to be able to take this on as they were expanding, selling
goods around the world and we stood, you know, atop the world and so
forth. So I think it was because of the relative strength of our
economy versus the relative weakness of their economies.

CAVANAUGH: There have been some rumblings about national healthcare for a long time, though, haven’t there?

NICHOLS: Oh, absolutely. I think what we’ve seen over time is while
the employer system may very well have made good sense in the fifties
and sixties, it’s becoming increasingly clear it’s not working for
small business at all. And, in fact, it’s not working all that well for
large businesses as we see our healthcare costs are so much higher than
other countries. They have to compete against businesses that are
working in systems where everything’s cheaper so our auto, our steel,
anything we’re trying to export, we have a disadvantage and, as I think
Mr. Mudd can tell you, our small group market has not worked well for a
very long time.

CAVANAUGH: Well, you know, some of our guests have said that the
U.S., in comparison with Europe, really doesn’t have a healthcare
system. We have sort of a patchwork approach. Do you – would you agree
with that?

NICHOLS: Well, yes and, again, that comes back to our fundamental
commitment to individualism. I think we sort of, you know, reject
planning like tissue rejection sort of thing.

CAVANAUGH: Hmm.

NICHOLS: But I think we’re coming to see that the absence of
systemness, the absence of coordination, the absence of thinking
through the implications of some of our freedoms, have left us with
very poor performance. We’re not getting good value for dollar, and
that’s why I think you see much more correct and appropriate focus on
reforming our system from all sectors, from inside the health system,
from employers, from households, certainly from government’s point of
view. We know the current system is unsustainable.

CAVANAUGH: I want to let our listeners know that we do have a great
link at KPBS.org/TheseDays “The High Cost of Healthcare, Part III.” It
looks at side-by-side comparisons of the U.S. and other countries’
healthcare systems. I’d like to move on now that we’ve established
where we are and how we got there. I’d like to lay out some of the
various proposals for healthcare reform that we’ve heard a lot about in
the past several months and some of which congress is looking at. Let’s
start with the idea of the individual mandate. Now that is currently
part of every proposal being discussed in congress. It would require
everyone to have health insurance either by buying it from a private
insurer or, if they qualify, getting a government subsidy to help pay
for it. Okay, Len, so tell us the pros and cons of that policy.

NICHOLS: Well, the idea behind the individual mandate is that it is
part of an insurance reform package that will actually make markets
work better and more fairly for everybody. Right now, we have an
insurance market that works for the very healthy but it doesn’t work
for everybody. If you’re sick, basically, insurers exclude you. Even if
you work for a small business, they just put you in a higher and higher
risk business class and so you end up with unaffordable premiums. And
what the individual mandate will do then, is it says to insurers, look,
everyone is coming, therefore, it’s perfectly appropriate for us to
require insurers to sell to all comers. If you make insurers sell to
all comers and don’t have a mandate, they would rightly fear only the
sick will come and buy. But if you have a mandate and everyone has to
buy, then they have no excuse, if you will, and then you can impose
rules that make markets more efficient and more fair. The irony is
smart regulation actually makes markets work better. The free market
ideology denies that but people who’ve studied insurance markets agree,
and that’s why you’ve got broad consensus, both parties, both houses,
lots of states as well have reached this conclusion.

CAVANAUGH: I want to ask you, Dr. Gordon, you’re a member of
Physicians for a National Healthcare Program, what do you think of the
individual mandate idea?

GORDON: Well, let me just make a small correction. It’s Physicians
for a National Health Program, and the website is Phnp.org and anybody
can follow up there.

CAVANAUGH: Sure.

GORDON: Let me try by making an analogy. I think my organization,
which has included as members, over 16,000 physicians, has been alive
and working hard for more than ten years on what we call single payer,
which is easy to understand because it would be Medicare 2.0 for
everybody. It does not conceive of an individual mandate, it conceives
of everybody who’s resident in the United States automatically being in.

CAVANAUGH: Right.

GORDON: Everybody in, nobody out. The primary reason for this
approach is, number one, moral, ethical and compassionate, that
healthcare is, in fact, a public good, a common benefit of cultured
societies and there should be nobody left out. And so I have to say our
underlying philosophy is based on the fact that it’s a moral and
ethical and compassionate issue. And what is the best way to get there?
In my own mind, I would like to convey an analogy. It’s like learning
to paddle a canoe. If you’re learning to paddle a canoe, and, say,
you’re a five year old, you might find that paddling the canoe is
easiest if you have the blade parallel to the canoe. It slices through
the water very easy. And in this country, we’ve been told that we have
individual choice in the free market and, like holding the paddle
parallel to the canoe, the stroke is easier if you let the free market
work. There’s less hassle, it’ll adjust things every – every much
better. But we’ve seen that this has become almost catastrophic. Wall
Street melted down last fall. We just fought a war in Iraq which was
privatized. We’ve tried to privatize water resources around the world
that’s created tremendous social unrest. So part of the philosophy of
my organization, I wouldn’t call it socialism, but understanding there
are activities in a good society which are not adequately performed by
a market, and that means putting the paddle broadside to the canoe,
getting real power and making the system work.

CAVANAUGH: Absolutely. And we’re going to talk a lot more about single payer and the idea of socialized medicine as we get into…

GORDON: That’s not the same thing.

CAVANAUGH: I understand that and we’ll make that – we’ll make that
differentiation, I assure you. I want to ask Mike, who is the Senior
Director of Public and Government Affairs for Scripps Health, the
individual mandate requiring people to either buy insurance or get it
subsidized through the federal government, what do – you think that’s
going to help us get out of the healthcare mess that we’re in?

BARDIN: Well, it’s clear that we need—and I guess the other term for
it is—universal coverage, that everybody has access. When analyzing
healthcare, it has always been a kind of delicate balance between cost,
quality and access, and one affects the other two in that triad. If
there are a substantial number of people that don’t have access, that
affects costs. It also, to some degree, affects quality. If you put too
much into quality, it affects the other two and such. So this is an
effort and I think there is pretty generally a consensus that everybody
needs to be in the system. The question is, what is the system?

CAVANAUGH: Now Massachusetts has this mandatory coverage, is a universal coverage, and how’s that working up there?

BARDIN: Well, it’s working, it’s spotty. The verdict is still out.
The jury is still out. The verdict is certainly not conclusive yet. The
costs have risen. The costs were predicted by many to have risen – to
rise, and they certainly are. Some would say it’s working; some would
say it’s not. Many would say it’s too early to tell.

GORDON: If I could chime in about Massachusetts again, it has
achieved more universality of coverage but it did that by avoiding the
cost issues largely and so they are real…

BARDIN: Up front, at least.

GORDON: Right. So they are stumbling over the tremendous burden on the state budget.

CAVANAUGH: And I want to move on to another part of the reform
proposals that’s – that is part of every perform – reform proposal
that’s currently before congress in the Senate or in – in the House,
and it’s called pay-or-play employer mandate, whereby businesses would
either provide insurance for their employees or pay a fine. And, Vince
Mudd, you’re a business owner, you’re a member of the Chamber of
Commerce, what do you think about that?

MUDD: Well, the – you asked a question about the individual mandate
and mandates in general. And general business doesn’t like mandates
primarily because of the law of unintended consequences, you never know
whether it’s going to impact your company separately than your
competition. But mandates that apply to everyone are mandates that
business understands. So I’ll give you a good example since we’re not
making this up from scratch. I’m also on the board of the State
Compensation Insurance Fund. Workers Comp insurance is mandatory in
every state. Every worker that works has Workers Comp insurance, every
business pays into it. As a result, Workers Comp, the cost to write
Workers Comp is some of the lowest insurance rate in the industry. So –
so we have universal workers healthcare…

CAVANAUGH: Yeah.

MUDD: …in the Workers Comp system and it tends to work. And then
over the last five years, since 2004, the rates have come down by $14
billion in the State of California alone. So we can work, as a
business, with individual mandates. We don’t necessarily like business
to still have to be the provider of the premium because to some extent
it’s – it tends to impact portability but we’re currently doing it and
we understand that. The other comment I was going to make real quickly,
insurance, every other type of insurance you buy, you hope you never
use. You never want to get into an accident and use your auto
insurance. You never want to use your life insurance. Maybe your spouse
does but you don’t. But the fact of the matter is, health insurance is
kind of the wrong word for what we’re trying to deliver to people.
We’re trying to deliver health care, and that’s something you want
people to use to be healthier. So you’ve got these competing philosophy
of one group wants you not to use at the lower cost and the other group
wants to use it in order to be healthier. And as a business guy, I want
our employees healthy. I want them not thinking about healthcare. I
want them focused on work. And so the concept of an individual mandate
or a corporate mandate to provide healthcare is not strange or unusual
to business. As a matter of fact, we’re doing it with Workers Comp.

CAVANAUGH: And before we have to take our break, Len, I just wanted
to throw this out. Isn’t, in a sense, mandated coverage simply a gift
to the insurance companies who’ve been pricing themselves out of the
market and losing business? I mean, if you…

NICHOLS: I…

CAVANAUGH: …if – if they have private insurers and you have to get
insurance from a – one of the private insurers, isn’t that giving them
a gift?

NICHOLS: It would be unless you change the rules. And if you don’t
change the rules, it’s not worth doing. So you got to change the rules
to make markets more fair and you got to have subsidies to enable low
income people to be able to buy. But you do both of those things, you
make the market rules smart and you subsidize the low income, mandates
are a necessarily tool to make our system efficient.

CAVANAUGH: Okay, then we have to leave it there and take our break
but we will return very shortly and continue our conversation about
healthcare. You’re listening to These Days on KPBS.

[break]

CAVANAUGH: Welcome back. I'm Maureen Cavanaugh. You're listening to
These Days on KPBS. We’re talking about the various healthcare reform
proposals being debated now in Washington, D.C. My guests are Len
Nichols, Director of Health Policy Programs at the New America
Foundation. Mike Bardin, Senior Director of Public and Government
Affairs for Scripps Health. Dr. Jeoffry Gordon, he is a member of
Physicians for a National Health Program. And Vince Mudd, is president
and owner of San Diego Office Interiors, and board member of the San
Diego Regional Chamber of Commerce. We are taking your calls at
1-888-895-5727. Let’s start off with John in La Jolla. Good morning,
John, and welcome to These Days.

JOHN (Caller, La Jolla): Hi. Good morning. Great show. I listened to
your show yesterday on the healthcare reform and they mentioned the
nine factors that are increasing healthcare, and I think if you dig
deep into each one of those you’ll find that the reason that these
costs are going up is one of two reasons, either the government has
very strong consumer protections and so there’s a lot of rules and
regulations that the hospitals have to follow. A good example they
brought up is like they do way too many MRI scans and things like that
because they want to save themselves from a lawsuit in case one’s
brought against them. And the other part of that is that the government
is trying to redistribute the wealth from the people that can afford
healthcare to the people that can’t. And because of that, they put in
all this bureaucracy that the hospitals have to follow and that raises
the cost for everyone including paying for the people that can’t afford
it. And so to me, if you really want to reduce healthcare is you reduce
– or the cost of healthcare, is reduce the amount of consumer
protection just a little bit and – and stop trying to redistribute the
wealth.

CAVANAUGH: Well, John, thank you for that comment.

JOHN: The free market will take care of it just like they’ve done
with cars, computers and every other type of thing. They’ll – they find
a way to reach the masses at the lowest price. But when the government
gets involved, that’s when things just go haywire.

CAVANAUGH: John, thank you for that call. And, Dr. Gordon, I know that you want to comment on this.

GORDON: Well, that’s exactly the kind of issue I was trying to
raise. This gentleman is very used to paddling with his paddle parallel
to the canoe. In fact, most of the trouble that hospitals have in these
regards are rules and regulations put on by the private for-profit
health insurance companies, which are trying to spend as least money as
possible on medical care and create onerous billing, review
qualification and disqualification criteria, creating massive
bureaucracies. The Medicare program is, in fact, the most efficient
health insurance system program in the country. It may have some
reimbursement problems but is far less expensive as a provider to deal
with. In fact, much of their bureaucracy is due to the complexity of
the so-called market. Let me say one other thing. It is not widely
realized that the private insurance companies exist and make money and
survive wholly due to government subsidy, a hundred percent. Number
one, the premiums are tax deductible to the employer. Number two, the
government takes many of the high cost patients totally off the hands
of the insurance companies. If you’re over 65, you’re a very expensive
patient potentially. If you have kidney failure and you need kidney
dialysis, if you have HIV, if you’re a child born with cerebral palsy,
all those patients are not in the private insurance market. They’ve
already been rescued by the government and the insurance companies do
not have to deal with the expense of their care.

CAVANAUGH: And, Mike, what about the free markets and hospitals?

BARDIN: Well, the point was made that Medicare is one of the most
efficient and such, and kind of passed over the fact that the
reimbursement for Medicare is one of the principle problems, frankly.
Our – In the hospitals, the fastest growing shortfall, that’s when
costs, reimbursement expense, reimbursement does not meet the expense
of care, Medicare is the fastest growing. Scripps system last year had
a shortfall of $137 million where the cost of Medicare was not met by
the reimbursement. Add to that—and we have a growing number of more
expensive patients in Medicare—add to that the expansion of it to more
population paying at those rates with the restrictions and the controls
and such that Medicare has, we see a very slippery and becoming more
slippery slope into uncovered costs.

CAVANAUGH: Vince.

MUDD: I don’t disagree with the caller’s sentiment but I just
disagree with his conclusion. As a free market person myself, I
understand the free market can solve a lot of problems, and the free
markets had an opportunity to solve the healthcare problem. As an
employer, my premium rates went up last year by 18% -- or, 17%. I had
no – No one had babies in our company and no one had major surgery.
They just went up. And I can’t do anything to lower my premiums. And I
don’t think anything that I did in my company was because of any kind
of excessive government regulation that made my rates go up. I think
the private market does what the private market does. When you can make
a profit, make a profit, and I don’t blame the insurance companies for
doing it. I just think that as an employer I need my rates to go down
and I need to have some control over how they go down. And if I have a
healthier workforce, I’d like to see a reduction in my principle – or,
my premium, and that’s where we’re focused on. But I don’t necessarily
think it’s just exclusively because there are consumer protections that
those drive the cost up so excessively that if we eliminate the
consumer protections we would expect the costs to go down. I think if
we eliminated the consumer protections, I think all you’ll have done is
eliminated the consumer protections, the cost will probably still be
high because you haven’t fixed the real problem.

CAVANAUGH: And, Len, isn’t there something perhaps fundamentally
troubling about putting people’s health and their welfare and their
illness in the hands of a sort of a dog eat dog free market kind of a
system?

NICHOLS: Well, I think it’s important to remember that no market
works without some rules. If you don’t have property rights and basic
rules of exchange, no market works. So making markets work is always
about creating the conditions under which the market will work well. In
markets for ice cream, you don’t have to do very much regulations
although you do have to be sure that they’re actually putting stuff in
there that you can eat. But in markets like health insurance you do,
for the very simple reason that the difference is an ice cream seller
always wants to sell to the next customer and the ice cream seller
knows what the cost of their ice cream is for that customer. From the
insurance point of view, the insurers do not want to sell to the
unhealthy, to those who look a little sicker or might have a family
history or might be obese or might already have a condition. They want
to exclude them. So markets are – free markets are just not going to
work. What rules are about is making it possible for all of us to buy
at reasonable rates. Now it is true that if you make stupid rules or
you make rules that aren’t carefully drawn, they will profit by, you
know, including people and making them suffer incredible consequences,
even death, because they can’t afford the healthcare they need. But
that’s really what insurance market reform is all about. It comes down
to information, incentives, and rules.

CAVANAUGH: You know, talking about government regulation, and there
is a portion of what we were talking about, these reform plans before
congress, that is very controversial and that is President Obama’s
insistence on a public option. So you have these universal coverage
being provided by private insurers and government subsidies but
President Obama says the only way that – that mandated insurance
coverage will work is if there is a public option that people could
choose to hold down costs. And I wonder, Lou (sic), what would a public
health insurance option look like?

BARDIN: Len.

CAVANAUGH: I’m sorry. Len.

NICHOLS: Oh, okay. Well, there are a couple different ways you could
design it but the most important thing is to understand that a lot of
people really don’t trust private insurance. There are a lot of people
who don’t trust government, there are also people who don’t trust
private insurance. So what they want is a plan that is something that
will have a manager picked by elected officials that would not have an
incentive to exclude people from care that they might need and so
people would be more willing to believe that that organization or that
plan would have their best interests at heart. And I think that’s
really the fundamental role of the public option. I do believe it’s got
to be set up in a level playing field way so the competition isn’t
unfair but I think there are a lot of examples where public and private
actually do compete and I think actually Vince Mudd can tell you about
one, so let me turn it over to him.

MUDD: Well, I was going to say that, you know, we have a lot of
public options in many areas that are working right now. For example,
San Diego State University is a public option for higher end education,
and we have it throughout our system. But I mentioned Workers Comp,
which is our current universal product that we have in California. The
State Compensation Insurance Fund, which I’m on their board, we are, in
effect, a public option. In other words, we are available. We are
required by the state constitution to be the insurer that’s available
market for people that need Workers Comp. But we have 59 private
insurers writing Workers Comp in the state of California. We’ve not
driven them out of business. They’ve – they thrive. They make a profit
but at a – but at a minimum, people know that if you’re not being
treated right in the completely private market, there is an option for
state fund. So I think the stories that you’re hearing that a private
option is going to destroy business is actually a lie. You can actually
say that word because it hasn’t been demonstrated that that’s true in
this regard. But we want, as citizens, and what I want as an employer,
is I want an option to make sure that there’s someone out there that’s
available for me to get good care for my employees and I can, if
they’re wrong, if they do something bad, I can politically do
something; I can go to the ballot, I can vote to change them, which I
can’t necessarily do with a private company. And, as I said, I’m a
private company myself so I’m not against the concept of private
insurance but the public option for health insurance or healthcare, I
should say, that public option model can work. It works in California,
for example, and it works in other places as well.

CAVANAUGH: You know, the insurance companies are fighting tooth and
nail against having a public option included in the healthcare reform
package. Why are they so opposed to it if, indeed, it doesn’t challenge
them?

BARDIN: Well, Maureen, this is absolutely the most contentious issue
in the whole debate in Washington, and it is a great example of why
something this comprehensive is so difficult to do in congress. It has
become political so the statement – Len mentioned very early on that
whether it’s practical or political, in this issue it has become
political and it is – A public option can – And remember, it was first
called government option and they changed the terminology to public
option.

MUDD: Umm-hmm.

BARDIN: That there is some argument for a public option, keeping and
helping this national health insurance exchange to become more fair,
more equitable, a level playing field. But government making the rules
in setting the rates and everything else is not a level playing field.
So there is this debate over how to do it but when it comes down to the
end of the day and a vote, the vote is based on politics.

CAVANAUGH: And, Dr. Gordon, there seems to be, among insurance companies, a feeling that a public option will sink them.

GORDON: Well, there’s nothing like being two-faced about it. On the
one hand, everybody’s saying the government’s incompetent and on the
other hand they’re saying, well, if they set up a public option, it’s
going to be so powerful that it’s going to sink us. I think that’s –
those statements are incompatible. Let me say that the public option
idea was developed by a professor at Berkeley, a Professor Hacker, and
when it was analyzed by the Lewin Group, which is a wholly owned
subsidiary of United Healthcare, they estimated that on a level playing
field basis over a 113 million Americans would choose that in a free
market over commercial insurance, and this is what scared the
commercial insurance companies. So congress has dutifully gone about
creating a public health option Mini-Me. There is nothing like the
quality and character of the conception of the public option that was
originally analyzed by the Lewin Company (sic). It’s being constrained
to certain individuals not working for large companies, certain
individuals who’ll always – already have employered (sic) sponsored
healthcare, and so on and so forth. And just like Medicare Part D, the
level playing field means the government has to operate with one hand
behind its back and being handicapped. So what you’re going to have is
not a competent public option but you’re going to have something that
looks like – more like Medicaid. In addition, it’s going to suffer from
what is called adverse selection, that is those people who are going to
go into the public option who are going to be the previously uninsured
or those people with massive medical problems who are not eligible for
commercial insurance because of prior existing conditions and the
public option will not be something that will influence the market if
you really think a market is what’s going to change the healthcare
system, which my organization does not.

CAVANAUGH: Well, Len, let me just be clear about this. The kind of
public option that President Obama wants, as I understand it, is part
of – you’d have an array of insurance companies that you could choose
from including this public option, so they would basically all be on a
level playing field and you could choose Company A, Company B, Company
C or the public option. Is that correct?

NICHOLS: That is right. And the model that I would hold out as his
vision is actually in place right now in most states, indeed in
California, where states run insurance markets for their employees and
they basically have the same kinds of choices that members of congress
have, and there’s lots of choice because there’s lots of state
employees. A lot of plans want to bid. But 34 states have decided to
have their own self-funded plan for which the state bears the insurance
risk, the state picks the managers, and they compete against the
Kaisers and the Anthems and the WellPoints and the – and the Blue
Shields and so forth. And they do this in a way that actually works.
They’ve been doing it now for 20 years; it’s just like the story Vince
told about Workers Comp insurance and public universities versus
private universities. There’s plenty of competition that the government
indeed encourages in order to let different kinds of arrangements find
the people that they work for the best. And that’s really what markets
is about. What’s ironic, and I think someone said earlier, it is
interesting how people can argue both sides of their mouth in the same
sentence. On the one hand, government is incompetent, on the other
hand, they’re terrified government will beat them. Well, what President
Obama is talking about is let’s make the competition actually fair.
What turns out to be true is that in a lot of insurance markets, not in
California, but in a number of markets around the country, there’s very
little competition and, you know, I can name lots of states, Maine, the
Blue Cross/Blue Shield, there’s 95% marketshare. Alabama, it’s above
90. Arkansas it’s 75. In Iowa, it’s 73. So what you have there is a
very dominant insurer which is charging small business, by the way,
very high premiums given the value of what they’re offering. And they
have no recourse, they have no way to get United or Cigna or anybody
else in there because the local Blue is basically locking up all
providers and they pay providers such that they won’t sign up with
anybody else so you’ve got a kind of a stuck monopoly equilibrium that
is not serving the people and that’s really what the public plan is
for, is to try to break that logjam.

CAVANAUGH: Well, we have been talking about the issues, the ideas
before congress about coming up with a healthcare reform proposal. And
when we return, we’ll be talking about some of those proposals that are
not being discussed too much by congress but are very – are the
favorite of a lot of healthcare reform advocates. We are talking about
healthcare reform. We are These Days on KPBS, and we’ll return in just
a few moments.

# # #

CAVANAUGH: I'm Maureen Cavanaugh. I want to welcome back my guests.
Len Nichols, Director of Health Policy Program at the New America
Foundation. Mike Bardin, Senior Director of Public and Government
Affairs for Scripps Health. Dr. Jeoffry Gordon, member of Physicians
for a National Health Program, and Vince Mudd, who is a board member of
the San Diego Regional Chamber of Commerce. We are talking about
healthcare reform and in the first part of the program we were talking
about what congress has been talking about and now we’re going to
discuss what they’re not talking about. The elephant in the room:
single payer. And, Jeoffry, you talked a little bit about single payer
in the beginning and I wanted to sort of stop you because I knew we
were going to get to it. A lot of healthcare advocates, a lot of
healthcare reformers are adamant about a single payer plan. What would
a single payer system look like for America?

GORDON: Well, just to start with, before I say anything, I have to
say that our elevated discussions, I think, are very cogent and
appropriate but as a practicing physician, I always have in mind the
patients and the people that were on your first show, and every day I
see about 30 patients. I see maybe 500 or 600 patients a month. A third
of my patients are either underinsured or uninsured, and the anguish
and the pain and the problems out there are heartwrenching and I see
them on a day-to-day basis. They do not have lobbyists. They do not
have constituencies. There are massive, embarrassing, horrible moral
problems in this country and it’s not just a money problem. We need to
solve this. I can only tell you – I had a patient who was a fully
employed man. He had full insurance. And he had a gallbladder attack so
I diagnosed him and sent him to a surgeon. Six months later I followed
up, he’d never seen the surgeon. Got him in the office, he told me he’d
had four more attacks that left him rolling on the floor in pain. I
said, man, why haven’t you had your surgery? He said, my insurance
company told me I have a thousand dollar co-pay and I don’t have the
money. That’s underinsurance, that’s what it is. To quote the great
comic Bill Maher, health insurance is like a hospital gown: It’s
flimsy, it’s very expensive, and it doesn’t cover your ass. When the
congress people stand up and say everybody loves their health
insurance, there are two kinds of people who love their health
insurance, an insurance plan that by accident gave them a good doctor
who they love. They love their doctor. They don’t choose their health
plan; their employer does. They happen to have good medical care from a
good physician. Secondly, the people that like their insurance have
never used it. Everybody who uses their insurance is now running for
their wallets and finding their wallet isn’t big enough.

CAVANAUGH: Right.

GORDON: It’s horrible out there.

CAVANAUGH: Right.

GORDON: So going back to what Professor Fuchs said so articulately
yesterday, the big problem is the huge administrative costs of our
absurdly complex system. It’s not just – And, again, Karen Evans (sic)
yesterday quoted a very low figure of 13% overhead for insurance
companies. That’s the lowest known insurance company overhead. At –
United Health Plans has a 20% overhead in their annual report. That
means that if you pay $100.00 for health insurance, $20.00 of it goes
off the top and will not go to healthcare ever.

CAVANAUGH: Len, why was single payer taken off the table so quickly?

NICHOLS: Well, I think the reality is that – I mean, Jeoffry makes a
lot of excellent points and I’ll just say I think the members of
congress who think that single payer cannot pass reflect the fear of
government. I mean, just look at the way the Obama discussion, look at
the way what’s in congress now is being labeled socialism, government
takeover, all these people disrupting town meetings all over our nation
right now are screaming government, government, government. If a
politician was to propose single payer, they’re terrified of being
accused of fomenting socialism. So what they want to do – and also look
at how the Obama campaign, which whatever else you may think, was among
the more successful campaign in history. They did, after all, elect a
black man in the United States. Because they were very attuned to what
people really worry about, they said throughout the campaign, if you
like what you got, you can keep it. It’s hard to advocate single payer
if you believe that most people feel reassured if they know they can
keep it. Jeoffry’s right; what they’ve got is not so great and, by the
way, it’s slipping away every day which is exactly why the impetus for
reform is so strong. But I just think most politicians were afraid of
going too far, too fast and, therefore, they just dismissed it as,
look, we can’t vote for that. It cannot pass.

CAVANAUGH: George is on the line from Encinitas. Good morning, George. Welcome to These Days.

GEORGE (Caller, Encinitas): Thank you. I’m also a physician, also a
member of Physicians for a National Health Program. Look, we want to
put the insurance companies out of business. We don’t – we think that
healthcare is a right that everyone who resides in the United States
should be covered. Everybody in and nobody out. I think we need to talk
a little bit about the fact that under a single payer system people can
continue to see the doctor they’re seeing. The only thing that would
change would be who is paying, not the insurance companies with their –
Well, I understand that it’s more like 33% administrative costs whereas
Medicare is like 3%. Single payer and national health insurance would
be a system in which a single public agency organizes health financing
but delivery of care remains largely private. Currently, the United
States healthcare system is outrageously expensive yet still it’s
inadequate despite spending more than twice as much as the rest of the
industrials nation – industrialized nations. The United States performs
poorly in comparison on major health indicators such as life
expectancy, infant mortality, immunization rates. And, moreover, the
other advanced nations provide comprehensive coverage to their entire
population.

CAVANAUGH: George, I’m going to have to stop you there. We’re sort
of getting to the point. You’ve gotten us to a very real point that I
want to pursue. And George said the – took us to the heart of the
issue. He says with single payer, we want to put the insurance
companies out of business because healthcare is a right. And we’ve been
talking a lot about the proposals and the reforms and so forth, and
what possibly politically might be able to get passed in congress. But
I’m wondering, starting with you, Vince, I would just like a roundtable
on what you gentlemen think about that. Are we getting to the point
where we finally say in this country people have a right to decent
healthcare and they don’t have to worry about how they pay it? This
should be really something that the government provides.

MUDD: I pay 100% of the healthcare for my employees and when my kids
are in school, I want to make sure that the child they’re sitting next
to doesn’t have tuberculosis and that they’re going to the hospital and
being taken care of. So I’ve come down on the side of saying that I
believe that life, health, safety issues in our country are things that
should be provided for for our citizens. We should be able to take care
of that. How we do it is what’s up for debate. And on the single payer
question, just so we’re clear, as a business guy, I don’t – single
payer means different things to different people. I’m not prepared to
say we’re going to put all the insurance companies out of business. I
think that if you don’t provide a benefit to people, you shouldn’t
exist, so some insurers don’t provide any benefit so they don’t exist.
What I don’t want to do right now – What I’m doing today as an employer
is, I’m paying healthcare to my work – through my health insurance
premium and my auto insurance and my homeowner’s insurance, my general
liability insurance. I’m paying healthcare in about twenty-five
different places and I’d like to only have to pay it in one place. And
so that one place can by my primary premium that I’m paying currently
to my insurer but the answer to your question is where I’ve come down,
as an individual, is that healthcare is something that I want to make
sure everyone in this country is healthy enough to sit next to my child
in school.

CAVANAUGH: And Mike, as a Senior Director for Scripps Health, do you
feel that there is – We have – We are in the process of crossing a
river here, that no longer is this really a business decision so much
as it is a right of the American people?

BARDIN: We have to be very careful about where we go in this debate.
If you go – And I think that’s what you’re expressing, that members of
congress are very afraid to go too far and that’s what politics is
about. If you go to a single payer system that isn’t – that ends up not
working, it’s very hard to reverse it and go back. So the public plan
is kind of – and that’s seen as to, if it’s done right, it would work.
If it isn’t done right, it simply is a slippery slope to single payer
which may or may not be the best American way of solving the problem.

CAVANAUGH: Dr. Gordon. I have to – I’m sorry. We have to move it
along just a little bit. And, Dr. Gordon, if you would be brief, I’d
appreciate it.

GORDON: I would like to make maybe three points. One is, we do have
a functioning single payer system in Medicare. Medicare is not
socialized medicine. Medicare provides health insurance for everybody
over 65 just because you live in the United States, with a few
exceptions. Number two, I practiced medicine before there was Medicare.
I was party to people being dumped at the hospital emergency room and
abandoned because they were sick and their loved family couldn’t take
care of them and there was no social support. You had patients on here
like that who are not over 65. Number two…

MUDD: Three.

GORDON: Number two, the single payer is not socialized medicine.
It’s a financing system. It’s the financing system that Professor Fuchs
said is way, way, way too complex and it doesn’t make an efficient
market; it makes a less efficient market. If we went to single payer,
the estimates, the conservative estimates, we would save over $200
billion a year, which would allow us to cover everybody fully. Number
three, it’s very ironic. Those politicians who are most conservative,
the senators and congressmen, come from rural areas. Rural areas have
the most employers who do not offer insurance. They have the highest
demographic of uninsured people in the United States and the highest
demographic of people on Medicare – Medicaid. They are the congressmen
representing the people who need reform the most and yet they’re
opposing it.

CAVANAUGH: And, Len, I wanted to ask you, we had George on the line
saying basically that, you know, basically saying the insurance
company’s a nightmare, that they, the single payer advocates want to
put the insurance companies out of business. Is that the direction that
we’re headed in? And do you think that that is why we’re seeing so much
resistance to health reform?

NICHOLS: Well, actually I would say this, to go back to your larger
question, we are grappling with the bigger question and that is, is
this a right or not? I think, in fact, a majority of our country does
support Vince’s vision. We want everyone to be able to sit next to his
children in school and my children in school and all of us on a bus and
in a stadium, etcetera. It is a right. It’s also an obligation of the
community to provide a framework in which those rights are well
exercised. And I think for most people in the congress and maybe even
in the country, they feel less scared of moving to the new world with
rights and obligations if they can keep something like what they’ve got
now, and that’s why we’re structuring a new insurance market for the
markets that are broken but let people move in there if they want to
but stay where they are if they want to. Over time, if insurers and,
for that matter, providers don’t show value, they will go away. But if
they do show value, I think they will be allowed to stay.

CAVANAUGH: Len Nichols, thank you so much.

NICHOLS: Thank you, Maureen, glad to be here. A great discussion.

CAVANAUGH: A great – Thank you. Thank you for being here. Mike Bardin, thanks for joining us.

BARDIN: My pleasure.

CAVANAUGH: Dr. Jeoffry Gordon.

GORDON: It was wonderful.

CAVANAUGH: And thank you so much Vince Mudd.

MUDD: Thank you also.

CAVANAUGH: I want to tell all of our listeners that tomorrow we will
have Congressmen Brian Bilbray and Bob Filner in studio and we’ll be
asking them how do we create a healthcare system that meets the needs
of the American public? And I want you all to know that you can also
post your comments about this segment online at KPBS.org/TheseDays, and
there you can also find additional resources about this topic.