The High Cost of Health Care (Part 3)

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.

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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.

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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.