339

Topic F

Alternative reform proposals

340 341

340 341

Section II: The Evidence Based Case for Single Payer National Health Insurance

Talking Point 15

Alternative proposals for “universal coverage” (e.g.based on the Federal Employees Health Benefits

Program, the old “Clinton health plan” or the recentreform in Massachusetts) do not work. State healthreformsover the past two decades have failed to

reduce the number of uninsured.

342 343

342 343

By David U. Himmelstein and Steffie Woolhandler

As the applause fades for President Obama’s health reform,David Himmelstein and Steffie Woolhandler fear that the newlaw will simply pump funds into a dysfunctional, market driv-en system

It was a stirring scene: President Obama signingthe new health reform law before a cheering crowd,and a beaming vice president whispering in his ear,"This is a big fucking deal." As doctors who havelabored for universal health care we’d like to join thecelebration, but we can’t. Morphine has been dis-pensed for the treatment of cancer – the reform mayoffer a bit of temporary relief, but it is certainly nocure.

The new law will pump additional funds into thecurrently dysfunctional, market driven system, push-ing up health costs that are already twice those inmost other wealthy nations. The Medicaid publicinsurance program for poor people will expand tocover an additional 16 million poor Americans, whilea similar number of uninsured people with higherincomes will be forced to buy private policies. Forthe "near poor" the government will pay part of theseprivate premiums, channeling $447 billion in taxpay-er funds to private insurers over the next decade.

Unfortunately, private insurers win in the market-place not through efficiency or quality but by maxi-mizing revenues from premiums while minimizingoutlays. They pursue this goal by avoiding the sickand forcing doctors and patients to navigate a byzan-tine payment bureaucracy that currently consumes31 percent of total health spending. The healthreform bill’s requirement that uninsured people buyinsurers’ defective products will fortify these firmsfinancially and politically.

Meanwhile insurers will exploit loopholes tododge the law’s restrictions on their misbehaviors.

For instance, the limit on administrative overheadswill predictably elicit accounting gimmickry, forexample by relabeling some insurance personnel as"clinical care managers." While insurers are prohibit-ed from "cherry picking" – selectively enrollinghealthy, profitable patients – they’ve circumventedsimilar prohibitions in the Medicare health mainte-nance organizations (HMOs). The ban on revokingpolicies after an individual falls ill similarly repli-cates existing but ineffective state bans.

Sadly, even if the reform works as planned, 23 mil-lion people will remain uninsured in 2019.Meanwhile the public and other safety net hospitalsthat uninsured people rely on will have to endure a$36 billion cut in federal government funding.

Moreover, many Americans will be left with cover-age so skimpy that a serious illness could lead tofinancial ruin. At present, illness and medical billscontribute to 62 percent of all bankruptcies, withthree-quarters of the medically bankrupt beinginsured. The reform does little to upgrade this inade-quate coverage; it mandates that private policiesneed cover only 70 percent of expected medical costs.The president has often promised that "if you likeyour current coverage you can keep it." YetAmericans who now get job based insurance will berequired to keep it – whether they like it or not. Andmany who receive full coverage from an employerwill face a steep tax on their health benefits from2018.

Soaring costs and rising financial strains seeminevitable, despite claims that the reform will "bendthe cost curve." Computer vendors have trumpetedimminent cost savings for half a century (see, forinstance, a video made by IBM in the 1960s, availableat http://bit.ly/cckdtB). Prevention, though laudable,does not generally reduce costs. Windfalls fromprosecuting fraud and abuse have been promisedbefore. The new Medicare advisory board merely

BRITISH MEDICAL JOURNAL, MARCH 30, 2010

OBSERVATIONS: U.S. HEALTH REFORM

Obama’s reform: no cure for what ails us

BMJ 2010;340:c1778

344 345

tweaks an existing panel. Without an enforcementmechanism, stepping up comparative effectivenessresearch cannot overcome drug and equipment mak-ers’ promotion of profligate care. Existing insuranceexchanges where patients can compare and shopamong private plans haven’t slowed growth in costsfor public workers nationally or in California. Andthe mandated experiments with capitated paymentsystems are warmed-over versions of PresidentNixon’s pro-HMO policies and subsequent failed ini-tiatives to fix America’s health cost crisis throughmanaged care.

Experience with reforms in Massachusetts in 2006– the template for the national bill – is is instructive.Our state’s costs, already the highest of any state,grew by 15 percent in the first two years after reform,twice the national rate. Moreover, capitated physi-cian groups had costs at least as high as those whowere paid on a fee for service basis. Meanwhile, afterinitial improvements in the state, access to care hasbegun to deteriorate, and the state has begun to cutback coverage.

Overall, President Obama’s is a conservative bill,drafted in close consultation with the drug andinsurance industries. Its modest salutary provisions– such as an extra $1 billion a year for communityhealth centers and the expansion of Medicaid – mir-ror measures that have been passed even underRepublican regimes. Its central tenet, that the gov-

ernment should force citizens to buy coverage from afor-profit firm, was first proposed by Richard Nixonwhen faced with the seeming inevitability of nation-al health insurance in 1972. Similarly, Mitt Romney, afavorite of conservatives, embraced the Nixonapproach as Massachusetts governor in 2006, astance he has now abandoned. Democrats, havingretreated from their traditional push for nationalhealth insurance, freed Republicans to move still fur-ther to the right.

Throughout the reform debate we, and the 17 000others who’ve joined Physicians for a NationalHealth Program, advocated for a far more thorough-going reform: a non-profit, single payer nationalhealth insurance program. We will continue to do so.Our health care system has not been cured or evenstabilized. For now, we will continue to practiceunder a financing system that obstructs good patientcare and squanders vast resources on profit andbureaucracy.

Passage of the health reform law was a major polit-ical event. But for most doctors and patients it’s no"big fucking deal."

David U. Himmelstein, M.D., is associate professor of medi-cine at Harvard Medical School and Steffie Woolhandler,M.D., M.P.H., is professor of medicine at Harvard MedicalSchool. They are also co-founders of Physicians for a NationalHealth Program.

BMJ 2010;340:c1778

344 345

Report from the United States

STATE HEALTH REFORM FLATLINES

Steffie Woolhandler, Benjamin Day,

and David U. Himmelstein

Massachusetts’ recent health reform has generated laudatory headlines

and a flurry of interest in state-based initiatives to achieve universal

health insurance coverage. In 1988, a similar Massachusetts effort was also

acclaimed and was imitated by several other states. Unfortunately, none

of those efforts can be judged a success. The authors briefly review this

earlier experience and caution against premature declaration of victory.

After seeming moribund for a decade, the drive for universal health care coverage

shows signs of life. President Bush has proposed federal tax code changes to

encourage the purchase of individual private health coverage and discourage very

comprehensive, so-called gold-plated, plans. But most legislative activity has

taken place at the state level.

Massachusetts’ effort has attracted the most attention. Legislation passed in

April 2006 promises near-universal coverage through an “individual mandate”

requiring the uninsured to purchase their own coverage, with subsidies for poor

and near-poor individuals. After the bill’s passage, then-governor Mitt Romney

declared: “Every uninsured citizen in Massachusetts will soon have affordable

health insurance and the costs of health care will be reduced” (1).

Six weeks later Vermont enacted a plan offering subsidized coverage to poor

and near-poor individuals, commencing in October 2007. If more than 4 percent

of Vermonters remain uninsured in 2010, the legislature promises to consider

making coverage mandatory.

California’s Governor Schwarzenegger, and officials in several other states,

have proposed similar mandatory coverage programs. And President Bush lent

his imprimatur to experimentation at the state level, proposing to allow states to

International Journal of Health Services, Volume 38, Number 3, Pages 585–592, 2008

� 2008, Baywood Publishing Co., Inc.

doi: 10.2190/HS.38.3.k

http://baywood.com

585

346 347

shift funds from safety net hospitals to innovative state programs to subsidize

private coverage.

Between the late 1980s and the collapse of President Clinton’s plan in 1994,

several states passed measures intended to dramatically expand coverage. In

this commentary we review the impact of this earlier round of reform on the

number of uninsured, using time trend data from the U.S. Census Bureau’s Current

Population Surveys. The Census Bureau changed its survey methods in 1999

and produced estimates for that year using both the old and new methods, which

differed by 5.5 percent nationwide (2). Hence, to ensure comparability with

the post-1999 Census Bureau figures, we adjusted the earlier state estimates by the

percentage difference between the Census Bureau’s two 1999 estimates.

ALTERED STATES

The last round of reform kicked off in 1988. Like the present one, it started with

Massachusetts legislation shepherded by a governor planning a presidential run.

On passage of the legislation, then-governor Michael Dukakis announced: “I am

very proud of the fact that Massachusetts will be the first state in the country to

enact universal health insurance for all its citizens” (3). The New York Times

editorialized that “Massachusetts last week ventured where no state has gone

before: it guaranteed health insurance for every resident” (4). In 1988, 494,000

people were uninsured in Massachusetts. The number of uninsured has remained

higher than that ever since (Figure 1A).

A year later Oregon made headlines with “the most far-reaching health care

reform plan in the nation” (5), combining universal coverage with explicit ration-

ing of expensive care. When the plan gained the federal waiver needed for full

implementation, the governor said: “Today our dreams of providing effective

and affordable health care to all Oregonians has come true” (6). The number of

uninsured Oregonians did not budge (Figure 1B).

The year 1992 was the high watermark for state health reform; bills passed

in Minnesota, Tennessee, and Vermont. According to the New York Times,

“Minnesota is enacting a program that will be the most sweeping effort yet to

provide health insurance to people who lack it. . . . Joy Wilson of the National

Conference of State Legislatures described the Minnesota plan as ‘the first

complete reform proposal in the United States’” (7). The plan called for universal

coverage by July 1, 1997. Between 1992 and 1997 the number of uninsured in the

state increased by 88,000 (Figure 1C).

Tennessee’s governor unveiled “the most radical health care plan in America”

(8) and declared that “Tennessee will cover at least 95% of its citizens with health

insurance by the end of 1994” (9). The number of uninsured dipped for two years,

then rose to levels higher than ever (Figure 1D).

Also in 1992, “Governor Howard Dean, the only Governor who is a doctor,

signed a law here today that sets in motion a plan to give Vermont universal

586 / Woolhandler, Day, and Himmelstein

346 347

healthcare by 1995.” “This is an incredibly exciting moment that should make all

Vermonters proud,” Dean said (10). The number of uninsured in the state has

grown modestly since then (Figure 1E).

The next year Washington State passed “one of the most aggressive health care

experiments in the nation, a program that would extend medical benefits to all 5.1

million residents of the state” (11). The bill called for universal coverage by 1999.

Between 1993 and 1999 the number of uninsured in the state rose from 661,000 to

898,000 (Figure 1F).

By 1995, the New York Times was lamenting that “ambitious state plans to

extend health insurance to more people took on importance as possible models for

the nation. But nearly a year later most of those plans are dead or stalled as the

states turn their attention to cutting budget deficits. Meanwhile the number of

uninsured people is growing fast” (12).

Heralding the new round of health reform, Maine passed its Dirigo Health

Program in 2003. A Boston Globe columnist opined that “Maine has just become

the first state in the union to approve a plan to provide universal access to

affordable health insurance” (13). On signing the legislation, Governor Baldacci

said: “It’s bold and comprehensive, and it is now the law of our state” (14). In 2006

the Associated Press reported that Dirigo “is now providing coverage to about

5,000 people who previously weren’t insured” (15)—about 4 percent of Maine’s

uninsured (Figure 1G).

DOING THE SAME THING AND EXPECTING

DIFFERENT RESULTS

The reforms enacted between 1988 and 2003 differed in detail but shared

common elements. All offered new public subsidies or expanded Medicaid for

poor and near-poor people. All left the bulk of existing private health insurance

arrangements undisturbed, although many included new insurance regulations

or state purchasing pools to help make affordable coverage available to

individuals and small businesses. Dukakis’s Massachusetts legislation, as

well as the reforms in Oregon and Washington State, included “employer

mandates”—requirements that most employers cover their workers. The

Massachusetts and Washington plans also mandated that self-employed

individuals purchase coverage—prefiguring the individual mandates in the

2006 Massachusetts bill.

Why did these plans fail? While they made rhetorical swipes at cost con-

tainment, none included effective cost-control measures. As health costs soared,

legislatures backed off from forcing employers and the self-employed to pay

ever-rising premiums, and the mandates requiring employers and the self-

employed to purchase coverage were repealed.

While Medicaid expansions incorporated in the state bills swelled Medicaid

rolls, the erosion of private coverage continued, offsetting any gains. (Indeed,

State Health Reform Flatlines / 587

348 349

588 / Woolhandler, Day, and Himmelstein

348 349

State Health Reform Flatlines / 589

Fig

ure

1.

Per

cen

tag

eo

fu

nin

sure

din

var

iou

sU

.S.

stat

esth

ath

ave

atte

mp

ted

stat

e-le

vel

hea

lth

care

refo

rms,

19

87

–2

00

5.

350 351

despite SCHIP—the State Children’s Health Insurance Program—which has

added about 5 million children to Medicaid nationally since 1997, the number of

uninsured children has fallen by only 2 million, while the number of uninsured

adults has risen by nearly 7 million.) Moreover, relying on Medicaid has proved

fiscally problematic for the states; when the economy cools, tax revenues fall

just as unemployment pushes families out of private coverage.

Like earlier reforms, the recent Massachusetts reform, and those proposed in

California, include expansions of Medicaid and requirements that most employers

make at least token contributions toward health coverage. While some earlier

bills required self-employed individuals to buy coverage, the new ones will

impose this mandate on all uninsured people with incomes above poverty. As in

several previous reforms, Massachusetts has organized a purchasing pool to help

make coverage available to the previously uninsured, lower overhead costs in

the individual insurance market, and spread the costs of high-risk individuals over

a large risk pool. The new reforms rely on a new funding stream—the premiums

(or fines) that the uninsured will be required to pay. But once again, effective

cost controls are absent.

In Massachusetts, any savings from reducing the overhead on individual

policies are being eaten up by the 4 to 5 percent surcharge that the new purchasing

pool will add to premiums in order to fund its own operations (16). The legislature

shifted responsibility for additional cost-control measures to a new council

charged with setting goals, identifying quality improvement and efficiency

measures, and setting up an Internet site to compare providers. Meanwhile,

premiums for the new coverage will cost at least $1 billion annually—probably

much more. Funds diverted from the state’s existing free-care pool will cover only

a fraction of this amount. And employer-provided coverage will predictably

shrink as costs continue to rise, leaving the new program with an ever-larger

responsibility for coverage.

Meanwhile, few of the near-poor uninsured seem able to afford even the newly

subsidized policies (17), and the federal funds providing the bulk of the subsidies

are set to expire in 2008. The unsubsidized coverage mandated for middle-income

individuals (most of whom have incomes between $30,000 and $50,000) offers a

bitter choice between unaffordable premiums (at least $7,200 for comprehensive

coverage for a single 56-year-old) or plans so skimpy (e.g., a $2,000 per person

deductible with 20% coinsurance for hospital care after that) that they hardly

qualify as insurance. The religious coalition that was key to passage of the

legislation has already called for a delay in enforcement of the individual mandate,

fearing that it will place unbearable financial stress on many of the uninsured (18).

In sum, neither government, nor employers, nor the uninsured themselves have

pockets deep enough to sustain coverage expansion in the face of rising costs.

We remain convinced that more-radical reforms can simultaneously expand

coverage and control costs (19). A shift from our complex and fragmented

payment system to a simple single-payer approach could save about 14.3 percent

590 / Woolhandler, Day, and Himmelstein

350 351

of total health spending—equivalent to $323 billion in 2007—on reimbursement-

driven bureaucracy (20). Such administrative savings are unattainable with lesser

reforms. A nonprofit national health insurance system could also curtail wasteful

over-investment in medical technology (e.g., the proliferation of new cardiac

care hospitals located near existing ones) and attenuate incentives for unnecessary

and even harmful care.

Powerful momentum for health reform is building. Previous reform efforts

that built on existing but defective insurance arrangements have quickly suc-

cumbed to their faulty economic logic. Added coverage meant added expense, on

top of already exorbitant costs. It would be shameful to squander the present

opportunity on yet another round of reforms that are politically realistic but

economically chimerical.

REFERENCES

1. Romney, M. Health care for everyone? We found a way. Wall Street Journal, April 11,

2006.

2. U.S. Census Bureau. Historical Health Insurance Tables, Table HI-1: Health insurance

coverage status and type of coverage by sex, race and Hispanic origin: 1987 to 2005.

www.census.gov/hhes/www/hlthins/historic/hihistt1.html (March 23, 2007).

3. Gold, A. R. Health insurance in Massachusetts to cover all: Victory for Dukakis.

New York Times, April 14, 1988.

4. Massachusetts’ bold health experiment (editorial). New York Times, April 26, 1988.

5. Abramowitz, M. Oregon blazes a trail: Doctor/legislator John Kitzhaber sets off

political fireworks with his plan to ration medical services while expanding coverage.

Washington Post, June 9, 1992.

6. Rich, S. U.S. approves Oregon plan for health care rationing. Washington Post,

March 20, 1993.

7. Minnesota adopting overhaul of healthcare. New York Times, April 19, 1992.

8. Tennessee governor offers health care reform. Federal & State Insurance Week 7(15),

April 12, 1993.

9. Pear, R. States again try health changes as Congress fails. New York Times, September

16, 1994.

10. Butterfield, F. Universal health plan is goal of law in Vermont. New York Times,

May 12, 1992.

11. Egan, T. State health bill interests Clinton. New York Times, May 2, 1993.

12. Freudenheim, M. States shelving ambitious plans on health care. New York Times,

July 2, 1995.

13. Goodman, E. A good day’s work on health care. Boston Globe, July 6, 2003.

14. Adams, G. Baldacci Signs “Bold” Dirigo Health Bill at Blaine House. Associated

Press Newswire, June 18, 2003.

15. Canfield, C. Dirigo Health Not Attracting Businesses. Associated Press Newswire,

May 25, 2006.

16. Estes, A. 6-figure pay for care plan overseers salaries at new state agency stir concern.

Boston Globe, January 27, 2007.

State Health Reform Flatlines / 591

352 353

17. Greater Boston Interfaith Organization. Mandating Health Care Insurance: What Is

Truly Affordable for Massachusetts Families? Boston, 2007. www.gbio.org/maint/

affordability_report.doc (March 14, 2007).

18. Dembner, A. Change in healthcare law urged: Group asks state to delay penalties.

Boston Globe, January 25, 2007.

19. The Physicians’ Working Group for Single-Payer National Health Insurance. Proposal

of the Physicians’ Working Group for Single-Payer National Health Insurance.

JAMA 290:798–805, 2003.

20. Woolhandler, S., Campbell, T., and Himmelstein, D. U. Health care administration

costs in the U.S. and Canada. N. Engl. J. Med. 349:768–775, 2003.

Direct reprint requests to:

Dr. David U. Himmelstein

Department of Medicine

Cambridge Hospital/Harvard Medical School

1493 Cambridge Street

Cambridge, MA 02139

e-mail: david_himmelstein@hms.harvard.edu

592 / Woolhandler, Day, and Himmelstein

352 353

Marcia Angell | April 21, 2008

F OR ALL THEIR PROMISE OFchange, Democrats are remark-ably timid about changing thehealth-care system. The system

now costs twice as much per person asthose of other advanced countries anddelivers worse average outcomes. It pricestens of millions of people out of healthcoverage altogether and limits care forcountless others. Yet leading Democratsare clinging to this system, proposing tocover more people but not changing thesystem itself except at the margins. Thetimidity extends to choice of words. Noone is supposed to say “single-payer” or“national health insurance” anymore,because that is “politically unrealistic”;the most we are allowed is to talk ofreforming the system incrementally sothat someday it will morph into “Medicarefor all.”

Thus, the proposals for reform takenmost seriously by Democrats — includingBarack Obama and Hillary Clinton —would retain the central role of theinvestor-owned private insurance indus-try as well as the thousands of for-profitbusinesses it pays to deliver medical serv-ices. This is the industry, mind you, thathas brought us to the predicament we’rein now, so let’s take a quick look at it.

The U.S. health system is unique intreating health care as a commodity to bebought and sold in a marketplace. Care isdistributed according to the ability to pay,not according to medical need. Privateinsurers compete by avoiding high-riskindividuals, limiting services for thosethey do cover, and, whenever possible,

shifting costs to other payers or topatients in the form of high deductiblesand co-payments. We have the only healthsystem in the world based on avoidingsick people. It’s a chaotic and fragmentedsystem that requires mountains of paper-work, which is one reason premiums areso high. Employers who offer health bene-fits react by capping their contributions,so that workers pay more out of pocketand bear the full brunt of premiumincreases.

Insurers contract with hospitals, HMOs,and other health facilities to provide thecare. They, too, are often for-profit busi-nesses that promote lucrative services forwell-insured patients (such as coronarycatheterization for Medicare recipients),while giving short shrift to less profitableones (such as psychiatric services for theindigent). To compete in a market environ-ment, even not-for-profit facilities behavein much the same way as for-profit ones.Doctors often act as entrepreneurs, invest-ing in health facilities to which they referpatients. And because they are usually paidon a fee-for-service basis, they have a strongincentive to overuse tests and proceduresthat have the greatest profit margins.

All of this drives up costs to the overallsystem, while yielding profits for the vari-ous players within it. In fact, there’s a fun-damental illogic to trying to contain costsin a market-based system. Markets areabout expanding, not contracting. Like allbusinesses, hospitals want more, notfewer customers — but only as long asthey can pay. Conventional wisdom holdsthat we need to retain this system becausemany Americans are satisfied with it. Butexcept for industry spokespeople and

politicians whose campaigns they sup-port, I’ve never met anyone who actuallyis. Many people like their doctors, butthat is not the same as liking the system.

The reforms favored by leadingDemocrats vary somewhat, but all have attheir heart expanding insurance coveragethrough public subsidies for those whocan’t afford the premiums or, alternative-ly, permitting those without access togood, affordable insurance to enroll in anew Medicare-type program that wouldbe set up to provide them with coverage.Some reform proposals include a mandaterequiring everyone to be insured.

Many proponents hope that a parallelMedicare-like system would eventuallycrowd out its less efficient private com-petitors, that under a play-or-pay require-ment, employers would gradually decideto stop providing coverage and just payinto the common pool. However, thiswishful thinking overlooks the power ofthe private health industry, through itshuge lobby, to influence the rules so that itcontinues to profit while the public sys-tem is undermined.

All of these variations in the Democrats’plans run into this intractable dilemma: Ifthe system stays essentially as it is and wetry to expand coverage, costs will inevitablyrise. On the other hand, attempts to controlcosts will inevitably reduce coverage.Without fundamental reform, coverage andcosts have to move in the same direction.Yet, we don’t have the option of expandingboth coverage and costs. At 16 percent ofgross domestic product, our health-caresystem is already unaffordable. In fact, costsare the central problem; universal healthcare would be easy if money were no object.Furthermore, none of the proposed reformsoffers any workable mechanism for control-ling the unsustainable inflation in healthcosts. Attempts to regulate private insurersto prevent the worst abuses would proba-bly do little more than add to the complexi-

Health Reform You Shouldn't Believe InWhat the Massachusetts experiment teaches us about incremental efforts to increase coverage by expanding private insurance.

354 355

ty and administrative costs of the system.The proposed reforms also make the

fundamental mistake of confusinginsurance with health care. As manyAmericans are learning, the two are notthe same — not by a long shot. Healthinsurance can easily be too skimpy or tooladen with exceptions and co-charges tobe of much use. What people really wantwhen they’re sick is medical care, notmedical insurance, just as they want edu-cation for their children, not the opportu-nity to buy education insurance.

Despite the Democrats’ coalescencearound the same approach for achievinguniversal care, only one such plan hasbeen implemented — the Massachusettshealth-reform plan. It is therefore worthlooking at in some detail.

MASSACHUSETTS MIRACLE OR MIRAGE?This plan, which was enacted in April2006 amid extraordinary hoopla, set outto cover the 500,000 to 750,000 uninsuredresidents of the state, and to see that thecoverage for everyone else met a minimumstandard. To that end, the state wouldpurchase insurance for everyone withincomes beneath the federal poverty level,and partially subsidize it for those earningup to three times the poverty level (whichnow comes to $31,200 per year for an indi-vidual). Everyone else — roughly 200,000to 250,000 people — would have to pur-chase his or her own insurance or face stifffines. The legislation established a newstate agency, the Commonwealth HealthInsurance Connector, which would try tomake sure insurance was affordable andmet the minimum standard and whichwould also determine the level of subsi-dies.

Financing the plan was iffy from theoutset. When fully implemented, it wasprojected to cost the state only $125 mil-lion in new money the first year — notvery much in a state with a $26 billionbudget. Mostly it would be financed bydiverting existing funds from two sources:Medicaid, under a two-year waiver thatwould permit federal money to be used forthis purpose, and the state’s generous “freecare pool,” which was established to pro-vide direct services to uninsured patientsin safety-net facilities and is supported byassessments on hospitals and insurers.There would also be a paltry fine onemployers who didn’t offer insurance, but

no one thought that would be an impor-tant source of funding. Success woulddepend crucially on the individual man-date requiring those with incomes morethan three times the poverty level to payfor their own insurance.

What’s happened since then? Whilethose beneath the poverty level signed upfor free insurance in even greater numbersthan anticipated, very few people whowere required to pay for their own insur-ance signed up. Even those eligible for par-tial subsidies were slow to enroll. Thedeadline to purchase insurance had to beextended, and 60,000 uninsured peoplewere exempted from the mandate because— yes, that’s right — they couldn’t affordit (so much for universality). The statemodified its requirement that all insur-ance meet a minimum standard. JonKingsdale, the executive director of theCommonwealth Health InsuranceConnector, told me that was because thefederal Employee Retirement IncomeSecurity Act prohibits states from settingstandards when employers act as theirown insurers (didn’t the Massachusettslegislators know that when they craftedthe law?), but he said that next year work-ers will be responsible for somehowupgrading their own policies, or (youguessed it) be fined.

Don’t get me wrong. Massachusetts isto be congratulated for seeking to extendhealth care to everyone in the state. Everydecent society should ensure health care,just as it does education, clean water, andpolice and fire protection. Massachusetts’plan is an ambitious and well-intentionedeffort. But unfortunately, it’s extremelyunlikely to work for three main reasons.

First, the individual mandate is harsh,regressive, and probably unenforceable. Itrequires the near-poor to pay a muchhigher percentage of their income onhealth care than their more affluent neigh-bors. Although insurers are prohibitedfrom charging more for people with med-ical conditions, older people have to paymore. The premiums for a 57-year-old aretwice as much as for a 27-year-old.According to the Connector’s Web site inMarch of this year, the least expensiveplan for a 57-year-old had a premium of$4,700 per year, a $2,000 deductible, andsubstantial co-pays and co-insurance upto $4,000 per year. (That cap did notinclude prescription drugs.) So a hypo-

thetical 57-year-old with a $32,000 annualincome (just over three times the povertylevel) could pay as much as $8,700 out ofpocket — or over a quarter of his income.Family plans are, of course, different, butthe effect is the same. Next year, thosewho haven’t purchased insurance will befined half the premium of the lowest-priced plan. Truly this is the SqueezeBlood from a Turnip Plan.

It also lets employers off the hook.They’re supposed to pay a $295 peremployee fine if they don’t provide healthbenefits, but they’re now considered tohave met their obligation if they offer ben-efits to just 25 percent of their employeesor contribute 33 percent of the premiums— no matter whether employees acceptthe offer and no matter how skimpy thecoverage. And a $295 fine is no incentiveto provide insurance that costs upward of$5,000. So the growing problem of under-insurance will be left to workers them-selves to solve.

Second, like all such plans, theMassachusetts strategy pretends thathaving insurance is the same as havinghealth care. The Connector makes muchof the fact that some 300,000 people whowere previously uninsured now haveinsurance, but most of those already hadaccess to health care, either through thefree-care pool or Medicaid. So it’s some-thing of a shell game, with money thatwould have been spent directly on healthcare passed through insurance companiesinstead (which keep quite a lot of it).

The Connector offers a choice of insur-ance plans from four different companiesfor those eligible for state subsidies (calledCommonwealth Care), and from six com-panies for those who have to purchasetheir own (Commonwealth Choice).There is a trade-off between premiums, onthe one hand, and deductibles and otherout-of-pocket costs, on the other. Theplans with the lowest premiums have thehighest deductibles and other costs. Butthose who select the cheapest plans arelikely to be precisely those least able toafford high out-of-pocket costs. So theycould end up with health insurance thatthey can’t afford to use but have to pay foranyway. The speaker of theMassachusetts House of Representatives,Salvatore DiMasi, one of the prime moversbehind the plan, wasn’t worried. He toldThe Boston Globe last year, “We’re moving to

354 355

universal insurance and then towardinsurance that has substantial benefits.That’s the key.” Can he really believe thatafter people have signed up for stripped-down coverage, and costs have continuedto climb, there will be the money andpolitical will to add to the benefit pack-age?

Third and most important, there is noeffective mechanism for containing costs.Insurance companies can set premiums ashigh as they like. If they’re much higherthan the competition, of course, theConnector can choose not to offer thoseplans. But if all the companies raise theirpremiums at about the same rate, there’snot much the agency can do. And sureenough, premiums have continued to risefaster than the background inflation rate(10 percent for Commonwealth Care nextyear). The only way to hold them in checkis to cut benefits or increase deductiblesand co-payments. (The Connector actual-ly favors increasing co-payments to pre-vent Commonwealth Care from becomingso attractive that employers will drop cov-erage and send workers to the state plan.)Insurance will quickly become too expen-sive, as well as increasingly inadequate.The state, which now faces a $1.2 billionbudget shortfall and health costs of $147million more than projected, will not beable to contribute much more from gener-al revenues. Funding depends utterly onthe Medicaid waiver being renewed inJuly, by no means a sure thing.

THE VERDICT: SINGLE-PAYERMassachusetts is not the first state to comeup with a plan to provide near-universalhealth insurance to its residents, althoughit is the first to rely on an individual man-date. Maine tried it in 2003, Minnesota andTennessee in 1992, to name a few. AndMassachusetts made an earlier attempt in1988. All were greeted with great enthusi-asm and fanfare in the media. And all failedand died with scarcely a whimper. Morerecently, California, inspired byMassachusetts, tried to pass similar legisla-tion. Despite Gov. Schwarzenegger’s sup-port, it died in the state Senate in January.It didn’t have resources anywhere near

comparable to those in Massachusetts,mainly the Medicaid funds and free-carepool, and had to rely more on employercontributions. What all the state effortshave had in common is that they left ourcurrent dysfunctional system essentiallyintact and simply tried to expand it aroundthe edges.

The only workable solution is a single-payer system (there, I said it), in whicheveryone is provided with whatever carehe or she needs regardless of age and med-ical condition. There would no longer be aprivate insurance industry, which addslittle of value yet skims a substantial frac-tion of the health-care dollar right off thetop. Employers, too, would no longer beinvolved in health care. Care would beprovided in nonprofit facilities. The mostprogressive way to fund such a systemwould be through an earmarked incometax, which would be more than offset byeliminating premiums and out-of-pocketexpenses.

This is not the same as Medicare for all.Medicare is embedded in our market-based entrepreneurial private system, andtherefore experiences many of the sameinflationary forces, including having todeal with profit-maximizing hospitals andphysicians’ groups. Doctors’ fees areskewed to reward highly paid specialistsfor doing as many expensive tests and pro-cedures as possible. As a result, Medicareinflation is almost as high as inflation inthe private sector and similarly unsustain-able.

In addition, Medicare is not what itonce was. For the past eight years, it hasbeen at the mercy of an administrationintent on dismantling and privatizing it.The prescription-drug benefit enacted in2003 is an example. It’s a bonanza for thepharmaceutical industry because it for-bids Medicare from using its purchasingpower to get good prices. Medicare recip-ients have also been encouraged to enrollin private health plans, which are paid onaverage 12 percent more than it wouldcost traditional Medicare to care for thesame people. Even as public funds aresiphoned off to the private sector, premi-ums and co-payments have been

increased, and there are now proposals formeans testing — a superficially attractiveidea but ultimately a grave threat to anypublic program.

Over the years there have been manyindependent analyses of the costs of con-verting to a single-payer system, eitherwithin a state or nationally. They includestudies by the General Accounting Office,the Congressional Budget Office, and con-sulting firms, such as the Lewin group,hired by state governments and, inMassachusetts, the state medical society.Most found that a single-payer systemwould initially cost roughly the same asthe system it replaced, while providinguniversal coverage, and over time wouldbe much cheaper.

Polls have shown that most people, andmost Massachusetts doctors, favor a sin-gle-payer system. The Boston Globe calledfor a national single-payer system lastMay. In an editorial about the big threeautomakers’ desire to transfer health coststo the autoworkers’ union, the Globe said,“It would make more sense for the federalgovernment to oversee a national healthsystem financed from taxes. The costcould be spread across the entire popula-tion, rather than borne by Chrysler orother companies that no longer enjoy theassured profitability of their best years.”

Nevertheless, the private insuranceindustry has managed to convince manypolitical leaders, including progressives,that a single-payer system is unrealistic.But what is truly unrealistic is anythingelse. My greatest concern about theMassachusetts plan is that when it unrav-els, people will draw the wrong lesson.They will assume that universal care at acost we can afford is impossible, and giveup on it. It’s not impossible; it’s justunlikely to be achievable while leaving ourdysfunctional system in place. Can wemake it right? I’m tempted to say, “Yes, wecan.”

Marcia Angell, M.D. is a senior lectureron social medicine at the Harvard MedicalSchool and former editor-in-chief of TheNew England Journal of Medicine.

356 357

#2 September 2004

PUBLISHED BY

PHYSICIANS FOR A NATIONAL HEALTH PROGRAM

NEW YORK METRO CHAPTER

FEHBP: A Feeble Model for Universal Health Care!

By Leonard Rodberg, PhD and Joanne Landy, MPH

(over)

PNHP NY METRO On the Issues #2

Politicians are fond of saying that everyoneshould have a health plan as good as the onethat Congress has. John Kerry, for instance,

says that “all Americans should have access to thesame affordable coverage policies that Members ofCongress get today,” and he proposes that anyindividual or business should be able to buy into it.This plan, which is available to Congress and allother employees of the Federal Government, is theFederal Employees Health Benefit Plan (FEHBP).What is FEHBP? Is it as good as these claimssuggest? Does the opportunity to buy in to FEHBPprovide a model for universal health care?

FEHBP is, in brief, a private insurance programthat the Federal government offers to its employ-ees. Just like many other employers, the Federalgovernment makes available a choice of privatehealth insurance plans. Federal employees canchoose from among plans offered by Blue Cross/Blue Shield, Aetna, and other such insurers. Theseinclude “fee-for-service” plans with “preferred pro-viders” (called PPOs), in which employees canreduce their out-of-pocket expenses by using an“in-network” provider, as well as HMOs offeringcare primarily through contracted providers.

Thus, FEHBP offers standard private healthinsurance in the current managed-care mode. Aspointed out by the Federal Office of PersonnelManagement, which runs the program, “You willfind managed care features in all the plans…pre-approval of hospital stays, the use of primary careproviders as ‘gatekeepers’ to coordinate your med-ical care, the use of a prescription drug formulary,and networks of physicians and other providers.”(www.opm.gov/insure/health/about/fehb.asp)

Thus, as in all private insurance plans today, underFEHBP a private, often for-profit, insurance com-pany will decide (i) which physicians you can see,(ii) which drugs your physician can prescribe, (iii)whether you can see a specialist, and (iv) whetherand where you can be hospitalized. You can beturned down for treatment. You then can appeal aservice denial, but first to the private insurancecompany before asking the Office of PersonnelManagement for a second appeal.

Under FEHBP, the Federal Government pays72% of the average premium for any plan; theemployee pays the rest. For example, for the stan-dard Blue Cross/Blue Shield Plan available nation-ally, the employee’s share of the cost is $1,271 peryear for an individual and $2,935 per year for familycoverage. Like the corresponding premiums in theprivate sector, these have been rising rapidly inrecent years. For instance, Federal employees’share of the premium rose more than 7% this year(by $84 for individuals and $199 for families).Premiums have been rising an average of 11 percentper year and have climbed more than 50 percentover the past four years – far ab ove the general costof living increase of 9 percent over four years.

Then there are deductibles of from $250 to $500per person (and $500 or more per family). All planshave copays of 10-25% for outpatient care and $10-30 for prescription drugs. There are limits to what itwill cost the employee: Most plans provide formaximum out-of-pocket expenses of $4,000 to$6,000 per family. So a family might, under theseplans, be paying $6,000 plus the employee’s shareof the premium ($2935) or $8,935 per year for

Health Care Is a Human RightHealth Care Is a Human RightHealth Care Is a Human RightHealth Care Is a Human RightHealth Care Is a Human Right

356 357

health care, clearly beyond the reach of many.

If the FEHBP were to be offered through privateemployers, would they be willing to pick up thesame nearly three-quarter share of the insurancepremium as the Federal government’s does for itsemployees? If they did not, or if a self-employed (orunemployed!) individual were to buy into this plan,the annual premium for the standard Blue Cross/Blue Shield plan alone — without any out-of-pocket medical costs — would be $4,539 for anindividual and $10,482 for a family. Kerry hassuggested tax subsidies to help pay these costs;they would have to be quite substantial to makethis truly affordable for low-income individuals andemployees of small businesses.

But this is not the worst of it: Those whoadvocate an “FEHBP solution” assume that theprivate insurers who participate in FEHBP wouldbe willing to offer the same plan that is offered toFederal employees, at the same cost, to anyonewishing to purchase it. However, Federal govern-ment employees are healthier, more securely em-ployed, and more “middle-class” than the averageperson in the population. It is highly unlikely thatprivate insurers would be willing to offer the samedeal to any small business or individual. We knowthat insurance premiums for small businesses andindividuals are much higher than for large employ-ers, where the risk is spread far wider. If FEBHPwere to be offered to the general population, eitherthe premiums would be substantially higher, orfewer insurance companies would choose to join,or, more likely, both.

Finally, there is the vaunted “consumer choice”that a program such a FEHBP would offer. Overtime there have been fewer and fewer choicesoffered in FEHBP. The number of participatingplans has dropped by 50 percent in the past fiveyears. In the New York City area, for instance,employees have the choice of just four majorinsurers — Aetna, Blue Cross, GHI, or HIP – alongwith several firms set up originally to serve postalworkers but now offered to any Federal employee.Other areas of the country have even fewer.

FEHBP requires that all plans cover the samemedical services. In spite of this, some plans offermore dental and vision coverage than others. How-ever, the primary “choice” is whether to pay now orpay later. Those who choose plans with lowerpremiums (taken out of biweekly or monthly pay-checks) face higher deductibles and co-paymentswhen they actually need medical care. Often thisresults in higher overall cost to those who choosewhat looks like a less-expensive plan. Seeing

PNHP-NY Metro ON THE ISSUES

Physicians for a National Health ProgramNew York Metro Chapter

2753 Broadway #198, New York, NY 10025Tel: (212) 666-4001 • Fax: (212) 866-5847

E-mail pnhpnyc@igc.orgWeb www.pnhpnyc.org

physicians “out of network” costs more in a “basic”plan than in a “standard” or “high option” plan. Weknow from many studies that higher co-paymentslead low- and even middle-income people to post-pone needed medical care. Since FEHBP premiumsare independent of the employee’s income, lower-wage workers are likely to choose a “basic” plan andthus face the barrier of higher costs when they haveto seek care. And many, of course, will not be able toafford to pay for any plan.

This is not universal health care. It is simply theclearest example of the excessively expensive waywe finance health care today, with millions still leftout completely. Funneling billions of additional dol-lars into the wasteful and intrusive private insurancesystem would not move us toward the kind ofhumane, inclusive, and efficient health care systemwe need and deserve. We would simply be pouringmore money into the coffers of the for-profit insur-ance industry, which is the central problem withAmerican health care, not its solution. We know, forinstance, that the complexity and wastefulness ofthe insurance industry alone is responsible for 1 outof every 6 dollars we spend on health care today.Studies by a variety of analysts show that, com-pared with countries with simpler national systems,our use of multiple private insurance companiescosts our country hundreds of billions of dollars eachyear in funds that could be better spent actuallyproviding health care to those who don’t have it andimproving the health care for those who do have it.

The only solution is to move to a single payernational health insurance system which wouldeliminate the duplication of multiple billing andreimbursement systems, the eligibility determina-tions, the corporate intrusion into medical practice,the massive expenses on marketing and otheradministrative waste, and the deeply offensiveattempt to collect thousands of dollars from ill anddying patients. We need Expanded and ImprovedMedicare for All, as embodied in the Conyers Bill,HR 676, if we are truly to make health careaccessible and affordable for all Americans.

358 359

Starr dates the origins of Bill Clinton’s com-mitment to health care reform to the specialcongressional election held in Pennsylvaniain November 1991, when Harris Woffordwon against all odds by making reform of thehealth care sector a major campaign issue.According to Starr, this event triggered agreat deal of interest in health care reform;even the American Medical Association(AMA) and the Health Insurance Associationof America (HIAA) supported some types ofreform such as an employer mandate to pro-vide health benefits coverage. As noted bythe editor of JAMA, “there was an air ofinevitability about health care reform.” It wasthis surge of interest that candidate, and laterPresident, Clinton tried to capitalize on bydeveloping a proposal to provide universalhealth care coverage for all Americans(meaning all U.S. citizens and residents).

Once elected, Bill Clinton established the500 member White House task force, led byMrs. Clinton, to work on the details of a pro-posal developed within a framework definedby the President. According to Starr, the pro-posal failed when President Clinton present-ed it to the U.S. Senate after completion of,rather than before, the budget discussions.The Senate did not support the proposal,because it would require extra revenues(making senators susceptible to Republicancharges of fiscal irresponsibility) and particu-larly because – again, according to Star – theproposed benefits coverage was too exten-sive and too large for many senators to swal-low. The final message of Starr’s article isthat it was President Clinton’s fault, ratherthan Hillary’s, that the reform proposalfailed.

Starr reproduces a widely held interpreta-

tion of the failure of the Clinton health carereform that (limiting the analysis to the rela-tionship between the President and Congress)attributes this failure to a calendar error – badtiming – and to the excessive generosity ofthe proposed health care benefits. I believethere is a need to correct such an interpreta-tion of the events that led to the death of thereform proposal and to challenge the assump-tions behind the interpretation. This is impor-tant because we might face a similar situationvery soon. The majority of the U.S. popula-tion is dissatisfied with the funding andorganization of the health care sector, and thisdissatisfaction has reached unprecedentedlevels. Once again, all indicators show thatpeople want change. But we could faceanother failure unless some major changestake place in the U.S. – changes that, I admit,are unlikely to occur with the current correla-tion of forces in the country and in theDemocratic Party.

Let’s start with some corrections to Starr’sassumptions. The commitment of theDemocratic Party and candidate Bill Clintonto universal health care coverage for all citi-zens and residents started much earlier thanStarr suggests. It began in the presidential pri-mary campaigns of 1988, when JesseJackson (for whom I was senior health advi-sor), running for the Democratic nomination,made a commitment to universal, compre-hensive health care benefits coverage a cen-tral component of his platform. This propos-al was dismissed by the Democratic Partyestablishment as “too radical,” but it hadalready mobilized large sectors of the party’sgrassroots (especially labor unions and socialmovements) to support Jackson, with morethan 40% of the delegates at the Democratic

Party Convention in Atlanta. This shook theDemocratic establishment and stimulatedresponses from Governor Clinton, Senator AlGore, and Congressman Richard Gephardt toblock this rise of the left in the DemocraticParty, which they did by establishing theDemocratic Leadership Council, amongother interventions. (Gore and Gephardt havechanged since then; Bill Clinton hasn’t.) (Idescribe these effects of Jackson’s health pro-posals on the Democratic Party in “The 1988Presidential Election,” in The Politics ofHealth Policy: The U.S. Reforms 1980–1998,Blackwell, 1994. pp. 99-110.) To control thisgrowth of the left, something had to be done.And as liberals always have done when facedwith the left, they recycled its progressiveproposals, adopting much of their narrativebut emptying them of their content. This iswhat Clinton did in his 1992 campaign. Heused the title, narrative, and symbols of JesseJackson’s campaign, calling his platform“Putting People First” (the title used byJackson in 1988) and including the call foruniversal health care benefits. As the percep-tive Financial Times wrote, “Clinton [hasborrowed] extensively from Jesse Jackson1988. He sounds like a Swedish social demo-crat.” While borrowing the language and thesymbols, however, Clinton changed the con-tent dramatically.

Whereas Jackson had called for a single-payer program similar to that in Canada,Clinton chose the opposite pole of the politi-cal spectrum: managed care competition.Managed care competition basically meantthe insurance companies exercised full con-trol over health care providers, with doctorsworking in group practices called HealthMaintenance Organizations (HMOs). As

G E T T I N G T H E F A C T S R I G H T : WHY HILLARYCARE FAILED

By VICENTE NAVARROProfessor of Health and Public Policy ~ The Johns Hopkins University

In his article “The Hillarycare Mythology” (The American Prospect, October 2007,pp. 12-18), Paul Starr, a senior health policy advisor to President Bill Clinton anda leading figure in Hillary Rodham Clinton’s White House task force on health carereform, analyzes the origins, development, and final outcome of the Clinton admin-istration’s health care reform – referred to by Republicans as “Hillarycare.”

358 359

stated by Paul Elwood, a leading member ofthe White House task force, “insurers-con-trolled HMOs, under managed care competi-tion will stimulate a course of change in thehealth care industry that would have some ofthe classical aspects of the industrial revolu-tion – conversion to larger units of produc-tion, technological innovation, division oflabor, substitution of capital for labor, vigor-ous competition and profitability as themandatory condition of survival” (“HeathMaintenance Strategy,” Medical Care, 9(1971), p. 291). This industrial revolution inmedical care would indeed have revolution-ized the practice of medicine.

It is important to note that the idea of man-aged care competition was first proposed as asolution to the irrationality of the U.S. healthcare sector by Alain Enthoven, personal advi-sor to U.S. Secretary of Defense RobertMcNamara during the Vietnam War.Enthoven was in charge of developing the“body count” as an indicator of military effi-ciency. After the Vietnam fiasco, Enthovenretired to the Rand Corporation, choosing tofocus his intellectual efforts on the reform ofU.S. health care. A strong ideologue and mar-ket fundamentalist, and completely ignorantof the mechanics of the medical care sector,Enthoven thought the best way to controlout-of-control costs in the health sector wasto increase competition in the sector, lettinghealth insurance companies compete for con-sumers – meaning patients – based on theprice of services. The problems with such anaïve and unrealistic scenario are many. First,patients do not determine the cost or price ofmedical care services. Second, patients havevery little choice in the U.S. health care sec-tor: employers choose which plans are avail-able to employees. Third, the market does notexist in the health care sector. Fourth, theinsurance industry’s financial viabilitydepends on its ability to discriminate againstheavy care-users. I could go on and on detail-ing just how wrong Enthoven’s proposalswere.

Not surprisingly, managed care was theproposal chosen by the insurance industryand by employers. As Bill Link, ExecutiveVice President of Prudential and one of thehighest-paid CEOs in the country, stated: “forPrudential, the best scenario for reform –preferably even to the status quo – would beenactment of a managed competition propos-al.” Link envisioned the corporatization ofU.S. medicine, breaking the long dominanceof health care providers in the medical care

sector. As Enthoven wrote in an article co-authored with Richard Kronick, anotherleader of the White House health care reform,“what about traditional fee-for-services indi-vidual and single specialty group practices?We doubt that they should generally be com-patible with economic efficiency. . . . Somewould survive in private solo practice with-out health plan contracts, serving the well-to-do.” It could not have been put more clearly:managed care competition was corporateassembly-line capitalism for the masses andtheir health care providers, with free choiceand fee-for-service medicine for the elites.

This proposal was actively promoted inthe White House task force by the staff ofDemocratic Representative Cooper andmembers of the so-called Jackson HoleGroup, who even distributed the group’smanuals on implementing managed carecompetition to task force members. Theywere particularly active in the Governance ofthe Health System (chaired by RichardCurtis, who had been an official of theHIAA) and Global Budgeting workinggroups. Outside the task force, managed carecompetition was actively promoted by theinsurance companies. Mr. Weinstein, a disci-ple of Enthoven and a member of the editori-al board of the New York Times (a third of theTimes board members then had connectionswith insurance companies), wrote nine edito-rials in support of managed care competition.

Paul Starr sold managed care to candidateBill Clinton. Of course, Starr and anotherleader of the White House task force, WalterZelman, were aware of some drawbacks ofthis scheme, and they modified it to allow forsome form of regulation of the ill-definedmarket forces – without specifying, however,who would do the regulating. They spoke ofHealth Alliances that would regulate the rateof growth of premiums and would allow, intheory, for consumer choice of health plans,with large employers operating on their ownoutside the regulatory process but still withinthe framework of managed care competition(with budget constraints); health insurers andhealth care providers could be integrated inthe same organization, or Health Plans.While managed care competition was theproposal favored by insurers and largeemployers, it was not favored by health careproviders. Providers had already had enoughexperience with insurance companies toknow that they could be more intrusive, abu-sive, and nasty than government. And man-aged care was certainly not the choice of the

grassroots of the Democratic Party – laborunions and social movements.

Concerned that managed care was notbacked by the majority of the progressivebase of the Democratic Party, Jesse Jackson,Dennis Rivera (then president of Local 1199,the foremost health care workers union), andI went to see Hillary Clinton. We complainedabout the commitment to managed care com-petition without due consideration of a sin-gle-payer proposal supported by large sectorsof the left in the Democratic Party. Weemphasized the need to include this proposalamong those to be considered by the taskforce. Mrs. Clinton responded by askingJackson and the Rainbow Coalition toappoint someone to the task force with thatpoint of view. And this is how I became amember of the White House task force. I laterfound out that there was considerable opposi-tion from senior health advisors, includingStarr and Zelman, to my becoming part of thetask force. According to a memo later madepublic and published in David Brock’s nastybook The Seduction of Hillary Clinton, Starrand Zelman disapproved of my appointment“because Navarro is a real left-winger andhas extreme distaste for the approach we arepursuing”– which was fairly accurate aboutmy feelings, but I must stress that my disdainfor managed competition and the intellectu-als who supported it did not interfere with myprimary objective: to make sure that theviews of the single-payer community wouldbe heard in the task force. They were heard,but not heeded. I was ostracized, and I hadthe feeling I was in the White House as atoken – although whether as a token left-winger, token radical, token Hispanic, ortoken single-payer advocate, I cannot say.But I definitely had the feeling I was a tokensomething.

It was at a later date, when some tradeunions and Citizens Action mobilized to getmore than 200,000 signatures in support of asingle-payer system, that President Clintoninstructed the task force to do somethingabout single-payer. From then on the battlecentered on including a sentence in the pro-posed law that would allow states to choosesingle-payer as an alternative if they sowished. In Canada, after all, single-payerstarted in one province (Saskatchewan) andlater spread to the whole nation. I have toadmit that I made that proposal with consid-erable misgivings, since the insurance com-panies can also be extremely influential at thestate level. For example, Governor Schaeffer

360

(a Democrat) of Maryland had asked insur-ance companies to interview the various can-didates for state insurance commissioner.Still, including this proposal was a steptoward giving single-payer a chance in theU.S.

It is interesting that in my debates withAlain Enthoven, he dismissed my proposalswith the comment that “the U.S. PoliticalSystem is incapable of forcing changes insuch powerful constituencies as the insur-ance industry.” Such candid admission of theprofoundly undemocratic nature of the U.S.political system was refreshing. The splendidopening of the U.S. Constitution, “We thepeople . . . ,” should be amended with a foot-note reading “and the insurance companies.”Actually, Enthoven’s statement came veryclose to Marx and Engels’ CommunistManifesto, which defines democracy as aclass dictatorship in which the corporate classcontrols the state. Empirical support in theU.S. for that statement is strong. But thestatement is not 100% accurate. I lived undera dictatorship in my youth (in Franco’sSpain) and I recognize a dictatorship when Isee one. The U.S. is not a dictatorship. Peoplein the U.S. do have a voice. Marx and Engels(and Enthoven) were not completely right:U.S. history shows that people’s mobiliza-tions can win the day. But, while not a dicta-torship, U.S. democracy is profoundly under-mined by the enormous influence of the eco-nomic and corporate lobbies, components ofthe corporate class. I documented this inMedicine Under Capitalism, published in the1970s. And things have become much worseduring the Reagan–Bush Sr.–Clinton–BushJr. era. The huge limitations of U.S. democra-cy are evident in the difficulty with which theimportance of people’s voice gets noticed.And this is why the Clinton proposal failed.He did not include in his plans any effort tomobilize people in support of the reform.Quite to the contrary. He allied himself withthe major forces responsible for the sorrystate of the U.S. medical care sector – thehealth insurance industry. The insurancecompanies ultimately opposed the final pro-posal because of its regulatory components,added by Starr and Zelman. But, apart fromthese components, the insurance companieswould have continued to manage the healthcare system.

Starr’s explanation of why the reformfailed is dramatically insufficient. The failurehad little to do with timing, with when andwhere President Clinton presented the pro-posal. It had to do with how the Clintons

related to the progressive constituencies,including labor and social movements. Nouniversal, comprehensive coverage will everbe achieved in the U.S. without an activemobilization of the population (especiallyprogressive forces) so as to balance and neu-tralize the enormous resistance from some ofthe most important financial lobbies in thenation. Starr’s social engineering approach,lacking any understanding of the dynamics ofpower, explains failure as a consequence ofproblems of the electoral calendar or thetypes of benefits offered.

In reality, the Clinton administrationignored the majority of the country’s progres-sive forces from the very beginning of itsmandate. President Clinton made his first pri-ority a reduction of the federal deficit (a pol-icy not even included in his program),approved NAFTA (against the opposition ofthe AFL-CIO, the social movements, andeven the majority of the Democratic Party),and committed himself to perpetuation of thefor-profit health insurance system – the pri-mary cause of the country’s inhumane med-ical care system. When NAFTA wasapproved, Clinton signed the death certificatefor the health care plan, and for theDemocratic majority in Congress. The num-ber of people who voted Republican in 1994was no larger than in 1990 (the previous non-presidential congressional election year). Thebig difference was in the Democratic vote.Abstention by working-class votersincreased dramatically in 1994 and was theprimary reason why Democrats lost theirmajority in Congress. This is a point thatStarr ignores. The Gingrich Revolution of1994 was an outcome of voter abstention,particularly among the working class, whowere fed up with President Clinton. ButNAFTA was also the death knell for healthcare reform. One could see this in the WhiteHouse task force. NAFTA empowered theright, and weakened and demoralized the left.

A continuing shift to the right (erroneous-ly called the center) has been the DemocraticParty’s strategy for the past 30 years, aban-doning any commitment to the New Deal andthe establishment of universal entitlementsthat make social rights a part of citizenship.David Brock writes in his book “thatNavarro had told Mrs. Clinton that if thePresident went ahead with a managed carecompetition plan, it would cost the election tothe Democratic Party.” Brock’s credibility asa reporter is extremely limited, but on thatpoint he was right. I told Mrs. Clinton that theonly way of winning, and of neutralizing the

enormous power of the insurance industryand large employers, was for the Presidentand the Democratic Party leadership to makethe issue one of the people against the estab-lishment. It was a class war strategy that theRepublicans most feared. My good friendDavid Himmelstein, a founder of Physiciansfor a National Health Program, told Mrs.Clinton the same thing. And as I judged byher response, she seemed to think we did notunderstand how politics works in the U.S.The problem is, we understood only too wellhow power operates.

This, then, is why the Clintons failed. Andunfortunately, Hillary Clinton will fail againif she lacks the courage to confront thoseresponsible for the predicament in thenation’s health care system. The insurance-controlled system imposes enormous pain onthe population. It is not just that 46 millionpeople are now without health insurance, butthe system also fails the huge numbers ofpeople who have insufficient coverage anddon’t discover this until they need it. Thiscruel system has been supported by largeemployers because it gives them oppressivecontrol of the labor force. When workers losetheir job, they lose not only their income butalso health benefits coverage – for them-selves and their families. The alliance of twoof the most powerful forces in this country –insurance and large employers – is at the rootof the problem.

A final observation. Love of country ismeasured by the extent to which one pro-motes policies that support the well-beingand quality of life of the population and, mostparticularly, the working and middle classesthat make up the vast majority of the popula-tion. Judged by this standard, most super-patriotic, right-wing forces fail miserably onthe love-of-country front. People in thisnation die due to lack of health care. The esti-mates vary from 18,000 to 100,000 a year,depending on how you measure preventabledeaths. But even based on the most conserva-tive number of 18,000 (from the conservativeInstitute of Medicine), this is six times thenumber of people killed on September 11,2001, by Al Qaeda. And these deaths contin-ue year after year. The deaths on 9/11 arerightly seen as the result of enemy action. Butwhy do the 18,000 deaths each year go unno-ticed? Why aren’t they seen as the outcomeof hostile forces, whose love for their countryis clearly nil? Mark Twain said, “You cannotlove people and then go to bed with thosewho oppressed them.” Why is it so difficult tounderstand such a basic truth?