Critical lessons from the health reform front.

Deep in one of the two most prominent health are plans in Washington, there is a single clause which dramatizes what's terribly wrong with the debate over how the country will reform its $1 trillion medical system. The Clinton administration' s bill and its chief Democratic rival, sponsored by Tennessee Rep. Jim Cooper, both allow states to experiment with their health care any way they choose--try some of Clinton, a little of Cooper, a dash of Chafee. But the Cooper plan (the one which seems to be picking up steam) makes an enormous, mind-boggling exception: States cannot---cannot--experiment with a singlepayer plan like the one now operating in Canada.

What is so frightening to Washington policy makers about even discussing how the Canadian plan might be a model for the American health care renovation? Could it be that the political culture, constrained as it is by fear of reform that would mean the near-abolition of the health insurance industry, is afraid people might like single payer if they saw it at work here?

We think that is a strong possibility. The press feeds this aversion to reform, too. For example, although stories of universal, cost-controlled systems which are experiencing even slight problems regularly win front-page display, good news about major health reform is buffed. When the 60'000'member American College of Surgeons (whose members' median income is $244,600 and who have the most to lose personally if reform passes and fees are capped) unexpectedly endorsed single payer in February, arguing it would preserve a patient's right to choose his doctor, cut bureaucracy more than any other proposal, and allow doctors to make their own medical decisions, The New York Times ran the story on page A24. The Washington Post published it on page A8.

Right now, Washington is engaged in one of its classic tribal dances, spinning and counter-spinning while the country awaits action. In fact, the clever thing to say in the capital this season was that there is no health care crisis in America. What began as a Republican strategy was picked up in January by Daniel Patrick Moynihan, who struck the pose on NBC's "Meet the Press." This counterintuitive line sounds wise, above the masses: We've done some checking, and it turns out all you deluded people worried about your insurance or paying your bills are all wrong. Not coincidentally, it also absolves lawmakers from making tough decisions and saves journalists from having to master a complicated issue.

But the "no-crisis" stance is dangerously wrong. Consider that the U.S. annually spends an astonishing 14 percent of GDP on health care while other advanced nations spend 10 percent or less. Spending billions more, we still leave 15 percent of the population--37 million Americans without insurance, millions more underinsured, and yet more millions in fear of losing coverage.

The Clintons deserve generous credit for taking on health reform. While we have grave objections to the administration's plan, we do not believe the Clintons deserve the battering they have taken for trying to produce universal coverage. In January, for example, a New Republic cover story entitled "No Exit" by Elizabeth McCaughey eviscerated the Clinton plan and did a hit-and-run on Canada but failed to offer an alternative that would provide universal coverage, saying only "Congress also should consider ways to provide insurance for those who cannot afford it... "In the issue which followed the article's publication, Michael Kinsley called it a "screed," and Ted Marmor and Jerry Mashaw, two Yale professors, wrote "virtually none of [McCaughey's] stark claims is indisputably correct." Yet the damage was done; the piece joined the Republicans and Moynihan in bombarding an administration that is at least trying to solve problems that rival plans ignore. Cooper, for instance, merely guarantees "universal access" to coverage--which means if you have money, you can buy coverage. That's the system we have now which leaves so many people out in the cold.

In the following article, Susan FitzGerald and Mark Jaffe of the Philadelphia Inquirer offer firsthand reporting on the two countries most similar to ours that have successfully reformed their health systems: Canada and Germany. These countries have both controlled costs and guaranteed equal treatment for rich, middle class, and poor alike.

How these systems work convinces us that the U.S. should adapt the principles that operate well in other systems and jettison those that don't. Whatever the other two systems' failings, it is essential to remember how much better they are than ours even with their problems. It is important to realize, too, that neither the Canadian nor German system need be carbon-copied [see "Socialized Medicine Now--Without the Wait," Nancy Watzman, October 1991]. We can work out the kinks and have national health care without waiting. The Congressional Budget Office (CBO) says single payer would provide universal coverage and still save an additional $14 billion a year. The General Accounting Office points out that with the equipment the U.S. already has, we could still provide high-tech treatments for everyone without resorting to waiting lines.

Of all the caricatures that haunt the American debate now, the worst may be that getting good health care in a system like Canada's or Germany's is only slightly more likely than getting good service from a U.S. postal clerk Until we bust our mental blocks on this, we won't get the reform all Americans should want: the best possible care available equally to everyone, no matter how rich or poor. Canada and Germany are not utopias, but they have much to teach us.

Take the most obvious possible complaint with the Canadian system: That a patient not in dire medical straits might have to walt for a hospital bed and full treatment. You will read about a woman, Joan Evans, who comfortably rests in the emergency room in just such a situation. She doesn't mind waiting; she could go to other hospitals where she would have no delay. (And of course, emergency patients have to walt in the U.S., too.)

But then consider Armand Jelilyan, a 33-year-old accountant who went to his doctor in Canada with "a cough that just wouldn't go away." As recounted by the Inquirer reporters in their 1993 book Hard Choices: Health Care at What Cost?, the doctor found lumps in Jelilyan's neck and immediately sent him for an X-ray and ultrasound. The next day, he was sent to a cancer specialist, who performed a biopsy. (A second biopsy was done the following week.) Jelilyan also had a CAT scan, a bone marrow test, and a dye scan to test for cancer. He had Hodgkins' disease. In the chemotherapy treatment that followed, he faced no delays.

To be sure, some patients do face a walt for a specific treatment. But 95 percent of Canadians report receiving the treatment they need within 24 hours, and deciding whether treatment is necessary is based on medical priority, not whether a patient can pay. In our country, uninsured people can go without care and even those with insurance sometimes go broke paying for treatments.

The key elements of reform are eliminating insurance bureaucracies and capping medical fees. Germany depends on nonprofit insurance companies, which have recently been prone to some bureaucratic logjams despite the system's overall low administrative costs. The Monthly favors the single-payer Canadian principle, because it both controls costs and paperwork. Most American doctors, however, have not gone the way of the College of Surgeons but instead instinctively oppose national health care because it would slow the growth of their salaries. But hold the pity: In the U.S., the average income for all doctors is $171,000; in Canada, a not-so-paltry $102,000; in Germany, $80,000. So even if physicians' pay were to slow to the Canadian rate, American doctors would still be making five times the average U.S. worker's wage. Another source of rising costs is expensive tests and procedures that specialists love. Canada and Germany have five to six times the number of family doctors per 100,000 people that the U.S. has, a fact which cuts down the volume of marginal tests and procedures.

But doctors are not the only obstacle to reform. To have single payer means largely dismantling the health insurance industry. As Tom Hamburger and Ted Marmnor have described in these pages, politicians, journalists, and experts fear such a hold move precisely because it is a bold move [See "Dead on Arrival," September 1993]. Them are insurance agents in every Rotary Club in every congressional district, and most politicians instinctively fear doing away with such a large institution--even if the vast majority of Americans would benefit from the resulting reform. Of course, single payer would throw many people in the health industry out of work. But the money we now spend on paperwork and bureaucrats--S100 billion is the CBO's estimate--will be freed up to be spent in other, more productive ways, including investments that will create new jobs.

One of the clearest examples of the fear of taking on such a huge task came when the Clintons unsuccessfully tried to avoid a fight with health insurers by leaving them in place and by financing the plan with "premiums" to avoid the dreaded word "taxes." (The cave didn't work; the insurers are still fighting the plan.) The unfortunate result of payroll financing is that it puts the weight of health care on the already-overburdened employer/employee relationship. Although Germany uses an employer/employee tax, Canada's system is financed by income, sales, and property taxes.

We believe Canada's financing method is better. Why? Because the lighter the burden directly put on the employer/employee relationship, the better the chances that paying for health care for all will not be a disincentive to employment. Income taxes spread the burden more equitably to provide what should, in truth, be a fight as basic as fire or police protection.

On cost control, Canada and Germany mandate how much money can be spent annually on medical care and then leave it up to doctors and hospitals to decide how that money is spent. But the Clintons did not go this proven route. Instead, the primary means by which the Clintons control medical costs is not by limiting overall spending but by capping what insurers may charge for coverage. This is a disaster in the making: U.S. doctors and hospitals can continue to charge what they want and private insurers will be in the position, as they are now, to decide what to pay for. (In single payer, as the College of Surgeons recognizes, fees are capped but doctors, not insurance bureaucrats, have the power to decide which patient gets which treatment.)

Will all this control rising medical costs ? Probably not. Clinton presumes insurance plans will compete to provide services more cheaply and that people will then choose to enter less expensive plans. But under Clinton's proposal and under Cooper's, spending more buys you more options, especially more leeway to choose doctors and hospitals.

The possible result? The rich will be able to buy more and better coverage, so money will continue to flow into the system, naturally driving up costs. Successful employers will be under pressure from employees to buy the best possible care; straggling employers will stick their employees in minimal plans with the poor who can't afford more coverage. Congress has already reserved the right to purchase extra coverage; so have federal employees, including the White House staff. So no one in power will have a personal stake in making sure the basic package is adequate, and that should make everyone deeply skeptical. For if official Washington declines to join the rest of the country, oversight will not be what it should be.

Let the well-off have the right--as they do in Canada--to pay for private rooms, televisions, and other amenities. But they should not have the right to buy better medical care. Both Canadian and German hospitals operate as nonprofits--a status that some American charities and hospitals have abused with excessive executive perks. Vigilance over nonprofits is essential, for efficient, honest nonprofit organizations could be the most effective instruments for getting the work of government done.

The features of successful reform--limiting doctors' compensation and compelling all doctors to participate--have worked before in American medicine. During World War 1I and Vietnam, drafting doctors and having them work under a budget and for ordinary salaries--they made just what other officers made--gave us the best, most efficient, and democratic medicine we have known. Nobody asked a sick GI whether he had insurance; he got the same high quality care as an Eisenhower or a Westmoreland, all under the broad authority of a democratic government. (In fact, the Vietnam work was so good that it revolutionized civilian emergency medicine. ) The free market has never done so well.

Note the features that worked: fixed compensation, universal access, and broad government supervision. We still believe that it is not too late to learn from other countries and from our own wartime experiences how to wrestle rising costs sucessfully and cover all citizens equally.