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Socialized medicine now - without the wait.

By now, you've seen a million stories on the Canadian health care system, and perhaps even read a few. If so, you've discovered that they all apply the same formula. First, like a slap in the face, comes the horror story: In Orange County, California, a woman goes into business for herself, giving up her health insurance--and discovers she has breast cancer. She takes to selling flowers from her garden in a desperate effort to keep up with her bills. Next come the terrifying statistics: Americans spend more than $750 billion--or nearly 14 percent of the GNP--on health care each year. If costs continue to rise at current rates, they'll eat up 37 percent to rise at current rates, they'll eat up 37 percent of the GNP by 2030. Yet 28 percent of U.S. citizens lack basic health care; 35 million are uninsured--and nearly two thirds of them have jobs.

Now the emergency is clear, and the stage is set for a hero. But as he comes into focus, our savior looks a lot less like a chiseled Mountie on a galloping steed than a . . . "Worthwhile Canadian Initiative," to borrow the inspirational title for a Most Boring Headline contest in The New Republic a few years back. The stories, you see, are carefully "balanced." On the plus side, they point out that "our neighbors to the north" spend only 9 percent of their GNP on a tax-financed national health program, yet everybody is covered, from the wealthiest businesswoman to the poorest, unemployed IV-drug user. Then comes the downside: Canadians must wait longer than Americans do for high-tech treatments such as coronary bypasses, MRIs, CAT scans, and even cancer treatments. It appears to be a trade-off, conclude The Washington Post, The New York Times, The Miami Herald, and Walter Cronkite. Who can say, they shrug, which system is better? Will America ever reform its health care system, and will Canada be the model? One thing is certain: Only time will tell.

Hey! How about a little American initiative? If our system's broke--as everyone from Physicians for a National Health Program to the Heritage Foundation agrees--let's fix it. That means choosing the best model we've got--the Canadian system--and eliminating the bugs. After all, the Canadians don't have to give us a blueprint, just a beginning.

Despite the utopian claims of universal health care advocates, the problems with the Canadian system are real. Making it right for us will take hard work and, above all, brutal honesty about its flaws. But the end result will be advanced, humane medical care for all Americans. That it will also be billions of dollars cheaper than the jury-rigged, inequitable system we've got now--well, that's just added incentive to do the right thing.

Wealth care

On New York City's Park Avenue, doctors understand the subtleties of putting together a practice. The artwork is understated but expensive, the New Yorkers uncreased and up-to-date. The nurse is as gentle as a Swedish masseuse, the gown as ample as your backside. And the doctor, one of the best in his field, gives you his undivided attention for an hour.

At $200 a visit, this is American medicine at its best. For the worst, walk 30 blocks uptown, to the "Medicaid mills" of Harlem. These "doctors' offices," which actually boast no doctors except on the requisite citi licenses, serve thousands of New York's poorest people. A recent Washington Post story described the care provided at one such institution: A clerk collects a patient's Medicaid card, scribbles out an Rx, and sends him on his way. Given this sham service, why do dozens of people pass through these revolving doors every day? Because many doctors in the city refuse to accept patients on Medicaid.

Now head northwest to the village of Tofino in the Pacific Rim region of Canada's Vancouver Island--one of the few places on earth that harbors more eagles than people. It also harbors the only hospital in 100 miles: a low-slug green building with one doctor, one nurse, one ambulance, one helipad, and nine clean yellow rooms. Inside tonight are an elder of the Ucluelets, an impoverished fishing tribe located several miles away; two injured loggers; and one affluent, 30-year-old ecotourist who escaped from Vancouver to hike the coast and promptly broke his leg. His starchy wife sits, reading Barry Lopez's Arctic Dreams, by the bed.

Universal access like this is the chief rationale for the Canadian system: Instead of some Americans receiving miserable treatment or none at all while others enjoy the best in the world, all would be taken care of. The rub is that universal access also means equal access--that all Americans will meet somewhere in the medical middle, sharing the same waiting room, the same doctor, the same equipment, the same quality of care. That leveling effect is wonderful if you're among the millions of Americans without insurance. It may not be so wonderful if you are accustomed to the Park Avenue touch.

But if you are, you're in a class virtually by yourself. Only 10 percent of Americans approve of their health care system. Meanwhile, according to a recent Harvard study, 56 percent of Canadians approve of theirs. That shouldn't be surprising, since all Canadians enjoy not just access to health care but choice about whom they're going to see to get it.

Opponents of "socialized medicine" always trot out the British system as the prime example of how state control can lead to consumer misery. And they're right--but only because the Brits made the mistake of depriving patients of any say over who peers in their ears, prods their stomachs, or cuts them open. Canadians can make an appointment with any doctor they choose. And what those doctors do for them is clearly working. Canadians are much healthier than Americans. They're less likely to die as babies or from surgical complications, and they live longer.

Mary Lou and Robert Dunn of Brampton, Ontario, have alternated medical crises through the years. Twenty years ago, she was in a car accident that left "the windshield with an imprint of my face." She had nine operations to fix multiple fractures and rebuild her nose, lips, and eyes. Robert's medical history includes one operation for hemorrhoids and several for his back. He's about to go in for an operation on his shoulder. Quality of care? The Dunns' praise is unqualified. Waiting time for an appointment? Just the other day, when they both woke up sick, "I called our doctor at about 9:30 a.m. and she said 'Come right on in, I have an opening in 15 minutes,'" says Mary Lou.

Even by south-of-the-border standards, that's good service. But its gets better. In all those operations, through vaccines and infections and a dozen bouts of flu, the Dunns have never seen a hospital bill. The only money they ever hand over for health care is what goes to the government in taxes--and, believe it or not, it's less than what it costs to supply the average American with health care. According to Consumer Reports, a Canadian who earns the equivalent of $26,000 pays about $1,300 for health care. People in the U.S.--or their employers, who pass the costs along as lower wages or higher prices--pay about $2,500.

The Canadian system is actually several different systems, as each province administers its own health plan using federal and local funds. What's constant is the way the system is structured to keep costs down. First, hospitals and clinics receive fixed amounts of money to cover day-to-day expenses, such as Q-tips and syringes. If administrators want more money to make capital investments--for a new CAT scanner, for example--they must apply to the provinces negotiate with medical associations to establish how much doctors are allowed to charge for certain services. This is not too different from the established reimbursement rates used by U.S. health insurers and government programs, except that U.S. doctors can always charge their patients more than what insurers are willing to pay. Canadian doctors are simply not allowed to do that.

The government-issued health plan cards that the Dunns carry in their pockets entitle them to care in every province in Canada and every country in the world. Their province will pick up the bill. That generosity ensures they won't end up stranded without coverage in some medical hellhole . . . like Washington, D.C., where their niece, 24-year-old Mamie Stobie, has been turned down for coverage by over 30 health insurance companies.

The reason? Mamie's diabetic. In health insurance jargon, that's a "pre-existing condition," a term that roughly translates to: Because Mamie needs health care, she can't have any insurance to help pay for it. That's the American way.

Home of the fee

One reason we'll be able to afford Mamie's insurance under a Canadian-style plan is that such a system would put an end to several perversions and ineficiencies in the U.S. medical market. Critics of the Canadian approach may rail about creeping socialism, but right now, American medicine turns the laws of supply and demand on their head.

Let's say, for example, you've had a heart attack. To dissolve the clots forming in your blood, you need to start taking one of two equally effective drugs. One costs $76 to $300 a dose, the other $2,200. So you take the cheaper one, right? Wrong. Because one of the drugs costs more, your doctor would probably prescribe it to you. As Andrew Pollack showed in The New York Times last summer, Genentech, the company behind the more expensive drug, pumps enormous amounts of money into studies and aggressive marketing (performed by 278 salespeople) to push its product. The other drug has been around for decades, is unprotected by patents--and so is too cheap to make marketing worthwhile. That's how the free market functions in American medicine: The development of more expensive, hightech treatments creates the demand for more expensive, high-tech treatments; likewise, more doctors means higher fees, and that means--you guessed it--more doctors. And even higher fees.

Estimates vary among surveys, but there is no doubt that each year huge members of Americans undergo treatments they don't need. A 1988 New England Journal of Medicine study, for example, concluded that two thirds of patients who receive heart surgery do so for either "equivocal" or "inappropriate" reasons. Perhaps this is because the American medical establishment helps them decide that they want it.

Consider the notorious cesarean section, the most frequently performed major surgery in America. Almost one in four babies is born with the assistance of a surgeon's scalpel, although some experts estimate only 12 to 14 percent actually need it. Why so many cesareans? One reason is that physician's fees average about $500 more for a cesarean than for a normal delivery, and hospital costs run about $2,000 higher. And the decision to perform the surgery is pretty much the doctor's alone--when your feet are in the stirrups and your baby's doing the Bump, you aren't too inclined to quibble with his recommendation. Maybe Marcus Welby would never let the fact that his kid wants a CD player flash through his mind as they wheel that writhing woman into the delivery room. But it does seem a strange coincidence that, according to Consumer Reports, uninsured women are least likely to undergo c-sections while those with Blue Cross or other commercial insurance are most likely to be sliced open. Membership, apparently, does have its privilege.

In Canada, doctors are also paid on a fee-for-service basis. But faced with rising health care bills, provinces are beginning to limit what an M.D. can make on certain high-volume procedures: Perform 200 cesareans in a year and get the going rate; do more than that, and get less per baby. This system ensures that doctors aren't overusing services simply for the fees.

Here's another example of the waste generated by the peculiar American medical market: overuse of the MRI, a sophisticated variation on the X-ray machine. At as much as $1,000 per scan, with doctors taking a $250 bite, these gizmos have helped hike radiologists' salaries to such heights (an average of $184,600, a 71 percent increase since 1981) that hospitals have taken to suing for a bigger cut. Of course, some doctors prefer to rely on the methods they've always used successfully. To enlighten them, most MRI centers put aside large chunks of money--the American Hospital Association (AHA) recommends $8,000 a month--for "aggressive marketing" of the scanner. Part of that money, says the AHA, should go to "convince physicians" to use the MRI more frequently. If local doctors are already fond of the MRI, "the marketing dollars are spent on attracting them to that particular facility." Guess who winds up paying for all that helpful PR--not to mention to unneccessary uses of the MRI it generates?

Dr. Eugene Vayda, a professor of health and medicine at the University of Toronto who sat on the expert committee that helped determine the distribution of MRIs, chuckled when asked how MRIs are "marketed" in Canada. "There's no marketing plan," he said, "because there's no money in it for the hospitals."

Life after debt

Another way to save on wasteful diagnosis is to pay the diagnosers less. Doctors are among the highest earners in the U.S.--in 1989 their average earnings were $150,000--and as their ranks swell, the money piles up faster. From 1971 to 1985, the share of the American GNP going to physicians rose by more than 40 percent. Under a Canada-type plan, physicians would not be able to charge the same fees that they do now--which is probably why the potent American Medical Association (AMA), which has opposed every major attempt at health reform in this century, has already begun battling the Canucks.

To hear some of the Canadian doctors groan, you'd think the Americans are right to worry. "I work twice as hard as [American doctros] and earn half as much," says Michael O'Neill, an orthopedic surgeon in British Columbia. But if O'Neill's not exaggerating, he's exceptional. While doctors' per-patient fees have fallen in Canada since nationalization in 1967, incomes on the whole haven't. The average Canadian general practitioners earns $100,000 a year, compared to about $38,700 in 1967. Isn't that enough money to lead a good life?

Restrictions such as the caps on fees may seem onerous, but the best evidence that Canadian doctors are generally satisfied with their system is that, despite ritual grumbling and constant dark prognosticating, there's been no mass exodus south to the U.S., where doctors could earn more for less work. When asked why, Canadian doctors almost always note that their system allows them to do what they were trained to: treat patients, not run a business. "I was going to go to the U.S. 12 years ago when I started practicing," says Dr. O'Neill. "But I decided not to. I don't have to bill my patients here. I don't have to fight to collect my money." The sentiment is echoed by a Quebec rheumatologist: "The system allows me to be a doctor. I don't want to be an entrepreneur." Compare these doctors' experiences with that of Dr. Bill Roy, who practiced gynecology in Topeka, Kansas, for 25 years. When he started out back in 1965, he struggled to keep his office costs below 25 percent. By the time he retired last year, more than half of his costs--at least 55 percent--had little to do with treating his clients. His form clerks and other paper-processors outnumbers his clinical staff.

Adding to the pleasure of practicing without pencil-pushing is the fact that Canadian doctors start out with less debt than American doctors do: In 1988-89, would-be doctors paid anywhere from $750 in Quebec to $3,000 in British Columbia for a year's worth of medical school. (Canada subsidizes most post-secondary education programs, not just medical school.) In the U.S., the average medical student enters residency saddled with a $40,000 debt--a powerful motivation for recommending more cesareans.

Subsidizing medical education and switching to a negotiated fee system like Canada's would be key to our nationalized program. But those aren't the only steps that should be taken to control the high cost of care. Information about the quality of doctors--the same sort of information we now get about cars, houses, and pet food--should be readily available to help patients make smart decisions. Say you're pregnant, and Doctor X recommends you have a cesarean. You should be able to go to a computer and find out how many times Doctor X has given that opinion. But, in the first place, reliance solely on doctors to provide medical care doesn't necessarily mean better service. Both the U.S. and Canada have made the mistake of thinking that it does. One way to further improve on the Canadian model would be to encourage greater use of "alternative care providers"--like nurse practitioners and physicians assistants--who can diagnose sore throats for a lot less than $200 a pop.

We need our hips

Under the Canadian system, the government doesn't step in just to iron out inefficiencies in the health care market. It actually takes control of supply, and therefore of demand, through rationing, a notion Canadians accept but Americans shudder to consider. Of course, some rationing decisions are fairly easy (like which of the two equally effective heart drugs doctors should be allowed to offer). In vitro fertilization, cosmetic surgery, and sex change operations are among the services for which Canadians most often have to dip into their own pockets. But the calls quickly get tougher. It's much easier to turn away than to confront hard rationing decisions, to trust in the invisible hand and our tattered patchwork of support programs rathern than in some new government bureaucracy--a federal Department For Whether We Feel Like Saving Your Life.

Trouble is, the invisible hand isn't known for its compassion. As a result of the laissex-faire approach to medical care, we already have a rationing system in place--one based not on need but on ability to pay. A new study in the Journal of the American Medical Association (JAMA) found that the uninsured were 25 to 75 percent less likely to undergo each of five high-cost, discretionary procedures, including certain biopsies, colonoscopies, and CAT scans. Even after controlling for the severity of illness at the time of admission, the study discovered that the uninsured were far more likely than the insured to die before leaving the hospital. Coinsidence? Not likely. Take the MRI again. The AHA explicitly recommends that MRI centers keep an eye on what's called the "funding mix"--in other words, making the MRI more available to those more able to pay.

So there's a strong social justice argument to be made for the rational rationing of health care. So what? That high-minded reasoning would be mighty small comfort if you found yourself waiting six months to get your hip replaced, like the Canadians do. It's rare that a procedure performed in the U.S. is not covered at all in the Canadian health care system. Instead, where rationing shows its dark side in Canada is in the wait you must endure for non-emergency care. Some cheerleaders for the Canadian system gloss over this problem, but no patients should have to wait six times longer to get his hip replaced under a new health care system than he would today at Georgetown University Hospital. Under our modification of the Canadian plan, no one--including those Americans who today have no hope of ever receiving the treatment in the first place--will have to.

Paper tigers

How is that possible? Because for once, more government involvement means less paperwork. Consider D.C. General Hospital, where armed guards escort men in shackles to the overtaxed HIV clinic. Ninety percent of the men and women who come through the doors lack health insurance--not to mention jobs, homes, and families. Dying or not, they wait more than an hour to see a doctor for 10 minutes. If there seem to be few staff members in this massive complex, take a turn down the stairs and through the hall. There are hundreds of health care workers here at D.C. General. Unfortunately, most of them are filling out forms.

Patients here have enough to worry about without paperwork. But the Medicaid forms they're required to fill out are so complicated that many just can't keep up. One U.S. government estimate states that about a million Medicare enrollees a year don't seek reimbursement because they find the forms too complicated. And don't think just the poor get confused. A recent Washington Post editorial lamented that you need a personal CPA to keep track of all the forms that pur in when you suffer from a serious illness--the health insurance claim forms, the hospital bills, doctor bills, the abstruse notices from Medicare that need deciphering to find out what's covered. This paperwork isn't just tiresome for would-be patients--it's incredibly expensive. Thankfully, the Canadian national health program actually involves less--much, much less--bureaucracy than ours.

Think about it. Since every citizen is automatically covered in Canada, there's no need to employ armies of people to determine whether Mamie's diabetes is a "pre-existing condition"--there's no such thing. Fewer people are needed to work in doctors' or hospitals' billing departments, because those facilities bill the government directly for all services. Doctors aren't forced to hire professional staff to manage the intricacies of insurance status and the collections process. They don't have to keep track of exactly how many Tylenol tablets one patients swallowed during a hospital stay in order to bill him for them later; they need only track how many Tylenol tablets are being dispensed at the hospital on the whole, which requires a lot less paperwork.

Here's the bottom line: In Canada, just one cent out of every dollar spent on health care goes to administrative costs; across the border in the U.S., up to 24 cents goes to billing, form filing, and other advanced forms of paper shuffling performed by health administrators, whose rank swelled nearly 400 percent from 1970 to 1987. In 1991 alone, we can expect to waste from $115 to $136 billion on health administration--money we could be spending on health care.

Steffie Woolhandler and David Himmelstein, Harvardbased physicians who work with Physicians for a National Health Program, have estimated that as much as $83 billion could be saved in paperwork costs alone if the U.S. switched to a national health plan. The General Accounting Office (GAO) estimate is a little more conservative: $68 billion. Yet even that amount is more than enough to pay for basic health coverage for all the uninsured people in the United States, with enough left over to do more besides.

The key thing to remember about these estimates is that they cover administrative savings alone. They don't include any of the other cost-saving measures already discussed, such as cutting back on unnecessary procedures or starting up a rational rationing system. And they assume--this is crucial--that Americans will not start waiting longer for their heart or kidney transplant operations, or for anything else. The GAO points out that with the equipment we've already got, we'll be able to provide high-tech treatments for everyone without resorting to Canadianstyle queuing.

Once that's understood, the question becomes: What do we do with the savings? The first thing, of course, is to extend the same level of care that insured Americans now receive to the uninsured; Himmelstein and Woolhandler estimate in a May JAMa article that this change would run us about $12 billion. If you take the GAO's $68 billion as a conservative estimate of administrative savings and subtract that $12 billion, then you're left with a full $56 billion for other goodies. What should we do with it?

Well, just to calm fears, let's take the worst case scenario, assume that we'll need to pay out some more money to fund high-tech treatments for all who need them, and do some seat-of-the-pants calculations. Consider the example of shock wave lithotripsy, a process that breaks up kidney stones. Canadians wait about six weeks to receive lithotripsy, while the average Washington can get it in about three weeks at Georgetown University Hospital. Right now in the U.S., about 23,000 people get lithotripsies per year. Assuming that most of these people have health insurance, we can divide 23,000 by the number of insured Americans--214 million--and come up with a rough ratio showing how many lithotripsies should be performed per population. Then take that ratio, multiply it by the 35 million unisured, and we get a rough number for how many lithotripsies we need to do if we want to cover the poor. Multiply that number by how much physicians earn for performing the procedure in Canada--U.S. $241--and voila, we've got a figure for how much we would need to chop off the $56 billion savings budget--$906,642. Now, that figure underestimates some costs (it doesn't take into account hospitalization, for example) and overestimates others (it assumes that all Americans who now receive lithotripsy have health insurance, while some undoubtedly don't). So, just to be conservative, let's multiply by 10.

We can use the same formula for kidney, heart, and heart and lung transplants. Multiply by 10 and tack on the lithotripsy cost, and you get about $31,387,750--just .05 percent of the money we've got to spend. That $56 billion could go an awfully long way.

If you're an economist or a hypochondriac, you may well be thinking: All that's fine, but what about improving on the quality of treatments already offered? With the government trying to hold down costs, what incentive will there be for the kind of daring research and development only good old American capitalism can foster? One reason Canada is able to control its health care costs, some critics point out, is that it can rely on the United State to invest in coming up with new treatments and equipment. With the U.S. also going to national system, health care could stagnate.

In the first place, there's still plenty of incentive for a truly daring health care entrepreneur to hit the laboratory; after all, if he can convince the American health care system to offer his treatment, he'll be a millionaire. But let's suppose that private corporations after nationalization do lose the will to invest in R&D. Who needs 'em? The federal government already plans to spend $8.7 billion in 1991 to fund health research--that amounts to 44 percent of all such research performed in the U.S. last year. Double that investment, kiss the private money goodbye, and we'll still have tens of billions of dollars in savings to spend on wart removal or herbal treatments or lolipops for the kids who don't cry.

Northern light

Right now there are almost as many piecemeal health reform proposals floating around Capitol Hill as there are congressmen. The most inventive program the Democratic leadership has come up with is more of what we've already got: expansion of employer mandates and government programs in a "play or pay" scheme. Such a patchwork approach would actually be more expensive than our current system, let alone a Canada-type plan, because it adds benefits without cutting costs; estimates range from $24 to $60 billion worth of new taxes, much of which would go for more administrative bloat. This lack of vision springs partly from blind fear--a patent unwillingness to fight the AMA and an insurance industry facing annihilation. This is why the final thing we must take from Canada is courage.

The situation Canada faced back in 1964, right before the government enacted the universal program, may sound familiar. The Canadian Medical Association wasn't any more pleased with national health care proposals than the AMA is now--and neither were Canadian health insurance companies. Meanwhile, inflation was rising and the federal deficit worsening.

When the Medical Care Insurance Bill was introduced in July of that year, the parliamentary debate was fierce. "So strident were the tones, so angry the voices, and so vehement the opposition that one journalist summed up. "The federal government's proposed legislation lies torn, tattered, and political rejected,'" writes Malcolm Taylor, a public policy professor at York University and a former Canadian official. Yet the bill passed in the end, partly because of the boost it received from an official commission report, requested by the Canadian Medical Association, that to the doctors' chagrin came out in favor of a national program.

Congress should listen less to campaign contributors and more to the facts. We can provide both basic, preventative medicine and sophisticated, hightech care to every American--for less money than we now spend to coddle the few while leaving tens of millions vulnerable. In fact, with some political courage and a little hard work, we could probably teach Canada a thing or two about the right way to run a national health care program.

Nancy Watzman works for Public Citzen.
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Author:Watzman, Nancy
Publication:Washington Monthly
Date:Oct 1, 1991
Previous Article:Blind data; why the life's gone out of the government's vital statistics.
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