Pearls and Irritations

In this Presidential election year, poll after poll report that American’s number one concern is affordable health care.

Improvements in accessibility to health care and measures to improve quality and cost effectiveness following the passing of the Affordable Care Act (“Obamacare”) are steadily being undermined by the Trump administration with no better plan being forwarded. Some 600,000 Americans declare bankruptcy each year as medical costs obliterate their finances.

A friend of mine and his father had a firsthand encounter with US health care last Christmas .They were on holiday in Nevada when my friend’s father became ill with a severe respiratory infection. When breathing became difficult he went to the emergency room at one of the major hospitals in Las Vegas. Triage at the ED only dealt with the patients insurance status for the first two hours of his attendance. No doctor would examine him until contacts with the providers of his travel insurance in Australia confirmed that they would cover the costs. With that done the ED doctors quickly confirmed he had pneumonia in lungs that were already in trouble as a result of decades of smoking. The admission that followed lasted 13 days, 10 of which were spent in an intensive care unit. On discharge he was presented with a bill for US $155,000! My friend reported that, visiting his Dad in the ICU, he encountered the family of another patient (American) who were distressed that despite having very expensive private insurance their insurer would not pay this hospital’s demand for $100,000 as this hospital did not belong to the network of hospitals with a negotiated contract with the insurer.

There is a global consensus that the reign of would be king Donald Trump has caused much damage internationally. Denying the reality of climate change, undermining international free trade, and demeaning important and long standing alliances are just some of the reasons there is global interest in the November elections that might remove him from office. That removal will require the choosing of a Democratic candidate that can have broad appeal and galvanise eligible voters to vote. At this writing Senator Bernie Sanders is the “frontrunner” with huge but not majority support for his Utopian promises which include “Medicare for all” a government funded universal health insurance scheme such as we have here, and as Sanders correctly and repeatedly notes, do most OECD countries. Add to this promises of free college education, the forgiveness of student debt, free child care for every child in America etc without a credible economic plan to pay for all the promises will, most informed commentators agree, have him seen by a majority of the electorate as a far left idealist who will readily be defeated by Trump. Millions of Americans, desperate for affordable quality health care, are obviously excited by his “Medicare for all “ promise that is the centrepiece of his social democratic platform. However almost certainly most Americans will believe that it is politicly and financially undeliverable.

Trump has declared that he will never allow America to become a Socialist country. It would seem that he and his Republican followers see no distinction between socialism and communism. However irony abounds when one looks at the answer to the following question. Which country on earth has the largest and most expensive government funded health care program? The Answer is the USA. America’s Medicare program, non-means tested health insurance for all citizens over 65 and its Medicaid program for the truly poor costs almost 1400 billion dollars a year. That is more money that all OECD countries combined spend on government funded health care. Trump, of course is planning to rip billions of dollars from the programs.

Sanders and indeed most of the Democratic contenders are correct in agreeing that their government needs to provide health insurance for all citizens. It must be the program of the future but so many realities need to change before it could be introduced that a ten year program rather then the four year one proposed by Sanders is more realistic. It is one thing to set up universal government funded health insurance in a relatively low cost environment as was the case in Australia, but quite another to try and set it up in the worlds highest cost health care system. Here are some of the realities.

Before Trump the the Affordable Care Act had provide health insurance to more than 20 million people who were previously uninsured now 87 million Americans have no insurance or are underinsured. All states have medical/hospital courts set up to exclusively handle legal proceedings against Americans who could not pay their health care bills. Many hospitals are bankrupt particularly in regional areas. There are 900 medical insurance companies in America only 84 of which are “not-for-profit” and collectively they charge Americans 1.24 trillion dollars each year for coverage. Insurers have the power to determine just what services/drugs will be offered to individuals they insure. The average “deductible” payment required for individuals who buy personal insurance is around $12000. People insured by their employer (about 155 million people) have a deductible liability of $2-5000. Coverage is associated with lower salaries. Successful lobbying by drug companies sees Americans paying ten times more than Canadians and Australians for most prescription drugs. Medical supplies are far more expensive in the US. GPs and Specialists, on average, are paid twice as much as their Australian equivalents.

The US national debt is currently 22 trillion dollars (That is $67,000 per capita) .It has markedly increased under Trump’s stewardship and on current projections without major changes it will increase by another 12 trillion dollars over the next decade. The current spending on the Medicare program for people over 65 is running at about $19,000 per year for enrolees. The program cannot be sustained with current financing. The trustees of the Medicare program are pointing to insolvency by 2026. Sanders is promising that in the first year off his presidency Medicare would be extended to cover all Americans older than 55 with a reduction in age determined availability of ten years for each of the following three years. There are 25 million Americans in the 55-65 age bracket. Even if one presumed that per capita expenditure on this bracket would be held to the national per capita average expenditure on health ($12,000) Medicare would need to find an extra 300 billion dollars in 2021! The current Medicare program destined for expansion by Sanders, has problems. There is a $1400 deductible for hospital care. Many institutions don’t want Medicare patients and the quality of care it purchases is patchy indeed. 75% of those entitled to Medicare take out supplementary private insurance.

Sanders believes he can pay for his universal health insurance program, which would have no deductibles and no insurance company making clinical decisions, by introducing a payroll tax (less costly to employers than paying for employees health insurance), a tax on the rich and corporations and a Medicare levy for all taxpayers ( average about $2000 per year). Many Americans are skeptical about the delivery of quality care by the Medicare program. 160 million Americans have employer subsidised health insurance and despite dissatisfaction with the associate wage penalties and deductible, feel relatively secure in such programs. Were they to have the option of keeping that insurance they would still need to pay the Medicare tax levy and of course employers would want out with a payroll tax being required. Other democrat contenders talk of “Medicare for all who want it” but the unaffordable would be even more unaffordable if those with private insurance were excused from the medicare levy.

The reality is that until costs of health care in the US are normalised, that is brought into line with most other OECD countries Americans cannot have universal Medicare. Achieving that is very problematic but certainly not impossible with appropriate bi-partisan commitment and time. A senate decision this year provides a reality check. Despite enormous public support for the measure, the Senate could not pass a law that would have required insurance companies to stop the need for ”surprise” costs, such as the $100,000 sprung on the patient in a non-network hospital described above. Lobbying from doctors who run private emergency services, independent ambulance operators and for profit hospitals who benefit from such charges won the day.

Medicare for all must remain the health care destination for the US. The journey requires a Democrat majority in Congress and the Senate, a ten year plan that starts with a determination to reduce costs across the health sector and restoration of the benefits of the ACA program. The undeliverable promises of an affordable quick fix, so attractive to many suffering in a health system riddled with inequity, might just deliver a democratic challenger to Trump whose vision would be rejected by most Americans destroying the opportunity for the health care reform journey America so desperately needs. This would be associated with four more years of a president who would remain a threat to International harmony and the planet itself.

Professor John Dwyer is an Emeritus Professor of Medicine at UNSW and the founder of The Australian Healthcare Reform Alliance.

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