ISSUES IN NATIONAL HEALTH INSURANCE IN THE UNITED STATES OF AMERICA

143

Health Services ISSUES IN NATIONAL HEALTH INSURANCE IN THE UNITED STATES OF AMERICA STEVEN

JONAS

Department of Community Medicine, Health Sciences Center, State University of New York, Stony Brook, New York 11790 THE United States of America is the only major country in the developed, capitalist world without some form of national health insurance programme. The struggle for national health insurance in the U.S., a long and bitter one, has been well described.1-3 It now appears as if there will be some form of national health insurance legislation in the U.S. before the Presidential elections of 1976. I consider here some of the major issues which will be involved in the coming political decision-making process. The proposers of the several national health insurance plans usually refer to a " national health care crisis" of some sort when introducing their legislative proposals. The state of the U.S. health-care-delivery system has been well and frequently described.’’ Actually, the present situation can hardly be called a "crisis "-a term which implies some sudden change in condition in reference to time. Since the opening paragraphs of the Final Report of the Committee on the Costs of Medical Care written in 1932 are still entirely relevan’t, and, for the most part, adequately describe the present situation,’ one can only say that the U.S. health-care system is one which has faced serious difficulties for many years, and that certain problems, such as rapidly increasing costs and malThe distribution of services, are getting worse. several legislative proposals which have been introduced in response to the current situation have been described and discussed, in detail, elsewhere. The existence of a vast private health-insurance industry is both a major feature of the U.S. healthcare-delivery system and a major factor which must be taken into account in the creation of any national health insurance plan. In 1972 the industry collected $22.3billion in premiums and paid out $195 billion in claims and benefits.48 It provided some kind of coverage for some health-care costs to 77% of the civilian population, according to the Office of Research and Statistics of the Social Security Administration, and to 87-6% of the civilian population, according to the Health Insurance Association of America (H.I.A.A.), the industry’s major public voice.

The

plethora of N.H.I. proposals currently on the legislative table 39,45-47 can be confusing, but, if the prominence of the private health-insurance industry in the U.S. health-care system is taken into account, they can be conveniently divided into two groups, relative to that role envisaged by each for the industry. The first group includes the American Medical Astion’s " Medicredit ", the Health Insurance Association of America’s " Health Care ", the Nixon Administration’s 1971 proposal " National Health Insurance

Standards Act/Family Health Insurance Plan, the Nixon Administration’s 1974 proposal, the "Comprehensive Health Insurance Plan"(C.H.I.P.), and the American Hospital Association’s "Health Care Services"plan introduced by Senator Ullman ; all envision a system in which the private insurance industry, under regulation of one sort or another, would provide health-care insurance policies which would be purchased for beneficiaries by employers and/or Government agencies. The second group includes the Senator Kennedy/Representative Griffiths original " Health Security Program ", the new (1974) Senator Kennedy/Representative Mills " Comprehensive National Health Insurance Plan " (C.N.H.I.), and Senator Javits’ proposal to expand Medicare to cover the whole population ; these would severely curtail the role of the private health-insurance industry. In fact, Kennedy/Griffiths eliminates the industry from the action altogether, while Javits and Kennedy/Mills " limit it to a Medicare " fiscal intermediary role in which, for a fee, it passes money from the insurer and administrator of the plan, the Federal government, to the providers and consumers. There is one proposal which at first glance falls clearly into neither one group nor the other-the Catastrophic Health Insurance " (C.H.I.) plan of Senators Long and Ribicoff. Its primary publicised intent is to provide limited financial protection against potentially pauperising episodes of illness-in effect, Federal major medical insurance for all. Thus, with a large deductible element, and co-insurance,* it would provide financial protection against " catastrophic illness ". It would also nationalise Medicaid (the State-run presently system of medical-care cost aid to the poor), and encourage the purchase of private health-insurance coverage for employed workers, by setting up voluntary national standards for such insurance. C.H.!. would be financed by Social Security and general taxation and would be operated by the Social Security Administration, with the private insurance companies playing a fiscal intermediary role. In the latter regard, C.H.I. would appear to have much in common with the Kennedy proposals. However, upon further examination, it becomes apparent that the beneficiaries of C.H.I. both before and after enactment of a broad-coverage N.H.I. programme would be the private insurance companies. They would be relieved of responsibility for the most expensive and most unpredictable risks-long-term illnesses-while making fees as fiscal intermediaries. They would also be relieved, by the second part of the legislation, of the obligation to provide insurance for the other highrisk group-the poor. At the same time, the third part of the legislation would authorise a Federal " seal "

of approval " programme for private health insurance, which would probably aid its further expansion. Thus, it is probably no coincidence that one of C.H.I.’s cosponsors is the otherwise liberal former Secretary of Health, Education and Welfare in the first administration of President John F. Kennedy, Senator Abraham A

"

deductible " is an amount of money to be paid by a beneficiary before insurance begins to cover costs, usually on an annual basis. Co-insurance " is an amount of money to be paid by a beneficiary sharing the costs of covered services with the insurance company. It is usually in the 20";, range. "

144

Ribicoff of Connecticut. Connecticut is the home State of many of the nation’s largest insurance companies. It should be noted that, except for certain features of Kennedy/ Griffiths,46 and fewer of Kennedy/Mills, the plans all envision maintaining the present healthcare-delivery system organisational modes, do little to affect the distribution of services, generally do not deal with the fragmentation of care, and do not contemplate, openly at least, any attempts to alter the private entrepreneurial fee-for-service system of medical practice currently predominant in the United States. PRINCIPAL

CANDIDATES

C.N.H.I. would

fits.

generally

have somewhat broader

benefits, and a special long-term programme for the elderly and disabled.

(8) Cost control.-There are significant cost-control mechanisms for both institutional and individual providers. Both plans envision prospective reimbursement for institutions. C.N.H.I. would come down much harder than C.H.I.P. on payments to individual providers, instituting a German-style pool system, while maintaining the appearance of fee-for-service. (9) Quality control.-The application of the Professional Standards Review Organization system 49 would be greatly broadened under both plans. For further details on these and other plans readers referred to previously cited works,39,4S,47 and, of course, the legislation itself: for C.H.I.P., Senate 2970, House 12,684, 1974 ; and for C.N.H.I., Senate 3286, House 13,870, 1974. In reviewing the features of the two plans, it can be seen that, while they differ from each other to a certain extent in most of their features, they differ sharply only in their proposed modes of administration and financing. C.H.I.P. places the private insurance industry in the central position in national health insurance, while C.N.H.I. relegates the industry to the role of. fiscal intermediary and would allow it to sell supplemental policies to cover deductibles and co-insurance. To understand C.H.I.P., one must know its genesis and the role of the private insurance industry in the American economy. In April, 1973, an organisation called the Committee for Economic Development published a national health insurance plan. 50 With one exception, the Committee’s proposal predicted, feature for exact feature, Nixon’s C.H.I.P.: are

At this point in time, with the introduction of the Nixon Administration’s C.H.I.P., and the Kennedy/ Mills C.N.H.I., it appears as if the field of contenders is beginning to shake down. Kennedy/Griffiths, which would have eliminated the private insurance industry from participation almost completely, has little political support, and is fading fast. C.H.I.P. is a fairly well

thought-out approach to Government-supported private health insurance, compared with previous proC.NH.I. is a comprehensive proposal to posals. provide health-care-cost coverage through the Social Security system, retaining the private insurance industry as money handlers. It is likely that these plans, representing well as they do the two fundamentally different approaches to the private insurance industry, possibly with the Long/Ribicoff C.H.I. plan as a stalking-horse for C.H.I.P., will become the two principal candidates. Thus, review of specific legislative proposals will be limited here to these two plans. (1)) 2dministration.-C.N.H.I. would be operated by the Federal Social Security Administration, which would be split off from the Department of Health, Education and Welfare and made an independent agency reporting directly to the President. The insurance industry would play the role of fiscal intermediary-that is, passing the money from Government to consumers and providers, as it does under Medicare. C.H.I.P. would provide for the creation and selling of insurance packages by the private insurance industry, under regulation, to employers and Government agencies, for beneficiaries. (2) Financing:-C.N.H.I. would be financed by a combination of social-security taxes and general taxation, while C.H.I.P. would rely on direct employer/employee contributions to buy insurance for employed workers, plus general taxation to purchase insurance for the nonemployed through Government agencies. (3) Participation.-Compulsory for consumers under C.N.H.I., voluntary under C.H.I.P., voluntary for individual providers under both. (4) User payments.-Both C.N.H.I. and C.H.I.P. have deductible and co-insurance features, with C.N.H.I. imposing a smaller financing burden. (5) Catastrophic insurance.-Protection against expensive, bankrupting illness costs is a feature of both plans. (6) Number of plans.-C.N.H.I. would have two: Medicare for persons 65 and over, C.N.H.I. for everyone else. C.H.I.P. would have three: Medicare; Employees’ Health Insurance Plan (E.H.I.P.) for covered workers and their families; and Assisted Health Insurance Plan (A.H.I.P.) for everyone else. (7) Benefits.-Broad for inpatient hospital treatment, physician, and related services under both plans with few limits, except for mental, dental, and pharmaceutical bene-

" We recommend that national health-insurance

cover-

age be provided through a three-category system: 1. Employers should be required by statute to provide

minimum level of employment-based insurance protection for all employed persons and their dependants for specified basic benefits under qualified plans. 2. Medicare would continue to cover aged persons under the social-security system and those eligible for disability benefits under both the social-security and railroad-retirement acts, with certain modifications in benefit provisions. 3. Federally sponsored community trusteeships should be established to assure basic benefits for all persons ineligible under the above categories ..." 51

a

Under parts 1 and 3, insurance would be purchased from private companies. Its proposed mode of administration, benefit package, schedule of phasing-in, and the like, are very close to those envisioned by C.H.I.P. The one major difference between the two approaches is that the C.E.D. calls for compulsory consumer membership while C.H.I.P. makes that voluntary. The interesting parallel is not surprising, however, when it is realised whom the C.E.D. represents. On its Board sit high-level representatives of many major corporations in the United States from American Telephone and Telegraph, through General Electric and I.B.M. to United Air Lines. Although nonpublicised, it is an influential group indeed. Previous reports have presaged the initiation of such important U.S. policies and programmes as the Marshall Plan, the post-world-war-n reorganisation of the Federal Reserve banking system, the development of regional

145 than State-owned

did make a profit. A 15 % return would produce a $1 thousand million profit. As noted above, exact data are not available, but the insurance companies bloc. Communist must be well aware that a significant expansion of he premium income, as would happen with GovernmentPRIVATE INSURANCE AND CORPORATE PROFITS sponsored private insurance, would lead to a significant As for the place of the private insurance industry growth in profits. :n rhe American economy, two of the largest comNow against all of this is a rather weak reed within mercial, profit-making companies, Prudential and the U.S. corporate structure which finds the approach Me:ropolitan Life, each have assets of about$30 to utilities, and the health-care-delivery system, underthousand million,õ2 making them larger than General taken in other capitalist countries rather attractive, for Mo:ors or Standard Oil of New Jersey. The large In health care the philosophy a variety of reasons. insurance companies are closely related to the major most likely derives from the Bismarckian principle that 2lDS through interlocking directorates. They invest the workers have to be given something otherwise :heir very sizable assets in the stock market, real they will revolt; and health care, not being capable ,state, housing, and industry. They thus have a of generating corporate profits (Bismarck didn’t say nu’or influence over what happens in those basic that last piece, I did), is as good as anything. This sectors of the economy. philosophy within American capitalism has been most Arrayed against these powerful forces representing strongly represented in Franklin Delano Roosevelt’s ,he private corporate sector of the American economy, New Deal. Two of the most prominent of the modernwhich already have a major voice in the health-care day descendants of the New Dealers are Congressman system, is an historical approach to the financing and Wilbur Mills of Arkansas and Senator Edward regulation of the health-care industry which has been Kennedy of Massachusetts. adopted, in one form or another, by every other Thus, the picture now becomes clear. In Congress maior capitalist country in the world : the regulated, on one side are those standing beside and behind semi-public utility approach. In it, the corporate C.H.I.P. It is a mechanism which has great potential structure in the country chooses not to use the healthfor protecting, and indeed possibly extending (see care-delivery system as a possible arena for the producbelow), corporate profit-making in the health-care tion of corporate profits, except around the fringes, in On the other side stands C.N.H.I, repreindustry. pharmaceuticals, hospital supplies, and proprietary the regulated, semi-public-utility approach to senting institutions (the last usually a relatively minor factor). health care, with profit-making continued to be conIn capitalist countries, aside from the U.S., with occa-’ fined to the fringes. Thus the battle is being joined, sional relatively small exceptions, the health-careprimarily, as an analysis of the features of the proposals delivery system is supported by some kind of Governshow, over the issue of the role of corporate America, ment regulated or operated financing system, the as represented by the private profit-making insurance majority of physician services are provided by private in the health-care-delivery system. industry, entrepreneurs, and major corporations do not partiIt is relatively easy to see the potential for expancipate in nor make profits from the system, except in sion of commercial insurance company profits if the the previously-mentioned fringe areas. This is conrole of the private insurance industry is enhanced. sistent with the non-private-profit approach underIf they were to handle$45 thousand million in taken in most capitalist countries to those industries considered utilities : annually (a distinct possibility under premiums customarily telephone, telegraph, their The United C.H.I.P.) profits from premium investment gas, electricity, railroads, and airlines. would States is one of the few capitalist countries in which quadruple. However, there are other areas of potential profit in health care which corporate America private profit is made from the provision of these sons of services. may well be examining. If they are not, in terms of continued capitalist expansion, they should be. In the U.S. health-care system, profits are made in In fiscal 1973, according to the Social Security Adminipharmaceuticals, hospital supplies, and proprietary stration, expenditures in the United States for physitut ons. The greatest profits are probably made cians’ and dentists’ services totalled about$23’5 b the private, profit-making, commercial sector of thousand million, excluding salaries of physicians and ’he health-insurance industry. One cannot be certain dentists employed by hospitals.55 This is probably a ’: ’hi, however, because public data in that area are low estimate since it is derived from information proavallable. ,3 However, the following deductions vided by the Internal Revenue Service. A portion of be made. commercial Private insurance comthat . as distinct from the private but non-profit expenditure went for overheads, but, if it were B:..:e Cross and Blue Shield companies, took in about possible for corporations to employ most or all of those physicians and dentists on a salaried basis, the billion in premiums in 1972. They had a net that loss with of about corporate profit-potential from medical and dental - rj=rwri!ing is, 6% : expenses ’(-::1 mto account, they spent in toto 6% more than practice would be significant. ’ :00k m in Total corporate profits at mid-1973 were being premiums.54 However, in investing ’r,’: collected premiums which, under certain earned at an annual rate of about$66 thousand regula’.". :hey are allowed to do, anything over a 6% million, so that$1 thousand million or, better yet, ’ -T. would All a would need produce profit. they $5 thousand million is not a pittance. It does not eam 6’"’) would be to put the money in a take too much imagination to see what could happen ’ ; .ings bank. Thus, it is highly likely that they to medical and dental practice, in terms of corporate

transportation systems, weland educational systems reform, and the policy of .:, :,’112 accompanied by the liberalisation of trade

-

’

146

profit-production, if it

were

converted from its

present petit-bourgeois, private-entrepreneurial, small-business mode, to an industrial, capitalist mode of production: that is, if the physicians and dentists were proletarianised-made into salaried workers separated completely from ownership of the means of production. This process has happened in the past to many other small businessmen, craftsmen, and tradesmen. Two contemporary examples in the U.S. are the corner grocers vis-a-vis the supermarkets, and the private gasoline (petrol) station owners vis-a-vis the large oil companies. If to the of and dentists were proletarianisation physicians added large capital investments, and significant infusions of lower-cost " physician-extenders " (already appearing in the form of clinical nurse practitioners and physicians’ associates), and if, then, the product were aggressively marketed in the typical corporate American manner, the profit-potential would be truly enormous. This is especially so since the financing for the system would be mandated by law and supported by taxation. The evidence indicates that this is the direction in which C.H.I.P. intends to go. The private insurance industry would be in command of the system, since it would control the flow of funds. The private profitmaking insurance industry is intimately related to the rest of corporate America, and already apparently makes significant profits in the health-care industry. U.S. capitalism is unique among capitalist systems in many areas, including its approach to the traditional public utilities. Capitalism appears now to be facing shrinking opportunities to develop new fields for earning corporate profits. For U.S. corporations, the health-care industry is certainly one potential area for the development of new opportunities for profit-

production. It will be most interesting to watch the developing struggle in Congress between the corporate profit-makers and the public-utility men. In my view, it is the major issue in the current controversy over national health insurance in the United States. REFERENCES

Anderson, O. W. The Uneasy Equilibrium: Private and Public Financing of Health Services in the United States, 1875-1965. New Haven, Conn., 1968. 2. Anderson, O. W. Proposals for National Health Insurance: 19101950. From Readings in Medical Care, Committee on Medical Care Teaching, Association of Teachers of Preventive Medicine; p. 621. Chapel Hill, 1958. 3. Falk, I. S. Health and Society, 1973, 51, 1.

18. 19. 20. 21. 22. 23. 24. 25.

26.

on the Citizens Board of Inquiry into Health Services for Americans. Heal Yourself. Washington, D.C., 1971. Ehrenreich, B., Ehrenreich, J. The American Health Empire: Power, Profits, and Politics. New York, 1971. Jonas, S. Nation’s Health, March, 1971, p. 5. Terris, M. Bull. N.Y. Acad. Med. 1972, 48, 24. Kennedy, E. M. In Critical Condition. New York, 1972. Ribicoff, A., with Danaceau, P. The American Medical Machine. New York, 1972. Schwartz, H. The Case for American Medicine: A Realistic Look at Our Health Care System. New York, 1972. Kennedy, E. M. National Health Insurance and Health Security: Introduction of the Health Security Act, S.4297. Congressional Record, 91st Congress, 2nd Session, Aug. 27, 1970. Washington, D.C. Health Insurance Association of America. Program for Health Care in the 1970’s. Health Insurance Institute, New York, N.Y.,

Report

1971. 27. Medical Committee for Human Rights. Preliminary Position Paper on National Health Care, September, 1971. 28. Bills, S. S. Hospitals, 1971, 45, 126. 29. Eilers, R. D., Moyerman, Sue S. National Health Insurance: Proceedings of the Conference on National Health Insurance. Illinois, 1971. 30. National Health Insurance. Hearings before the Committee on Finance, U.S. Senate 92nd Congress, First Session, April 26, 27, and 28, 1971. 31. Somers, A. R. Health Care in Transition: Directions for the Future; Chap. 8. Hospital Research and Educational Trust, 840 North Lake Shore Drive, Chicago, Illinois, 1971. 32. Weinerman, E. R. Yale J. Biol. Med. 1971, 44, 133. 33. Eilers, R. D. New Engl. J. Med. 1971, 284, 881, 945. 34. Burns, E. M. Am. J. publ. Hlth, 1971, 61, 2164. 35. Roemer, M. I. Trans-Action, 1971, 8, no. 11, p. 31. 36. Bodenheimer, T. Am. J. publ. Hlth, 1972, 62, 1324. 37. 1971 Health Conference: Toward a National Health Program. Bull. N.Y. Acad. Med. 1972, 48, no. 1. 38. Silver, G. A. Pharos, 1973, 36, 95. 39. Washington Information: National Health Insurance. February 1974. 40. American Medical News, April 8, 1974, p. 1. 41. Jonas, S. Medical Wld (England), January 1973, p. 15. 42. National Health Insurance, II. ibid. February, 1974. 43. National Health Insurance, III. ibid. May, 1974. 44. National Health Insurance, IV. ibid. July, 1974. 45. Health Security News, 1973, 2, no. 11. 46. Peterson, O. Ann. intern. Med. 1973, 78, 739. 47. House of Representatives, Committee on Ways and Means. National Health Insurance Resource Book. U.S.G.P.O., Washington, D.C., 1974. 48. Mueller, M. S. Social Security Bull. 1974, 37, no. 2, p. 20. 49. Decker, B., Bonner, P. PSRO: Organization for Regional Peer Review. Cambridge, Mass., 1973. 50. Committee for Economic Development. Building a National Health-Care System. New York, 1973. 51. ibid. p. 65. 52. Bay Area Chapter, Medical Committee for Human Rights. Billions for Band-aids; p. 59. San Francisco, 1972. 53. Mueller, M. S. Social Security Bull. 1974, 37, no. 2, p. 31. 54. ibid. table XIII. 55. Cooper, B. S., et al. Social Security Bull. 1974, 37, no. 2, p. 16. 56. Business Week, July 21, 1973, p. 21.

1.

4. Committee American

on

the Costs of Medical Care. Medical Care for the

People; p. 2. Chicago, 1932. Reprinted, United States Department of Health, Education and Welfare, 1970. 5. Carter, R. The Doctor Business. New York, 1958. 6. Harper’s Magazine, October, 1960, p. 123. 7. Moskin, J. R. Look, Nov. 3, 1964, p. 26. 8. Newsweek, July 11, 1966, p. 57. 9. National Commission on Community Health Services. Health is a Community Affair. Cambridge, Mass., 1966. 10. National Advisory Commission on Health Manpower: Report. U.S.G.P.O., Washington, 1967. 11. Battistella, R., Southby, R. McK. F. Lancet, 1968, i, 581. 12.

Report

on

Action.

13. 14. 15. 16. 17.

the Health Task Force of the Urban Coalition. Rx for

Washington, D.C., 1969. Time, Feb. 21, 1969, p. 53. Columbia Broadcasting System. Don’t get sick in America. C.B.S. Network Television, April, 1970. Business Week, Jan. 17, 1970. Fortune, January, 1970. New York Times. Health of nation lags behind scientific gains; July 16, 1971. Dilemma in health care: rising cost and demand; Sept. 13, 1971.

MARY, MY PATIENT Her zigzag fingers barely grip the stick, and old and bent and frail and thin she hobble-stumbles in the room. Her painful eyes smile sadly dim upon a blurred world flashing by. She calls to Death, but he is too busy, gloating over uniformed youth. So who will love you now, Mary, with your crepe-de-chine neck and your atrophic womb? What tender hand will caress your wrinkled skin,. for are you not a woman still? So who will love you now, I willFor ten minutes, Once

a

Mary?

month-

S. G.

JEFFS.