Thursday, October 08, 2009

T.R. Reid: For-Profit Insurance Destroys Health Care Delivery

T.R. Reid's indispensable book about successful national health systems, The Healing of America, provides a patient's- and doctor's-eye view of health care delivery in France, Germany, Japan and other countries that provide complete coverage for all residents and pay half to two thirds of what the U.S. pays for health care (as a percent of GDP) with better outcomes. The book induces startling clarity about the key dysfunctions of our system.

Our primary dysfunction is simple. While France, Germany and Japan all rely on private insurance to pay for comprehensive health care, the private insurers are all nonprofit. In all three countries, the government sets uniform rates for all procedures; all providers charge the same rates, and all insurers must pay all claims. In France, every citizen's complete medical history, including procedures performed and their costs, are embedded in a national health card (the carte vitale). Doctors simply record each service performed - and get paid by one of the country's fourteen insurers within a week.

The lesson is clear: U.S-style for-profit insurance for basic comprehensive health care is purely parasitical (for-profits are in the mix in The Netherlands, but they're subject to strict price controls and risk equalization, by which plans with a higher concentration of sick members are paid more). Our for-profit health insurance industry creates a needless bureaucracy, matched in no other country, which it pays itself handsomely to manage, and it makes money by denying claims.

Any reform that makes health insurance available and affordable to all Americans is worth doing. Mandates requiring insurers to cover all eligible comers without differentiating cost according to condition are key; so are mandates laying out minimum coverage standards.

But to meaningfully narrow the gap between health care costs in the U.S. and other rich countries, reform would have to kill for-profit insurance, quickly or slowly. Health care co-ops are actually closer to the system that works so well in France and Germany than a single "public option." But in those countries, the "sickness funds" did not have to evolve in competition with for-profits.

Every industrialized country is wrestling with rising health care costs. In France, the sickness funds operate at a deficit; in Germany, doctors are up in arms because the government keeps imposing new limits on permissible treatments for given conditions. But both countries are continuing to reform from a position way ahead of us, with complete universal coverage, costs 1/2--2/3 of ours, and the government in complete control of rates and mandated coverage.

None of this should be secret. Legions of American health care experts know how things work in Europe and Japan. Senators are reading Reid's book. But as Reid stresses, it's political anathema in the US to suggest cribbing from other countries' successes. Our national 'debate' is obfuscated by lack of full discussion of how successful systems work.

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