April 1, 2009
Testimony of Annette B. Ramírez de Arellano, Dr.PH., Health Researcher
Public Citizen Health Research Group
At Congressional Forum
Dr. Atul Gawande has described American health care as “an appallingly patched-together ship, with rotting timbers, water leaking in, mercenaries on board, and 15 percent of the passengers thrown over the rails to keep it afloat.” And those thrown overboard are not a cross-section of the population as a whole; rather, they are more likely to be minorities and poor. Thus, in 2007 approximately one-third of Latinos, one-fifth of African-Americans, and one-sixth of Asians in the US were uninsured, compared to one-tenth of non-Hispanic whites. Moreover, the disparities are likely to become sharper with the economic downturn, which is already having a strong negative effect on blacks and Hispanics in the labor market. And insurance does matter, as a recent Institute of Medicine report stresses when it points out that “despite the availability of some safety net services, there is a chasm between the health care needs of people without health insurance and access to effective health care services. This gap results in needless illness, suffering, and even death.”
To compound the situation, the cost of keeping the health care ship afloat represents a rising percentage of the gross domestic product, with no end in sight. There is general consensus that health care is uneven in access and quality, leaves too many people out, and costs too much. There is less agreement on what should be done to fix it.
In my brief remarks this afternoon, I would like to address why incremental approaches are short-sighted and ineffectual, and why a single payer is the only viable solution to controlling costs.
There are serious issues with focusing on just parts of the problem and calling it “incremental reform”.That is what we have done up to now. Indeed, “Health for some” appears to have been the prevailing slogan for much health care planning in the US. Medicare and Medicaid were designed to cover the elderly and the poor, which were the populations most identifiably in need. And we are still discussing the possibility of mandating care for just certain groups, leaving the rest behind. “Health for some” seems to have political currency even when we have run out of specific identifiable groups to cover. But sifting and sorting the population further will only pit one group against the other, undermine equality, and exacerbate the disparities in access and quality that are already prevalent and unacceptable. For several reasons, we should avoid any approach that is short of universal.
First, it does not make practical sense. The fact is that lack of coverage for all affects everyone in the United States, including those with health insurance. Lack of access cannot be seen solely as a problem of the poor, or of children, or of selected minorities. In many ways, everyone pays for the gaps in service and the neglect of specific groups. In communities with high uninsurance rates, even the insured are likely to have difficulty obtaining needed health services. Health providers of every type gravitate to well-insured areas, which in turn attract new technologies and promote additional services. Moreover, the uninsured who need care end up generating expenditures that are covered by others. This “implicitly subsidized care” (defined as the difference between the amount a privately insured person would be expected to pay for the same care and the uninsured person’s actual payment) is estimated at $536 per person for the full-year uninsured, and care provided by other private and private sources adds another $567. As a result, the care that is not paid for out of pocket comes to $1103 per person. Three-fourths of this is covered by the government, through different pathways. And some of these services may come too late. Such services also tend to cost more, which limits the cost-effectiveness of the expenditure. This is suggested by a study of Medicare decedents published last month, which showed that black and Latinos have substantially higher costs than whites in the last 6 months of life.
Secondly, incrementalism militates against a broad-based sense of community and shared responsibility among members of society. Our current system is highly stratified; one’s place in the hierarchy largely determines not only access to care but also the quality of care received. The top tier includes those with comprehensive private insurance or Medicare. The second tier is made up of those who rely on means-tested safety-net programs such as Medicaid and SCHIP. Those in the second tier often face complicated hurdles to gain access to care. Moreover, because the scope of services and the availability of providers may vary widely from state to state, there is a kind of geographical determinism at work here: what one gets depends on where one lives. And there is no stability in coverage, as states make constant adjustments to balance needs against revenues, modifying eligibility requirements and changing the services covered over time. The final tier is composed of the uninsured, most of whom are poor and who often forgo necessary care. This hierarchy leads to de facto health segregation that undermines the “United” part of the United States. And because minorities are disproportionately represented in the lower two tiers, this widens the racial and ethnic health disparities that have been repeatedly documented.
Third, the incremental approach lacks political appeal. “Health for some” is hardly a ringing motto under which to mobilize support, and it certainly does not represent the change that most Americans want. Access to health should be a right, and health care a social good which should be available to all. We’re all stakeholders in this and need to come together to ensure that the currently “patched together ship” is redesigned or replaced. Universal coverage would provide a standard set of benefits to all, thereby eliminating the discriminatory stratification that exists now. It would also lead to a more equitable distribution of health resources, as providers would not have the current incentive to confine their practices to areas where there are covered patients. And a single-payer system would streamline administrative costs for providers, cut back on the bureaucracy, and ensure that a higher proportion of our health expenditures is spent on health services rather than paperwork. At present, this administrative waste is estimated at $400 billion. The multiplicity of payers means that between 12% and 20% of premiums are devoted to marketing and advertising, profits, and the complicated processes insurers use to protect themselves against higher risks. And the labor costs of hospitals and practitioners rise when they have to deal with multiple billing forms, fees, reporting requirements, and when they have to seek authorization for given procedures. A single payer system would be better able to leverage its purchasing power, obtaining better prices. In addition, a single payer would be better placed to monitor health care at the national level, providing the public sector with important intelligence on patient needs and demands, consumption patterns for different types of services, provider behaviors, and rising costs and their distribution. Having a single payer does not preclude health care being provided and organized in a variety of ways. But it makes explicit the trade-offs that are often obscured by the different funding streams that support our patched-up services.
Returning to the metaphor of the ship, Dr.Gawande is correct in his diagnosis but mistaken in his prescription. We need to do more than replace a few rotting timbers, or provide lifeboats for some of those who have gone overboard. This is the time for bold solutions and significant steps towards universal coverage and single-payer health care. Here, it is appropriate to recall the words of David Lloyd George, who said “Don’t be afraid to take a big step if one is indicated. You can’t cross a chasm in two small jumps.”
Thank you very much.
 Atul Gawande, “Annals of Public Policy: Getting There From Here: How should Obama reform health care?” The New Yorker, January 26, 2009.
 Carmen DeNavas-Watt, Bernadette D. Proctor, and Jessica C. Smith. Income, Poverty, and Health Insurance Coverage in the United States: 2007. US Department of Commerce, Economics and Statistics Administration. 2008: 19-27.
 Rakesh Kochhar, Unemployment Rose Sharply Among Latino immigrants in 2008. Pew Hispanic Center, February 12, 2009. http://pewhispanic.org/reports/report.php?ReportID=102.
 Institute of Medicine Report Brief: America Uninsured Crisis: Consequences for Health and Health Care. February 2009: 2.
 See, for example Jonathan B. Oberlander and Barbara Lyons, “Beyond Incrementalism? SCHIP And The Politics of Health Reform,” Health Affairs 28 (3) 2009: w399-w410; and Don McCanne, “Why Incremental Reforms Will Not Solve the Health Care Crisis,” JABFP 16 (#) May June 2003: 257-261.
 Institute of Medicine, op. cit.: 4.
 These data are based on Medical Expenditure Panel Surveys (MEPS) data. See Jack Hadley, et al. “Covering The Uninsured in 2008: Current Costs, Sources, of Payment, and Incremental Costs. Health Affairs 27 (5), 2008: w401.
 These include Medicaid DSH and supplemental payments, Medicare DSH and IME (Indirect Medical Education) payments, direct care programs, and state and local tax appropriations. See Hadley, op. cit.: w411.
 Amresh Hanchate et al. “Racial and Ethnic Differences in End-of-life Costs: Why Do Minorities Cost More Than Whites?” Archives of Internal Medicine 169(5), March 9, 2009: 493-501.