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A National Health Insurance Program for the United States


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The country must abandon its fragmented system

By Don R. McCanne, MD

The total projected spending on health care in the United States for 2004 is $1.79 trillion—15.5% of its gross domestic product[1]. That amounts to $6,167 per person, almost twice what most nations with comprehensive systems spend on care. Most policy analysts agree that this level of spending should be more than enough to provide all Americans with high quality, comprehensive health care. Yet the United States falls far short of these goals. What are the flaws in the United States health system that prevent Americans from receiving value from this huge health care investment? And what are the options for improvement?

Physicians for a National Health Program

First, I should reveal my personal bias. Physicians should be well represented in the forefront of reform. As we look back on the past half century of failed health policy decisions, we see that the dominant physicians’ organization in the United States, the American Medical Association (AMA), has opposed most reform measures that would result in an equitable, affordable system for everyone. Instead, the AMA has supported an agenda that promotes physicians’ freedom to maximize their personal financial reward, even though those policies may deprive tens of millions of Americans access to affordable care. The AMA agenda has contributed significantly to the current high costs of American health care and to our failure to adequately address the mediocrity that characterizes health care in the United States.

Many American physicians—including myself—believe that the funding infrastructure should be redesigned to maximize heath care resource allocation for the primary benefit of patients. Because of the failure of organized medicine to advocate on behalf of our patients, we decided that a new organization was needed. We established Physicians for a National Health Program (www.pnhp.org) [2,3].

The Uninsured and the Poorly Insured

There are 45 million Americans with no health care coverage, and not surprisingly, lack of insurance is associated with worse health outcomes [4]. About 18,000 young adults die each year because they lack health insurance [4]. The uninsured are less likely than the insured to receive the professionally recommended standard of care for their chronic diseases, such as diabetes (Figure 1) [5]. And if you have a serious health crisis while you are uninsured, you risk major debt or bankruptcy.

Even the insured are inadequately covered. Employers and individuals who purchase coverage are rebelling at the high price of insurance premiums. To maintain competitive premiums, insurers are designing products that reduce the benefits they pay out by increasing the out-of-pocket portion that patients are required to pay for services received. Insured patients may have to pay cash for care until a designated amount is reached (the deductible)—which could be thousands of dollars. In addition, patients are often required to pay a dollar amount (co-payment) or a percentage of the charges (coinsurance) each time services are received.

Insurers may also exclude specified services from coverage, such as maternity benefits or mental health services. Most insurance plans now use lists of contracted physicians and hospitals, and impose severe financial penalties for using health care providers that are not contracted. All of these measures reduce the value of insurance by shifting costs from the insurers to the patients who actually need care.

Inadequate insurance coverage is making average-income Americans poorer. A recent study found that for 29% of individuals who had average or greater-than-average incomes and were continually insured, medical bills had caused significant financial problems [6]. For those who were not continuously insured, the percentages were even higher. These financial barriers are impairing access to beneficial services. The United States insurance market is now dominated by insurance plans that provide neither adequate health security nor financial security.

Does Higher Health Spending Mean Better Quality?

There is a widespread belief that the high spending in the United States means that high quality care is being delivered to the majority, who can afford both comprehensive coverage and the attendant out-of-pocket expenses. But international comparisons of industrialized nations have shown that the United States is in the bottom quartile of population health indicators such as life expectancy and infant mortality [7]. And in regional comparisons within the United States, increased levels of spending have not produced a commensurate improvement in health care outcomes. In fact, a recent study found that in a state-by-state comparison, there is an inverse relationship between spending and quality outcomes—the more expenditure, the worse the quality [8].

In 2000, the World Health Organization rated the United States first in its health expenditures per capita, but 37th in its overall health system performance, below most industrialized nations [9]. The United States is clearly not receiving adequate value for its health care investment.

Some contend that the poor performance of the United States system is due to the funding of health care in the private sector, and that all would be well if the government would just take over funding. But it is not quite that simple. The greater part of health care in the United States—59%—is already funded by the tax system. On a per capita basis, the public, taxpayer-funded health care expenditures alone total more than the health care spending of every other nation’s public and private funding combined (with the exception of Switzerland, in which total spending per capita equals our public spending alone) [10].

Flaws in Funding and Allocation

How can the United States spend as much as it does and end up with such mediocre health care? Of the many reasons that exist, two are particularly important. The United States has a highly flawed system of funding health care and a flawed system of allocating its health care resources.

In the United States, a multitude of private health plans cover the lucrative sector of society—low cost, healthy workers and their healthy families. But public programs must cover the higher costs of the elderly, individuals with permanent disabilities, and some low-income individuals. Since the uninsured are frequently unable to pay for the care they receive, the costs for their care are shifted to government programs or private plans, or to the charity of providers, even if unintended. The costly administrative excesses of private health plans, especially when contrasted to government programs, have been well documented [11]. This fragmented system of funding care places an even greater administrative and financial burden on the providers of health care. Although the exact amount is disputed, most policy analysts agree that replacing this fragmented system of funding care with a single, universal, publicly administered insurance program could recover 200 billion dollars or more, which are currently being wasted on useless and sometimes detrimental administrative services [11].

And what is wrong with the way that the United States allocates its resources? Many studies have confirmed that supporting a strong primary care base provides better outcomes at a lower cost [12]. But in the United States, specialized, high-technology care is heavily marketed, and providers of that high-tech care are rewarded more generously than primary care professionals. Yet studies show that these greater expenditures result in no additional benefit—and sometimes even in worse outcomes [8,13]. Excessive resources are allocated to inappropriate expansion of high-tech facilities and to training an excessive number of specialists to provide high-tech services [8,13].

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