Guest Editorial: Healthcare Reform: Responding to the Rhetoric

    In my first editorial as Consulting Editor, I am offering a pie-in-the-sky suggestion for change. Some of these ideas originate from my unique perspective — I am a representative for organized dermatology on the American Medical Association’s Resource Based Relative Value Update Committee¹ (note: the opinions expressed are my own and do not represent those of any organization) and a practitioner who splits the work week between private practice, a state-run medical school, and a VA hospital. Subsequent editorials will outline ways for clinicians who provide skin, ostomy, and wound management services ways to effect suggested changes.

    By the time you read this, we will know whether we have four more years of the same or a regime change in the White House, along with possible significant changes in the House and Senate. Will we see meaningful healthcare reform? Not likely, if the past performance of the major parties is an indicator of future behavior. Senator Kerry would like to offer every American the health plan provided to Congress and the rest of government² along with some fixes to allow the uninsured to purchase health insurance at affordable rates. The incumbent has a plan to allow more access to healthcare via a mix of tax breaks based on health savings accounts, among other features.³ Senator Edwards lays the two plans side by side and offers his perspective,⁴ a noble effort since the reforms of the past few years are difficult to comprehend even by those who are responsible for putting them in place (even the AARP dedicates a web page to handouts⁵ to help make a program they supported less confusing for beneficiaries). The government also has its finger in the education pie.⁶

    All of these schemes smack of temporary bandaids when multilayer compression dressings are needed. In fact, many Americans continue to have little or no access to health insurance and healthcare. According to the AMA, as of September 2003, more than 43 million out of 281 million US citizens are uninsured.^7,8

Healthcare Historically

    The use of pooled resources to spread risk can be traced to the so-called funeral societies of ancient Greece. Government support also dates back to the Greek city-states (possibly earlier), where citizens enjoyed the ministrations of tax-supported public physicians. Later on, medieval craft guilds, precursors of modern labor unions, often set up welfare funds to assist sick or needy members.

    In 1798, the US Government set up a Marine Hospital Service, the forerunner of the Public Health Service, and required the owners of merchant ships to contribute 20 cents per month into a sickness fund for each seaman in its employ. In the 19th century, as the industrial revolution gathered momentum, a number of labor unions and individual employers required workers to join relief funds, many of which eventually came under government regulation.

    The first broad-gauged compulsory health insurance law was enacted in Prussia in 1854, 29 years before Germany was united under Bismarck. The Chancellor was able to draw on this precedent in 1883 when he persuaded the German Reichstag to extend compulsory health insurance to workers throughout the German nation. Bismarck’s concept soon spread to other European countries, notably Great Britain, and eventually expanded into the comprehensive system of worker protection we know today as “social insurance.”⁹ (Of note: Bismarck is also credited with commenting on the process of developing legislation: “Laws are like sausages, it is better not to see them being made.”)

    The best definition of insurance was penned by humorist, author, and journalist Ambrose Bierce. In his book, The Devil’s Dictionary, published in 1911, Bierce defined insurance as “An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table.”¹⁰ (Of note: Bierce went to Mexico in 1913 to report on the activities of Pancho Villa and was never heard from again.)

    In 1929, the year the stock market crashed, Dr. Justin Ford Kimball, a former school superintendent, became an administrator at the Baylor Hospital in Dallas. According to the official history of Blue Cross Blue Shield of Texas,¹¹ Kimball was reviewing the hospital’s unpaid accounts receivable and recognized the names of many Dallas schoolteachers. Knowing these low-paid teachers would never be able to pay their bills, he initiated the not-for-profit Baylor Plan, which allowed teachers to pay 50 cents a month into a fund that guaranteed up to 21 days of hospital care at Baylor Hospital. The Baylor Plan was the beginning of modern health insurance as we know it — a plan to ensure hospitals get paid with benefits to physician and patients as a sideline. In 1944, the Baylor Plan evolved into Blue Cross and Blue Shield of Texas.

    In the late 1940s, Harry Truman was the first president to endorse health insurance under Social Security. On July 30, 1965, President Lyndon Johnson signed into law the Social Security Amendments of 1965 that created Medicare as we know it today. Since then, some 700 long, difficult-to-understand statutes written in legalese have tweaked the system. Despite these flaws, Medicare admirably serves the needs of senior citizens and boasts the lowest administrative overhead of any insurance plan, public or private.

The Realities of Medicare/Medicaid

    Medicaid, federally funded but state administered in most cases, seems more adept at maintaining a bureaucracy than with providing reasonable healthcare options. Colleagues (who have asked to not be quoted by name) claim Medicaid funds pave roads instead of treat patients. What factors actually contribute to this conundrum?

    Overhead. According to Woolhandler and colleagues,¹² the average administrative overhead for private insurers was 11.7%, while for Medicare and Medicaid, the figures were only 3.6% and 6.8%, respectively. Overall, public and private insurance overhead totaled $72.0 billion — 5.9% of the total healthcare expenditures in the US or $259 for every man, woman, and child.

    Options. Anyone who has ever worked for the federal government has seen the menu of healthcare plans available from the Federal Employees Health Benefits Program, which offers an alphabet soup of HMOs and PPOs, a broad menu of Blue Cross plans, and a dizzying array of options. Just administering all of this takes a lot of money.

    The VA. Another expensive and separate system is the Veterans Administration Medical Center network, where politics leap far ahead of practicality and necessity. For those over 65 years of age, it is an expensive redundancy. The VA system is essentially built as a socialized system from the ground up. Although he wasn’t referring to the VA system specifically, George Bush Senior campaigned in 1992 with a message about government-run healthcare. He said, “I trust the people, not the government, to decide where and when to get a doctor’s help. Americans deserve a better healthcare system than one that’s run with the efficiency of the Department of Motor Vehicles and the compassion of the KGB. We do not want to go to a nationalized or a socialized plan.”¹³ Bush lost his bid for re-election despite a popularity-inflating victory in Kuwait supposedly because of widespread perception that he was somehow out of touch with real life in America.

Reform Needed

    To a great extent, Medicare works like a vintage 1965 Mustang that has been ridden hard — it’s held together by frequent minor fixes and keeps going. Like that 1965 Mustang, it ignores many technological changes that have occurred in the past 40 years. How do we fix healthcare in a meaningful way to get the uninsured under the its umbrella?

    Change legislators' coverage. When members of Congress visit your area, ask “If Medicare and the VA healthcare system are good enough for our senior citizens and veterans, why aren’t they good enough for you?” It is time to put every member of the House, Senate, and Executive Branch and their families on Medicare as their primary health insurance and eliminate preferential drug plans for them and their families. The one alternative as a free option should be Veterans Administration Medical Center care — again, assuming if it good enough for those who have served our country, it should be good enough for those who serve in Congress.

    Implementation should be relatively easy. Every agency head and cabinet member, along with immediate staff and thereafter every federal employee, can be placed on Medicare within a year. If they are unhappy with this arrangement, as citizens of a democracy they would be offered the option to purchase insurance on their own. However, as elected officials, they should be required to reveal what additional policy they choose, much as federal campaign contributions above $200 are publicly posted.¹⁴

    Combine funds. The next year, Medicaid funds back can be rolled into Medicare. Perhaps, even more radically, roll the VA system and Medicare into one entity, keeping the best parts of each. The finances of such a system would exemplify the true principles of actuarial science — ie, spreading the risk. Incorporating a wide range of socioeconomic levels would allow the government to determine the cost of providing services to each American, as the newly covered group would be a broad mix of ages and races.

    Determine cost. The next step is an easy one: offer the same coverage to anyone who wants it, with a base rate based on age, and charge enough to maintain the financial integrity of the system long into the future, not merely until the next election. If someone is too poor to purchase at the base price but too well off to get the equivalent of the Medicaid free ride, the cost of insurance, based on his/her Form 1040 income, could be scaled accordingly.

The Results

    The necessary reforms — now clearly visible to patients and their physicians — will elicit the attention of the 435 representatives and 100 senators and their families, in a realistic, in-your-face way. But most important, it would address affordability. A great deal of calculation would be necessary to determine the precise savings from the overhead of costly private insurance programs, but it is worth a try. Remember, I am not suggesting a specific fix to a specific problem but rather a philosophical fix that will align those who make the rules with those who must abide by them. The downside? The insurance executives making multimillion-dollar compensation packages may have to make some lifestyle changes — those administering Medicare plans average $16 million per year, which does not include stock options.¹⁵ Just think how many dressing changes and wound care supplies a Rolls Royce could buy.

1. http://www.ama-assn.org/ama/pub/category/2292.html. Accessed September 18, 2004.

2. http://www.johnkerry.com/issues/health_care/. Accessed September 18, 2004.

3. http://www.georgewbush.com/HealthCare/. Accessed September 18, 2004.

4. http://www.johnkerry.com/issues/health_care/compare.html. Accessed September 18, 2004.

5. http://www.aarp.org/legislative/prescriptiondrugs/#. Accessed September 18, 2004.

6. http://www.medicare.gov/. Accessed September 18, 2004.

7. Attributed to Yank D. Coble, Jr., MD. Available at: http://www.ama-assn.org/ama/pub/article/1617-8064.html. Accessed September 18, 2004.

8. http://www.ameristat.org/Content/NavigationMenu/Ameristat /Topics1/Estimates__Projections/U_S__Population__ The_Basics.htm. Accessed September 18, 2004.

9. http://www.ssa.gov/history/corningintro.html. Accessed September 18, 2004.

10. http://www.alcyone.com/max/lit/devils/i.html. Accessed September 18, 2004.

11. http://www.bcbstx.com/about/history.htm. Accessed September 18, 2004.

12. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in the United States and Canada. N Engl J Med. 2003;21;349(8):768-775.

13. http://bushlibrary.tamu.edu/research/papers/1992/ 92080302.html. Accessed September 18, 2004.

14. http://www.opensecrets.org/indivs/index.asp. Accessed September 18, 2004.

15. www.familiesusa.org. Accessed September 18, 2004.