Published in the New York Post, January 12, 2009
President-elect Barack Obama argued on the campaign trail that the US status quo in health care is untenable, citing the 46 million people who don't have health insurance at any time as evidence. Like many others, he seems to believe the government should play a larger role.
Yet the United States already has an extensive system of taxpayer-financed medical care – and Obama should take a closer look at its strengths and failings.
In 2007, US health-care expenditures totaled more than $2.2 trillion – a sixth of our economy. New studies show that nearly half of that amount is paid via government programs.
Much of that is financed through two programs created in 1965 – Medicare, the federal health program for those over 65 (and the disabled), and Medicaid, the federal-state program meant to cover low-income Americans.
There's more. The more recent State Children's Health Insurance Program provides insurance to more than seven million children whose parents earn too much to qualify for Medicaid but can't afford private insurance. Other federal insurance programs cover populations such as active-duty military, veterans and Native Americans.
These two programs provide health services to more than 107 million people – more than a third of the population.
On top of that, federal law requires hospitals to treat anyone who shows up needing care, regardless of ability to pay. Government-supported community-health centers and charity clinics also give care to the needy.
But the performance of public programs is troubling. Medicare and Medicaid pay doctors, hospitals and others based on a government-determined fee schedule – and those fees are often so low that many can't afford to treat such patients.
That's especially true of Medicaid, which is administered by the states, whose budgets are under growing pressure.
New York now ranks 49th in the nation when it comes to Medicaid doctor reimbursements. For example, its physicians earn just $20 for an hour-long consultation with an established Medicaid patient – whereas Medicare and private plans pay up to $260 for that same service.
Despite this, New York's Medicaid program costs $45 billion a year, spending more per capita – more than $10,000 – than any other state. Officials estimate that New York loses as much as 40 percent of its Medicaid spending to fraud and abuse.
States also pay a fraction of pharmaceuticals' cost for Medicaid patients and often deny the program's beneficiaries access to newer and better drugs.
Understandably, many physicians are reluctant to accept Medicaid cases because they lose money on every patient they see and often have to fight government bureaucracies to get even minimal payments.
In a 2006 survey, the Center for Studying Health System Change found that more than one in five physicians refuses to accept new Medicaid patients. Eighty-four percent of those polled cited low reimbursement rates as a "moderate or very important reason" for their refusal.
It's a similar story with Medicare. The Texas Medical Association reports that just 58 percent of doctors in that state are willing to accept new Medicare patients.
Do we really want to add millions more people to public health programs where they'll have difficulty finding a physician?
No question, changes are needed in the US health-care system. But there are other options besides turning more of our health sector over to government.
About half of the uninsured are without health coverage for four to six months. This suggests that many people are losing coverage during transitions between jobs – and we're the only developed nation that ties health insurance to employment. In an economy where one in four workers changes jobs every year, people clearly need more options.
If health insurance were portable, people could take it with them from job to job and have greater continuity and security in their health coverage. To do that, we need to level the playing field so people get the same tax break whether they get health insurance on their own or through their jobs. And Americans should be able to buy insurance across state lines to find the coverage that best suits them, their families and their pocketbooks.
Real solutions require a new way of thinking. Just putting more money into the taxpayer-financed health sector is looking backward, not forward. Instead, we should build a system that offers choice, competition and innovation – and puts doctors and patients, not bureaucrats, in charge.
Grace-Marie Turner is president of the Galen Institute, a research nonprofit focused on free-market solutions to health reform.