we in a health crisis?
think we're in a health care crisis any more than we have been in
the last 30 years. There are many crises within the systems that
are stressed. Academic health centers have financial troubles. Millions
of Americans don't have health insurance, can't afford the care.
So these are small crises, but the system, overall, is in good shape.
most at risk?
at risk in this country are basically low income working stiffs,
as I call them. Those are people not poor enough to qualify for
Medicaid and yet their employer doesn't give them insurance and
they're not rich enough to buy an insurance policy, which would
cost them about six to eight thousand for a family of four. When
you're making 25,000 and you have that big a hit, you often say,
"I go bare. Maybe I won't get sick." They are at risk.
do experts in other countries view our U.S. health care system?
you go to international conferences, there's always two themes.
They admire our medical clinical care, because we're advanced. They
admire some of the stuff we try to do with quality control, and
they abhor our insurance system. They call it "asocial", "inhumane",
"inegalitarian". They really think it's a horror show. So you have
this split attitude. They come here to learn how we practice medicine,
but they abhor our insurance system.
talk about the insurance system here.
In the United States now, close to half of all health care dollars
flow through the public budget, that is, Medicare, Medicaid, the
Veterans Administration. Then we have the private system, 90 percent
of which comes at the place of work. Your employer, when you sign
on, gives you a menu of health insurance companies. You pick one.
You pay a little, they pay the bulk, but in fact, of course, you
pay it through your paycheck. And there are over a thousand private
insurance carriers in the country, so it's an extremely complicated
about the problem of coverage for individuals and preexisting conditions?
a real problem in the United States that's faced by a low income,
working person, whose employer does not offer insurance. They would
have to find individually purchased insurance. And, of course, then
you're not part of a larger pool over which risk is spread. So if
you're sick, that will drive up your premium, but even if you're
totally healthy, it is extremely expensive to do this piece meal
enrolling of people. It's much, much cheaper to enroll 10,000 General
Motors employees. The administrative cost per enrollee is trivial,
but when it has to be done one by one, something like 30 to 40 percent
of your premium just goes for administration. And that is what makes
it in a way a double whammy for a low income working stiff who doesn't
have employer-provided insurance. They pay this huge overhead, but
it isn't that the insurance company is gouging. It costs that much
seems more and more people are without coverage.
the employment-based system in the U.S. had, of course, a virtue,
and that is that the company provided the risk pool and made it
simple for employees. On the other hand, the cost you pay is if
you lose your job, you lose that coverage. So at the worst moment
in your life, you also lose your insurance coverage. If you're part-time,
you usually are not entitled to this insurance. If you're sick,
until recently, you had to wait a year before you could get on the
company's plans for preexisting condition. So it's an extremely
brittle arrangement that when you're employed and you're healthy,
you have it, but the minute you're unemployed you could be in real
trouble. And that happens, of course, a lot to 50 year-olds when
their company gets bought out, restructured, they're on the street.
That is, ah, a weakness of the system, that it isn't permanent.
Every other country had insurance system where you stay with your
insurance company for life and you are never without insurance.
It just can not happen. Can't happen in Canada, in France, in England,
or in Germany. It's not possible to be without insurance.
I once actually addressed the National Governors Association. There
were all these very pious-looking governors in front of me and I
gave a talk about how the devil seduced America's soul, and I described
how the devil systematically built our health insurance system that
has the feature that when you're down on your luck, you're unemployed,
you lose your insurance. And I said only the devil could ever have
invented such a system. Humans of goodwill would never do this.
So this has to be the devil's work, and I still believe that.
about the issue of rationing.
is basically defined as withholding something from someone that
is beneficial. That's what rationing means. And you can do it in
two ways. You can either use the price system by saying, "If you
don't have any money, you will hold it from yourself." But are rationing
yourself. Or you can do what Canada and Europe does, where the money
is there, but they say, "We will deny it on administrative reasons,
that unless you have this condition, you won't get it, or if you're
too old, we will not do a heart transplant."
most Americans we do not really ration yet at all. The sky is the
limit, even under managed care. They deny very few procedures, about
one percent of the procedures. So for most well-insured Americans
there really hasn't been any rationing. Anything they want, ultimately
they usually got. But for the 40 million uninsured, we have brutal
rationing by price and their income. And I sometimes resent politicians
or smug economists who say, "We can avoid rationing through the
market, through the price system." That is so patently false, you
would box the ear of a freshman in Congress for ever saying that,
and here, you have grown-up politicians saying it. Markets ration.
They ration by price and income. If you're a waitress, uninsured,
and your child has an ear ache and you can not afford to go to a
doctor, you have been rationed out of the system. And I'm appalled
that there are politicians who can not understand this.
seems we have a confusion about our approach to health care.
Americans actually focus on the individual as the ethical unit and,
therefore, that leads to the next step which every physician is
taught, that you must do the best for that patient regardless of
what the spill-over effects might be on other patients, because
if you blow all the resources on one patient, you may not have money
to look after the other. And this tension, it's really a contradiction,
because, on the one hand, we pretend to be a community, but, on
the other, we structure everything around the individual. We also
do that with the legal system, where we'll blow millions on one
case and then you condemn people to death, innocent people to death
because we have no money for their lawyers. The foundation of any
health system is the social ethic it should obey. And you have to
actually make that explicit. If you go to the European Continent,
they call about the principle of solidarity. That is the ethical
principle, and because of that, they will not do certain things
that may make economic sense. They say, "Oh, this would violate
the ethical principle of solidarity." In the U.S., we really have
never discussed ethics openly. It's something that's always swept
under the rug and no one ever wants to engage in an open debate
on what should be the social ethics that drives our health system.
you think Americans feel that health care is a social obligation
or a commodity?
first of all, when you say "Americans", there's such a variety when
you do surveys. If you do surveys of ordinary working Americans,
most will say health care should be a right. Health should be egalitarian.
If you then go to the decision-makers, the corporate executives,
the people who dominate in Congress, they can not openly say, "We
disagree with this." But, in fact, if you know what they have done
over the last 30 years, they believe health care is the individual's
responsibility and it should be rationed by income and ability to
pay. That is the official social ethic of the United States Congress.
I wish they had the guts to say it, because if they said it, we
could easier develop a health policy that matches that social ethic.
But it is out of sync with what the people want.
do we deal with the 40 million uninsured?
the 40 million uninsured, most of them actually won't get sick in
any given year. So it's not a problem. Those who do get sick, if
they are mildly sick, ah, we let them fend for themselves. If they
can afford to go to the doctor, fine. If not, they don't go. When
they get really critically ill where it's life-threatening, they
have a right, by law, to go to the nearest emergency room. And the
emergency room, the hospital is obliged to stabilize them and to
take care of them. And so ultimately there is a universal catastrophic
insurance policy in force in this country, and it is the emergency
room of your neighborhood hospital. That's, of course, an extremely
inefficient way to provide health care, because you usually wait
until people are really sick and then you have to do all kinds of
expensive things. Plus we do know that uninsured people die earlier
and die at a higher rate from the same illnesses simply because
they go too late. Why do we let it go to this critical phase? Why
can't we give these people an insurance policy? It might actually
you look who are the uninsured, my answer often is they are the
people that make America great. They're the people who get up in
the morning, they work very hard, they make our life comfortable
for the upper classes. They drive us. They fill our gas tanks. They're
very proud people. And they usually don't beg. I mean they're really
tough customers, but when they're sick, they don't really want to
stand in the Medicaid line. They want what every other working stiff
has, which is private insurance. My own sense is that while these
people take care of us, serve us food, drive us when they're healthy
and make our life comfortable, we owe it to them morally to look
after them when they get sick. We ought to pay taxes to help these
can't we just maintain the status quo?
problem with maintaining this catastrophic system, it is really
a pin-the-tail on the donkey system. You go to the emergency room.
You're deathly ill. They stabilize you. They can't kick you out.
They have to treat you. And no one pays. So now what happens? You
look around for someone who is paying to whom you can shift that
cost, and it used to be the private insurance, employer-provided
policy. But then came managed care and they said, "We've been hired
by employers not to pay this anymore." And so then the hospital
says, "Well, maybe we can stick it to the government." So the government
passed a law that said "If you treat a lot of poor, we'll give you
some extra allowances for the Medicaid and Medicare reimbursement
to cover them." So we have sort of stopgap cost shifting, we call
it. And that system, I think, is permanently maintainable if we
have only about 30 million uninsured. When the number goes much
above 40 million, then the hospitals and doctors find it a burden
and you see agitation for universal coverage. So now you have a
American Hospital Association and the American Medical Association
and all these groups are agitating for universal coverage. But my
personal belief is, secretly, they all will stop the minute we cover
about ten million of them. It's always been the history, if you
provide just enough relief so that they can sort of manage, the
drive towards universal coverage stops.
it important that we have a one-tier health system such that when
someone has an illness, no one could tell whether they're rich or
poor by the way their hospital treats them? Or is it acceptable
to say, "Let's give everyone a basic package." Do we want a system
that is egalitarian, and by that, I mean that once your clothes
are off and you have a given illness, you get the same treatment
regardless of whether you're rich or poor? Is that what we want?
Or do we tolerate a system that says, "We give everyone a guarantee
of a basic level of care, maybe generic drugs even if it has side
effects, or hospital wards. People who want better can buy with
their own money an insurance policy that gives them that," which
will be a two-tier or three-tier or multiple-tier system? It seems
to me that's the big question that this nation faces. We fudged
it by saying, "We won't discuss it," and in the process put in place
a three-tiered system where the uninsured low income people get
rationed brutally, the middle class get rationed mildly through
managed care, and the upper class is still in the open Disneyland
no-holds-barred fee-for-service system.
do you see us going?
I look the next ten years ahead, the first thing I notice that the
cost control that we achieved in the mid-90s is already gone. Premiums
for small business are rising 12-15 percent per year. For big business
you're talking seven to ten percent. And the inflation rate, overall,
is almost zero. So health care costs are escalating again. For the
bottom, we will probably in this decade cover another 10-15 million
uninsured. But if we have a recession, we will be stuck with 30
to 50 million uninsured and we will ration them quite harshly as
we always have. And I think that's the system that I see unless
a politician with traction could come along and say, "Enough already."
But I think ultimately what'll carry the day in November will be
a politician will a very minimalist increment approach to cover
I say let us have a two-tiered system that's accepted and let us
focus on the bottom tier and say, "Let us make it good enough to
that, as Americans, we could be proud of it." I think that could
be done. That would probably be based around managed care. It would
have HMOs and it would have gatekeepers in it. You could have all
of that if you follow the advice that we should monitor the quality.
And it would entitle every American to have at least a right to
this basic package and they should pay maybe 10-12 percent of their
income towards it, but if they're poor, we should subsidize them.
We have to be our brothers' and sisters' keeper. That is the Judeo-Christian
ethic. Would this cost an arm and a leg? No. It could all be done
for less than a hundred billion additional national health spending
a year. It will be less than that, because the uninsured already
do get care, they just get the most expensive care too late in the
stage of this disease. Is a hundred billion an awful lot of money?
The federal budget is 1.8 trillion. Our GDP is nine trillion and
growing. How is a hundred billion a lot of money?
to the question of who has the political will to get it done?
asked a senator, "If Jesus came to your office and asked, 'How do
you explain that you make health care cheaper for a rich man than
a poor man?' After all I said, what would you tell Jesus?" This
was a nice Born-Again Christian. "What would you tell Jesus?" And
he was speechless, and I said, "That is probably the most you could
tell Jesus." But that is really what it's all about, the amount
of tax forgiveness well-to-do people in America get because their
insurance is tax deductible. Where is that fair? That is what's
wrong, in my view, and the politician alone is to blame for that.
There's no one else to blame but the politician in Washington, D.C.
They have to answer for what I consider a highly immoral tax policy
on health care.
to the problem of expensive medications.
medications are rising in price in very strange ways. If you actually
look at a particular product and say, "How has its price risen over
time," that's been only two to three percent. There's not been that
much inflation. What really costs is that you had a product that
worked and then a better one, similar but better, comes along and
its price is two-and-half times the old one and that new product
is protected by a patent. So it essentially has a monopoly in that
regard. And it is that phenomenon of substituting new or better
drugs for older than is driving drug spending. Plus, let's face
it, the industry does a lot of research and there are a lot of great
drugs, particularly for depression, for upper respiratory condition.
lifestyle, even such things as Viagra. There'll be more of these.
And if you look where a lot of the drug spending is, it's really
in areas that make life a lot more tolerable for chronically ill
people. And the question is, how do you pay for this?
me give you some numbers on pharmaceutical spending. As a percent
of Gross National Product, it's one percent. Only one percent, as
we speak, of GDP goes for prescription drugs. It's about eight to
nine percent of total health spending. Only eight to nine percent
is drugs. If you take all the pharmaceutical companies' profits
this year, it's probably in the neighborhood of 20 billion. That's
about a quarter of one percent of GDP. So these are not big numbers.
The point of these numbers is to say, can America afford drug therapy?
Yes. What is unaffordable is that a family with a chronically ill
person, somebody with depression, they can not afford -- or an elderly
person -- we have 12 to 15 million elderly who have no insurance
for drugs at all -- elderly people often use drugs for quality of
life. They can not literally afford it. So the problem is one of
sharing. How do we share the wonders of this industry so that everyone
can partake? And that is a task for Congress, obviously.