[lit-ideas] Krugman on healthcare

  • From: Carol Kirschenbaum <carolkir@xxxxxxxx>
  • To: lit-ideas@xxxxxxxxxxxxx
  • Date: Wed, 03 May 2006 17:54:21 -0700

For un-Selected Krugman addicts. Note his characterization of "lower-income" 
Americans as earning between 20K and 40K. This is a standard salary range 
for teaching (k-12), in social service (caseworkers), in editing and 
journalism (sorry, yeah), and in allied medical careers. It's "low income" 
but a huge leap up from minimum wage, which is $5.15/hr, in most states.

So what's considered a "middle-class" income these days? There's dirt 
poor/homeless (minimum wage and below), and there's 
million/billionaire--people whose response to gas shortages is to rush out 
and buy a hybrid, with cash. But can it be that the vast middle is actually 
"lower income"--or would be, if forced to live on one salary?

Carol,
with Krugman below
******************************





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May 1, 2006
Op-Ed Columnist
Death By Insurance
By PAUL KRUGMAN
For lower-income working Americans, lack of health insurance is quickly 
becoming the new normal. That's the implication of survey results just 
released by the Commonwealth Fund, a nonpartisan organization that studies 
health care. The survey found that 41 percent of nonelderly American adults 
with incomes between $20,000 and $40,000 a year were without health 
insurance for all or part of 2005. That's up from 28 percent as recently as 
2001.

Many of the uninsured reported spending their entire savings on health care 
and/or that they were having difficulty paying for basic necessities. And 
most uninsured adults reported cutting corners on medical care to save 
money - failing to fill prescriptions, skipping medications, going without 
preventive care.

Here's the other side of the same coin: health insurers' business is 
lagging, reports The Wall Street Journal, as "rising premiums and medical 
costs push more of their traditional-employer customers to shun or curtail 
company health benefits." And some investors are feeling the pain. Aetna's 
stock price fell sharply last week, on news that its "medical cost ratio" - 
a term I'll explain in a minute - rose from 77.9 to 79.4.

Taken together, these stories tell the tale of a health care system that's 
driving a growing number of Americans into financial ruin, and in many cases 
kills them through lack of basic care. (The Institute of Medicine, part of 
the National Academy of Sciences, estimates that lack of health insurance 
leads to 18,000 unnecessary American deaths - the equivalent of six 9/11's - 
each year.) Yet this system actually costs more to run than we would spend 
if we guaranteed health insurance to everyone.

How do we know this? The medical cost ratio is the percentage of insurance 
premiums paid out to doctors, hospitals and other health care providers. 
Investors are upset about Aetna's rising ratio, because it leaves less room 
for profit. But even after the rise in the cost ratio, Aetna spends less 
than 80 cents of each dollar in health insurance premiums on actually 
providing medical care. The other 20 cents go into profits, marketing and 
administrative expenses.

Other private insurers have similar ratios. And here's the thing: most of 
those 20 cents spent on things other than medical care are unnecessary. 
Older Americans are covered by Medicare, which doesn't spend large sums on 
marketing and doesn't devote a lot of resources to screening out people 
likely to have high medical bills. As a result, Medicare manages to spend 
about 98 percent of its funds on actual medical care.

What would happen if Medicare was expanded to cover everyone? You might 
think that the nation would spend more on health care, since this would mean 
covering 46 million Americans who are currently uninsured. But the uninsured 
already receive some medical care at public expense - for example, treatment 
in emergency rooms that would have been both cheaper and more effective if 
provided in doctors' offices.

And Medicare manages to spend much more of its funds on medicine, as opposed 
to other things, than private insurers. If you do the math, it becomes clear 
that covering everyone under Medicare would actually be significantly 
cheaper than our current system.

And this calculation doesn't even take into account the costs our fragmented 
system imposes on doctors and hospitals. Benjamin Brewer, a doctor who 
writes an online column for The Wall Street Journal, recently commented on 
the excess expenses he incurs trying to deal with 301 different private 
insurance plans. According to Dr. Brewer, he currently employs two full-time 
staff members for billing, and his two secretaries spend half their time 
collecting insurance information. "I suspect," he wrote, "I could go from 
four people in the paper chase to one with a single-payer system."

Many pundits see red at the words "single-payer system." They think it means 
low-quality socialized medicine; they start telling horror stories - almost 
all of them false - about the problems of other countries' health care. Yet 
there's nothing foreign or exotic about the concept: Medicare is a 
single-payer system. It's not perfect, it could certainly be improved, but 
it works.

So here we are. Our current health care system is unraveling. Older 
Americans are already covered by a national health insurance system; 
extending that system to cover everyone would save money, reduce financial 
anxiety and save thousands of American lives every year. Why don't we just 
do it?







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