[Corp. Watch] The other 'N-word': How to save healthcare from corporate inefficiency and plunder

[Corporation Watch]

Nationalization Would Be Good for Our Health

  by Phil Mattera

(Dirt Diggers Digest, Feb. 25) -- "Nationalization", a term alien to  
most Americans taught to believe in the ideology of a free market, is  
now at the center of a public discussion on how to address the ongoing  
crisis of the country’s major financial institutions.

	For most observers, nationalization is viewed as an unfortunate and  
temporary step that would be taken to restore troubled banks to  
health, and then turn them loose on the market again. Yet perhaps we  
shouldn’t be thinking in such narrow terms.

	If the taboo against government ownership is disappearing, now might  
be the time to consider applying that solution to another industry  
that causes Americans a great deal of grief: for-profit health  
insurance.

	Long before the banking system became a national embarrassment,  
health insurance companies -- especially health maintenance  
organizations (HMOs) -- were a leading symbol of market forces running  
amok.

	A wave of consolidation put the industry under the control of a  
handful of huge for-profit corporations whose business plans are based  
as much as possible on the denial of care. Despite being hit with a  
variety of class action lawsuits filed on behalf of patients and  
healthcare providers, their practices remain largely unchanged.

	Calls for healthcare reform have grown, yet mainstream analysts  
insist that private insurers have to remain a central part of any new  
system. Although government-managed coverage is the norm in most other  
developed countries, the conventional wisdom is that [even just  
implementing] the single-payer approach long advocated by groups such  
as Physicians for a National Health Program is unthinkable here.

	That’s not because single-payer isn’t feasible. On the contrary: It's  
the current for-profit system that leaves a lot to be desired in the  
efficiency department.

	Consider this: According to their latest financial statements, the  
five largest private U.S. health insurers -- UnitedHealth, WellPoint,  
Aetna, Humana, and Cigna -- together spent more than $36 billion on  
marketing, administration, and other non-medical costs last year.

	This represented 19 percent of their total costs, which doesn’t  
include the administrative costs they impose on doctors, hospitals and  
other healthcare providers. By contrast, in Canada’s government-run  
single-payer insurance system, administration accounts for only 3.4  
percent of total costs.

	If the five big U.S. private insurers were that efficient, they would  
be spending only about $7 billion a year on non-medical costs. In  
other words, they're wasting nearly $30 billion a year on functions  
that do little to promote the physical well-being of their customers.

	In fact, a large portion of the waste represents their efforts to  
reduce the provision of care and thereby raise profits, which for the  
five totaled more than $8 billion last year despite a difficult  
economic environment.

	A great deal of the waste among private insurers reflects the huge  
workforce -- totaling more than 200,000 among the top five firms --  
they employ to operate their immense bureaucratic machine.

	Imagine how much better our system would be if most of those 200,000  
people were re-trained to be healthcare providers rather than deniers,  
and the billions in wasteful spending went toward lowering premiums  
and improving care.

	Some researchers have estimated that the replacement of the  
multiplicity of private and public payers into a single national  
system would eliminate $350 billion a year in wasteful expenditures.

	In his speech to Congress this week, President Obama was emphatic  
about moving on healthcare reform soon, but he was vague about  
details. Vast sums are being spent to at least partially nationalize  
banks. Why not use some of those funds to take over the health  
insurers that create their own form of financial distress?

	It is an auspicious time to take the plunge. Thanks to the slumping  
stock market, the stock prices of the big insurers are cheap. The  
total market capitalization of the big five is currently only about  
$74 billion.

	For far less than what has been spent giving dubious capital  
infusions to banks, the federal government could buy out all the  
shareholders of the large insurers and move their subscribers into a  
federally operated system -- perhaps an extension of Medicare -- and  
use the cost savings to remove restrictions on coverage and enroll the  
uninsured.

	I know there are a lot of complications, but this may be a rare  
opportunity to cast away old assumptions about what is possible, and  
seek radical rather than patchwork reform.

	Nationalization of shaky banks may prove to be a futile effort -- the  
federal takeover of private medical insurance would pave the way to a  
more humane and effective healthcare system.