GUEST: Dr. Karen Davis
AIR DATE: 11/01/2008
I’m Richard Heffner, your host on The Open Mind. And today’s program is quite literally an extension of one today’s guest and I began together at the very beginning of the century.
For in 2000 I introduced an Open Mind titled “A 20/20 Vision for American Health Care” calling it the first of several programs that in the MONTHS ahead – and I should more accurately have said the YEARS ahead – would deal with a theme that resonates widely and importantly in American life. One that surfaces again and again in our national politics, and that quite literally impacts critically on each and every one of us.
Indeed, we all recognize it as a matter of life and death … the matter of health care in America.
Appropriate then – as it is today – that my Open Mind guest was – and is once again – economist Karen Davis, whose distinguished career in public policy and research led her in 1994 to the Presidency of the Commonwealth Fund, a national philanthropy heavily engaged in independent research concerning an overall high performance health system for all Americans.
Well, back at the turn of the Century, Dr. Davis’ and the Commonwealth Fund’s vision for a health care system worthy of Americans by 2020 included five basic features: automatic and affordable health insurance for all; access to health care for all; patient responsive health care; information-driven health care; and of course commitment to quality improvement.
Well, now we’re not all that far away from 2020, and earlier this year, long BEFORE we knew that Barack Obama and John McCain would be the Democratic and Republican Party standard bearers, I raised the question with Dr. Davis of which of the two parties’ various Presidential Primary contenders offered health care planks likely to take us closest to her 20/20 vision.
Which brings us to the here and now: two parties; two candidates; two health care proposals. And I would first today ask my guest whether either set passes muster in attaining her 20/20 vision. Is that a fair question?
DAVIS: It is a fair question. The US certainly has been slipping further behind than we were eight years ago on what it is possible to have from our health care system. And I think the candidates are offering starkly different approaches to the health care system … the way we finance care, the way we organize and deliver care.
HEFFNER: Which one brings us … and that’s the tough question, of course, which one of the candidates brings us closer to your 20/20 ideal?
DAVIS: Well the first principal of the 20/20 vision for the high performance health system is having health insurance for everyone.
Senator Obama has that as an explicit goal. Senator McCain is more concerned with the cost of care and making consumers more cost conscious shoppers.
Estimates indicate that Senator McCain’s proposal would reduce the numbers of uninsured by about one million people initially … that’s out of about 46 million Americans without health insurance. Maybe cover as many as five million after a few years. Senator Obama on the other hand sets a goal for coverage for everyone. And his proposal would reduce the numbers of uninsured to about half of what would otherwise happen in this country. So he’s got a goal in universal coverage. Doesn’t quite get there. But certainly he would make coverage much more affordable, would require coverage of every child and begin to move us along a path to a high performance health system.
HEFFNER: Would you feel that’s the best we can do at this point?
DAVIS: No, I think we can achieve universal coverage. I think there are some pragmatic ways to get there that build on the programs that now work.
Take employer coverage. The candidates differ markedly on the role of employer health insurance. Today about 160 million Americans are covered by employers. That would increase by another 10 or 20 million under Senator Obama’s proposal because they require all employers to either provide coverage to their workers or make a contribution toward that coverage.
He would pay half the premium for small businesses and he would provide publicly funded re-insurance to make premiums lower for, for employers. Most importantly he would let small businesses and individuals buy into a Medicare-like, type of proposal which would also lower the premium.
Senator McCain on the other hand thinks that we’d be better off if people bought insurance on their own rather than getting it through their employer. So he would tax, as income to the worker, any amount of money that the employer spent on health insurance. And instead he would give a tax credit … $5,000 per family … to everyone to buy coverage on their own. Or if they’re employer did provide it, to apply against the extra taxes that they would pay on employer contribution.
But generally the philosophy is to get the employer out of the health insurance business; let people buy it on their own.
It’s a continuation … really, of policies we’ve seen in the last eight years. A belief that if people have individual ownership of their health insurance policy (laugh), are making cost conscious choices, are really looking at the premiums … choosing a plan with a higher deductible, putting aside some tax favored money in health savings accounts … that costs will go down.
In fact that really hasn’t worked. I don’t think there’s any evidence in the last eight years either that these policies are attractive to people, not very many people go out an buy a $2,000 or $5,000 deductible plan. That means they have to pay so much out of pocket.
But what we have seen is the slight erosion of employer coverage, particularly for small businesses. And more importantly we’ve seen an increase in deductibles for, for everyone.
And the consequence of that is higher debt. A recent study by the Commonwealth Fund found that the percent of working age adults who are struggling to pay their medical bills or have accumulated medical debts has gone up from 34% to 41% … two fifths of all working adults can’t pay their medical bills.
And this is a direct consequence either of being without coverage, losing it for part of the year or having inadequate coverage that leaves people vulnerable to high bills. High bills because of cost sharing, high bills because certain benefits aren’t covered.
HEFFNER: All right. We’re doing this program less than two months before the election. Is there any indication that the Commonwealth Fund has gathered, any indication, any information about the understanding on the part of the American people of the consequences of the two party proposals?
DAVIS: Well, I think Americans do want change. So that comes through very strongly in our survey. It comes through very strongly of our survey from health care opinion leaders who work in the health sector and really know it best. They do think we need to change.
I think there is an understanding, that basic philosophical differences … people are certainly concerned about their own out of pocket costs and I think understand that being on your own isn’t a good thing.
We find that three fourths of people think employers do a good job … of picking health insurance coverage for them … even people who don’t have employer coverage … would like to have good health benefits on the job.
HEFFNER: The … in the primary campaign it was obvious certainly in the Democratic Party primary … that all of the candidates … I’m talking about Joe in Minnesota, or Sarah in Illinois … who had been without health insurance and told tear-jerking stories about what has happened to Americans. These for real? Representative, in your estimation?
DAVIS: Oh, absolutely. When you’ve got 46 million people without coverage, when you’ve got 79 million without the ability to pay their bills or, or have debts that they’ve got on their credit cards that they’re trying to deal with … it’s reaching every American household. They either have somebody in their immediate family … a neighbor, someone at church who’s been, been effected.
There are certain groups that are most effected. First of all young adults have the highest rate of being uninsured. Senator Obama would say, “Stay under your parents policy until you’re age 25 or 26”. That’s a pretty practical solution.
He would also keep the children’s health insurance program going up to age 25, 26. So that young adults who are low income could, could have that coverage.
Right now we do okay by full time college students. But other young people who aren’t able to go to college full time or are trying to find a minimum wage job often go without health insurance coverage.
But there’s also a serious problem with older adults. Studies are showing that if you’re uninsured at age 55, age 60 … you’re out of luck trying to find health insurance on your own if you have any kind of a health problem.
So nine out of 10 people who look for individual coverage simply can’t find anything that meets their needs or they can’t afford the premium, or in many cases they’re actually turned down when they apply for, for coverage.
So, in fact there are a lot of flaws of this individual health insurance market. And, and we need a more secure form of coverage for all Americans. We shouldn’t have people wait two years if they’re disabled to get on Medicare. These are people with cancer, these are people with strokes, they need health care now … not in two years.
HEFFNER: What are other people doing in this regard? I know that you make constant surveys of other countries, other health plans … are they really so far ahead of us?
DAVIS: Absolutely. You know one key indicator is the proportion of the population that die every year as a result of causes that are amenable to medical care, that could be prevented if people were taking medications, for example, for hypertension, were taking medications for diabetes and were getting good treatment for chronic health conditions.
The US now ranks 19th out of 19 countries on mortality amenable to medical care.
It’s not that we’re not making progress, actually over the last five or six years, we’ve improved by 4%, but other countries have improved by 16%. So the bar’s being raised and we’re slipping further behind. So it does have consequences.
The Institute of Medicine studies, for example, have shown that 18,000 Americans die every year as a direct consequence of being uninsured. This is a problem that doesn’t exist in other countries.
The US is the only major industrialized nation that doesn’t have a system of covering everyone.
HEFFNER: Don’t you shock people when you reveal these statistics?
DAVIS: Well, it is shocking. It’s upsetting and it’s time for change. It’s time to change direction. When it’s so clear that there are several things that we can do to put us on the path to high performance that can improve prevention, that can improve management of chronic conditions, that can help people afford their medications so that they don’t skip doses or fail to fill prescriptions that the doctors write for them.
So, I think what this election is all about is whether we’re going to change directions, we’re going to do whatever other industrialized country has done … and that’s make sure that every American who needs health care is able to get it.
HEFFNER: Let me ask a question that I ask my guests quite frequently. Here it seems almost outrageous to do so, but I’ll do so anyway.
What’s the downside of your argument? And is there any upside to the argument of those who don’t want the kind of change you want?
DAVIS: Well I think people are worried about two things. They’re worried about the taxes … what is this going to cost us? And they’re worried about government run health systems, that won’t be as responsive to patients, that will be bureaucratic, that will ration care, you won’t be able to get what you need.
First of all, if we really looked at the data … the US already spends more than other countries on health care. We spend twice, per capita, what other countries spend.
So it’s simply not the case that covering everybody would take huge new expenditures. You have to be willing to adopt changes that will achieve savings that other countries, for example, have adopted.
Let’s take one that Senator McCain has endorsed. He’s endorsed importing drugs from other countries. Well, we pay 50% or 60% more than other countries for prescription drugs because other countries negotiate pharmaceutical prices, they also have set up evidence based institutes that really find out whether one drug is better than another drug. Does it cost more when it’s no more effective than the alternative and they recommend “well, let’s … don’t cover it” if it’s no more effective.
Or in Germany they say we’ll pay for the least expensive equally effective drug. So these are simple things that other countries are doing. And both Senator McCain and Senator Obama say we need to move in the direction of evidence-based medicine; we need to get these prices down, whether it’s through negotiation, as Senator Obama has suggested.
Or just letting the same drugs come back into the US so that we can buy them cheaper from, from Canada than we can here in the US as both Senator McCain and Senator Obama suggested.
HEFFNER: But where they disagree, that’s where I wonder … is there … it seems so outrageous that the statistics you offer should prevail about the added suffering that we experience that others do not … whether one can say anything for the points of view that are maintained, that have been maintained over the past nearly eight years and that are maintained by Senator McCain and his party platform?
DAVIS: Well, a lot of it boils down to a different philosophy about government and the market. Senator McCain believes that we’re better off if the government doesn’t try to regulate private insurers. That you could buy insurance from any company in any state, including a state that doesn’t require insurance companies to take sick people.
Senator Obama says, you know a lot of our problems come from the fact that government hasn’t exerted its responsibility to set the rules for the sale of private insurance. So he would require private insurance companies to take everybody, healthy or sick, charge them the same premium, healthy or sick, and spend most of the premium on medical care … instead of on profits or administrative overhead.
Switzerland, for example, requires that its insurers not make a profit on basic health insurance coverage for the population. So, this, this philosophical divide about whether we’re better off just letting insurance companies do what comes naturally … or set some basic rules.
But what comes naturally is avoiding people who are sick. Ten percent of people account for about two-thirds of all health spending. Because they’ve got serious health problems, or they’re disabled. And if insurers can avoid covering those people they’ll make money on the premiums. If they have to cover everybody then they’ve got to demonstrate some value-added, that they can improve efficiency by selecting better doctors, or hospitals that really reduce their readmission rates, for example.
So, there’s, there’s the difference, the extent to which we’re willing to have the government set basic rules on the insurance market. To set basic rules on the delivery of services and really change our current system in a way that rewards doctors and hospitals for being accountable for the results they get for their patients. But also for the prudent use of resources.
HEFFNER: Do you feel that the present … again we’re talking here mid-September … the present chaos, failure in Wall Street, in the market place will make Americans, when they go to the ballot box in November more likely to recognize that this all of a piece, anti-regulation?
DAVIS: Well, absolutely. I think people are seeing what happens when we have unfettered private markets without rules that establish certain parameters for the functioning of those markets. I think they’re seeing what happens when we got over extended with debts.
And I … unfortunately … think we’re seeing what’s happening when people have the financial risks that come without either insurance or without adequate insurance.
What our studies are showing is that people, in fact, are jacking up credit card debt to fill a prescription. And, and these are serious problems … it means, first of all, that hospitals and doctors don’t get paid … those who are willing to see patients without insurance.
But it also deters patients from going back to that doctor where you owe a bill that you haven’t paid.
HEFFNER: Is medical indebtedness really growing at a pace that’s as significant as you’re hinting?
DAVIS: Yes, it’s jumped significantly. Just in the last two years between 2005 and 2007 we had a major jump. But you know what’s so surprising about that … it’s affecting middle income families. It’s not just affecting poor people or low income people, it’s really people with incomes of $40,000, $60,000 … there’s where … impact … the economic squeeze is really hitting working families with what we would think of as, as median incomes that are slipping into debt because of the erosion of the quality of their health insurance coverage.
You take retiree health benefits. Those have largely disappeared over the last couple of decades. So if somebody has a health problem … retires at age 60, they’ve got five years to wait before they can buy into Medicare. One strategy which Senator Obama has put forward is let’s set up a national health insurance exchange and let’s provide a Medicare like plan for that people can buy into early.
What our studies have shown is that Medicare, which is a program we know … we know that it works, we don’t have to think about some kind of socialized system that we’re afraid of.
Medicare has lower costs … 2% administrative overhead because it doesn’t have to pay a salesman, it doesn’t advertise, it doesn’t have to make profits …so it’s got 2% of the premium going for administrative overhead. With employer insurance, it’s 10% or 15%. With individual insurance, it could be 15% to 40%, so a lot of that is sheer waste.
In fact our commission on a high performance health system found that we could save $102 billion dollars a year if we had the kind of administrative costs that other countries have … if we were as good as the best three countries.
So there is real money to be made by eliminating a lot of this waste and one way to do it is to put Medicare into direct competition. Say to small businesses, say to people who don’t have insurance, “if you want to buy Medicare, you can do so” and the premium would be about 30% lower because of the lower administrative costs and also because of the way they pay doctors and hospitals.
HEFFNER: And … the question I wonder about … is there any indication … measurable … indication that the problem that you’re talking about now … the growing indebtedness over the past two and a half years or so has adversely affected the health of our people?
DAVIS: Absolutely, all of the studies show that when you don’t have good health insurance, you just don’t get preventive care.
HEFFNER: But not … I, I don’t mean hypothetically. I mean in reality.
DAVIS: Oh, absolutely. Unfortunately, we hear the stories both on our surveys and people who are expressing what’s happened to them, how they’ve had to go without needed care. Often that is in the form of medications to control conditions. But even people with cancer, we’re finding here in New York City, that there are women diagnosed with breast cancer … simply aren’t getting chemotherapy, radiation therapy that are recommended … for all sorts of reasons. But financial access is part of it.
So it’s not just hypothetical, it’s real conditions. The Institute of Medicine is the best source on this … part of our National Academy of Sciences. And they say, even in trauma care, in accidents, when patients show up in the Emergency Room, the quality of care and their survival is affected by whether or not they have insurance.
So, it’s, it’s a serious problem. It’s not just a financial problem. It’s a health problem. It’s a human problem. And it touches our friends, it touches our families, it our touches our neighbors and there’s no reason why we can’t get with it and really address this issue the way every other country has.
HEFFNER: You know, Dr. Davis, the word that comes to me is “impossible”, it just can’t be. And yet you’re facts and figures indicate that this is happening in America.
DAVIS: Well, it certainly shocks visitors to our country. We bring international fellows …
HEFFNER: Yeah …
DAVIS: … to the US every year to spend a year here studying our health system because we believe in learning from best examples …
DAVIS: … all around the world. And they can’t believe it. You know some of our leaders have said, “Oh, there’s no problem, people can go to an Emergency Room”. But, you don’t go to an Emergency Room for your diabetes medication. They’ll see you once you’re in extreme reaction to an asthmatic attack or a heart attack. But unfortunately that can be too late for many people.
HEFFNER: You know I’m, I’m a child of the Depression. Grew up with Franklin Roosevelt … my … the President I knew …
HEFFNER: First term, second term, third term and fourth term … and, and I find this so incredibly difficult to comprehend in my country. And you think this will … this will show itself … manifest itself … when the people choose.
DAVIS: I think it’s affecting enough people. Unfortunately in economic downturns people worry even more about health care. They know their jobs aren’t secure and when they lose their jobs … they’re at risk of losing their health insurance and certainly they know they couldn’t afford to, to buy it on their own even if they could find a policy that, that met their needs.
So people are worried. It’s shows up in our surveys that they think it’s time to do something about this.
I think we’re a country that can solve our problems. And that we could put our talent together and with the right leadership we can all work on this together.
I think if we insist this is a shared responsibility, it’s not just individual responsible, it’s also employer responsibility, it’s government responsibility … at the Federal government, at the state government level … it’s a responsibility of hospitals and doctors. But if, if we have leadership that really says “Our goal is the best that America can be, we can move on to a high performance health system. Instead of slipping further and further behind, why don’t we lead. We’re spending more that any other country, we should get the best results … and here’s the way to do it. We’re going to study the best practices … all around the US, all around the world and if something works, we’re going to spread it, we’re going to support it.”
It’s that kind of leadership that’s at stake in this election.
HEFFNER: Karen Davis, I love you for saying all of that. Thank you so much for joining me again on The Open Mind.
And thanks, too, to you in the audience. I hope you join us again next time. If you would like a transcript of today’s program, please send $4.00 in check or money order to The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.
Meanwhile, as an old friend used to say, “Good night and good luck.”
N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.