Universal Care

Congressman Jim McDermott advocates a Canadian-style system
as a simple, cost-effective, humane alternative for the US

One of the articles in Good Medicine (IC#39)
Originally published in Fall 1994 on page 40
Copyright (c)1994, 1997 by Context Institute

There’s been little attention paid in Congress to proposals for a Canadian-style single-payer approach to health care reform, despite its popularity in US public opinion polls. But perhaps that will change now that the managed competition approach appears to be going nowhere.

US Representative Jim McDermott has been one of the chief congressional advocates of such a plan; his bill, HR 1200, now has 92 co-sponsors in the House. In addition to representing portions of Seattle in the US Congress, Jim McDermott is an MD, was a practicing psychiatrist, and was stationed in Zaire in 1987-1988 as an employee of the US Foreign Service.

Sarah van Gelder: Let me start by asking what we would gain if we were to adopt a single payer plan rather than some variation on managed competition?

Jim McDermott: Two things. The first is a guarantee that patients can choose their own providers without restriction and that decisions made between doctor and patient will not be second-guessed by an insurance company. The second is cost savings — the Congressional Budget Office estimates that a single-payer system would save up to a hundred billion dollars a year in administrative costs. That’s the largest savings of any plan put forward so far. So from an efficiency standpoint and delivering the best quality health care, single-payer is the way to go.

Sarah van Gelder: I’ve been struck by the amount of support that exists for the single-payer approach, despite the fact that there has been so little coverage in the media.

Jim McDermott: People understand it. You see, I can explain it in about three sentences. Single-payer is a system in which everyone pays a health care premium into a central fund. One agency in each state negotiates how much money will be available for care that year and the specific fee schedules for doctors and hospitals. Patients see their doctors and receive treatment, and doctors are paid by the central agency. That’s a single-payer system.

Sarah van Gelder: How would policies be set, such as how much to spend on treatment as opposed to prevention, or how many high-tech. diagnostic procedures someone would get?

Jim McDermott: Those issues would be part of the negotiations I mentioned. Each citizen would be guaranteed certain benefits, and within the money that was available for health care, the doctors and hospitals must figure out how to provide care in the most efficient manner. That’s the process in Canada and Germany. Physicians in the US have not had to do this before, so it would be a little tough in the beginning, but they do just fine in other countries. Right now, our doctors and hospitals have an open-ended system so they never have to confront these questions.

Sarah van Gelder: What changes would single-payer make in people’s lives?

Jim McDermott: For patients, the changes would be minimal because only the financing system would change, not the delivery system. You could still choose your physician.

Physicians and hospitals would negotiate their fee schedules annually with the state’s funding authority – just as they do in Germany, Canada, and a variety of other countries.

The biggest impact would be on insurance companies. Their function would be eliminated, except that each state would designate either an insurance company or a state agency to administer its health plan. Whoever administers it would have to live within a 3.5 percent administrative cost limit.

Sarah van Gelder: What effect would eliminating the insurance industry have on health care?

Jim McDermott: The insurance industry adds nothing to health care – you don’t need the duplication and waste produced by 1500 insurance companies! If you look back in history, the buggy whip industry was a big deal at one point, but as automobiles came in, it disappeared. People who worked in that industry moved to other things. Certainly the people who are working for health insurance companies need to be considered, and our bill provides money to retrain them.

Without insurance companies, we would save money. Every penny you see spent on advertising is unnecessary! The 20 percent of our health care dollar that now goes to administration is really an added cost to businesses for insuring their employees, and that reduces their competitiveness.

Sarah van Gelder: How would decision making about an individual’s care be affected?

Jim McDermott: Decisions made by insurance companies are clearly driven by the need to produce a dividend at the end of the quarter for their stockholders. That’s not bad — it’s simply the way they’re organized.

If an insurance company’s objective is to make a profit rather than deliver health care, a patient’s best interests may not always be in the forefront of their thinking. Decisions are made by accountants and actuaries, not necessarily on the basis of what’s best for the patient.

That’s why the American College of Surgeons is in favor of the single-payer plan. They find themselves, as I did when I was in practice, constantly forced to call some insurance company clerk at a l-800 number and argue about what is best for their patients. They’re arguing with someone who has never seen the patient, who simply operates off a series of manuals. The time that’s wasted and the aggravation is simply not necessary, and it certainly doesn’t deliver better health care. It is a method by which insurance companies deny care and therefore wind up with more money to pass out as dividends.

Sarah van Gelder: You advocate a single-tiered system. Why should people who are doing very well financially want to be in the same health care boat with people who aren’t?

Jim McDermott: Because you never know how long you’re going to be in that boat. Many people think they’ll always have a great job and will always be taken care of. But last Friday IBM laid off a whole bunch of people who were making good money and getting good health benefits, and now they have nothing. It’s a national disgrace that someone can be bankrupted by an illness or an injury!

All over the country, people are paying more for insurance than they need to because the costs of uncompensated care have been shifted to them. It distorts the financial picture when you don’t have everybody covered. Some people think that if 95 percent have insurance, that’s enough. The problem is that the 5 percent who are not covered continue to get sick, and someone has to pay one way or another. You simply cannot control costs without everybody in a single system.

It gets down to the basic question of a democracy: How do you decide who gets what? Are we going to decide simply by how much money someone has?

Let’s take fire protection as an example. It used to be that if you hadn’t paid your taxes for fire insurance, the fire trucks would just come and watch your house burn. Same with roads. We used to have roads where they collected tolls every mile. We decided that didn’t make sense, that we needed systems which everybody can access. I think the same is true in health care. In a democracy, the way you keep society on an even keel is to provide the basic necessities to everyone.

Sarah van Gelder: In our research, we’ve been looking at health issues that are not being talked about in the current reform debate, such as the prevalence of chronic and preventable diseases – particularly those related to life styles, such as smoking, over-eating and lack of exercise. Is there any way your proposal would help prevent and better treat the illnesses that result?

Jim McDermott: Right now, nobody has a stake in resolving these issues. What the insurance companies do is try not to cover these people at all. There are pre-existing conditions or various screening mechanisms to get rid of the people who are problematic.

It’s pretty clear to me that if you have say, the State of Washington paying for everyone’s health care costs, they are going to find some money for the promotion of health. That kind of educational campaign saves money by changing behavior.

Drunk driving and the accidents that result become a public health issue when we all have to pay for all those shattered bodies that the ambulances haul in from the highways.

So, many countries – Sweden, for instance – spend a serious amount of money each year advertising against the drinking of alcohol and they have very strong laws against driving while under the influence, because the rest of the public understands that if they don’t do this they’re going to wind up having to pay for somebody who’s been in an automobile accident. It makes much better sense to prevent the accident.

Sarah van Gelder: People in different cultures have different ways of handling death. In our culture, we sometimes think we can prevent death if we can just come up with one more high-cost or high-tech intervention. This is one of the factors driving up health care costs. Any thoughts on how we can better handle those last few months of life?

Jim McDermott: You’ve raised one of the more difficult and least understood issues in the whole health care debate. I think we will not solve the health care financing problem until we come to grips with the significant amount of money – the figures vary from 40 percent to 50 percent of all health care dollars – that is spent on the last six months of life. We do things for people in their last days which are not motivated by a belief that the patient is going to live a long healthy life. Rather, we do them simply to prevent lawsuits or because they’re there.

There’s a real need to have a public discussion about this. There were two startling examples recently, Mrs. Onassis and Mr. Nixon – both made the decision to go home and die. I think those were remarkable examples of appropriate behavior when the time comes.

Sarah van Gelder: Are there ways that your proposal addresses that?

Jim McDermott: Not directly; it’s not an issue that can be dealt with by legislation. It has to be a decision that doctors and patients feel comfortable discussing and making choices about.

However, it would allow a more honest discussion to occur because the decision would be based on what’s best for the patient, not cost. Rather than say, "We can’t do this cancer treatment because your insurance doesn’t cover it," the doctor might say, "Your chances for recovery are 5 percent, and it will be very painful. I want you to understand this before we embark." Once you take the money out of it, you have access to good care, no matter who you are.

Sarah van Gelder: How do you respond to people who say that a single-payer system is not politically do-able in the US?

Jim McDermott: To say that is, in my opinion, a capitulation to the insurance companies, which have convinced people they are the only ones who can finance health care. They’ve been doing it for 40 years, and costs have absolutely gone out of sight! This country pays 50 percent more for health than any other country in the world, and the insurance companies tell us they can control costs. Well, why haven’t they? They’ve convinced the press that health care systems in other countries are not working adequately. There’s simply no evidence for this!

Health care is a $950 billion a year industry, and nobody who has a piece of that action wants to give up one thin dime. They don’t want to change anything. But in a couple of years, they’ll be back screaming about costs. The very thing that got us into the health care debate was the president’s concern that our health care costs were out of control.

We’re reaping the harvest of 12 years of Reaganomics when the president convinced people that the government is the problem. The result: it’s hard to get our proposal considered, to get Americans to believe that government can solve a problem.

Sarah van Gelder: What do you hope will come out of this round of the health care debate?

Jim McDermott: The opportunity to move toward a single-payer system someday. I don’t want to do anything now that makes it impossible later. Ultimately, these other plans will fail; that’s when this country will again look at single-payer.