This paper has been submitted by Miriam Yevick Retired Assoc. Prof of Mathematics Rutgers, The State University 22 Pelham Street Princeton N.J. 08540 The U.S. Health Care System, (except for seniors enrolled in Medicare) is in shambles. Some 46 million Americans, 1 in 6, has no medical insurance. 41 % (up from 28% in 2001) of the non-elderly with incomes between $20,000 and $40,000 a year were without health insurance for all or part of 2005. One third were deterred by cost from seeing a physician. Many report needing to choose between paying for medical care and basic necessities. Many report spending their entire savings on medical care. Yet the average spending for health care per person in the U.S. tops that of other developed countries with Universal Health Insurance: U.S.: $5,267 per person Canada: $2,931 per person Germany: $2,817 per person Britain: $2,160 per person Yet, the U.S. has lower life expectancy than any of these. Yet, the U.S. has a higher infant mortality rate. Yet, the U.S. has a higher rate of medical errors. Yet the waiting time for an appointment with a recommended specialist (if available at all) is now typically as much as two months in the U.S., barely less than in the above countries. Yet the U.S. government already directly or indirectly pays over of the nation's health care expenses in emergency care and follow up for the uninsured, in the loss of revenue from the untaxed pay packages of employer-based health care (adding up to some $190 billion, a hefty share of the yearly national deficit) and in subsidies to Medicare H.M.O's (not to mention to the pharmaceutical companies under the new drug law). Yet private insurance to be profitable cannot remain so by accepting the 5% of the population with the highest potential claims at an affordable premium. Yet anyone of us may have the misfortune of becoming part of this group. And let us not forget to mention the additional cost in time and of secretarial help incurred by physicians in dealing with the paper work required by hundreds of different private plans. And what, God forbid, if there were a pandemic? Given that many hospitals are already on the financial ropes, with their emergency rooms clogged, it seems unlikely that they could handle an onslaught of very ill patients. MEDICAL CARE IN THE U.S. SOME EARLY HISTORY The Health Care Situation for the non-elderly in the U.S. today is very reminiscent of the dire situation in health care for the elderly before the enactment of the Medicare Program (1965) as part of the Social Security System. Americans, from the very beginning, did not look favorably on a government role in social welfare. The immigrants had escaped the yoke of the British government's rule and were self-reliant folks, pioneers and struggling individualists. Medical care through most of the 19th Century suffered from an absence of an organized coherent medical profession which would establish who was and who was not a doctor. The meaning of health care was associated with oral tradition or self-help. The non-poor looked to domestic medicine and lay practitioners. Unorthodox medical sects dominated the healing arts and prevented hospital community care from developing (as did happen in Britain). As a result hospitals continued to provide custodial rather than curative care. They served as a last resort for the indigent and residents of poor houses. They were dreaded by others as associated with infection, experimentation and other types of failure and misery. THE HEALTH CARE CRISIS OF THE 1930'S American medicine which had resisted improvements in medical knowledge and procedures in the previous century, however developed rapidly by the early 20'th. Century. The U.S. came to supplant Europe as the dominant medical research center. Hospitals were transformed into centers of curative treatment. Voluntary and other private hospitals began to attract a wide spectrum of Americans from the "respectable" working class to the middle and upper classes. The shift in the public's understanding of hospital care created major problems for the existing municipal and voluntary hospitals. Public hospitals felt compelled to give free treatment to the sick and elderly although originally destined for the destitute. They could not financially meet the increasing demand for their services. The situation with respect to health care for seniors had become very dire. Since the 1930's, the rapid growth of non-state insurance schemes to finance the greater demand for hospital treatment had been oriented to the employed. After retirement, however, many elderly who had previously enjoyed middle-class incomes began to find that non-state arrangements for financing their care either had lapsed or were too expensive. Many retired people, were being forced into indigence having to rely on the dreaded poor-law arrangements. Public welfare and hospital officials from around the country testified that, although most elderly were covered during their working years, their retirement and the onset of sickness forced many to rely on public assistance. Ill health had become a major cause of destitution among the aged. The elderly often forestalled needed medical care as they struggled to cling to their waning independence on near-starvation incomes and refuse to apply for public assistance. Yet public resistance during the Roosevelt (1932-1945) and Truman (1945-1952) administrations created a major barrier to the enactment of government health insurance. THE FIRST STEP. MEDICARE FOR SENIORS The situation could not go on as it was. Wilbur Cohen, a representative of the American Public Welfare Association, one of a group of reformers, testified before Congress "that it is not the wish of the American people that substantial numbers of our aged citizens be required to turn to public welfare for help with their medical needs." The central argument for the Medicare approach, then, that "the aged should not become by high medical bills to become medically indigent and to undergo the means test." Instead reformers pressed for financing arrangements that would be favorably perceived, "providing medical care to the aged who need it, as a matter of right, with head up, with a sense of dignity." Cohen concluded that although the elderly tended to favor a smaller government role, the New Deal, especially the Social Security Act of 1935, had created a shift in the meaning of government. They were now ready to make an exception in the area of financing medical care costs. Thus Cohen and other reformers looked specifically to the Social Security system, which was widely recognized by the 1950's as enjoying universal support. For the non-poor, who were repulsed by poor-law arrangements, Social Security's reliance on contributions by beneficiaries during their working years was enormously appealing, giving its benefits "a different character that separates it entirely from an assistance or welfare program." A broad debate about the need for a social insurance program to provide older Americans with reliable health care coverage started within the Social Security Administration and in Congress. Public hearings were held and several proposals were considered by the House of Representatives, but the debate did not intensify until 1960, when it became clear that private insurers were becoming increasingly incapable of providing comprehensive, affordable health care coverage to the rapidly growing population of older adults. Between 1950 and 1963, the aged population grew from about 12 million to 17.5 million, or from 8.1 to 9.4 percent of the U.S. population. At the same time, the cost of hospital care was rising at a rate of about 6.7 percent a year, several times the annual increase in the cost of living and health care costs were rapidly outpacing growth in the incomes of older Americans. To support these costs, private health insurance carriers repeatedly raised premium rates and/or reduced benefits, making private insurance too expensive and/or inadequate for older adults living on fixed incomes. Between 1960 and 1965, the health coverage debate was a front burner issue in Congress, with dozens of proposals introduced and testimonies given by representatives of major organizations, including the American Hospital Association, the American Medical Association, and the AFL-CIO. A 1964 Senate study estimated that only 50 percent of the policies issued to retirees provided comprehensive coverage (75 percent or more of the average hospital bill), meaning only 1 in 4 older Americans had adequate hospital insurance protection. Finally, in July 1965, the House and Senate yielded to public pressure and in spite of the opposition of powerful private interest groups, passed the bill which established Medicare, a social insurance program designed to provide all older adults with comprehensive health care coverage at an affordable cost. Medicare was made part of the Social Security System, a social public health insurance system taxed for, into, and paid from general revenues. COMMUNAL COST SHARING AND RISK POOLING VERSUS THE FREE MARKET Privatizing Social Security ? Americans displayed an overwhelming opposition to the current administration's plan to privatize the Social Security System. The electorate understood the benefits of communally pooling risks and benefits over trusting the free market to give a fair shake to all retirees. Medicare vs Private Insurance Plans An attempt was made during the 1990's to modify Medicare to rely on the private marketplace so as to create competition among plans and to lower the cost of Medicare. The Medicare + Choice program enacted in 1997 to that purpose turned into a failure. People who enroll in Medicare HMOs actually cost the government more than if they were enrolled in the original fee-for-service Medicare program, adding billions to government spending. Healthier people with Medicare who have lower than average medical costs are more likely to sign up for Medicare HMOs, leaving the sicker ones whose care is more costly in the original fee-for-service Medicare program. According to the GAO report, in 1998, Medicare paid HMOs an average of 13.2% more than Medicare would have spent if HMO enrollees had received care under the government-run Medicare program. Privatizing Public Safety Protection ? Imagine that instead of paying the police directly, the government delegated the public safety function in our urban centers entirely to the private market. Citizens would buy safety insurance from private companies. What would happen? How safe would our cities be? Clearly the well-to-do would be able to contribute considerable resources to the protection of their enclaves. There would be a large contingent of public safety employees patrolling their neighborhoods. The situation would be the opposite in the poor sections of town. Here even though more police is needed, the residents would not have the resources to pay for them. The middle class, squeezed in between would face a large influx of thieves and criminals from the destitute parts of town, yet would be financially restricted in hiring the required number of police. Private or Government Building of Storm Levees ? New Orleans, sited below the Mississippi River and its levees, had its own special problems. Free market thinkers proclaimed that markets have solutions for everything that governments botch. Building levees, however, demands cooperation guided by some overall authority. A levee protects the land behind it only by shunting water onto other lands, which then require their own levees to shunt the water back, and downstream, and even, as it turned out, upstream. Competition among levee builders becomes a vicious spiral Over the centuries it led step-by-step to levees four stories high. Last year the overbuilt levy system, legacy of 150 years of the slow vicious spiral of misdirected competition to beggar-thy-neighbor, finally betrayed the city. Clearly in our complex society the private profit market does not or would not work, for Public Safety Protection, for Levee Building and for many other widely accepted functions, (such as air traffic control, public highway planning, vaccinations against epidemics etc). THE SECOND STEP. MEDICARE FOR ALL. THE PRIVATE MARKET DOES NOT WORK FOR HEALTH CARE Medicare, this first step in creating a communal national health care program, should be followed with a second step, a communal national health care system financed in the same way, by taxes paid into and paid from general revenues dedicated to a Social Security Universal Medical Care Trust Fund. Such a system will be more efficient and less costly than the current non-system and will protect the health of all Americans. Public pressure succeeded in overcoming the power of special interests opposed to enacting the first step, public pressure can succeed again. Miriam Yevick Retired Assoc. Prof of Mathematics Rutgers, The State University 22 Pelham Street Princeton N.J. 08540

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