Health Care 1990-A
Consumer Perspective
Robert E. McGarrah, Jr American Federation of State, County, and Municipal Employees, Washington, DC
Introduction by Chairman Richard P. Anderson Our first speaker is M r Robert E. McGarrah, Jr. Mr McGarrah is a graduate of the Villanova Law School and serves as Public Policy Director of the American Federation of State, County, and Municipal Employees, AFL-CIO. The AFSCME has 1.2 million members, of whom more than 300,000 work in health care services. His department works extensively on federal and
state budget issues with particular emphasis on tax reform. Mr McGarrah was one of the original members of Ralph Nuder’s Health Research Group, and he serves as a member of the Robert Wood Johnson Foundation‘s National Advisory Committee on the Chronically Mentally Ill. He will speak to us on Health Care 1990-A Consumer Perspective.
Y
D
r Anderson, Governor Lamm, and members of The Society of Thoracic Surgeons: I want to thank you for the opportunity to speak with you today from the consumer’s perspective on health care in America in 1990. We meet at a critical time for American consumers. After a nearly decade-long economic expansion-driven by consumer demand, according to most economists-consumers across the country are tightening their belts and worrying more about the future than ever before. Consumer confidence in the economy, indeed, consumer confidence in the American dream, is at its lowest point in decades. Now as surgeons, you may say these matters are of little concern. And it is true, according to the Bureau of Labor Statistics Director, Janet Norwood, that health care, along with government, are the only two areas of the economy that are still generating new j o b s t h e y are growing amidst increasing signs of a national economic recession. The Federal Reserve Chairman, Alan Greenspan, says interest rates must remain high if we are to continue to attract foreign investment to finance America’s bloated deficit. And there are signs that foreigners are increasingly unable or unwilling to fund America’s borrowing needs, according to leading economists. There is more bad news for consumers. For with higher gas prices, high interest rates, and declining job opportunities, more and more Americans find themselves in a terrible squeeze. And then there is health care. Consumers do not control the supply or the demand for health care-you as physicians, their employers, government, and insurance companies are the real gate keepers here. The patient you tell to undergo a bypass procedure may Presented at the Interim Meeting of The Society of Thoracic Surgeons, Chicago, IL, Sep 21-23, 1990. Address reprint requests to Mr McGarrah, American Federation of State, County, and Municipal Employees, 1625 L St, NW, Washington, DC 20036.
0 1991 by The Society of Thoracic Surgeons
have a few questions, but more than likely he or she will comply-after, that is, getting clearance from his or her managed care plan and checking second opinions, insurance coverage, and other financial hurdles. (It is possible, but highly unlikely, that the patient has heard enough to run and check whether you are listed in the Nader Group’s list of 8,700 questionable doctors. Most Americans are still in the dark on quality or even the barest information on such issues.) So the question for most Americans is insurance. And those of you who read the New England Journal of Medicine are probably well aware of the fact that this is the central consumer concern in 1990. More people look at health insurance as their single biggest concern in health care than ever before. They are financially squeezed as never before. Their real incomes have been falling regularly since 1973. They cannot afford housing, cars, education. And they face more economic uncertainty than ever. And then they look at health care. If they are black or Hispanic, they probably do not even have health insurance. So you probably do not even see them unless they came in through the emergency room. Thirty-one million Americans share their plight, according to the Census Bureau. Their children are inevitably sicker, grow up with disabilities that could have been prevented, and cost us more as a society because they cannot become truly productive citizens in our economy. When they use the emergency room-their only source of medical care-they cost us still more because they are sicker and they are using the most expensive part of our health care system. We all pay the higher costs-in taxes for government subsidies, and in higher premiums for health insurance caused by hospitals cost shifting their bad debt and charity care on to the insured population. Then there are the 87% of us who have insurance. This is a reassuring figure, but not as it used to be. Gaping holes are starting to appear here. Fifty million Americans Ann Thorac Surg 1991;52:36&8
0003-4975/91/$3.50
Ann Thorac Surg 1991;52366-8
have completely inadequate coverage. Their insurance policies are so bad they would hardly be able to pay your fees. Insurance companies share the blame here. They wrote these policies and make a profit on the misery of these Americans. Sometimes they dupe people into buying these so-called health plans-preying upon their understandable fears of dread diseases like cancer. But the insurance companies-which, of course, must make a profit for their shareholders-do more to put holes in this basic safety net. As Consumer Reports magazine, the premier consumer publication, describes in its August and September 1990 editions, they experience-rate by groups and now by individuals and soon, according to Brandeis professor Stuart Altman, by genetic make-up. They rid themselves of millions of Americans because they consider them bad risks. These are Americans who are being victimized day after day. They need our help, and we owe it to them to bring them the health insurance they need. Then there are the working men and women in unions and out-maybe 80 million or more-whose families find their employers cutting their insurance coverage. The cuts are sometimes so radical they provoke strikes-look at the United Mine Workers and the Pittston Corporation, Boeing and the Machinists, and the AT&T and the Communication Workers. And there are the millions more who daily suffer the hardship and the indignity of having their pay cut, just to pay the skyrocketing premiums of their health insurance policies. In Indiana, this year the entire pay raise for state workers was lost this way. Many workers dropped coverage for their children because they could not afford it. Others dropped their own coverage as well. And cynical employers are trying to lure still more employees into dropping coverage altogether with schemes like cash bonuses to drop coverage or take a bare-bones packageanything to cut costs of skyrocketing health care. These costs, according to the experts, consume nearly 12% of America’s gross national product and will double in 5 years. The people at Ford and Chrysler tell us these costs are cutting into our competitive position in world wide markets. You have already heard about the $700 tacked on to a Plymouth compared with the $200 cost for health care in Canada or Japan. We consumers have some potential allies there. So there is clearly a reason why the polls show more and more Americans are dissatisfied with America’s health insurance system-it is just not working well. And you surgeons know this all too well. In fact, I would venture to say you do not like the paperwork, the second-guessing, the hassles, and the waste that come from our 1,500 health insurance companies. How could you? Consumers want to choose their own doctors and hospitals-not their insurance companies (as the Health Insurance Association of America maintains). Managed care is the rage these days. Millions of Americans are being forced into it and losing their right to choose a
INTERIM MEETING MCGARRAH A CONSUMER PERSPECTIVE
367
doctor. Why? Because insurance companies say it will cut costs. What other choice does the consumer have? Not much in today’s market place. It is either take the cuts, drop the coverage, or pay more out of your own pocket. Some choices. Now, I am not saying consumers are unaware of the quality situation. But it is not high on the list right now. It must be dealt with, however, because it is costing too much not to attack it. Robert Brook and others at RAND say it could be another $100 billion a year-not to mention the lives saved from death and injury. But here is another point of common cause with consumers and physicians. Why should we let insurance companies tell us who the good practitioners are? Why let them impose the choices? They will, for now, because we are divided in our search for solutions. The answer is an American national health care plan for all Americans; a plan that protects the consumers’ right of free choice and protects the clinical judgment of America’s physicians. It is a plan that would cover every American. It is not something that adds to the 27% we now spend on administrative waste in billing, marketing, and otherwise consulting about how to game the present system. (This 27% is the fastest growing portion of hospital costs.) We do not need 1,500 insurance companies, when each of us needs just one card to guarantee our care. Physicians do not need to worry about 1,500 insurance companies and the thousands of different policy coverages they may and may not provide. What I am talking about is apparently anathema at the American Medical Association. It may be with some of you, too. But you have to look at the alternatives to the deteriorating system we have today and the increasing intrusiveness and waste of insurance companies. Consumers want care and choice. You want freedom to practice medicine. A single American health plan can meet our needs. It will not meet the needs of private insurance companies-at least not for the future. They would become irrelevant, as they should be. It would meet the needs of consumers and physicians because it would guarantee care for everyone. It would empower physicians because it would say-as it shouldyou tell us with your professional judgment where the care is needed and what is needed. You decide where changes need to be made and where the poor practitioners are. You do this in a fair and publicly accountable decision-makingprocess that sets the fees and the amount of money needed to provide high quality care to all Americans, not in some company by company, patient by patient, policy by policy approach that leaves us all the losers. There are obviously problems with this approach. Canada has well-publicized disputes. But ask for the consumers’ views and they will tell you the plan is essential. Ask for the physicians’ views and you will get some criticisms. But ask about the uninsured, the infant mortality rates, the clinical intrusions from insurance companies, and you will see that few Canadian physicians would buy the US system.
368
INTERIM MEETING McGARRAH A CONSUMER PERSPECTIVE
What I am talking about may well be at least a presidential election or two in coming. It may never come, however, if consumers and physicians do not make common cause in an American health care plan that guaran-
Ann Thorac Surg 1991;52:3&4
tees care for all-a single plan for everyone-and the right to choose your own doctor. I hope we can begin this effort together. Thank you.
Comment by President W. Gerald Rainer Mr McGarrah, I enjoyed your comments very much. I will try to make my remarks very brief. First of all, you speak of the 12% of gross national product that goes to health care in this country; this is really 11%%, I believe. Leland Kaiser, who has been a very good predictor of this gross national product percentage, has said recently that the percent of gross national product going to health care may very well level offat the 20% to 22% level. It did not seem to bother him greatly that this figure is relatively high because this is in response to the demand for high-quality medical care by the American people. He has been very accurate in predicting this percentage over the past decade. Second, we continue to compare the 11%% to 12% of the gross national
product going to health care in the United States with Canada's situation; yet, there are those that say that if you calculate them on the same basis, Canada spends closer to 11.2% of their gross national product rather than the 8% that has been referred to widely. Finally, John Goodman from the National Center of Policy Analysis in Dallas has published a health care plan for the American people in which he puts forth a mechanism by which everyone is insured and those who are not employed are the ones who receive the government subsidy. This is not a national health plan as we perceive it but is an incentive plan based on the individual person Is needs.
Consumer Perspective
Robert E. McGarrah, Jr American Federation of State, County, and Municipal Employees, Washington, DC
Introduction by Chairman Richard P. Anderson Our first speaker is M r Robert E. McGarrah, Jr. Mr McGarrah is a graduate of the Villanova Law School and serves as Public Policy Director of the American Federation of State, County, and Municipal Employees, AFL-CIO. The AFSCME has 1.2 million members, of whom more than 300,000 work in health care services. His department works extensively on federal and
state budget issues with particular emphasis on tax reform. Mr McGarrah was one of the original members of Ralph Nuder’s Health Research Group, and he serves as a member of the Robert Wood Johnson Foundation‘s National Advisory Committee on the Chronically Mentally Ill. He will speak to us on Health Care 1990-A Consumer Perspective.
Y
D
r Anderson, Governor Lamm, and members of The Society of Thoracic Surgeons: I want to thank you for the opportunity to speak with you today from the consumer’s perspective on health care in America in 1990. We meet at a critical time for American consumers. After a nearly decade-long economic expansion-driven by consumer demand, according to most economists-consumers across the country are tightening their belts and worrying more about the future than ever before. Consumer confidence in the economy, indeed, consumer confidence in the American dream, is at its lowest point in decades. Now as surgeons, you may say these matters are of little concern. And it is true, according to the Bureau of Labor Statistics Director, Janet Norwood, that health care, along with government, are the only two areas of the economy that are still generating new j o b s t h e y are growing amidst increasing signs of a national economic recession. The Federal Reserve Chairman, Alan Greenspan, says interest rates must remain high if we are to continue to attract foreign investment to finance America’s bloated deficit. And there are signs that foreigners are increasingly unable or unwilling to fund America’s borrowing needs, according to leading economists. There is more bad news for consumers. For with higher gas prices, high interest rates, and declining job opportunities, more and more Americans find themselves in a terrible squeeze. And then there is health care. Consumers do not control the supply or the demand for health care-you as physicians, their employers, government, and insurance companies are the real gate keepers here. The patient you tell to undergo a bypass procedure may Presented at the Interim Meeting of The Society of Thoracic Surgeons, Chicago, IL, Sep 21-23, 1990. Address reprint requests to Mr McGarrah, American Federation of State, County, and Municipal Employees, 1625 L St, NW, Washington, DC 20036.
0 1991 by The Society of Thoracic Surgeons
have a few questions, but more than likely he or she will comply-after, that is, getting clearance from his or her managed care plan and checking second opinions, insurance coverage, and other financial hurdles. (It is possible, but highly unlikely, that the patient has heard enough to run and check whether you are listed in the Nader Group’s list of 8,700 questionable doctors. Most Americans are still in the dark on quality or even the barest information on such issues.) So the question for most Americans is insurance. And those of you who read the New England Journal of Medicine are probably well aware of the fact that this is the central consumer concern in 1990. More people look at health insurance as their single biggest concern in health care than ever before. They are financially squeezed as never before. Their real incomes have been falling regularly since 1973. They cannot afford housing, cars, education. And they face more economic uncertainty than ever. And then they look at health care. If they are black or Hispanic, they probably do not even have health insurance. So you probably do not even see them unless they came in through the emergency room. Thirty-one million Americans share their plight, according to the Census Bureau. Their children are inevitably sicker, grow up with disabilities that could have been prevented, and cost us more as a society because they cannot become truly productive citizens in our economy. When they use the emergency room-their only source of medical care-they cost us still more because they are sicker and they are using the most expensive part of our health care system. We all pay the higher costs-in taxes for government subsidies, and in higher premiums for health insurance caused by hospitals cost shifting their bad debt and charity care on to the insured population. Then there are the 87% of us who have insurance. This is a reassuring figure, but not as it used to be. Gaping holes are starting to appear here. Fifty million Americans Ann Thorac Surg 1991;52:36&8
0003-4975/91/$3.50
Ann Thorac Surg 1991;52366-8
have completely inadequate coverage. Their insurance policies are so bad they would hardly be able to pay your fees. Insurance companies share the blame here. They wrote these policies and make a profit on the misery of these Americans. Sometimes they dupe people into buying these so-called health plans-preying upon their understandable fears of dread diseases like cancer. But the insurance companies-which, of course, must make a profit for their shareholders-do more to put holes in this basic safety net. As Consumer Reports magazine, the premier consumer publication, describes in its August and September 1990 editions, they experience-rate by groups and now by individuals and soon, according to Brandeis professor Stuart Altman, by genetic make-up. They rid themselves of millions of Americans because they consider them bad risks. These are Americans who are being victimized day after day. They need our help, and we owe it to them to bring them the health insurance they need. Then there are the working men and women in unions and out-maybe 80 million or more-whose families find their employers cutting their insurance coverage. The cuts are sometimes so radical they provoke strikes-look at the United Mine Workers and the Pittston Corporation, Boeing and the Machinists, and the AT&T and the Communication Workers. And there are the millions more who daily suffer the hardship and the indignity of having their pay cut, just to pay the skyrocketing premiums of their health insurance policies. In Indiana, this year the entire pay raise for state workers was lost this way. Many workers dropped coverage for their children because they could not afford it. Others dropped their own coverage as well. And cynical employers are trying to lure still more employees into dropping coverage altogether with schemes like cash bonuses to drop coverage or take a bare-bones packageanything to cut costs of skyrocketing health care. These costs, according to the experts, consume nearly 12% of America’s gross national product and will double in 5 years. The people at Ford and Chrysler tell us these costs are cutting into our competitive position in world wide markets. You have already heard about the $700 tacked on to a Plymouth compared with the $200 cost for health care in Canada or Japan. We consumers have some potential allies there. So there is clearly a reason why the polls show more and more Americans are dissatisfied with America’s health insurance system-it is just not working well. And you surgeons know this all too well. In fact, I would venture to say you do not like the paperwork, the second-guessing, the hassles, and the waste that come from our 1,500 health insurance companies. How could you? Consumers want to choose their own doctors and hospitals-not their insurance companies (as the Health Insurance Association of America maintains). Managed care is the rage these days. Millions of Americans are being forced into it and losing their right to choose a
INTERIM MEETING MCGARRAH A CONSUMER PERSPECTIVE
367
doctor. Why? Because insurance companies say it will cut costs. What other choice does the consumer have? Not much in today’s market place. It is either take the cuts, drop the coverage, or pay more out of your own pocket. Some choices. Now, I am not saying consumers are unaware of the quality situation. But it is not high on the list right now. It must be dealt with, however, because it is costing too much not to attack it. Robert Brook and others at RAND say it could be another $100 billion a year-not to mention the lives saved from death and injury. But here is another point of common cause with consumers and physicians. Why should we let insurance companies tell us who the good practitioners are? Why let them impose the choices? They will, for now, because we are divided in our search for solutions. The answer is an American national health care plan for all Americans; a plan that protects the consumers’ right of free choice and protects the clinical judgment of America’s physicians. It is a plan that would cover every American. It is not something that adds to the 27% we now spend on administrative waste in billing, marketing, and otherwise consulting about how to game the present system. (This 27% is the fastest growing portion of hospital costs.) We do not need 1,500 insurance companies, when each of us needs just one card to guarantee our care. Physicians do not need to worry about 1,500 insurance companies and the thousands of different policy coverages they may and may not provide. What I am talking about is apparently anathema at the American Medical Association. It may be with some of you, too. But you have to look at the alternatives to the deteriorating system we have today and the increasing intrusiveness and waste of insurance companies. Consumers want care and choice. You want freedom to practice medicine. A single American health plan can meet our needs. It will not meet the needs of private insurance companies-at least not for the future. They would become irrelevant, as they should be. It would meet the needs of consumers and physicians because it would guarantee care for everyone. It would empower physicians because it would say-as it shouldyou tell us with your professional judgment where the care is needed and what is needed. You decide where changes need to be made and where the poor practitioners are. You do this in a fair and publicly accountable decision-makingprocess that sets the fees and the amount of money needed to provide high quality care to all Americans, not in some company by company, patient by patient, policy by policy approach that leaves us all the losers. There are obviously problems with this approach. Canada has well-publicized disputes. But ask for the consumers’ views and they will tell you the plan is essential. Ask for the physicians’ views and you will get some criticisms. But ask about the uninsured, the infant mortality rates, the clinical intrusions from insurance companies, and you will see that few Canadian physicians would buy the US system.
368
INTERIM MEETING McGARRAH A CONSUMER PERSPECTIVE
What I am talking about may well be at least a presidential election or two in coming. It may never come, however, if consumers and physicians do not make common cause in an American health care plan that guaran-
Ann Thorac Surg 1991;52:3&4
tees care for all-a single plan for everyone-and the right to choose your own doctor. I hope we can begin this effort together. Thank you.
Comment by President W. Gerald Rainer Mr McGarrah, I enjoyed your comments very much. I will try to make my remarks very brief. First of all, you speak of the 12% of gross national product that goes to health care in this country; this is really 11%%, I believe. Leland Kaiser, who has been a very good predictor of this gross national product percentage, has said recently that the percent of gross national product going to health care may very well level offat the 20% to 22% level. It did not seem to bother him greatly that this figure is relatively high because this is in response to the demand for high-quality medical care by the American people. He has been very accurate in predicting this percentage over the past decade. Second, we continue to compare the 11%% to 12% of the gross national
product going to health care in the United States with Canada's situation; yet, there are those that say that if you calculate them on the same basis, Canada spends closer to 11.2% of their gross national product rather than the 8% that has been referred to widely. Finally, John Goodman from the National Center of Policy Analysis in Dallas has published a health care plan for the American people in which he puts forth a mechanism by which everyone is insured and those who are not employed are the ones who receive the government subsidy. This is not a national health plan as we perceive it but is an incentive plan based on the individual person Is needs.
