ST. PAUL, Minn. — All Americans could have health insurance while actually spending less than we do now if the nation reforms the pharmaceutical industry and switches to a national health plan similar to Medicare, a new report says.
“Waste Not, Want Not,” published Oct. 7 by Jobs With Justice, is the latest research backing efforts by groups such as the Universal Health Care Action Network (UHCAN), the Steel Workers, the Machinists and PACE unions and the Minnesota AFL-CIO, for a “Medicare for all” type system.
“The United States is already spending far more money than is necessary to provide adequate health insurance for all its people,” JwJ’s report states. “It is only necessary to redirect some of the money from powerful corporate interests — like the insurance and pharmaceutical industries — to provide the high-quality, secure health care that everyone should have.”
JwJ’s report says the U.S. health care system is filled with waste. It proposes attacking three of the largest areas: administrative costs, pharmaceutical monopolies, and government subsidies for private Medicare insurers. That approach is in contrast to the Medicare prescription drug law that George W. Bush pushed through the GOP-run Congress late last year.
Bush’s bill strips the government of negotiating power against the drug companies, while giving them $46 billion-$139 billion over the next decade in subsidies to provide drugs to the elderly.
Switching from “a fragmented and inefficient private health insurance system” to a “Medicare for all” plan could directly save $94 billion a year, JwJ’s report says. Savings would come from eliminating administrative duplication and unnecessary paperwork, and eliminating the profits and excessive executive salaries built into the private system.
Studies show administrative costs are only 2 percent of spending in Medicare. Most HMOs and other private insurers use 15 percent or more of revenue for administrative costs. The savings on administrative costs alone could insure 55 million Americans, the report says.
JwJ’s report says a “Medicare for all” system could save even more than $94 billion yearly, because doctors, hospitals and other medical providers would save money by working with only one payer, not hundreds. Tom Sengupta, owner of Schneider Drugs in the Twin Cities, says he must deal with 650 HMOs or insurers, each with different forms, eligibility, billing, co-pays and deductibles.
JWJ also estimated yearly savings of $140 billion by stripping drug companies of monopolies over marketing drugs.
“The United States is the only country in the world that doesn’t have a competitive market for prescription drugs,” Minnesota UHCAN’s John Schwarz says. Patent monopolies “allow drug companies to charge as much as they want,” JwJ’s report says. Due to the monopolies, it notes, drugs are twice as expensive in the U.S. as they are in Canada and similar countries.
To bring down drug costs, the JwJ report recommends the U.S. government negotiate market prices, as other countries do. The Bush-GOP prescription drugs law bans such bargaining.
In addition, JwJ urges the U.S. eliminate patent monopolies by having the federal government finance all drug research. Publicly funded research, plus similar research at nonprofit organizations such as universities and foundations, account for more than half of total U.S. drug research spending, JwJ says. Drug companies spent $33.2 billion on R&D last year, their lobby says. But Families USA points out the drug companies spent more than double that on advertising and marketing.
JwJ’s report also attacks a few other proposed health care reforms, including “health savings accounts” and tax breaks to help offset health expenses. Tax breaks primarily benefit rich individuals, not most workers, and do not attack costs, JwJ says. Health savings accounts “provide little or no benefit” to many workers, it adds.
JwJ said health savings accounts are a bigger benefit to healthy people than to people who actually need health care, and could increase costs and increase the number of uninsured citizens by “pulling relatively healthy people out of the standard insurance pool.”
Bush touted the health savings accounts in the third presidential debate. The GOP-run Congress wrote those accounts into law after lobbying by a big-giver: Golden Rule Insurance Co.
St. Paul Union Advocate and PAI
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