The American healthcare system is, simply put, a mess, but
we may finally be ready to fix it.
By Ezra Klein
Los Angeles Times
Tuesday, December 26, 2006
The statistics by now, are well known. Forty-seven million
uninsured Americans. Premium increases of 81% since 2000.
Small businesses failing, big businesses foundering,
individuals priced out and, amid all this, skyrocketing
profits for insurers, hospitals and pharmaceutical
The American health system, put simply, is a mess. An
In 2002, we spent $5,267 per capita on healthcare — $1,821
more than Switzerland, the nearest runner-up. Yet we had
higher infant mortality, lower life expectancy, more price
inflation and an actual uninsured population, a phenomenon
virtually unknown in the rest of the developed world, where
universal healthcare is, well, universal.
These are unsustainable trends. The U.S. healthcare system
cannot, in its current form, go on forever, or even for very
much longer — employers can't afford it, individuals can't
handle it and the country's conscience won't countenance it.
Change may come sooner than most think. Across the country
there are unmistakable signs that the gridlock and confusion
sustaining our sadly outdated system are coming to an end
and that real reform may finally emerge, possibly starting
in California, where Gov. Arnold Schwarzenegger is promising
to spend his upcoming State of the State speech explaining
how he will push the Golden State closer to universal
healthcare in the coming year.
It's about time. Few mention this, but the American
health-care system is something of a mistake. It blossomed
out of a World War II tax reform meant to guard against
corporate war profiteering. Liberals, with their usual
combination of good intentions and inadequate foresight,
imposed massive marginal tax rates on corporations,
effectively freezing their profits at prewar levels. But
the law had a loophole: Corporations could funnel their
wartime riches into employee benefits, such as healthcare,
thus putting the cash to use within their company. And so
they did, creating the employer-based health-care system.
But health care was simpler in the 1940s, and far less
expensive. In the 21st century, it's not simple at all.
Once a perk of employment, health insurance is now a
necessity, and a structure that dumps such power, complexity
and cost in the laps of employers is grotesquely unfair to
both businesses and individuals. There's no logic to an
auto manufacturer running a multibillion-dollar health
insurance plan on the side; it should stick to making cars.
There's no excuse for pricing the self-employed and
entrepreneurial out of the market. And there's no reason
the owner of a three-employee start-up should have to go to
bed with a heavy conscience because his coffee shop can't
pay for chemotherapy.
But health insurance is not only the inexplicable
responsibility of business; it
is a big
business, which is why the system survives. The
medical-industrial complex is a massive, remarkable beast,
consuming a full one-ninth of the American economy and
offering astonishing profits to many of the participants
(indeed, Big Pharma was the most profitable industry in the
U.S. from the 1980s until 2003, when energy companies
wrested away the top spot). As with any lucrative industry,
the winners are resistant to reforms, and they have a
formidable army of politically lobbyists, PR specialists and
image consultants helping to preserve their position, to
preserve a mistake.
But there is evidence, finally, that their castle is being
stormed. Massachusetts has passed the nation's first
near-universal health-care plan, creating a structure that
should cover 95%-plus of its citizens by making health-care
as mandatory as car insurance. The Democratic resurgence
has returned universal health-care to the agenda and its
advocates to power. In the House, Rep. Pete Stark
(D-Fremont, CA), a staunch Medicare-for-all advocate, is
expected to be chairman of the health subcommittee.
Surrounded by an unlikely array of union leaders and
corporate chief executives, Sen. Ron Wyden (D-Ore.) has
unveiled an inventive, comprehensive reform plan that would
end the employer system forever. What businesses pay in
employee premiums would be redirected to employee raises;
insurers would offer their plans through state associations
that would no longer allow price discrimination for reasons
of health or job status; and everyone would have to buy in.
Universal coverage would be achieved in under two years.
The most compelling evidence that resistance to reform is
futile, however, is coming from the insurers themselves.
Cognizant that Congress and the nation are tiring of the
current dystopia, the insurance industry recently released
its own plan for universal health-care.
It's a bad plan, to be sure. Its purpose is more to preserve
the insurance industry's profits than improve healthcare in
this country. But the endorsement of universality as a
moral imperative, and the attempt to get in front of the
coming efforts at reform, mark the emergence of a distinct
rear-guard mentality within the insurance industry. Their
game is up, and they're turning some of their attention to
shaping their future rather than betting that they can
continue protecting their present.
Some of the industry's more enlightened members are going
even further. In California, the heads of Kaiser Permanente
— a historical "good cop" insurer amid the almost cartoonish
villainy of the industry — have proposed a serious, albeit
extraordinarily complicated, plan for achieving universal
coverage in the Golden State. The details of the plan are
unimportant; it's the constructiveness of the proposal that
And joining them in calling for reform is Schwarzenegger,
who recently seized on a report by the New America
Foundation showing that cost-shifting caused by the
uninsured population costs each family in the state the
equivalent of $1,186 in annual premiums. His plans for
reform will be announced at the State of the State address
The work is not done, of course. There are arguments yet to
be had, wars yet to be fought.
Insurers want to retain their ability to discriminate
against the ill and the old; conservatives want individuals
to assume more risk and expense in order to force wiser
health decisions; liberals want the government to guarantee
universality and utilize its massive market power to bargain
prices down to levels approximating those paid by other
What's important, though, is that for the first time since
the early years of the Clinton administration, these
arguments are being made, and employers, insurers,
politicians and, most crucially, voters are making their way
back to the table.
The realization that our illogical, mistaken health-care
system can't go on forever has dawned, and so it will end.
The question now is what replaces it.
Ezra Klein is a writing
fellow at the American Prospect and a blogger at