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Activists Promote Known Failures as Health Care Reform

Opinion Editorial
April 5, 2003

By Linda Gorman

In April, a Denver opinion columnist wrote a health care reform piece titled “Panthers spring at HMOs failure.”[1] Devoid of logic, it parroted the favorite sound bites of advocates for government health care. One hopes that this same writer will one day run another column, comparing those advocates claims to the known facts.

That column would point out that the HMOs the Gray Panthers claim to hate”the Gray Panthers are still angry about those soporific attack ads that helped kill health-care reform in the 90s”–were in fact the centerpiece of the health care reforms “defeated” by the “soporific” Harry and Louise ads. It would also note that although those “reforms” were defeated nationally, they are in use in other nations and in several U.S. states.

It would explain that the regulatory burden, tax burden, price controls, and political rationing caused by the reforms the Panthers promote have virtually bankrupted the government health care systems in Kentucky and Tennessee.[2] The Canadian system is coming apart. The British NHS and European systems are failing. The wait in the British NHS is so bad that an EU ruling is now forcing it to send seriously ill people abroad for surgery. Canadian provinces have sent patients to the United States for years.

It would explain that insurance is not the same as medical care and that when government provides the insurance there is no guarantee that one will get care because governmental systems are inherently inefficient and there is no recourse when a bureaucrat rules against you. In countries with single-payer systems, people die on waiting lists and are routinely denied access to new drug therapies and medical procedures. In the Netherlands, they die when doctors kill elderly hospital patients because they are going to die anyway and the system wants their beds. In Britain, they die because bureaucrats wont pay for chemotherapy drugs routinely used in the U.S. Women with breast cancer in Britain have a 67% five-year survival rate. In the U.S. the rate is 84%.[3]

It would document that the number of uninsured commonly claimed by Mr. Ron Forthofer of Healthcare for All Colorado, has been revised downward by the Census Bureau,[4] that a huge fraction of those people are uninsured by choice because they know they can get care if they become sick, and that the fastest growing group of uninsured is households making more than $55,000 a year. It would remind readers that the seriously ill uninsured have more access to care in the U.S. than the insured do in Canada (and that Canadian emergency rooms must also deal with uninsured people who know theyll get care even if they dont pay). The crisis in Canada is now so bad that a slim majority of those polled favor repealing the law against private clinics, a reform that would make the Canadian system more like the British one.[5]

It would inform readers that the WHO study Mr. Forthofer cites (“[U.S.] ranks 37th in overall health statistics”) was grossly biased and has been discredited. To save time, it would ask that Mr. Forthofer pledge to go to Greece, Cyprus, Morocco, or Columbia the next time he is seriously ill. Each of those health systems ranked higher than the U.S. in the WHO study.[6]

It would ask how Mr. Lee Carlson, cited in the column as someone who spent 30 years in the insurance industry, calculated an administrative overhead of 33% for Cignas Colorado HMO. The state of Washington requires that major insurers file information on overhead. Their data suggest overhead for three major health insurers of 11-14%. Other people in the health insurance industry cite overheads of 17-23%.

It would note that anyone who believes that eliminating insurance companies will eliminate health care overhead is at best too nave to have an opinion worth listening to. Mr. Forthofer was quoted as saying that “Our opponents say a single-payer system is socialized medicine. Thats a lie. Single payer is health care without insurance companies. It means the money goes to health care instead of overhead.” In fact, when actuary Mark Litow estimated Medicare and Medicaid he found overhead was at least 26%.[7] Wharton professor Patricia Danzons study of the Canadian system suggests that the overhead of the Canadian system is about 45% of claims.[8] Her estimate of overhead for U.S. private insurers, net of government cost shifting, was about 7.6% of claims.

Yes we need reform, but not from one-note reformers who only propose more of what has created the current mess. Large-scale experiments over more than 50 years show that government control of health care raises costs and degrades quality. Limited tests of market-based reforms suggest that freeing the system provides higher quality at lower cost.

Which set of reforms would you rather hear about?

1 Diane Carman. April 28, 2002. “Panthers spring at HMOs failure,” The Denver Post.
2 Scott Shepard. February 15, 2002. “Deterioration of TennCare has providers bailing.” Memphis Business Journal. As posted online at , July 3, 2002. Rachel McCubbin. June 6, 1997. The Kentucky Health Care Experiment: How “Managed Competition” Clamps Down on Choice and Competition. State Backgrounder No. 1119/S. The Heritage Foundation, Washington, D.C. As posted on the web at on July 3, 2002.
3 James Frogue. March 22, 2000. “A Prescription for Trouble.” The Heritage Foundation, Washington, D.C. As published on the web at on July 3, 2002.
4 Charles T. Nelson and Robert J. Mills. August 2001. The March CPS Health Insurance Verification Question and Its Effect on Estimates of the Uninsured. U.S. Bureau of the Census, Housing and Household Economics Statistics Division. as of 1 May 2002.
5 Norma Greenaway. April 16, 2002. “Canadians want private health clinics, poll finds.” National Post, Online edition.
6 Ajay Tandon,, Christopher JL Murray, Jeremy A. Lauer, and David B. Evans. “Measuring Overall Health System Performance for 191 Countries,” GPE Discussion Paper Series: No. 30. World Health Organization. as of 1 May 2002.
7 Mark Litow and the Technical Committee, “Rhetoric vs. Reality” Comparing Public and Private Health Care Administrative Costs,” Council for Affordable Health Insurance, March 1994.
8 Patricia Danzon. Spring 1992. “Hidden Overhead Costs: Is Canada’s System Really Less Costly?” Health Affairs.

Copyright 2002, Independence Institute

INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.

JON CALDARA is President of the Institute.

LINDA GORMAN is the Director of the Rocky Mountain Health Care Center at the Independence Institute.

ADDITIONAL RESOURCES on this subject can be found at: www.i2i.org

NOTHING WRITTEN here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.

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