Inequality and Health Care

Our second guest post is from Systemdoc. Thanks for sending it in, and we're always looking for more good information and analysis like this. I've done a little light editing and made a couple of enhancements to make this blog-friendly -- that's a free service you get here, and only here. I hope Systemdoc doesn't mind. My interpolation in italics.

-- Cervantes

Starting points in the daily media stream of information about the “health care industry” - comments on the integration of the US health care system into the global financial system – i.e. the “dis-linkage” of health care transactions from any human interaction that has local, community-based accountability.

First, this from AMA Medical News. It's subscription only, but AMA members can read this here.

March 6, 2006
Health plans make more, spend less in 2005
By Jonathan G. Bethely

If physicians needed any more indication of tightening reimbursement, how about this - not only did profits for the biggest health plans go up last year, but those plans also continued to cut the percentage of revenue they spend on care.

The medical-cost ratio - also called the medical-loss ratio or medical-care ratio - is the key number for health plans in terms of their level of profitability. That ratio, simply, is the percentage of dollars the companies spend on health care.

Whereas 10 years ago many plans had medical-cost ratios in the high 80s or 90s, now the highest percentage among large, publicly traded health insurers is Health Net, at 83.9%. Aetna, which had a medical-cost ratio well into the 90s when CEO John Rowe, MD, took over in 2000, recorded a ratio of 76.9% in 2005, Dr. Rowe's final full year before his retirement. That was the lowest medical-cost ratio for the nation's largest publicly traded plans.

Medical-loss ratios for 2005 (Source: Company 10-K, year-end filings with the Securities and Exchange Commission):

76.9% - Aetna
82.3% - Cigna
83.9% - Health Net
83.2% - Humana
78.6% - UnitedHealth Group
80.6% - WellPoint

And this tidbit taken from Don McCane’s daily internet report from Physicians for national health insurance points to the accelerating nature of the financial concentration of dollars/capital in the private portion of the US health care system:

[O]f course, it is estimated that about 60% of the actual health care dollars are provided by public payors, e.g. Medicare. (source: Woolhander and Himmelstein: Paying for National Health Insurance- And Not Getting It – Health Affairs: July/August 2002 pp 88-96)

So we have an example of how the publicly provided dollars/resources are taken up by for profit entities, with the services to the population restricted. With all this consolidation, the “non-profit” sector has been pushed my economic forces to emulate the for-profit sector.

The Center for Health Systems Change (funded by the RWJ Foundation, and is affiliated with Mathematica Policy Research) conducted a review of hospital billing practices -this review had been triggered by the public scrutiny of non-profit hospitals’ billing and collection practices, which, reportedly, had included putting liens on the homes of patients who had not been able to pay their hospital bills.

This report presents the sympathetic view toward the hospitals, that they had restricted some of their more aggressive collection practices, in response to the public outcry/scrutiny, but does make it clear that the public policy/political economy environment is driving them to try to collect unpaid billings from the uninsured. My own sense is that this progressive inequality in the larger US political economy is generating pressures on the health care “system” that lead to increasingly unjust practices – which, eventually, will lead to political unrest.

However, it may be that the ecological pattern of “punctuated equilibrium” will take over, with a period of outright chaos in the us health care sector, with the likely occurrence of the bankrupting of many community-based institutions such as hospitals and medical practices.

The collapse will have to take down some of this institutions before real health care reform, or the return of the "Hippocratic" physician - there is simply too much inequality in the health care political economy, with the "non-profit" hospitals, which even include the catholic church-owned hospitals, going after the meager assets of poor people, who, in fact, are charged higher prices than patients covered by the for-profit insurers. Certainly, in 10 years time, the academics will be writing about how unstable this current set of arrangements turned out to be.

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