[Congressional Record Volume 143, Number 158 (Monday, November 10, 1997)]
[Extensions of Remarks]
[Pages E2297-E2298]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 AMERICA DOESN'T LOVE ALL ITS CHILDREN

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Sunday, November 9, 1997

  Mr. STARK. Mr. Speaker, ``should the child of a poor American family 
have the same chance of avoiding preventable illness or of being cured 
from a given illness as does the child of a rich American family?''
  That is the question.
  That is the question brilliantly posed in the following essay by Uwe 
Reinhardt from the Journal of the American Medical Association's 
November 5 issue.
  It is a profoundly moral and religious question.
  America's answer to the question is, I am sad to say, no. Unlike 
other advanced industrial societies, America is saying no to millions 
of its children and their parents. In many ways, we really are not a 
nation or a society. We say we are, but we are practicing the social 
Darwinism of every man, woman, and child for himself.
  We do not love all our children.

  [From the Journal of the American Medical Association, Nov. 5, 1997]

  Wanted: A Clearly Articulated Social Ethic for American Health Care

                           (By Uwe Reinhardt)

       Throughout the past 3 decades, Americans have been locked 
     in a tenacious ideological debate whose essence can be 
     distilled into the following pointed question: As a matter of 
     national policy, and to the extent that a nation's health 
     system can make it possible, should the child of a poor 
     American family have the same chance of a avoiding 
     preventable illness or of being cured from a given illness as 
     does the child of a rich American family?
       The ``yeas'' in all other industrialized nations had won 
     that debate hands down decades ago, and these nations have 
     worked hard to put in place health insurance and health care 
     systems to match that predominant sentiment. In the United 
     States, on the other hand, the ``nays'' so far have carried 
     the day. As a matter of conscious national policy, the United 
     States always has and still does openly countenance the 
     practice of rationing health care for millions of American 
     children by their parents' ability to procure health 
     insurance for the family or, if the family is uninsured, by 
     their parents' willingness and ability to pay for health care 
     out of their own pocket or, if the family is unable to pay, 
     by the parents' willingness and ability to procure charity 
     care in their role as health care beggars.
       At any moment, over 40 million Americans find themselves 
     without health insurance coverage, among them some 10 million 
     children younger than 18 years. All available evidence 
     suggests that this number will grow. \1\ America's 
     policymaking elite has remained unfazed by these statistics, 
     reciting the soothing mantra that ``to be uninsured in these 
     United States does not mean to be without care.'' There is, 
     to be sure, some truth to the mantra. Critically ill, 
     uninsured Americans of all ages usually receive adequate if 
     untimely care under an informal, albeit unreliable, 
     catastrophic health insurance program operated by hospitals 
     and many physicians, largely on a voluntary basis. Under that 
     informal program, hospitals and physicians effectively become 
     insurance underwriters who provide succor to hard-stricken 
     uninsured and who extract the premium for that insurance 
     through higher charges to paying patients. The alarming 
     prospect is that the more effective the techniques of 
     ``managed care'' will be in controlling the flow of revenue 
     to physicians and hospitals, the more difficult it will be to 
     play this insurance scheme otherwise known as the ``cost 
     shift.'' It can be expected that, within the next decade, the 
     growing number of the nation's uninsured will find themselves 
     in increasingly dire straits.
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     Footnotes appear at end of article.
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       But these straits have never been smooth for the uninsured, 
     notwithstanding the soothing mantra cited earlier. Empirical 
     research must have convinced policymakers long ago that our 
     nation rations health care, health status, and life-years by 
     ability to pay. It is known that other socioeconomic factors 
     (such as income, family status, location, and so on) being 
     equal, uninsured Americans receive, on average, ony about 50% 
     of the health services received by equally situated insured 
     Americans. \2\ This appears to be true even for the subgroup 
     of adults whose health status is poor or only fair.3 
     Studies have shown that uninsured Americans relying on the 
     emergency departments of heavily crowded public hospitals 
     experience very long waits before being seen by a 
     physician, sometimes so long that they leave because they 
     are too sick to wait any longer.4-6 Studies 
     have found that after careful statistical control for a 
     host of socioeconomic and medical factors, uninsured 
     Americans tend to die in hospitals from the same illness 
     at up to triple the rate that is observed for equally 
     situated insured Americans 7 and that, over the 
     long run, uninsured Americans tend to die at an earlier 
     age than do similarly situated insured Americans.8 
     Indeed, before the managed care industry cut the fees paid 
     physicians sufficiently to make fees paid by Medicaid look 
     relatively attractive to physicians and hospitals, even 
     patients insured by that program found it difficult to 
     find access to timely care. In one study, in which 
     research assistants approached private medical practices 
     pretending to be Medicaid patients in need of care, 63% of 
     them were denied access because the fees paid by Medicaid 
     were then still paltry relative to the much higher fees 
     from commercial insurers.9
       If the champions of the uninsured believe that the 
     assembly and dissemination of these statistics can move the 
     nation's policymaking elite to embrace universal coverage, 
     they may be in for a disappointment. The working majority of 
     that elite not only are unperturbed by these statistics, but 
     they believe that rationing by price and ability to pay 
     actually serves a greater national purpose. In that belief 
     they find ample support in the writing of distinguished 
     American academics. Commenting critically on the State 
     Childrens' Health Insurance Program enacted by Congress in 
     August 1997 as part of its overall budget bill, for example, 
     Richard Epstein author of the recently published Mortal 
     Peril: Our Inalienable Right to Health Care?,10 
     warns darkly that the new federal plan ``introduces large 
     deadweight administrative costs, invites overuse of medical 
     care and reduces parental incentives to prevent accidents or 
     illness.'' Summing up, he concludes: ``We could do better 
     with less regulation and less subsidy. Scarcity matters, even 
     in health care'' (italics added).11
       Clearly, the scarcity Epstein would like to matter in 
     health care would impinge much more heavily on the poor than 
     it would on members of his own economic class, as Epstein 
     surely is aware. In his view, by the way, Epstein finds 
     distinguished company in former University of Chicago 
     colleague Milton Friedman, the widely celebrated Nobel 
     laureate in economics, who had proposed in 1991 that for the 
     sake of economic efficiency, Medicare and Medicaid be 
     abolished altogether and every American family have merely a 
     catastrophic health insurance policy with a deductible of 
     $20,000 per year or 30% of the previous 2 years' income, 
     whichever is lower.12 Certainly, Epstein and 
     Friedman would be content to let price and family income 
     ration the health care of American children. They rank 
     prominently among the ``nays.''
       In his book, Epstein frames the debate over the right to 
     health care as a choice between the ``maximization of social 
     wealth'' as a national objective and the ``maximization of 
     utility,'' by which he means human happiness. ``Under wealth 
     maximization,'' he writes, ``individual preferences count 
     only if they are backed by dollars. Preferences, however 
     genuine, that are unmediated by wealth just do not 
     count.'' \10\ One implication of resource allocation with 
     the objective of wealth maximization is that a physician 
     visit to the healthy infant of a rich family is viewed as 
     a more valuable activity than is a physician visit to the 
     sick child of a poor family.\13\ If one does not accept 
     that relative valuation, then one does not favor wealth 
     maximization as the binding social objective.
       Although conceding that wealth maximization does imply a 
     harsh algorithm for the allocation of scarce resources, 
     Epstein nevertheless appears to embrace it, even for health 
     care. Establishing positive legal rights to health care 
     regardless of ability to pay, he argues, could well be 
     counterproductive in the long run, because it detracts from 
     the accumulation of wealth. ``Allowing wealth to matter [in 
     the allocation of health] is likely to do far better in the 
     long run than any policy that insists on allocating health 
     care without regard to ability to pay. To repeat, any effort 
     to redistribute from rich to poor in the present generation 
     necessarily entails the redistribution from the future to the 
     present generation.'' \13\ Applying his proposition to the 
     question posed at the outset of this commentary, the argument 
     seems to be that poor children in one generation can properly 
     be left to suffer, so that all children of future generations 
     may be made better off than they otherwise would have been.
       One need not share Epstein's social ethic to agree with him 
     that, over the long run, a nation that allocates resources 
     generously to the unproductive frail, whether rich or poor, 
     is likely to register a relatively slower growth of material 
     wealth than does a nation that is more parsimonious vis-a-vis 
     the

[[Page E2298]]

     frail. \10\ Nor does one need to share his social ethic to 
     admire him for his courage to expose his conviction so boldly 
     for open debate. Deep down, many members of this nation's 
     policymaking elite, including many pundits who inspire that 
     elite, and certainly a working majority of the Congress, 
     share Epstein's view, although only rarely do they have the 
     temerity to reveal their social ethnic to public scrutiny. 
     Although this school of thought may not hold a numerical 
     majority in American society, they appear to hold powerful 
     sway over the political process as it operates in this 
     country. \14\ In any event, they have for decades been able 
     to preserve a status quo that keeps millions of American 
     families uninsured, among them about 10 million children.
       At the risk of violating the American taboo against class 
     warfare, it is legitimate to observe that virtually everyone 
     who shares Epstein's and Friedman's distributive ethic tends 
     to be rather comfortably ensconced in the upper tiers of the 
     nation's income distribution. Their prescriptions do not 
     emanate from behind a Rawlsian \15\ veil of ignorance 
     concerning their own families' station in life. Furthermore, 
     most well-to-do Americans who strongly oppose government-
     subsidized health insurance for low-income families and who 
     see the need for rationing health care by price and ability 
     to pay enjoy the full protection of government-subsidized, 
     employer-provided, private health insurance that affords 
     their families comprehensive coverage with out-of-pocket 
     payments that are trivial relative to their own incomes and 
     therefore spare their own families the pain of rationing 
     altogether. The government subsidy in these policies flows 
     from the regressive tax preference traditionally accorded 
     employment-based health insurance in this country, whose 
     premiums are paid out of pretax income.\16\ This subsidy 
     was estimated to have amounted to about $70 billion in 
     1991, of which 26% accrued to high-income households with 
     annual incomes over $75,000.\17\ The subsidy probably is 
     closer to $100 billion now--much more than it would cost 
     for every uninsured American to afford the type of 
     coverage enjoyed by insured Americans. In fairness it must 
     be stated that at least some critics of government-
     financed health insurance--Epstein among them--argue 
     against this tax preference as well.\10\ But that untoward 
     tax preference has widespread supporters among members of 
     Congress of all political stripes, and also in the 
     executive suites of corporate America.
       This regressive tax preference would only be enlarged 
     further under the medical savings accounts (MSAs) now favored 
     by organized American medicine. Under that concept, families 
     would purchase catastrophic health insurance polices with 
     annual deductibles of $3000 to $5000 per family, and they 
     would finance their deductible out of MSAs into which they 
     could deposit $3000 to $5000 per year out of the family's 
     pretax income. In terms of absolute, after-tax dollars, this 
     construct effectively would make the out-of-pocket cost of a 
     medical procedure much lower for high-income families (in 
     high marginal tax brackets) than it would for low-income 
     families. It is surely remarkable to see such steadfast 
     support in the Congress for this subsidy for the well-to-do, 
     in a nation that claims to lack the resources to afford every 
     mother and child the peace of mind and the health benefits 
     that come with universal health insurance, a privilege 
     mothers and children in other countries have long taken for 
     granted. Unwittingly, perhaps, by favoring this regressive 
     scheme to finance health care, physicians take a distinct 
     stand on the preferred distributive ethic for American health 
     care. After all, can it be doubted that the MSA construct 
     would lead to rationing childrens' health care by income 
     class?
       Typically, the opponents of universal health insurance 
     cloak their sentiments in actuarial technicalities or in the 
     mellifluous language of the standard economic theory of 
     markets,\18\ thereby avoiding a debate on ideology that truly 
     might engage the public. It is time, after so many decades, 
     that the rival factions in America's policymaking elite 
     debate openly their distinct visions of a distributive ethic 
     for health care in this country, so that the general public 
     can decide by which of the rival elites it wishes to be 
     ruled. A good start in that debate could be made by answering 
     forthrightly the pointed question posed at the outset.


                               footnotes

     \1\ Thorpe KE, The Rising Number of Uninsured Workers: An 
     Approaching Crisis in Health Care Financing. Washington, DC: 
     The National Coalition on Health Care; September 1997.
     \2\ Behavioral Assumptions for Estimating the Effects of 
     Health Care Proposals. Washington, DC: Congressional Budget 
     Office; November 1993; Table 3: viii.
     \3\ Long SH, Marquis MS. Universal Health Insurance and 
     Uninsured People: Effects on Use and Costs: Report to 
     Congress. Washington, DC: Office of Technology Assessment and 
     Congressional Research Service, Library of Congress; August 
     5, 1994; Figure 1:4.
     \4\ Kellerman AL. Too sick to wait, JAMA. 1991;266:1123-1124.
     \5\ Baker DW, Stevens CD, Brook RH. Patients who leave a 
     public hospital emergency department without being seen by a 
     physician. JAMA. 1991;266:1085-1090.
     \6\ Bindman AB. Grumbach K, Keane D, Rauch L, Luce JM. 
     Consequences of queuing for care at a public hospital 
     emergency department. JAMA. 1991;266:1091-1096.
     \7\ Hadley J, Steinberg EP, Feder J. Comparison of uninsured 
     and privately insured hospital patients. JAMA. 1991;265:374-
     379.
     \8\ Franks P, Clancy CM, Gold MR. Health insurance and 
     mortality: evidence from a national cohort. JAMA. 
     1993;270:737-741.
     \9\ The ultimate denial: rationing is a reality. Issue Scan: 
     Q Rep Health Care Issues Trends From Searle. 1994;4(2):5.
     \10\ Epstein RA. Mortal Peril: Our Inalienable Right to 
     Health Care? New York, NY: Addison-Wesley; 1997.
     \11\ Epstein RA. Letter to the editor. The New York Times. 
     August 10, 1997:14.
     \12\ Friedman M. Gammon's law points to health care solution. 
     The Wall Street Journal. November 12, 1991:A19.
     \13\ Reinhardt UE, Abstracting from distributional effects, 
     this policy is efficient. In: Barer M, Getzen T, Stoddard G, 
     eds. Health, Health Care, and Health Economics: Perspectives 
     on Distribution. London, England; John Wiley & Sons Ltd; 
     1997; 1-53.
     \14\ Taylor H, Reinhardt UE. Does the system fit? Health 
     Manage Q. 1991;13(3):2-10.
     \15\ Rawis J. A Theory of Justice. Cambridge, Mass: Harvard 
     University Press; 1971.
     \16\ Reinhardt UE. Reorganizing the financial flows in 
     American health care. Health Aff (Millwood). 
     1993;12(supp);172-193.
     \17\ Butler SM. A policymaker's guide to the health care 
     crisis, I. Hertiage Talking Points. Washington, DC: The 
     Heritage Foundation; February 12, 1992:5.
     \18\ Reinhardt UE. Economics. JAMA. 1996;275:1802-1804.

     

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