PESQUISA / RESEARCH

Problems of Health Insurance Coverage and Health Care in theUnited States: Public and Private Solution Strategies1

Problemas de Cobertura de Seguridade em Saúde e Serviços nosEstados Unidos da América: Estratégias para Soluções Públicas ePrivadas

E. Richard Brown 2

BROWN, E. R. Problems of Health Insurance Coverage and Health Care in the United States:Public and Private Solution Strategies. Cad. Saúde Públ., Rio de Janeiro, 8 (3): 270-286,jul/set, 1992.

A nearly universal consensus has developed in the United States that the current health carefinancing system is a failure. The system has been unable to control the continuing rapid rise inhealth care costs (by far, the highest in the world), and it has been unable to stem the growingpopulation that has no health insurance coverage (at least 36 million people). There is nearlyuniversal political agreement that government must provide health insurance to a far greatershare of the population than ever before. The political debate now focuses on whether thisexpanded government role should supplement the private insurance system with an enlargedpublic program covering those left out of private insurance coverage, or replace privateinsurance with a universal government health insurance program covering the entire population.

Keywords: Health Insurance; Health Care Costs; National Health Insurance; Health ServicesFinancing

1 Based on a paper presented at a conference of the PanAmerican Health Organization, Quebec City, March18-20, 1991.2 School of Public Health, University of California. 10833Le Conte Avenue, Los Angeles, CA, 90024-1772, U.S.A.

INTRODUCTION

Despite the apparent attraction that manynations find in proposals to privatize theirlargely public systems for financing healthcare, the United States is moving in theopposite direction. In almost all OECDcountries, public expenditures account formore than three-quarters of health spending,compared to only about 40 percent in theUnited States (Schieber & Poullier, 1989).There now is nearly universal consensus inthe United States that the current, largelyprivate health care financing system is afailure. This view is shared by nine out of tenAmericans, including the same proportions of

the general public and the chief executiveofficers of the nation's largest corporations(Blendon et al., 1990).

In many countries debate centers onwhether to privatize some or all of publichealth care insurance or national healthservice programs. In the United States, thereis wide consensus that government mustprovide social insurance for health services toa far greater share of the population than everbefore. The political debate focuses onwhether this public insurance program shouldsupplement an expanded private insurancesystem or replace private insurance. Thepublic policy debate is between establishing agovernment-mandated system ofemployment-based health insurance, with anexpanded public program covering those leftout of private insurance coverage, or insteadcreating a universal national health insuranceprogram, thus expanding government

involvement to cover the entire population.This growing demand for government

intervention in health care is a direct result oftwo fundamental problems in health servicesfinancing that have plagued the United Statesduring the 1980s and 1990s. One problem isthe soaring cost for health care and for healthinsurance, a problem which the U.S. shares tosome extent with most industrialized nations.A second problem is the growing number ofpeople who are uninsured for health careexpenses, a problem that, among theindustrialized countries, is virtually unique tothe United States and the way it financeshealth services. The combined pressure ofthese two forces has generated growingpolitical support for broad reforms to solvethese problems, and this political pressure isbringing the country to a critical choice point.

HEALTH INSURANCE COVERAGE

Most people in the United States have sometype of health insurance coverage. Nearly theentire elderly population, 65 years of age orolder, is covered by Medicare, a federal socialinsurance program that covers about half thehealth care costs of the elderly. To pay forsome of the expenses that Medicare does notcover, most of these elderly persons also haveprivate insurance or Medicaid, awelfare-based program that covers about halfof the poorest population (mainly those whoare eligible for federal public assistance).

The Uninsured Population is Large andGrowing

Among the nonelderly population, however,coverage is much more variable, and manypeople have no protection at all againstmedical expenses. In 1989, 74 percent of thenonelderly population had private insurancecoverage, including 64 percent who obtainedtheir own employment-based health benefitsor were covered through employment of afamily member and another 10 percent whohad privately purchased insurance coverage.Another 10 percent of the nonelderlypopulation were covered by Medicaid, afederal-state welfare-related program thatcovers about half of the poor, or anotherpublic program (Figure 1) (Brown et al.,1991; unless otherwise noted, all data onhealth insurance coverage are taken from thisreport and additional analyses by the author).

But 17 percent of the nonelderly population,more than 35 million Americans, have nocoverage of any kind — neither privateinsurance, nor Medicare, nor Medicaid, norany other coverage. These people thus haveno protection against the costs of medical carefor themselves or their families.

The problem in some regions and states,especially the southern and southwesternstates, is even more severe than for thecountry as a whole. In California, forexample, 23 percent of the population under65 years of age — 5.9 million persons — areuninsured, and in Los Angeles County, one inevery three nonelderly persons is without anycoverage.

The Uninsured are DisproportionatelyYoung, Low-Income and Ethnic Minorities

Nearly one-third of all the uninsured arechildren under the age of 18, another 30percent are between 18 and 29 years of age,and the rest are between 30 and 64 years ofage (Figure 2). Young adults are most at riskfor being uninsured; one in four persons18-29 years of age is without any protection(in California, one in every three young adultsis uninsured) (Figure 3).

Nearly half (47 percent) of all the uninsuredin the United States are poor or near-poorchildren and adults (in 1989, an annualincome of about $19,000 or less for a familyof four). The relative poverty of the uninsuredis important to the public policy debatebecause it is unlikely that most of theuninsured can afford to pay much, ifanything, for their coverage. Nevertheless, alarge proportion of the uninsured are not poorat all: 22 percent of the uninsured have familyincomes in the upper half of the incomedistribution (about $38,000 or more for afamily of four).

Low-income persons are much more likelyto be uninsured than the more affluentpopulation. In 1989, 35 percent of those withfamily incomes below the poverty line($12,675 for a family of four) and 36 percentof those just above the poverty line had nocoverage, compared to 19 percent of thosewith family incomes between 150% and299% of the poverty line and just 7 percent ofthe more affluent population.

Thirty-eight percent of all nonelderlyLatinos were uninsured in 1989, the highestrate among all ethnic groups (three times ashigh as the rate for non-Latino whites).Although lower than the rate for Latinos, theproportions of uninsured blacks and Asiansand other ethnic minority groups aretwo-thirds higher than the rate for non-Latinowhites.

Nearly Nine Out of Ten of the Uninsured areWorkers or in Families Headed by a Worker

The uninsured are overwhelmingly workersand their families. Nearly 9 out of every 10uninsured people — 86 percent of theuninsured — are workers or in a familyheaded by at least one worker. In fact, 62percent of the uninsured are full-timeemployees and their dependent spouses andchildren (the remaining 24 percent of theuninsured are part-time employees and theself-employed and their dependents) (Figure4). Although most Americans gain access tohealth insurance as a fringe benefit ofemployment, the very large proportion of theuninsured who are working people and theirfamilies is clear evidence thatemployment-based private, voluntary healthinsurance inadequately covers even theworking population.

Employees who work full time for the fullyear (at least 35 hours per week and at least50 weeks a year) are more likely than otheremployees or self-employed workers to gethealth benefits through their own jobs. It is,therefore, not surprising that 74 percent offull-time full-year employees were covered bytheir employer's health plan in 1989. Another16 percent received coverage through theinsurance of another family member or someother source, but that left 10 percent whowere completely uninsured. Full-timepart-year employees and self-employedworkers are two and one-half times as likelyto be uninsured (Figure 5).

Low-income employees are far less likely tohave health benefits through their employmentand are far more likely to remain completelyuninsured. Even among full-time full-yearemployees, the more people earn, up to about$35,000 a year, the more likely they will be

covered by their own or a family member'shealth benefits and the less likely they will beuninsured. More full-time full-year employeeswith personal incomes below $10,000 areuninsured than are covered byemployment-based health insurance.

A 1988 survey of homecare workers in LosAngeles, for example, found that 65 percentof these low-income service workers wereuninsured. These workers, who earned $3.72per hour performing personal care services forelderly and disabled persons, received nohealth insurance through their jobs. Thosewho were not covered by the group healthplan of a family member (many were singlepersons or single mothers) relied on taxpayersupported county hospitals for most of theircare, although a small number were eligiblefor Medicaid (Service EmployeesInternational Union, 1988).

The proportion of full-time full-yearemployees who get job-based health benefitsdiffers considerably by industry. Someindustries — including transportation,communications, and utilities; manufacturing;professional services; financial services;wholesale trade; and public administration —are far more likely to provide health benefitsto at least their full-time full-year employeesthan are other industries — especiallyagriculture, forestry, fishing, and mining;construction; personal services; business and

repair services; and retail trade (Figure 6).Unionized workers are much more likely

than non-unionized workers to get job-basedhealth insurance. Among unionized workers,82 percent get their own health benefits,compared to 56 percent of those who are notcovered by a union. Historically, theemployment-based coverage, especially ofblue-collar workers, was due to collectivebargaining by unions on behalf of theirmembers, accounting in part for the higherinsurance coverage in the more heavilyunionized industries. But with only 19 percentof American workers currently in unions orcovered by a union contract, this factor haslost much of its influence for the workingpopulation as a whole.

Employees who work in small firms aremuch less likely to get employer-sponsoredhealth benefits. Although 8 out of 10 full-timefull-year employees in firms of 100 or moreworkers get their own benefits, fewer than 7in 10 in firms of 25 to 99 workers get thesebenefits, and less than half in firms withfewer than 25 employees receive them (Figure7). Small firms are one of the centralcontributing factors to the problem of lack ofinsurance coverage. Although 22 percent ofall employees in the U.S. work in firms withfewer than 25 workers, 42 percent of alluninsured employees work in firms of thissize.

The decrease in employment-basedinsurance coverage among workers and theirfamilies is due in large part to a decline injobs in manufacturing and other unionized,higher-wage sectors of the economy and anincrease in employment in the retail andservice sectors (Congressional ResearchService, 1988). The shrinking of employmentin industries that have traditionally providedhealth benefits, and the rapid growth of jobsin small retail and service firms, where lowwages and seasonal employment areprevalent, has made increasing numbers ofpeople question the continued reliance onprivate employment-based health insurance inthe United States.

In addition to the population that iscompletely uninsured at any given time, asubstantial portion of the population isinadequately covered by health insurance,leaving them exposed to major financiallosses or debts due to expensive medical care.The most definitive analysis of this problemestimated that, including the inadequatelyinsured and the completely uninsured,between 24 and 37 percent of the nonelderlypopulation is underinsured against thepredictable risks of large medical expenses.These included, in 1977, about 9 percent ofthe population who were uninsured throughoutthe year, more than another 9 percent whowere uninsured part of the year, and at leastanother 5-18 percent with private insurancecoverage that left them vulnerable to

significant risks of spending at least 10percent of their family income on medicalexpenses (Farley, 1985). It is a virtualcertainty that the underinsured now representconsiderably more than the one-quarter toone-third of the population they were adecade and a half ago.

Why is the Growing Lack of HealthInsurance a Problem?

Several factors make the lack of healthinsurance a serious problem for the uninsuredthemselves and for health care providers, localgovernments, and employers who do providehealth benefits. First, compared to people withhealth insurance coverage, the uninsured havemuch less access to necessary medical care.They are less likely to see a physician in ayear, less likely to get their young childrenadequately immunized, less likely to receiveprenatal care in the first trimester ofpregnancy, less likely to have their bloodpressure checked, and only half as likely tosee a physician within 30 days if they haveserious symptoms, such as persistent highfever, nausea, or bleeding (Davis & Rowland,1983; Freeman, 1987; Freeman et al., 1987).

Second, reduced access to medical care dueto lack of insurance coverage may contributeto a severe decline in individuals' healthstatus. Research studies have found thatpregnant women and their children andpersons with chronic illness are especially at

risk (Lurie et al., 1984; Lurie et al., 1986;Braverman et al., 1989).

Finally, although the uninsured get less carethan the insured population, everyone pays forcare that the uninsured do receive. When theuninsured need urgent care, they usually go tohospitals and clinics. Uncompensated care(bad debts and charity care, mainly for theuninsured) cost hospitals in California, forexample, $975 million in fiscal year 1985-86— 49 percent more than in 1981-82, afteradjusting for inflation (Sofaer et al., 1990).Charity care cost U.S. hospitals more than $8billion in 1988. Individual and businesstaxpayers shoulder the financial burden ofuncompensated care provided by publichospitals, but these public facilities remaindepressingly underfunded, understaffed, andill equipped to meet this population's needsfor medical care (Brown & Dallek, 1990;Baker et al., 1991; Bindman et al., 1991).

Employers and employees pay for much ofthe uncompensated care provided by privatehospitals. That is, the costs of this care thatare not paid out-of-pocket by the patient areshifted to the bills of insured patients, mainlyemployees of firms that do not provide healthbenefits. But as such "cost-shifting" hasbecome more difficult over the last few yearsbecause employers are demanding discountrates from hospitals, more and more privatehospitals have found ways to keep outuninsured patients. Hospitals in many cities

throughout the country have sporadicallyclosed their emergency rooms, others havedowngraded them permanently, shutting theiremergency room doors to emergency rescueambulances, and many have closed theirtrauma centers. These actions affect the entirecommunity — people with insurance as wellas the uninsured.

RISING HEALTH CARE COSTS

The other major health care financingproblem that plagues the United States is therapid increase in expenditures for medicalcare. Health care in the United States hasbeen consuming an ever greater share of oureconomic resources, from 6 percent of ourgross national product in 1965 to an estimated14 percent in 1992 (Levit et al., 1991;International Trade Administration, 1992).Part of the increase in total expenditures isdue to the rapid increase in the costs andprices of medical care, which have beengrowing at a faster rate than inflation in therest of the economy. Much of this increase isdue to an increasing "intensity" of servicesprovided to each patient, many of which areneither necessary nor effective.

The United States spends a 50 percentgreater share of its GNP on health care thanany other country in the world. Measured inU.S. dollars per capita, the United States

spends 40 percent more than Canada, thesecond most expensive health system, whichcovers its entire population through auniversal government-run, tax-funded healthinsurance program in each province (Figure 8)(Schieber & Poullier, 1991).

Does the United States Get Adequate Valuefor its Higher Spending?

Despite greater per capita health carespending, health indicators in the UnitedStates demonstrate that it should be gettingmore for its money. Many less developedcountries have lower infant mortality and asgood or better life expectancy than the UnitedStates. Nineteen other industrialized countries,for example, had lower infant mortality ratesin 1987 than the United States. Althoughmedical care contributes less to determiningwhether people are healthy or sick than do thesocial and physical environment — such asfinancial resources, living and workingconditions, and culture — as well as personallifestyle, many types of preventive andcurative care have been shown to make asignificant and important difference indetermining who lives and who dies.

One reason the United States gets less valuethan it should for the amount it spends onmedical care is that more of its health dollarsare spent on administration than in othercountries. In the United States, 1,500 separateprivate health plans and an estimated 175,000self-insured employer plans (McDonnell et al.,1986) compete with one another for enrollees,each bearing substantial marketing costs,analyzing the financial risks of applicants,negotiating fees with individual doctors andhospitals, scrutinizing clinical decisions ofphysicians, and processing individual bills andclaims from health care providers andenrollees. During the 1970s and 1980s,administrative costs took a rapidly increasingshare of total health care spending (Levit etal., 1989). The costs of administering healthinsurance are about 1 percent of total programexpenditures in the public Canadian insurancesystem, about 3 percent of total costs in theUnited States public Medicare program, andabout 11 to 12 percent for private insurance

plans in the United States (U.S. GeneralAccounting Office, 1991). These insuranceoverhead costs do not include the muchhigher administrative costs of U.S. doctorsand hospitals for billing and collecting from afragmented insurance and payment system(Woolhandler & Himmelstein, 1991). Higheradministrative costs seem to be a corollary ofa privatized health care financing system.

The fragmentation of "third-party" payershas prevented payers from negotiatingcollectively and effectively with hospitals andthe medical profession. Only the federalMedicare program has a sufficient share ofthe market to give it substantial clout inreimbursement policy, enabling it to innovatepayment reforms for hospitals and doctorsthat have had an impact on all payers, publicand private alike. Until very recently even theMedicare program reimbursed hospitals theircosts for all services performed and paiddoctors their "usual and customary" fees forall covered services. Medicare's change inhospital reimbursement to a prospectivepricing policy per admission, with thepayment based on classification of the patientinto one of several hundred diagnosis-relatedgroups (DRGs), has influenced hospital careand expenditures under all third-party payers(Lave, 1989). Payment for physician servicesis now also being reformed by Medicare, to afixed-fee schedule designed with financialincentives to encourage more primary care atthe expense of procedure-oriented specialists(Iglehart, 1990; Ginsburg et al., 1990).

Although Medicare reimbursement reformshave influenced other payers, competingprivate health insurance plans havethemselves relied on competition amonghospitals and doctors to negotiate pricesindividually. This strategy of a privatecompetitive solution to the cost problem hasdivided payers from one another and lefthealth services and medical care costsvirtually uncontrolled.

Health Insurance has Become Unaffordablefor Many

Higher medical care costs mean higherpremiums. As costs of care escalated, health

benefit costs rose accordingly. Between 1977and 1987, average premium contributions foremployment-based health benefits per personcovered increased 49 percent ininflation-adjusted dollars, from $1,111 to$1,656 (both figures are in 1987 dollars)(DiCarlo & Gabel, 1989). Every year,employers get hit with substantial double-digitpercentage increases in the costs of healthbenefits (Gabel et al., 1989; Medical Benefits,1989).

Small firms have been hit very hard byrising health care costs and insurancepremiums. Certainly one factor thatcontributes to the high cost of insurance forindividual firms and employer trusts isexperience rating, which has isolated smallerrisk groups and exposed them to everescalating rates. (Under "experience rating",the insurer bases the premium in part on thecosts of health benefits used by that coveredgroup. This is distinguished from "communityrating, "in which the insurer averages thecosts of all covered persons as one "riskgroup", rather than considering the experienceof particular subgroups.)

Rising costs have made it difficult for smallbusinesses to purchase insurance. The healthinsurance market for small groups is dryingup throughout the country: since 1988, at least34 insurers have stopped selling grouppolicies to small businesses in California(Reich, 1989; White, 1990). Finding healthinsurance for small groups in which one ormore members have a preexisting medicalcondition is difficult for even the mostdedicated insurance broker. Moreover, asmore insurers move from community toexperience rating, employers have seen theirhealth insurance premiums skyrocket.

Employers who do provide insurance haveresponded to rising health benefits costs byencouraging or forcing their employees to joinmanaged-care plans. Employers also haveshifted more of the costs of coverage toemployees by increasing required cost sharingfor premiums and for medical care (Short,1988; Jensen et al., 1987). Employers'increasingly desperate attempts to controltheir costs by altering formerly generoushealth benefits is a major source of conflict in

labor-management relations, and has becomea main factor in nearly 80 percent of allstrikes (Service Employees InternationalUnion, 1990). Despite these efforts to controltheir own costs, many employers are at theirwits end. As the president of the CaliforniaCouncil of Employer Health Care Coalitionshas said, "We have tried a lot of things —utilization review, case management, costsharing with employees, health maintenanceorganizations, preferred providerorganizations, hospices — and costs are stillgoing up 20 to 30 to 40 percent" (Holzman,1989).

These cost increases have extracted agreater share of workers' earnings and ofcorporate profits. Between 1965 and 1989, thecost of health benefits has grown from 2percent of wages and salaries to 8 percent(Figure 9). And it has jumped from 8 percentof pre-tax corporate profits to 56 percent(Figure 10). (Author's analysis of unpublisheddata from the Health Care FinancingAdministration.) The financial losses inflictedon business and labor, together withincreasing labor-management conflicts andstrikes over health benefits, have pushedpolitical pressure for health care reform to anall-time high.

SOLVING THE PROBLEMS:PUBLIC POLICY OPTIONS

These two health care financing problemsare inextricably linked. A large and growinguninsured population has little access tonecessary medical care. When they do getcare, the uninsured add to the hospital bills,insurance premiums and taxes of others.Universal coverage of the population wouldprovide more equitable access to health careand end uncompensated-care cost shifting toemployers, employees, and government.

Rising health care costs, the second majorhealth care financing problem, are strainingthe economic resources of employers, workersand their families, as well as all levels ofgovernment. The high costs of health care andhealth insurance make it increasingly difficultfor small employers and low-income people

to pay for health benefits. This problem, likethe problem of insurance coverage, can besolved most effectively by major reforms inthe health care financing system.

The approaches to the problem now beingconsidered range from incremental, targetedstrategies — proposals that would providecoverage for some groups of the uninsured —to strategies that would completely reform thefinancing of health care. These restructuringproposals would provide insurance to theentire population by completely reforming thehealth insurance market or by establishing auniversal health services financing program.The variety of reform strategies are discussedbelow and compared in Table 1.

Encouraging or Requiring Employers toProvide Coverage

Some states and private groups, hoping toavoid enacting mandatory programs, havebeen experimenting with tax credits toencourage employers to cover their uninsuredemployees. Small employers' participation isinfluenced by the very factors that nowdiscourage them from providing this fringebenefit — low profit margins and the highcost of insurance (Small BusinessAdministration) — adding up to a competitivedisadvantage for those who might add to theirproducts or services the increased labor costsdue to health benefits. Few small employers

are buying into such programs because thecost remains high, for both employer andemployee, and because participation remainsvoluntary. Most of the tax credits for suchprograms go to employers who are alreadyproviding health benefits. In the end,relatively few of the uninsured can beexpected to participate in and benefit fromthese voluntary private insurance programs(Brown & Dallek, 1990). Nevertheless, theBush administration, seeking to avoid anymandates that business opposes, has adoptedtax credits as its main strategy to extendcoverage to the uninsured (The President,1992).

The most dramatic incremental policyoption that is being considered is to requireemployers to provide health benefits to theirworkers. The high cost ofgovernment-subsidized health coverageprograms has encouraged legislators in manystates and members of the Congress topropose laws that would mandate employersto provide coverage to their employees anddependents. This strategy would place the fullcost of such health insurance on employersand their workers, a completely privatized

solution to the uninsured.Employer mandate proposals, however,

would not control health care costs foremployers, employees or others. Rather, theywould impose a significant cost on smallemployers and their employees, and they offerno reason for optimism that the double-digitinflation in health care premiums experiencedby large as well as small employers would berestrained. Employers, together with theiremployees, are very frustrated by theirinability to control the costs of their healthbenefits — and they want some relief.Because of its impact on small businesses andgeneral business opposition to governmentregulation, business groups have heavilyattacked employer mandate proposals.

"Play or Pay" Reforms

A variation on the employer-mandateapproach is the "play or pay" strategy (U.S.Bipartisan Commission on ComprehensiveHealth Care, 1990; Enthoven & Kronick,1989; Enthoven & Kronick, 1991). Designedto ameliorate the impact of the requirementon small firms with low profit margins, "playor pay" would require all employers either to

provide health benefits or to pay a specialhealth care payroll tax, in most proposals setlower than the cost of purchasing healthinsurance. With the revenues from this andother taxes, the government would providecoverage in a "pay" program or purchase itfor otherwise uninsured people from contracthealth plans. Although only Massachusettsand Oregon have enacted "play or pay"programs, but not yet implemented them,many states are considering such legislation(Brown & Dallek, 1990). Several proposalshave been introduced into the Congress,including one by the Senate Democraticleadership (U.S. Senate, 1991).

However, the "play or pay" strategy wouldrequire heavy government subsidies to makeit affordable to low-income workers andlow-profit employers. If employers withhigher risk workers dump their bad risks intothe "pay" program, the need for subsidieswould rise dramatically. This tendency towardincreasing public-sector costs due to thedumping of bad risks is a threat to any mixedpublic-private financing system.

"Play or pay" proposals almost all includeefforts to prevent some of the insuranceindustry's most egregious marketing andunderwriting practices, particularly thoseinflicted on small firms. By requiringguaranteed renewal of policies, limiting orprohibiting exclusions of coverage for medicalconditions, and limiting the range ofpremiums that an insurer may charge, thesereforms are likely to bring small employerinsurance costs closer to those of largeremployers.

But "play or pay" proposals' methods tocontrol the rise in medical care costs are weakand very regressive. They almost always relyon market competition between health plansand hospitals and doctors to bring costs undercontrol. Market competition, however, favorslarge groups with substantial shares of themarket. And the competition among healthcare providers for this business encouragesconstant over-investment in buildings andequipment, resulting in costly unusedcapacity, duplication of services, andbankruptcies among many hospitals.Moreover, administrative costs in a

competitive, fragmented financing system arevery high. These market-oriented proposalsalso impose heavy cost sharing on enrolleesto encourage "cost-conscious" consumerbehavior, a tendency that would make healthcare financing even more regressive (Cantor,1990).

Finally, "play or pay" strategies would putthe poor and mainly lower-income workers ina separate public medical care program.Despite the improvements this wouldrepresent for those now covered by theunderfunded Medicaid program, this limitedpublic program would be politically isolatedand would remain vulnerable to the budgetaryaxe (Brown, 1983). Who would join the poorin the public program would depend uponwhether only small, usually low-wageemployers would be allowed to buy-in, therate at which the payroll tax is set, and howgenerous the benefits are. Past experiencewith Medicaid and other programs restrictedto lower-income populations suggests that anew "pay" program would suffer a similarfate of political vulnerability.

The "play or pay" approach would be ahalfway reform, ameliorating access and costconditions caused by the present chaoticcollection of very regressively financedprivate health plans and limited publicprograms. But it would perpetuate many ofthe current system's problems. Nevertheless,many analysts and political leaders believethat this approach, compared to moresweeping reforms, is more likely to beenacted, largely because it requires lessdramatic changes for insurers, the medicalprofession and hospitals, and other powerfulelements in the present financing system.Despite this optimistic political assessment,business groups have not liked "play or pay"requirements much better than straightemployer mandates, and they have foughtthese proposals in state legislatures and in theCongress with the same intensity.

Universal Coverage Through NationalHealth Insurance

A more comprehensive reform strategywould establish a universal national health

insurance program, an approach that long hashad a substantial core of political support inthe United States but that has been defeatedwhen periodically proposed (Fein, 1986; Starr,1982). National health insurance (NHI)proposals typically would replace the paymentof premiums by employers and individuals tomyriad private insurance plans with agovernment-run health care financing programsupported by tax revenues (Fein, 1986;Brown, 1988).

These NHI proposals would provide acomprehensive package of benefits coveringessentially the entire population in onefinancing program that would pay for careobtained from independent practitioners andfacilities or organized health plans. Forexample, Rep. "Pete" Stark's (D-Calif.)"Mediplan" proposal, H.R. 650, would extendMedicare-type coverage to all U.S. residents,and Rep. Marty Russo's (D-I11.) "UniversalHealth Care Plan," H.R. 1300, would adaptthe Canadian national health insuranceprogram to the United States (Himmelstein &Woolhandler, 1989). Senator Bob Kerrey's(D-Neb.) "Health USA" proposal, S. 1446,would establish a federal-state NHI program,enabling every resident to enroll in anyapproved private or state prepaid health plan,with the state health insurance programpaying a premium to the enrollee's plan andthe plan paying for doctor and hospitalservices and other covered benefits.

The complete NHI approach has severaladvantages (see chart below). First, healthinsurance coverage would no longer dependon or be tied to employment. People would becovered because they are residents of thecountry, and their coverage would notterminate or change due to changes in theiremployment status or marital status. Auniversal financing system that separatescoverage from employment, covering theentire population in one program, wouldprovide protection for the poor and otherpolitically less powerful groups, avoiding theinequities of separate, politically vulnerableprograms. Even two of the most widely citedauthors of the "play or pay" approachacknowledge that an employment-basedfinancing program is not the ideal way to

cover a population (Enthoven & Kronick,1989).

Second, a public NHI program wouldpermit effective control of health care costsand spending. It would channel most healthcare dollars through a government financingprogram with negotiated fee schedules andexpenditure targets for doctors and some formof budgeted payment of hospitals. Thesereimbursement methods have been usedeffectively by Canada and Germany to controltheir health care expenditures (Evans et al,1989; Fuchs & Hahn, 1990; Kirkman-Liff,1990; Iglehart, 1991). Such methods also areadministratively much simpler and moreeconomical than complex efforts to controlutilization by reviewing physicians' clinicaldecisions.

Third, tax financing would shift the burdenof paying for health care from a veryregressive system of premiums, which areessentially a flat amount irrespective ofincome or earnings, to a system that is moreprogressive, related to ability to pay. Fourth,employers' and employees' liabilities forhealth care expenditures would be limited andtheir total health benefits costs greatlyreduced to a specified tax. Employers'administrative costs related to their presentrole of health insurance brokers would becompletely eliminated. Fifth, cost shiftingbetween payers would end because providerswould receive equal payments for all personsthey serve, regardless of the person's sourceof coverage.

Finally, a tax-funded government financingprogram would be more accountable than thepresent financing system that relies on manyprivate insurers. Employer mandates andinsurance market reforms leave peoplevulnerable to the "accountability" of themarketplace, a particularly weak positiongiven the regressiveness of the financingsystem and the limited choice of plans madeavailable to most employees by theiremployers. A public financing program couldactually expand market accountability byproviding a virtually unlimited choice ofproviders, like the Canadian system, or bygiving each person a very wide choice ofhealth plans, as in Senator Kerrey's proposal.

Of course, any large organization orprogram, whether a government agency or aprivate corporation, has a tendency towardbureaucratization and unresponsiveness. Butgovernment financing and operating controlare subject to the accountability of thedemocratic political process, whileoligopolistic insurance companies are not. Apublic financing program with expandedmarket choice and political accountability isthus more likely than the private marketplaceto serve society's needs, as well as theinterests of private providers and health plans.

Many state legislatures have beenconsidering variations of these basic nationalNHI and market-reform approaches. Thepressure for state action has grown in theabsence of leadership from the White Houseand the Congress. Most advocates seestate-level reforms simply as a necessity tocome to grips with the growing crises facingalmost every state. Many, however, see statehealth insurance as a way to begin to solvenational problems of access and costcontainment in those few states that have theeconomic base and political will to act —much as Saskatchewan's leadership in healthinsurance reform was followed by otherCanadian provinces, ultimately leading to anational health program. There is newpolitical momentum behind health care reformin the Congress, reflected in the spate ofbroad "play or pay" and national healthinsurance bills as well as in the BushAdministration's recent introduction of itsown proposal. It is difficult to say whether thestates or the Congress will enact significantreform first.

Public Support for Major Health InsuranceReform is Growing

More Americans are very dissatisfied withtheir health care system, and more likely tosupport dramatic restructuring, than people inmost other industrialized countries. Of 10industrialized democracies surveyed in arecent study, fewer Americans were satisfiedwith their system than were the citizens ofany other country, despite the fact that theU.S. spends more money per capita on health

care. In the United States, 89 percent ofrespondents believed that fundamental changeor complete rebuilding of the nation's healthcare system is needed (compared, forexample, to 69 percent of Britons and 43percent of Canadians) (Blendon et al., 1990).This view is shared by 91 percent of the chiefexecutive officers of the nation's largestcorporations; 73 percent of them say theproblems cannot be solved by companiesworking on their own, that government musttake a bigger role in this sector (Cantor,1991). The leaders of four major nationalbusiness organizations recently made a jointappeal to the Congress to "do something"about health care costs (Rosenblatt, 1989).And the upset electoral victory of HarrisWofford to a U.S. Senate seat fromPennsylvania, running on a platform callingfor national health insurance against a Bushadministration official who opposed it, hasmade it clear that the electorate demandscomprehensive health care reform and thatpoliticians who stand in the way may godown to defeat (Hinds, 1991).

Although there is clear and consistentevidence of strong dissatisfaction with thepresent system, there is less consistent publicsupport for any particular solution(Jajich-Toth & Roper, 1990). A majority ofthe public supports a government nationalhealth insurance program, while a majorityalso supports a "play or pay" approach orsome other employer mandate, includingabout a third who support both (Echholm,1991; Pokorny, 1988; Blendon & Taylor,1989). The public opinion polls demonstratethat — driven by fears of potentially ruinousfinancial losses, inability to obtain care andweariness with the confusion andfragmentation of the present system — peoplewant the problems resolved, but they arepoorly educated about the substance andconsequences of alternative solutions.

Political pressure is growing rapidly tocontrol health care costs and to extendcoverage to the uninsured. At the same time,elected officials fear that new coverage wouldincrease fiscal demands on already strainedgovernment tax revenues, and business leadersworry that new programs would add to

employers' labor costs and fuel inflation inhealth care prices and total expenditures. Thisapparent political dilemma can be solved bylegislation that addresses both problemstogether in a comprehensive way. There isgrowing consensus, at least among healthpolicy analysts and many political leaders,that legislation must simultaneously beenacted to provide coverage for the uninsuredand underinsured and to control health carespending. But medical industry interest groupshave thrown their substantial political weightagainst reforms that would limit their earningsand profits, as almost any effective costcontrols must.

Despite the present impasse, more and moreAmericans are looking to government eitherto severely regulate the private insuranceindustry and operate a very large publichealth insurance program or to create auniversal national health insurance programthat would completely replace the presentmainly private financing system. It is ironicthat, while other countries with predominantlypublic financing of health services areconsidering privatizing their health carefinancing systems, political support for publicsector financing and control is rapidlybuilding in the nation with one of the mostprivatized systems.

RESUMO

BROWN, E. R. Problemas de Cobertura deSeguridade em Saúde e Serviços nosEstados Unidos da América: Estratégiaspara Soluções Públicas e Privadas. Cad.Saúde Públ., Rio de Janeiro, 8 (3): 270-286,jul/set, 1992.É praticamente consenso nos EUA que o atualsistema de saúde está falido. O sistema nãofoi capaz de controlar o rápido aumento noscustos dos cuidados em saúde (de longe, omais elevado do mundo), e também não foicapaz de estancar o crescimento da populaçãosem qualquer cobertura de seguro saúde (pelomenos 26 milhões de pessoas). Politicamente,há quase total concordância de que o governodeve prover seguro de saúde a uma parcela

bem maior da população do que no passado.O debate político agora centra-se na questãose este papel expandido do governo devesuplementar o sistema de seguridade privadoatravés de um programa aumentado, de modoa cobrir os que ficam de fora da coberturaoferecida pelo seguro privado, ou substituir oseguro privado por um programa de seguro-saúde governamental de abrangênciauniversal, dando cobertura a toda a população.

Palavras-Chave: Seguro de Saúde; Custos deAtendimento à Saúde; Seguro de SaúdeFederal; Financiamento dos Serviços de Saúde

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