Dean Interview with Esquire

7/7/09
Howard Dean: Private Health Care Is Breaking Our Economy

By: John H. Richardson
Howard Dean says private health care is breaking the economy, the Republicans are liars, and Washington is as scared of change as a cult. Except when it comes to the health-care debate, Howard Dean really knows what he's talking about.

As Congress debates health-care reform, the arguments against a "public option" are coming fast and furious. The best I've read recently is from Greg Manikow, the distinguished Harvard economist and former Bush advisor who insists that the public option will inevitably crowd out private insurance companies, resulting in less competition and poorer health care. Manikow reminded me of how quickly the efficiencies of private military contractors like Blackwater crushed the socialists in the United States Army, how the option of great public beaches in New York drove all Connecticut elite from their Buffy-and-Muffy-only private beach clubs to the boardwalks of Coney Island, and how the wealthy rushed from their Park Avenue penthouses to take advantage of the great deals in Section 8 housing.

For an alternate point of view, however, I consulted the former governor of Vermont. As a doctor married to a doctor, Howard Dean made health care a priority of his administration, putting strict regulations on health insurance profiteering and figuring out a way to extend insurance to every child in the state. In a new book called Howard Dean's Prescription for Real Health Care Reform, he makes a persuasive case for reform.

ESQUIRE: Your book really lays everything out in a very simple, clear way. It's obvious this is something you've been thinking about for a long time.

HOWARD DEAN: It was one of the reasons I ran for president.

ESQ: One thing I've never seen before is when you say, "Much is made of the 47 million without insurance, but nothing of the 25 million who have insurance but don't go and see the doctor." I've got one of those high-deductible catastrophic plans myself, so I don't go to the doctor unless I'm bleeding. Why have I never seen this argument before?

HD: Because 99 percent of the discussions among reporters, policy wonks, and politicians focus on the uninsured — which is, frankly, why nothing is passed. They don't focus on the majority of Americans who have health insurance that doesn't work.

ESQ: Boil it down, if you would. Why isn't it working even if you do have insurance?

HD: Because it's too expensive. The private sector can't manage costs. Health care is one of the few places — defense is another — that the government works more efficiently and more effectively than the private sector. That's just a fact.

ESQ: Why is that?

HD: Because there is no feedback in the private health-care system. When I was practicing medicine, nobody with substernal chest pain ever got off my examining table and said, "The guy down the street does it for $2,000 cheaper, I'll see you later." That's why we've had 40 years of costs that increase between two and three times the rate of inflation every single year. It's breaking our economic system. People are yelling and screaming about jobs going to China, but they're not yelling and screaming about jobs going to Canada. But they are. Because the right-wingers can scream and yell about rationing if they want, but economically their system works much better than ours does.

ESQ: I've seen nothing about that during this debate. But in the book you talk about GM and — or was it Toyota? — moving their new factories just across the bridge to Ontario to take advantage of the Canadian health-care system.

HD: Toyota did also, but GM and Ford were the big ones.

ESQ: It seems pretty obvious. They save money. So why are businesses so completely resistant to this?

HD: They're not. Some businesses — and the Chamber of Commerce — are resistant because they're ideological. They are part of the right wing. Then there are lots of businesses that aren't particularly ideological but genuinely believe that if they keep doing the same thing, they'll somehow get a different outcome. That's human nature. They think they can manage health-care costs even though it's been 40 years since any of them ever have. That's why I think Obama's plan is so great: If you like what you have, you can keep it.

ESQ: Speaking of the Obama plan, you're even stronger than he has been lately in support of the public plan. You say that without it, it's not reform.

HD: It's not. It's a waste of time. Don't pretend you're going to do health-insurance reform unless you're really going to change the system. The discussions in the Senate have not been about changing the system.

ESQ: They seem to be worried about preserving the status quo.

HD: Washington is the most conservative town in America. Its culture is the most resistant to change except a few religious cults.

ESQ: [Laughter]

HD: It's true! It's absolutely true.

ESQ: You say that the public plan shouldn't be able to dip into general government reserves to subsidize its operations. But the Republicans say it will.

HD: The Republicans just make things up out of whole cloth. Nothing they say about health care is true. It's all just nonsense and fears and what-ifs. It doesn't happen. First of all, Medicare doesn't dip into government reserves. It has never happened. It might happen in 10 years if they don't cut benefits or raise taxes, but so far, never in the history of America has a program like Medicare used public reserves. The Republican tactic is to raise objections because they never have anything positive to say themselves.

ESQ: In the book you ask, "Is health insurance really health insurance or an extension of the things that have been happening on Wall Street?"

HD: Think about it. What the big insurance companies have done is deny claims just so they can improve their bottom line. That's just extraordinary.

ESQ: But still, even you say you expect 65 million people to enroll in the public option, and a study by a health-care company put the number at 117 million. That's a lot of people.

HD: It is.

ESQ: But isn't that a threat to the insurance companies? Especially at a time when we want to keep businesses healthy and people employed?

HD: This is one of the many problems the Senate is now having. They are focused on anything but the American people. But the insurance companies will be fine. It won't happen overnight, and they'll make plenty of money. But this is not a matter of making the insurance companies happy. This is a matter of making the 72 percent of the people who want a public option happy, including the 50 percent of Republicans who want a public option.

ESQ: Fifty percent of Republicans want a public option?

HD: Yeah. That's in a Kaiser poll and in a New York Times/CBS poll last week. The Senate is in the process of self-destructing. They are talking about managing health-care reform to make sure that a relatively small sliver of American industry is satisfied at the expense of 72 percent of their constituents. That's unbelievable.

ESQ: You say that average premiums would be 23 percent lower in the public plan. Could you explain how they can achieve that level of efficiency without subsidizing it?

HD: I'm going to use Medicare as an example because it is a public plan. About 4 percent of every dollar that goes into Medicare is spent on administration. In the private sector, that number is between 12 percent and 50 percent. That's because of return on equity, very high CEO salaries, advertising, and general administration. But you don't have return on equity in a public plan, and there doesn't have to be advertising, and the people who run it aren't going to be making $20 million a year. They are probably making less than $200,000 a year. And that's before you get to cost controls.

ESQ: What about rationing?

HD: I don't think there will be rationing. I think what there will be is elimination of unnecessary stuff, and there is a lot of it. There is no rationing in Medicare.

ESQ: But they do ration in England, don't they?

HD: Here's what they do in England. Let's say there is a very, very expensive cancer drug that will extend your life on average by four months. They may not pay for it. The reason they won't pay for it is that they know they'll have to cut back pediatric visits if you do. Is that rationing? Sure. But we ration in America today. If you are one of the 47 million people who don't have insurance at all or if you're someone who has a lousy plan because you can't afford a good one, that's rationing by price. I'll tell you who rations. It's the private insurance groups. This ridiculous nonsense that the right-wingers are talking about, that public insurance will put a bureaucrat between you and the doctor — that goes on every day in the system we have. But only in the private sector. It doesn't happen in the public sector. I have never had, in my 10 years of practicing medicine, a Medicare bureaucrat call me up and say, "You can't do this and you can't do that." But that used to happen every day with the private insurance companies. You'd beg to have your patient have this drug or that procedure.

ESQ: What about the idea that if we put cost controls on drug companies, they're not going to be able to develop the next miracle drug?

HD: The truth is, I don't have any interest in screwing the drug companies. That would be foolish. Pharmaceuticals cost about 10 to 12 percent of our entire health-care system, and they save as much money as they cost. They allow cancer patients to be treated as outpatients instead of inpatients. They get heart-attack patients out of the hospital much earlier. I don't want to give pharmaceutical companies a blank check, but the pharmaceutical industry is not the problem.

ESQ: Another surprising argument you make is that the $1.5 trillion reform is supposed to cost over 10 years is already in the health-care system. Can you explain that?

HD: Sure. Let's take somebody who works who doesn't have insurance. They get sick. They end up going to the hospital, and the hospital has to treat them. It's called uncompensated care, and it just gets shifted to taxes or higher premiums. There are hundreds of billions of dollars right now that you're already paying. Next, let's say that 65 million people leave the private sector and go to the public sector. That's new money that the federal government has got to figure out how to put in the system. But those 65 million people are not paid anymore by business, so you're freeing the business community from all that responsibility — which was exactly the point I was making in the story of General Motors investing in Canada. In Canada, the business sector has no responsibility. Do they pay higher taxes? Yes, they do. But their taxes do not go up two or three times the rate of inflation, as health-care costs have in America.

ESQ: Another idea that's new, at least to me, is your suggestion that we help solve global warming at the same time by using a carbon tax and gas tax to pay for health care.

HD: I never liked the gas tax much because it's a regressive tax. But in this case, the people who are paying it are getting much more back, because the people who pay the highest percentage of their income in gas taxes are also usually statistically the people who are most likely to not have health insurance. So for an extra 350 bucks in gas taxes, they now have affordable health insurance.

ESQ: So how's that going over when you talk to people in the administration?

HD: I think they're horrified. But most energy people think a carbon tax is better than cap-and-trade.

ESQ: And what about the public plan? A couple of months ago, people were telling me, "It's a slam dunk. We've got this huge mandate." Now it seems to be falling apart.

HD: I think that the Senate needs to understand that the American people want a public plan. That's not an advocate talking. That's the facts of the polls. People want the choice. And why shouldn't the American people get to choose instead of the big Washington government making the choice for them? So I think the Senate will come to understand that their first job is to serve the American people and not the health-insurance industry.