Fuchs on federal health insurer

Victor Fuchs

For many Democrats, the key issue in health-care reform is the creation of a government health insurance program to compete with the private sector. Stanford's Victor Fuchs, a leading health economist, is skeptical of the idea. Paul Costello, executive director of the medical school's communications office, spoke with him for a podcast in the "1:2:1" program, available at http://med.stanford.edu/mcr/2009/5q-fuchs-0617.html. The following is adapted from a transcript of the interview.


1. What do Democrats see in this public agency that you don't?

Fuchs: There is an element in the party that really wants to have Medicare for all—a single-payer system, working much the way Medicare works. They see this proposal as either getting it right away, which is unlikely, or setting up a situation where it would evolve into Medicare for all.


2. What's wrong with Medicare for all?

Fuchs: The Medicare program we have now is going broke and to put another one in, we'd just go broke faster. It promises wonderful benefits and the beneficiaries like it. I am a beneficiary, and I like it very much. But there is no adequate means to pay for it. The trust fund is running out of money.


3. What about the idea that such a government agency would make the insurance market more competitive?

Fuchs: It isn't the lack of competition that the market suffers from; it suffers from an open-ended funding system with third-party payer, so that anything that anybody wants—or anybody thinks might do some good—gets paid for. We are paying for a lot of stuff, which is of small, marginal benefit; there is nothing in the Medicare system to change that. Under Medicare, you can go to any physician you want to, he or she can prescribe anything that they believe is good and that the FDA said is kosher, and it doesn't matter whether it adds a lot to health or not.


4. But aren't we at a juncture when we have the Congress, the president and a new coalition, including big businesses, to push through reform?

Fuchs: There are so many people who have made such a big political and emotional investment in getting something, that I think something will pass. I think it will be mostly cosmetic. I don't see them proposing anything that gets to the heart of the problem: We have a very inflated system that spends $2.4 trillion a year, and grows very rapidly over time. I don't see many people talking about the rate of growth.


5. What is it about American culture—our notion of a boundless frontier ahead of us—that keeps us from grappling with the cost?

Fuchs: There is something in American culture that looks for technological fixes. When we are dealing with health, we are dealing with essentially an existential problem; everybody sooner or later is going to die. It is something that most of us would like to postpone as long as possible, and somebody comes along with a gimmick, a gadget, a drug or something and says, this is going to help you and somebody else is going to pay for it—that's where the third party comes in. Why not?

We are much more prone to believe in technology. Other cultures are more accepting of the human condition and how to live better with the limitations that they have. We don't have that kind of thing at all.