By Trudy Lieberman
March 2003

	How to Protect Yourself from the Health Care System Join the Discussion: Solutions to America's Health Care Woes Scarcity of Geriatricians Puts Elderly at Risk (November 2002) Life on the Edge—Without Health Insurance (February 2002) Now, Do-It-Yourself Health Care (January 2002) Subscribe to AARP's Health and Wellness Email Newsletter

"Soaring Health Premiums Creating More Uninsured"; "Despite Efforts, Medical Errors Go on Killing"; "Half of Doctors Plan to Limit Medicare Patients They Treat."

As the headlines these days make all too clear, something is wrong with the U.S. health care system. On some level everyone knows that—whether it's a drug you can't afford, a medical mistake that injured a relative or finding a doctor who will take your Medicare card. It has been coming apart for decades only to be stitched back together by temporary fixes and, for some people, by HMOs.

Hit by the backlash against managed care, relentlessly rising costs and waves of new technology, the system once again threatens to destruct. What ails U.S. health care these days is deep and fundamental, many experts believe. "The heart of the problem is the basic nature of the system—the way insurance is paid and the way doctors are paid," says Arnold Relman, M.D., the former editor of the New England Journal of Medicine. "The system is fragmented, providers are paid on a piecework basis, and there's no overall accountability."

The system seems to work for people who stay insured and never have medical problems, but once they need care or leave a job, they often bump into the barriers that prevent them from receiving care. No wonder the Commonwealth Fund, a New York-based research organization, found that Americans are more dissatisfied with their system than citizens in Australia, Canada, New Zealand and the United Kingdom.

Discontented as some people may be, "there's no consensus that we need a whole new system," says Robert Blendon, professor of health policy at the Harvard School of Public Health. "People can be quite unhappy and disturbed, but that doesn't translate into a major political movement."

And so the system staggers along with little agreement on how to repair it. Just look at the political stalemate over a prescription drug benefit for Medicare beneficiaries. In short, says Harvey Fineberg, M.D., the new president of the Institute of Medicine, "We are drastically underperforming on access, we are extravagant in costs"—and, he adds, the country is just beginning to focus on quality. Americans confronting the realities of growing old know what Fineberg means.

THE NEW UNINSURED
Some 41 million people have no health insurance—a statistic that many people pay scant attention to. Middle-class Americans "have other things to worry about," says Stuart Altman, a professor of health policy at Brandeis University. "The uninsured are them, not us."

Increasingly, the uninsured are us as employers cut back on coverage for active workers, those retiring early and workers already retired. Americans too young for Medicare but no longer insured through their employers are finding themselves without health insurance for the first time in their lives.

According to William M. Mercer, an employee benefits firm, 46 percent of large employers offered early retirees health insurance in 1993. By 2001 only 29 percent did. The numbers also tell a grim story for people already retired and who expected to continue coverage from their employers. In 2001 only 23 percent of large employers offered insurance to retirees compared with 40 percent in 1993. Many employers still providing coverage are shifting more of the cost to retirees.

Uninsured people have few affordable options. Existing medical conditions make it hard to buy a policy in the individual health insurance market, and state programs designed to help the uninsured aid a limited number of low-income individuals.

State high-risk pools offer coverage to people who are uninsurable in the regular market. But premiums are high.

EXTRAVAGANT SPENDING
It is no secret that the United States spends more of its gross domestic product on health care than any other country. It spends 14.1 percent of GDP on medical care, while the Canadians spend 9 percent, and the Germans spend nearly 11 percent. Both Canada and Germany insure all their citizens and have lower prices for prescription drugs.