2009 Health Plan


“Life, Liberty, and the pursuit of happiness—”

What is “life” ?, without health care.


Princeton Plan’s Savings:at least $77 billion less for consumers

German Model, 11% GDP: savings,  $525 billion less for consumers

Clinton Proposal’s Cost: + $110 billion federal tax dollars,
plus interest on U.S. Treasury Bonds, in perpetuity;
a  subsidy to insurance companies

Obama Proposal’s Cost:   + $102 billion federal tax dollars,
plus interest on U.S. Treasury Bonds, in perpetuity;
a subsidy to insurance companies

HR 676 (currently defunct):+, a 3% payroll tax on all public
(2005)               and private employers and employees, etc.

Medicare for All

We recommend a new Medicare Part E to be all-inclusive, to insure  hospital costs, physician fees
and medical needs, and prescription drugs—i.e. Parts A, B, and D of Medicare—to be offered to the
161 millions under 65 who are now insured by private insurance companies, and for the 47 million
who are uninsured.

Because of lowered administration costs alone, this has a minimum potential of saving $77

A working private/government partnership is already in place and working for 44 million U.S. citizens
in the year 2007—15% of our population—those most in need of medical care: the 36.7 million
elderly and the 7.1 million disabled—MEDICARE.

It has four components which recommend it: an administration cost of 4%; already negotiated fees
for physicians and hospitals; a single,  national risk pool; and it works, with a minimum of fraud.

A great advantage of this national, single risk pool of 44 million is that the oldest and sickest people
are included equally, and their risks spread among a large pool of people, rather than excluded, and
discriminated against by the private insurance companies, especially those with pre-existing
conditions. Better yet, their coverage cannot be cancelled.

It also has the advantage of prompt payment of claims without delaying tactics, or refusing
coverage and payment.

Medicare’s administration cost of 4% handles 92 million people— the Medicare, Medicaid, and SCIP
programs— one third of our population.

As an alternative, we recommend the adoption of the German health care system. (See

In any case, we recommend mandatory health insurance for all. In practical terms, Hawaii has
mandated health insurance for years, and has only reached the percentage of 93% of its citizens

Holland has a success rate of 98% for its mandatory insurance.


“Most physicians now support single-payer, national health insurance” (“Medicare for all”)
Professor Alan Meyers, Boston University Medical School, NYT 6/19/08

Current health costs, 2005, 16% GDP:  $1.988 trillion, with worse health outcome results than the
other G7 industrialized nations.

Scott Serota, president of the Blue Cross Blue Shield Association, which insures 102 million
Americans, or one out of three, stated that 29% of the nation’s health costs are due to waste.
(New York Times, October 18, 2008)

Dr. Thilo Weissflog wrote in the New York Times of November 20, 2007, “As a physician, I deal with
insurance companies and their reluctance to pay for indicated procedures or tests on an almost daily

“The difference between health care and other businesses is that it doesn’t deal with widgets but
human lives. Cutting your costs and increasing your profits, by denying people necessary care is
unconscionable. Until profit is removed from the health insurance industry, we will unfortunately not
see an end to these tragic

The wife of another doctor wrote in the New York Times of November 6, 2007 “Before my husband
and I moved to Denmark in August, we were increasingly frustrated with a system in which even
people with ‘good’ insurance spend too much time begging for approval for medical treatments. As a
physician, my husband felt he was in a daily fight with midlevel bureaucrats whose sole job was to
deny care”.

“As to whether a single-payer plan has political support, it depends on whether you ask the average
person or the average politician.

“Whereas polls show that a majority of the people favor a single-payer plan, the politicians, many of
whom be beholden to the insurance industry, would like you to believe otherwise.” Peter Hanauer,
November 28, 2007, the New York Times.

“The truth is that single-payer, government-run health care has been a panacea.

“In the 40 years that I’ve practiced family medicine, I’ve found Medicare, Medicaid, the Veterans
Administration, all of them single-payer government administered health care programs, more
predictable, uniform and reliable than the for-profit health care insurance companies.

“This is better for doctors and hospitals and certainly better for the patients.

“I like one form to file, one payer, one set of rules for everyone and the assurance that everyone has
health care coverage when patients come to see me”. Melvin H. Kirschner, M.D., the New York Times,
November 28, 2007

“Where we are unique (among countries)  is in leaving most of our health system to the tender
mercies of profit-maximizing investor-owned businesses”.
(Marcia Angell, M.D., senior lecturer, Harvard Medical School; former editor in chief, The New England
Journal of Medicine; the New York Times, November 28, 2007)

“The ‘mandate model’ for reform rests on impeccable political logic: avoid challenging insurance
firms’ stranglehold on health care. But it is economic nonsense. The reliance on private insurers
makes universal coverage unaffordable.

“an inconvenient truth: only a single-payer system of national health care can save what we
estimate is the $350 billion wasted annually on medical bureaucracy”.
(David U. Himmelstein and Steffie Woolhandler, Professors of Medicine at Harvard; the New York
Times December 15, 2007)

Necessities of Life

Food, water, shelter, health care are necessities to sustain life.

In all cases in the U.S., government acts to provide them, including emergency health care.

Water is free, and regulated by governments; food stamps are available for the poor, subsidized by
federal payments to farmers; shelter is provided for the homeless and poor, subsidized by federal
housing grants; health care is given to those over 65 years of age, subsidized by all taxpayers through
FICA taxes; pensions are earned for those who worked at least a few quarters of the years of their
lifetime through Social Security.

Many hospitals and nursing homes are built and supported by governments.

For the military and veterans, health care, prescription drugs, surgery and hospitalization are
provided by the federal government by doctors and nurses who are government employees.
President George W. Bush has gone to the National Naval Medical Center in Bethesda, Md. for
checkups and treatments. Many federal politicians have also gone there.

What is not provided by the government is full health care for those under 65, although insurance
premiums are deductible expenses for businesses; and medical costs over a certain percentage
threshold are deductible on individual federal income tax returns.

The American Cancer Society has decided to devote its entire advertising campaign for 2007-2008
to promote access to quality health care for all; as uninsured cancer patients are more likely to have
their cancers diagnosed at an advance stage, resulting in more expensive treatments, and at a
greater risk of death.
(New York Times 9/11/07 editorial)

In New York City, the city government runs public hospitals like Bellevue and Elmhurst.

Everyone we know of wishes they were old enough to qualify for Medicare.

And wishes even more that they could be covered by the federal employees insurance system, like
members of Congress.

Both Old Age Social Security pensions, and Medicare, are single-payer systems. Only arch-
conservatives want to tamper with them.

The American Medical Association is the second biggest spender on lobbyists.

Comparision with Foreign Countries

“The United States ranks 44th in life expectancy, behind Bosnia and Jordan; near last, compared
with other developed countries, in infant mortality; and in last place, according to the Commonwealth
Fund, a health-care research group, among major industrialized countries, in health-care quality,
access and efficiency.

U.S. Medicine

“Overutilization is driven by many factors. The most important factor, however, may be the perverse
financial incentives of our current system.

“Doctors are usually reimbursed by whatever they bill. The culture in practice is to grab patients and
generate volume. ‘Medicine has become like everything else’, a doctor told me recently. ‘Everything
moves because of money.’

“I tried to practice ethical medicine, but it didn’t help. It doesn’t pay, both from a financial and a
reputation standpoint.”

(Sandeep Jauhar, M.D.; the New York Times 3/11/08)

The average salaries for doctors range from $254,558 to $486,734 for all doctors except pediatrics,
internal medicine, and family medicine—$188,496, $191,526, and $178,859 respectively.
(The New York Times 3/19/08)

For occupational earnings in the health care fields, see the Bureau of labor Statistics, Occupational
Earnings (the latest data is for 2006)


Medicare’s administration cost of 4% handles 92 million people— the Medicare, Medicaid, and SCIP
programs— one third of our population.

There is a negative. It is subsidized by federal tax money—
$167.5 billion in 2006, which pays for 75% of the costs of the medical portion, Part B—$2,800 per
enrollee—; as well as subsidies for insurance companies that write Medicare “Advantage” policies,
and those affording drug coverage, Part D.

The federal agency, the Centers for Medicare and Medicaid Services (CMS), is the largest purchaser
of health care in the United States, serving over 92 million Medicare, Medicaid and SCHIP
beneficiaries; for a total net outlay of $517.185 billions, i.e. over half of the monies for hospital and
physician fees.

Hospital Costs, Part A

Part A, for hospital costs, is financed by a 1.45% wage tax each on employees and employers, and
is forecast to continue to be in surplus until 2018.

Hospitals complain that they are losing money, but according to the Wall Street Journal  analysis of
data from the American Hospital Directory, the 50 largest not-for-profit institutions enjoyed a
combined net income—profit—of $4.27 billion in 2006.
(AARP Bulletin July 2008)

Physicians and Medical Needs, Part B

Part B, for physician’s fees and  medical needs like wheelchairs, laboratory fees, etc. is financed by
a monthly premium of $93.50, or $1,122 for participants. This is what is subsidized by tax money, and
to break even the premium should be raised to $4,000, the per capita costs for Medicare Part B.

The total cost per person for a Medicare enrollee for the year 2007 with full coverage is $13,122 as

* Part A Benefits- Hospitals                         $4,600
* Part B Benefits- Medical                                $4,000
* Medigap Insurance-                                   $2,000
* Prescription Drug Premiums                          $  480

* plus deductibles and co-payments, for a minimum total cost for an
enrollee of                $11,080

 Federal Subsidy for Insurance Companies
offering Drug Insurance or
“Advantage” policies                   $2,042

Total:                          $13,122

The source of monies for these per person Medicare costs is:

Part A Income- Hospitals (FICA)        2.9%             $4,600
* Part B Income Insurance Premiums  Medical             $1,200
Federal Government tax revenues                $2,800
* Medigap Insurance-                                           $2,000
* Part D Income Prescription Drug Premiums       $  480

Federal Subsidy for Insurance Companies
offering Drug and “Advantage” Insurance         $2,042

Total:                                     $13,122

* This cost, to an enrollee, totals $3,680 for full coverage

If the Medicare benefits cover the costs for the sickest patients, then the per person expenses for the
healthiest people—those under 65—should be substantially less.

In fact, private insurance companies are charging on the average $3,000 per person for those under
65, $10,122 less than the Medicare costs of $13,122.

“The average cost of family coverage (for 4 people) bought through an employer was $12,100 in
2007, with workers paying $3,281 0f that amount”
(New York Times July 23, 2008)

If Medicare were to offer individual policies to all under 65, because of its lower administrative costs
of 4% as opposed to 20-30%; using a savings of 16% of $3000, the cost for this Part E policy would
be $2,520, a savings of $480. For a family of 4, the savings would be $1,920.

Prescription Drugs, Part D

Part D, for prescription drugs, is subsidized by the federal tax payers for $49 billion a year through
subsidies for the insurance companies offering drug insurance. One reason for this is to reimburse
the insurance companies for their enrollees’ costs when their drug costs go beyond the “doughnut”

Normal insurance industry practice is to spread this risk through reinsurance.

There are only 24 million enrolled out of 44 million, for a per capita subsidy of $2,042 to the
insurance companies.  Many of the balance of 20 million are covered by their employer’s drug plans.

Congress mandated that this drug plan can not negotiate for lower prices for its 44 million person
pool, like Medicaid and the Veterans Administration do.  Rep. Henry Waxman, chairman of the House
Oversight and Government Reform Committee, estimates that if Medicare administered Part D, there
were be savings of $10.7 billion a year.

Another reason for using tax monies is to subsidize the so-called Medicare “Advantage” insurance
policies (which include a Part D component), issued by private insurance companies. There are 7
million persons enrolled in these “Advantage” programs. The federal payment averages $9,000 per
person, which includes a markup of 12%.

Moreover, these “Advantage” policies seem to be a problem. Senator Max Baucus criticized the
“unscrupulous tactics of some plans”. Their administration costs are 20-30% because of sales
commissions and marketing.

Humana, the second largest health insurer in the U.S., expects to earn a profit of $1.28 billion this
year from Medicare, mainly from the Advantage program. (NYT 12/5/07)

William W. McGuire, the former chief executive of United Health, the nation’s largest health insurer,
has been asked by the Securities and Exchange Commission, to return $616 million to settle claims
related to back-dated stock options. (NYT 12/7/07)

Representative Pete Stark, chairman of the House Ways and Means Sub-Committee on Health, said
“Medicare overpayments fatten company profits”.   (New York Times 2/28/08)

Total National Health Care Costs

In 2005, health care costs in the United States were 16% of the Gross Domestic Product; $1.98

In 2003, health care costs in the United States were nearly 16% of the Gross Domestic Product, and
were $1.7 trillion— $5,500 per person.

“Costs for 2007 are $2.2 trillion—16.2 % of GDP—, twice as much on a per capita basis as any other

“But  the health of those in America is not appreciably better than that of people in other
industrialized countries. Most of which offer government-run care systems”.
(The Morning Call, Allentown, Pa. December 18, 2007)

There are five major components of health care costs—hospitals, physicians, prescription drugs,
dental care, and long term nursing care; all naturals to be covered by insurance.

However, a drawback of a private insurance-financed system is the millions of dollars spent on
lobbies—700 in Washington, D.C. alone—plus many more in each of the 50 state capitals—by these
insurance companies, hospitals, doctors, nurses, drug companies, etc. to maintain the status quo.

In addition, all of the above are spending millions of dollars on marketing expenses—television,
radio, newspapers, magazines, direct mail, billboards, you name it.

Neither this industry-wide lobbying nor marketing effort directly benefits the patients, only those
promoting themselves.

These activities add at least 10-20% to the national health care bill.

According to the U.S. Department of Health and Human Services for the year 2003, of the total health
care costs, $629 billion —37%—, was for non-physician services and non-hospital costs, i.e.
prescription drugs, dental, long term nursing home care, etc.

Hospitals accounted for $522 billion, or 30.7%.

Physicians accounted for $374 billion, for an average cost of $422,611 for the 884,974 doctors in
2004, or 22% of the total health expenditures. Estimating the number of doctors in 2003, it would be
869,080 (853,187 in 2002; 884,974 in 2004 averages 869,080. Figures from the AMA); for an annual
cost of $430,340 each.

In The New York Times of March 19, 2008, they reported the average salary for the following
physician categories:

Plastic Surgery
Orthopaedic Surgery
Radiation Oncology
General Surgery
Diagnostic Radiology
Emergency Medicine
Internal Medicine
Family Medicine


Data from the Medical Group Management Association highlights the salaries of physicians with
over one year experience in the year 2005:

Surgery: General
Obstetrics/Gynecology: General
Psychiatry: General
Internal Medicine: General
Pediatrics: General
Family Practice(without obstetrics)


In The New York Times of April 7, 2008, Dr. Denis A. Cortese, president of the Mayo Clinic, in
explaining why their costs are half of those of the U.C.L.A. Medical Center to care for chronic illnesses
in a patient’s last two years of life said, “Our physicians are all salaried. They have no financial
incentive to do more than is necessary for the patient.”

All the medical schools allow doctors, staff members and students to accept free food, travel,
gifts, ghost-writing services to doctors, join industry-sponsored speakers’ bureaus, etc.

Drug companies spend billions wooing doctors—more than they spend on research or consumer
advertising. Speakers’ bureaus and drug samples are the pillars of the industry’s marketing
(New York Times 4/28/08)

Insurance Savings

Remove all medical insurance coverages from the other types of insurance policies, i.e. automobile,
personal liability, homeowner’s, etc.

Administration Savings

Private insurance companies have marketing and advertising costs and profits—13%—not incurred
by Medicare.

Salesman commissions range from 10-20%. Advertising media include television, radio,
newspapers, magazines, direct mail, billboards, etc.


The General Accounting Office (GAO) has estimated that 10% of medical costs are due to fraud.
Reducing the number of payers would reduce the opportunity for fraud.

“Defrauding Medicare is easy and safe”, said Professor Malcolm Sparrow, Harvard University.
20% of its money goes towards fake claims and mischarges (Doctors, hospitals, insurance
companies, etc.?)
(Parade, April 20, 2008)

Ingenix, a subsidiary of United Health Group, one of the nations largest health insurers, is the
company that provides the information that insurance companies use to calculate how much they will
pay their policy holders based on “reasonable and customary charges”. Attorney General Andrew
Cuomo of New York State is asking these insurance companies to prove their calculations, as there
is evidence of fraud on their part to deliberately underpay their insureds.

Senaor Ron Wyden, Democrat of Oregon, welcomed the proposal, “I helped write the 1990 law,
which put an end to Medicare supplement insurance scams, but today some of the same deceptive
practices have resurfaced in the marketing of Medicare Advantage,” Mr. Wyden said.

Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services, sent
“secret shoppers” to 240 marketing events last fall, and they found inaccuracies or omissions in
three-fourths of the sales presentations.

And Many Jo Hudson, director of the Ohio Insurance Department, said: “There are many good,
conscientious agents, but we still see predatory sales of private Medicare plans.  Agents go door to
door in senior housing complexes and tell seniors they have to buy a particular product, or they will
lose their Medicare benefits.

Who Pays for these Health Care Costs ?

Of our 300 million population, 92 million are enrolled in Medicare, Medicaid and SCIP for $187 billion
of federal tax dollars.

47 million are not insured; meaning that the balance of 161 million are covered by private insurance

Recommendation: a new Part E for Parts A, B, and D

For those under 65

It has been estimated that currently the premium cost of these 161 million people covered by
private insurance companies averages $3000 per year.

We recommend that those privately insured be offered a standard Medicare benefit package
covering hospital, physician and drug costs.  In as much as Medicare administrative costs are 4%,
and private insurance administrative costs are at least 20%, this new Part E coverage would save
$480 per person.

This has the potential of saving $77 billion.

It would also eliminate the denial of medical claims, as well as  rejection of issuing an insurance
policy. It would allow patients to choose any physician or hospital without referrals.

This would also create a nation-wide insurance risk pool of potentially 161 million persons, more
than adequate to spread the risks. The 47 million uninsured would be eligible for this insurance, and
thus a part of this pool.

Social security insurance covers the entire national risk pool of 300 million people for disabilities
and old age pensions.

Physicians control the cost of health care through their own fees, their writing of prescriptions for
drugs, for tests and lab work; their recommendations for hospital admittance and for surgery,
physical therapy, etc.

Either we create a system that supports their decisions, or we continue with the current system of
questioning their professional judgment in order to avoid paying for needed care.

The private health insurance companies are notorious in trying to avoid paying for needed medical
services. For example, United-Healthcare, with 26 million members, leaves the decision to cover the
drug  propofol, used in the colonoscopy procedure, to its local carriers, most of whom have restrictive

Aetna, with 16.6 million insureds, has “suspended” its policy of denying coverage for this drug.

Humana and Well-point are among the large carriers that have sought to curtail coverage.
(New York Times 2/28/08)

As it is, Shannon Brownlee, senior fellow at  the New America Foundation, writing in her book
“Overtreated” says “We spend between 20% to 34% of our health care dollars on care that does
nothing to improve our health.”

“Doctors and hospitals typically depend on how much they do, on the volume of work for their
income, and they are the gatekeepers who decide when work needs to be done.

“Hospitals that don’t use the fee-for-service model, like those run by the Veterans Health
Administration, are already getting better results for less money.”
(David Leonhardt, the New York Times, December 19, 2007)


As an alternate to creating a new Part E for persons under 65, i,e, “Medicare for All”, we recommend
the German model, i.e. negotiated doctor’s fees of 3.5 times the average blue collar workers, and a
resulting 11% of their GDP as opposed to our 16%; a savings of 5% of our GDP.

We are enclosing a description of the German system from our 1993 white paper.

Mandatory Insurance

At present those who have insurance are paying a compulsory surcharge to pay for the costs of
treating the uninsured. This is especially noticeable in the ridiculously high per diem hospital

We do not question the necessity of requiring universal auto liability insurance, even though there
the insured pay a surcharge for the uninsured through “uninsured” and “underinsured” coverages.

We recommend the adoption of John Edward’s idea that when a person files their federal income
tax return, they must submit proof that they have health insurance.

Similarly, when a person goes for medical care, they must show proof of insurance, or be enrolled
on the spot in our proposed Medicare Part E.

Mandatory health insurance is required in Holland, with a 98% success rate.

Mandatory health insurance is required in Hawaii, with a 93% success rate.

For the U.S. as a whole, a 7% failure rate would equal 21 million people.

For those who truly cannot afford to pay for health insurance, enroll them in Medicaid.

Attachment: the German Program (1845 and 1910 A.D.)

Current German Program

(France and the Netherlands have similar programs)

*  Life-long medical care for all its citizens

*  Pays for hospital,  doctor and dental care, and a sickness
benefit after a 6 week waiting period.

*  Mental health services program weak

*   Serious shortage of nurses.  Complaints about low pay and
low status

*  Long-term nursing home care and home care being improved

*   Paid prescription drugs.  “Reference” prices  established
for  drugs,  which are solely available from  privately  operated

*  Doctors paid by fee-for-service,  fees negotiated annually
by program.

*  1147 statutory compulsory not-for-profit medical insurance
companies  guarantee provision of comprehensive coverage  to  all
insureds  (90% of population).  Plan over 100 years old (1845 and
law of 1911. Called “sickness funds”.

This large number of sickness funds makes for unwieldy ad-

*   Also have 42 private health insurance plans which 10%  of
the population has chosen based on over $36,000 annual income and
occupational status.  Plans reimburse physicians and hospitals at
twice the negotiated rates.

*   Large  companies have created their own  sickness  funds

*   Paid for by a fixed %age of employees’ gross income, plus
an employer contribution. Combined rate was 12.8 in ’89

*   Premiums  of unemployed paid by Federal Labor  Admin.  in
2/3’s of cases, or local welfare agencies in 1/3rd.

*   Premiums of retired persons paid by their pension fund as
a  flat  %age of the pension,  based on the national  average  of
working persons’ payroll contribution.

Only  covers 40% of care of pensioners.  Retired  persons
remain members of their sickness fund,  which subsidizes the dif-

*    Federal government has responsibility for health service
professions,  statutory health and accident  insurance,  doctor’s
fees,  hospitals,  pharmacies and medicines,  social security and
welfare medical care, protection of patients, medical research.

*    System  operates within strict framework of federal  and
state regulation

*   Since  ’77  have enacted cost-containment laws  and  some
cost-sharing by patients

*   17  regional associations of ambulatory  care  physicians
monitor   their  patterns of service,  negotiate annual  fee-for-
service rates,  provide to their members disability and survivors
insurance, subsidies for underserved areas

*  90% of ambulatory care physicians prohibited from treating
patients in hospitals

*  Most hospital-based physicians (salaried) prohibited  from
treating ambulatory care patients

*  Physician procedures given a “point value” on fee schedule
rather than monetary value

*  Patient presents physician with a “treatment voucher”, and
doctor notes thereon the services provided.  Physician bills  own
regional association quarterly

*   One  clerk  in  the regional association  office  per  10
physicians reviews and pays claims. Administration cost = 2.5%

*  1 doctor per 357 persons (ratio nearly lowest in world)

*  Average net income for doctors before taxes = $100,000 =
3 1/2 times earnings of blue collar workers

*   11 hospital beds per 1000 persons.  Rates negotiated on a
flat per diem charge

*   26 medical schools (all public institutions) with  12,000
graduates a year, 40% women.

(U.S. has 126 medical schools and 16,000 graduates a year)

*   Most students’ costs paid by government.  Admissions  and
perforance testing prescribed by law


Uwe E. Reinhardt, economics professor at Princeton University
specializing in health issues reported to favor the German plan.

*  Sickness funds cost 5% of gross domestic product in ’89
Total health care cost was 8.2%

Sweden’s rate was  8.8% of gross domestic product,
France’s rate was  8.7%,
Canada’s rate was  8.7%,
Japan’s  rate was  6.7%,
Britain’s rate was 5.8%


’89 Health care disbursements breakdown:

Germany   U.S.A.

Hospitalization                         31.5%     38.4%
Physicians                              17.5      18.9
Maternity                                2.1       —
Preventive                               3.8       —
Drugs                                   15.6       8.2
Loss of income                           6.6       —
Medical appliances                       6.0       1.8
Dental care                              9.8       5.1
Administration                           5.8       5.0
Funeral                                  1.0       —

Sources:  New England Journal of Medicine, 2/14/91 and 6/13/91

Embassy of the Federal Republic of Germany


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