Thom Hartmann: But to the healthcare debate. There is a new, a new group over on Facebook. Let me just set this up by sharing this with you. It’s called ‘One million strong against our socialist fire departments.’ The topic: ‘For far too long fire departments across the United States have been socialist organizations resulting in taxes on the American people. Fact: Most Americans never use the socialized services of the fire department. The Obama Administration has been very clear about keeping the status quo when it comes to tax payer funded fire departments. It’s time to open the fire department up to private industry. We have the best fire departments in the world in the U.S. but that doesn’t mean that anyone, even non-U.S. citizens, should be able to dial up and have fires put out. I mean we’re putting fires out for illegal aliens. There are private companies, Halliburton, etc. who could step in tomorrow and take over every fire department in America and thus charge the consumer directly. So only those people who are using the fire department would actually pay for it. This is America. No free fire safety. Better dead than the fire truck red.’

Michael Tanner is with us with the Cato Institute, senior fellow at the Cato Institute, co-author of ‘Healthy Competition—what’s holding back healthcare and how to free it.’ Cato Institute of course the Libertarian think tank in Washington DC. Michael, welcome to the show.

Michael Tanner: Well thank you, it’s a pleasure to be with you.

Thom Hartmann: Or welcome back I should say. You’ve been here before. Um you have written this op ed about the whole, you know, healthcare thing, and you’re suggesting that basically free enterprise is going to be the solution to all of our problems in this regard. Let me ask you what I think is really the bigger question. Every country in the world that has a national healthcare system as large as Germany, Switzerland, France, as small as Costa Rica. Every country in the world that has one has made it a crime, has made it illegal, for any of the health insurance companies, and in Switzerland it’s all health insurance companies, for any of the health insurance companies that are offering primary basic care, preventative medicine, responsive medicine, treatment of cancer, all that kind of stuff. As opposed to having a fancier room in the hospital or a private hospitals even, or as opposed to cosmetic surgery, primary care, has made it illegal to be for profit. Why…

Michael Tanner: Actually, that’s not true. In Switzerland a number of the companies are for profit and there are for profit companies in most of Europe that offer plans that compete with the government…

Thom Hartmann: Not on primary care. This was the essence of the piece that was done for National Public Radio, National Public Television actually. And it was actually deleted. It was edited out of the National Public Television Corporation for Public Broadcasting piece, and I’m forgetting the guy’s name [T. R. Reid], I don’t have it right here in front of me, but he just wrote a book about it. Just it’s simply not true. Every country says for basic primary care it has to be not for profit. But you’re right. There are a lot of for profit health insurance companies all around the world, they’re thriving, they’re doing well. But they’re not thriving at the level of UnitedHealth or Wellpoint because they don’t have everybody by the neck like we do here in the United States. Why should anybody be allowed to engage in for profit health insurance?

Michael Tanner: Let’s accept that for the moment, I mean I don’t necessarily agree with that statement. But let’s just accept that. All right, about 40% of all people in the United States are with private and non governmental insurance are insured through non profit. All mutual insurance companies are by definition non profit. Most Blues in most states are non profit. So we have plenty of non profit health insurance companies in this country.

Thom Hartmann: Yeah, I’m not disputing that. What I’m saying is why should we allow any of the for profit companies. Because it’s the for profit companies that are basically sucking us dry. I mean these mind boggling salaries. You’ve got Steven Hemsley, the President of UnitedHealthcare is sitting on 700 million dollars worth of stock options for five years work. His predecessor, Dollar Bill Maguire, taking over one billion dollars in compensation for 10 years. How can we look at this and see these guys making these incredible, these huge massive. You know CIGNA, Edward Hanway, 12 million bucks he’s taking home this year. And he’s the President. The Vice President, 4.3 million. You look at UnitedHealth roup. I already mentioned Hemsley, his EVP, his executive Vice President, 6.5 million. Another executive, that's George Mikan, another Vice President William Munsell. Another one, Anthony Welters, he’s taking 5.6 million. All of that is money out of people who thought that they were paying for healthcare and instead they’re paying for the obscene salaries of these guys who are leeches on our backs.

Michael Tanner: Well I’m not sure that if you go to the non profit insurance companies you’ll find salaries considerably lower. But that said, I have no brook for the salaries of the CEOs. Most of them are overpaid, their stock holders should be tossing them out, but that said, you could take away all their salaries and you wouldn’t have a significant impact on premium prices or healthcare costs in this country.

Thom Hartmann: Well in large part because they’re also, because UnitedHealth care just also declared a 5 billion dollar profit. They’re distributing that as dividends for their stock holders. And again, why should stock holders and CEOs be making money off of healthcare? They’re not giving a single shot, they’re not doing a single physical exam. Why are they making money?

Michael Tanner: Well gee, why should grocery stores?

Thom Hartmann: Grocery stores sell food.

Michael Tanner: They don’t grow corn.

Thom Hartmann: Grocery stores deliver corn. Health insurance companies don’t deliver healthcare.

Michael Tanner: No but they deliver protection from risk.

Thom Hartmann: Well yeah and that’s what government does well. That’s why we have fire departments.

Michael Tanner: Well we could get into an argument about what is a public good.

Thom Hartmann: Michael, you came on kind of late. Do you want to stick around over the break and we can continue the conversation?

Michael Tanner: Sure.

Thom Hartmann: Okay. Great. Michael Tanner is with us from the Cato Institute. Cato.org is their website. Stick around.

...

Thom Hartmann: Welcome back to talk radio for the rest of us. It's the Thom Hartmann radio program. Michael Tanner is with us, senior fellow at the Cato Institute, co-author of ‘Healthy Competition—What’s holding back healthcare and how to free it.’ Cato.org, of course, the website for the Cato Institute. And Michael, here’s my argument in a nutshell and you know, have at it, please.

Michael Tanner: Sure.

Thom Hartmann: One of the main reasons that we founded this country, or that the founders of this country founded this country, was to distribute risk. One of the reasons why the federal government was created was to distribute risk. It’s the reason why we have the army. Everybody agrees that the army should be federally paid for because none of us can afford to protect ourselves individually against an invasion from Canada or Russia or whatever. It’s one of the reasons why we have gone now, since Ben Franklin by and large organized the fire department in Philadelphia as a public entity, to fire departments.

Prior to the Chicago fire, by the way, and Mrs. O’Leary and her cow, whether it’s a apocryphal or not, you had private fire departments in Chicago who competed and very often people would simply, you know if you didn’t have a medallion on your house they would simply drive on by if you weren’t paying them the monthly fee. And after that Chicago fire, they said, 'screw it, we’re going with a socialized fire department. We’re going to distribute the risk absolutely as widely as possible.' Government distributes risk at a relatively low cost. The cost of Medicare is under 2%. Most national healthcare programs around the world operate at under 3%. The health insurance companies are running anywhere from 15-40% in their overhead costs which goes into profits and what not. I was arguing the morality of that to begin with.

But this is just the practicality of it. If we agree that our bodies being on fire, which metaphorically, which would be like getting cancer or a heart attack. If we agree that our bodies being on fire should be put out, that that fire should be put out, by as broadly a shared risk as possible, then why would we want to have socialized fire departments but privatized healthcare? It seems to me like we’re backwards. It seems to me that, and the socialized army for that matter, socialist army. It seems to me like this would be one of the very most important things to distribute the risk as widely as possible which means everybody in the country participates, which is called single payer healthcare.

Michael Tanner: Well I actually believe single payer healthcare is a coherent system unlike the sort of hybrids that we have today or the ones that the Obama Administration is trying to put through. I have a lot of problems with it. But at least, for the reasons you describe, it is a coherent system. Where I would disagree is with a couple things. First of all, in terms of the administrative costs, I think you vastly understate the cost on a public system. They, the direct costs you see are very low, because in many cases they unload costs to other agencies. For example, insurance companies have to collect premiums because the IRS, which is not part of the healthcare system for Medicare, collects payroll taxes, doesn’t count as an administrative cost for the Medicare system. If you actually…

Thom Hartmann: But they’re already doing that so that’s not going to, it’s not the entire cost to the IRS we should add. Let’s, okay. Let me give you that and say it adds 2 or 3 %, you know. It’s an additional 2 or 3 % cost. So what, it’s still under 5%.

Michael Tanner: Well, I think if you look at them, there’s been studies, there’s a great study out of the Warden School. They looked at them and said actually the public and private systems are relatively comparable with the exception of the fact that private systems essentially have to do advertising and things like that, which I suppose you could eliminate, which would take a couple of percentage out.

Thom Hartmann: If that’s the case, Michael Tanner, why is it that the Americans are paying on average a little over $9000 per capita, man, woman and children. And the next most expensive country in the world, Canada, is paying a little under $5000. And you get down to France and Germany, which are no slouches and they’re doing just fine thank you very much and they’re paying around $3000.

Michael Tanner: Well, most of that cost is not in the cost of insurance premiums. That’s in the actual cost of the care we provide. And in many cases we over provide care and in many cases we simply want more care.

Thom Hartmann: No that’s the cost of care as reflected by collections for insurance premiums.

Michael Tanner: No, it’s not that the average insurance premium is a third higher, it’s that if you look at a per capita cost of providing healthcare, we’re a third higher than Switzerland and about double say Britain or France or Germany.

Thom Hartmann: But those numbers include, in the United States, those numbers include the profits of the insurance companies.

Michael Tanner: Sure, but the profits of the insurance companies are a negligible part.

Thom Hartmann: How can they be negligible if they are 30% of the overhead?

Michael Tanner: No, no, no. They’re not anywhere near 30% of the overhead. And general insurance administrative costs, which include many things that we want insurance companies to do. For example, Medicare, largely operates on an old fashioned fee for service system. You send in a bill, they pay you. It doesn’t matter whether the patient got well or not. It doesn’t matter you know, any number of things, how much fraud there is. Which is why there’s such a high fraud rate in Medicare. We want insurance companies to be doing more coordinated care, more managed care, more. We want them weeding out fraud and things like that. All that adds is administrative costs.

Thom Hartmann: If we want, exactly, it does. And why distribute that over hundreds of companies. Why not say okay we’re going to have one agency do this. We’re going to bring best practices to that agency. We’re going to have absolutely transparent, because it's part of the federal government and is subject to lawsuits, federal transparency lawsuits and things. And have it done with like every other industrialized company in the world has to a large extent.

Michael Tanner: Well, you don’t have it necessarily over one company in many of these countries. In countries like the Netherlands or Switzerland, even Germany there are a multitude of insurers.

Thom Hartmann: Right, but not for profit and totally transparent and heavily regulated. So that’s what you would advocate? Okay. Well people can read Michael Tanner’s work over at Cato.org. Michael, thanks for dropping by. It’s an interesting conversation and on ongoing one, no doubt.

Michael Tanner: You got it.

Thom Hartmann: Its 27 minutes past the hour. Back with your calls.

Transcribed by Suzanne Roberts, Portland Psychology Clinic.