We are in the middle of a presidential election year in which one of the major questions posed to the candidates is how they plan to fix our dysfunctional healthcare system--a system in which more than 45 million people are without health insurance and their access to care is usually via the emergency room. This expensive method of providing healthcare is a cost borne by everyone.

The rational basis for all insurance is to spread the cost of services as widely as possible. This is especially true in healthcare, where the service needed is often not one which the individual can delay or do without. Thus, as a social obligation, everyone needs to be part of the system and share in the cost.

In the late 1970's, as the cost of medical care was rising rapidly due to advancing technology and an aging population, the idea that free marketplace competition among insurers would keep the costs as low as possible was advanced. Thus was born the HMO industry where competing insurers, given the right to direct where and when patient care would take place, would lower medical costs. Alan Einthoven, Ewe Reinhardt and other academic economists thought that delivering healthcare was no different from selling cars or refrigerators, and that free competition based on price and quality would be best for all. Indeed, managed care did slow the rapid increase in medical costs for a while, but the improvement occurred mainly by delaying authorization for appropriate care and forcing contracts with insufficient reimbursement on doctor groups, driving some into bankruptcy.

However, with the ability to direct patient care, and contract with doctors and hospitals who were restricted by law from forming equally large negotiating entities, most of the contracts soon became contracts of adhesion. The insurers could then reap untold profits, soon becoming the darlings of Wall Street. Regulations which should have made these insurers act as public utilities, making sure that most of the premium dollar was actually spent on patient care, were never written. Thus we find again and again that 30-40% of the premium dollar taken by Blue Cross, Aetna, United Healthcare and others goes to administration, advertising, profits for stockholders, and absurdly large executive bonuses and perks.

In California where 54% of the workers are under HMO insurance, the absurdly low physician compensation has led many doctors to leave the state and those in their late fifties and early sixties to consider closing their offices. This will severely impact access to care at a time when the baby boomer population is requiring more care as they age.

Some people see a single-payer, tax-supported government-run system as the only answer. This, in my opinion, is desperate thinking since tales of long delays in diagnosis and care are rife in the government-run systems of England and Canada. A third way must be found which will keep the best aspects of private sector administration, but with a strong layer of social responsibility mandated to the insurance companies. The ability to sell health insurance nationwide instead of state-by-state, portability of insurance, and decrease in the number of non-essential mandates required are just some of the first steps needing to be addressed in a meaningful approach to the problem.

The AMA Health System Reform proposal addresses the shortcomings of our present system, especially the unfairness of employer-based health insurance being tax deductible, while individually purchased insurance is not. The proposal advocates a clear role for the government in financing and regulating health insurance coverage. Visit www.voicefortheuninsured.org for details.

In the early years of the 20th century, Theodore Roosevelt was able to reign in the predatory actions of the railroads and other monopolies by having the federal government act as an arbitrator for the benefit of all the people. In this new century, similar socially responsible thinking is also required. We need to get beyond the ultra-liberal thinking that only the federal government can run the healthcare system fairly for all, and the ultra-conservative thinking that all regulation is bad per se.