February 17, 1971
5:26 pm – 5:53 pm
This is a transcript of the 1971 conversation between President Richard Nixon and John D. Ehrlichman.
John D. Ehrlichman: On the —on the health business—
President Nixon: Yeah.
Ehrlichman: —we have now narrowed down the vice president’s problems on this thing to one issue and that is whether we should include these health maintenance organizations like Edgar Kaiser’s Permanente thing. The vice president just cannot see it. We tried 15 ways from Friday to explain it to him and then help him to understand it. He finally says, “Well, I don’t think they’ll work, but if the president thinks it’s a good idea, I’ll support him a hundred percent.”
Ehrlichman: Well, everybody else’s judgment very strongly is that we go with it.
President Nixon: All right.
Ehrlichman: And, uh, uh, he’s the one holdout that we have in the whole office.
President Nixon: Say that I—I—I’d tell him I have doubts about it, but I think that it’s, uh, now let me ask you, now you give me your judgment. You know I’m not to keen on any of these damn medical programs.
The organization defines its eight regions as:
|Mid-Atlantic (vicinity of Washington, D.C. including Maryland and Virginia)|
|Northwest (Northwest Oregon and Southwest Washington)|
The three organizations which make up each regional entity are:
|Kaiser Foundation Health Plans work with employers, employees, and individual members to offer prepaid health plans.|
|Kaiser Foundation Hospitals operate medical centers in three states.|
|The Permanente Medical Groups are for-profit partnerships of physicians.|
But what are we getting for all this money?
For most Americans, the result of our expanded investment has been more medical care and care of higher quality. A profusion of impressive new techniques, powerful new drugs, and splendid new facilities has developed over the past decade. During that same time, there has been a six percent drop in the number of days each year that Americans are disabled. Clearly there is much that is right with American medicine.
But there is also much that is wrong. One of the biggest problems is that fully 60 percent of the growth in medical expenditures in the last ten years has gone not for additional services but to meet price inflation. Since 1960, medical costs have gone up twice as fast as the cost of living. Hospital costs have risen five times as fast as other prices. For growing numbers of Americans, the cost of care is becoming prohibitive. And even those who can afford most care may find themselves impoverished by a catastrophic medical expenditure.”
Reforming the health care insurance system without fundamentally changing the health care delivery system is mathematically impossible.
The 80th percentile of the insured population uses $3,000 (2002 dollars). You have to hit the 95th percentile to get anywhere interesting, and even there you have only $11,487 in costs. It’s the 99th percentile, the people with over $35,000 of medical costs, who represent 22% of the entire nation’s medical costs. An individual adult insurance plan is $7,000 (and it varies by age, by sex and location).
$11,487 is less than two years’ premium; less than one if the individual has family coverage in the $12,000 price range.
Health Insurance Math
1. How much does the health insurance company pay if a person has a $2,200.00 hospital bill and a $200.00 annual deductible?
Solving: Deductible is the amount that the policy-holder must pay out-of-pocket before the health plan pays its share.
Hospital Bill – Deductible
2,200 – 200 = 2,000
2. How much does the insurance company pay if the person has a $ 2,200.00 hospital bill, a $200.00 deductible, and 80/20 co-insurance?
Solving: Deductible is the amount that the policy-holder must pay out-of-pocket before the health plan pays its share. Co-Insurance is the policy-holder must pay a percentage of the total cost (In this case insurance pays 80% and individual pays 20%).
Find percent individual and insurance pays
Insurance = 80%
Individual = 20%
80% of 2,000 = 1600 (This is what insurance pays)
20% of 2000=400 (This is what you pay)
Dr. House: “Who here doesn’t have health insurance? None? None at all? Michael Moore was right. MRIs, PET scans, neuro-psych tests, and private rooms for all these patients. Fight the power!”