GRAND RAPIDS, Mich. — In America, employers pay for health insurance. Catholic surgeon Dr. William Passinault says American medicine has changed dramatically because of changes introduced to the health-insurance system in the mid-20th century.

“There’s no question about that,” said Passinault, of Grand Rapids, Mich., who graduated from Loyola University Chicago Stritch School of Medicine in 1961.

America’s current “third-party” payer insurance system took shape in the period immediately following World War II, not as a result of a concrete decision, but instead of what Catholic health-care analyst Grace-Marie Turner calls “an accident of history.”

In response to wartime wage and price controls, many companies began offering a key non-wage benefit to their workers: employer-based health-insurance packages.

In 1954, Congress passed legislation that codified employer-based insurance plans as a tax-free benefit.

According to U.S. Census Bureau data, 177 million Americans participated in employment-based health-insurance plans in 2007.

Turner, who is president of the Virginia-based Galen Institute, said the Congressional Budget Office recently calculated that the value of the tax subsidy for employer-based health insurance now amounts to $250 billion annually.

“That’s a huge incentive for people to get their health insurance through the workplace,” Turner said.

The Catholic Medical Association’s 2004 document, “Health Care in America: A Catholic Proposal for Renewal,” noted that the tax exclusion for employer-provided health insurance is much more beneficial for people with high incomes than for lower-wage workers.

“This regression in reverse in the tax code is a serious affront to the requirements of justice,” the Catholic Medical Association document states.

The other main component of the contemporary third-party system is government health insurance, primarily Medicare and Medicaid.

Medicare and Medicaid were both introduced in the mid-1960s as part of President Lyndon Baines Johnson’s Great Society initiative of expanded social benefits.

According to the U.S. Census Bureau, 83 million Americans were covered by federal and state government health plans in 2007.

Said Turner, “We’ve developed a culture where everyone thinks somebody else has to pay for all their health care.”

Unwanted Consequences

Kevin Schmiessing, a research fellow at the Michigan-based Acton Institute for the Study of Religion and Liberty, said that 86% of all Americans are currently covered by either employer-based or government health insurance.

“The most obvious consequence, and at the same time the most important, is simply out-of-control inflation in health-care costs,” said Schmiessing, who serves as editor of the Acton Institute’s Christian Social Thought series.

The inflation occurs because the current system provides little incentive for consumers to cut costs by shopping around, Schmiessing said, since consumers don’t pay directly for the costs of medical services they receive.

Passinault, who retired from active surgical practice in 2003 but continues to serve as chairman of the ethics committee at St. Mary’s Hospital in Grand Rapids, said the cost issue is also manifested in the time and expense imposed on doctors by the bureaucratic red tape associated with employer-based and government insurance.

He said that most doctors are forced to hire staff to deal with the plethora of forms they must file in order to receive payment for their services.

Passinault said the system also encourages doctors to become “technicians” and discourages them from spending time counseling patients about possible treatment options and providing moral support when dealing with serious ailments like cancer.

Said Passinault, “Those teaching moments with patients and those lengthy discussions are not things that insurance companies place a value on.”

Principle of Subsidiarity

Schmiessing and Turner both said the current system contradicts the Catholic principle of subsidiarity by taking health insurance out of the hands of individuals and families and assigning it to government and tax-subsidized employers.

The Catechism of the Catholic Church states, “Excessive intervention by the state can threaten personal freedom and initiative. The teaching of the Church has elaborated the principle of subsidiarity, according to which ‘a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co-ordinate its activity with the activities of the rest of society, always with a view to the common good’” (No. 1883).

When health-care insurance delivery violates the principle of susidiarity, problems follow. Participants lose personal responsibility over an area of fundamental importance, said Schmiessing.

And when people become patients, he added, “They are just another client to be processed through the system.”

Catholic health-care institutions also face pressures to provide things like sterilization and artificial contraception that gravely contradict Church teachings but which may be covered by insurance plans.

Said Schmiessing, “When you have a system that’s heavily government-regulated, this can cause problems for institutions like Catholic hospitals.”

The Christian Approach

Another concern identified by Catholic experts with respect to the current health- insurance system is that it undermines the Christian imperatives that lie at the heart of the Church’s medical apostolate.

“The key to the crisis in American health care today is that it violates essential norms of justice and charity on both sides of the physician-patient relationship,” the Catholic Medical Association’s 2004 health-care document states. “It impairs the ability of the physician to decide and act as Jesus would, and it ignores the dignity of the poor in countless ways.”

Perhaps the biggest single way the current system discriminates against poorer Americans is the problem of the 47 million people who are not insured at all. This topic will be the focus of the next segment of the Register’s health-care series.

Retired surgeon Passinault agrees that serious problems exist. Yet, he remains hopeful, citing the selfless attitudes that predominate among the second-year medical students who take his medical ethics course at the Grand Rapids branch of Michigan State University’s College of Human Medicine.

“I’m actually quite impressed with the humanitarian perspective of young medical students,” Passinault said. “I really do think the majority of students enter their profession with those kinds of attitudes — we just have to be good role models so they know they’re not alone.”

Tom McFeely is the Register’s Contributing Editor.