By Lynn Cook
The Houston Chronicle, February 21, 2008

Dr. Ronald Davis chokes up when he recalls the poverty he witnessed in rural Ecuador the summer he was 17.

It was the summer he knew for certain he wanted to become a doctor.

Davis traveled, often by mule, to remote villages, vaccinating 500 children against measles along the way through the Amigos de las Américas program. Amigos sends high school and college students from the U.S. to Latin America to perform health service projects.

Today, Davis, a preventive medicine specialist associated with the Henry Ford Health System in Detroit, is president of the American Medical Association. He was here last week to give a speech to Amigos, which was founded in Houston.

He talked with Chronicle business health reporter Lynn Cook about Medicare reform, the uninsured and how the health coverage debate is playing out in the race for president. The following are excerpts from that interview and his speech.

Q: Who will the AMA endorse for president?

A: The AMA doesn't endorse candidates or their health platforms. We try to communicate what's needed to reform the system.

Q: I know it's a big question, but what's needed?

A: We started talking about things like tax credits 10 years ago, and now some candidates have incorporated that into their platforms as a way to help cover the uninsured population in this country, which stands at 47 million.

People ought to be required to own health insurance once they can afford to do so. President Bush has talked about tax deductions, but that only helps those with a significant enough tax liability.

If you're at 500 percent of the federal poverty level — which is $50,000 a year for a single person or about $100,000 a year for a family of four — then you should be required to have health insurance. Six percent of this population doesn't have it. We need credits to get at the rest.

Some candidates have talked about required coverage. Some candidates haven't made their position clear.

We're not getting a lot of details out of them, and we think their feet need to be held to the fire about this, because in 2009 when we have a new president and a new Congress, there will no longer be any excuse for not dealing with this issue.

Q: What else?

A: You know, 40 percent of businesses don't offer health insurance. We need insurance market reform. We need statewide risk pools to cover high-risk people with pre-existing conditions. And we need guaranteed renewability so you don't get kicked out for being sick.

But we have to work with the insurance companies, too. You can't simply mandate that insurance companies take all comers because that could drive up the price of premiums for everyone.

Q: How could requiring everybody to be covered actually be funded?

A: Eliminate the exclusion of employee health benefits from taxable income. That's the start.

Today, people who get health benefits through their jobs, in effect, get subsidized by the government.

Those federal subsidies for health total $120 billion a year. And remember that as income rises, and the richer the benefits get, the richer the tax breaks get, too.

So our system now is that those with the highest incomes and most benefits get the most tax break.

The AMA has actuarial data showing if we took back that $120 billion and the government found another $30 billion to $60 billion more to add to it, we could be at an overall insured rate of 94 percent in this country.

Q: I have to ask about Medicare because so many doctors have told me the looming 10 percent cut is their biggest concern. What's the AMA doing to try to stop it?

A: Sixty percent of doctors tell us they will reduce their Medicare patient load if there are more cuts. They tell us they'll have to, and with the baby boomers starting to enter the Medicare population, this is not the time to reduce service to seniors.

We've been fighting this fight for years but, normally, we get at least a year's reprieve before it comes up again. Now it's becoming year-in, year-out cutting.

What's particularly frustrating this time around is they gave us a 0.5 percent increase in payments for six months ending in June and then plan a big cut after that.

We think payments should be going up.

Q: How likely is that?

A: When you look at the Medicare Economic Index — this is a government index tracking medical costs — the amount it takes to run a physician's practice has been going up steadily by 3 percent a year.

Yet the government is cutting payments to physicians even while increasing some payments to nursing homes and hospitals to adjust for inflation. We don't think that's right.

A few years ago, the Congressional Budget Office estimated that fixing the way physician payments are calculated would cost $90 billion. Now, they say adjusting to the Medicare Economic Index will cost more than $260 billion.

Legislators need to know the longer they kick this can down the road, the worse it's going to get.