Category Archives: Health Care Reform

The $8,000 Rip-off That Is Healthcare

Picking up on a theme I presented in two earlier posts this year, Health Care is Not a Market  and The Free Market Utopian Fantasy, Joe Paduda today asks “what would you do with another $8,000?”

Joe’s post outlines how providers, big pharma, device companies, and healthplans make money from a system designed to do so, and not to help you and your family stay healthy and functional. [ Emphasis Joe’s]

He shows us graphically how big health sector profit margins are, how we spend more than any other country, but die younger, and how healthcare premiums and deductibles and out of pocket costs keep climbing, but wages do not.

His one key point, is the following:

Healthcare is not, and cannot ever be, a free market. A free market requires buyers have the ability to make sellers respond to buyers’ needs – yet we all know we consumers have zero ability to make pharma, hospitals, big doctor groups, device companies respond to our needs.

Lastly, Joe asks the question: “If air travel worked like health care?” [Video link]

Would you rely on the airlines with your health care? Would you rely on the health care industry to fly you to your nephew’s wedding in Orlando? Of course, not.

So, why would you continue to defend, support and protect a dysfunctional, broken, wasteful, bloated, health care system that does not work like the free market, but only makes huge profits for the insurance companies, drug companies, device manufacturers, hospitals, investors, stock and shareholders.

And yes, you hanger’s on in consulting and research organizations who constantly attack single payer health care because it, one, puts you out of a job, and two, takes away any profits you and your company makes from advising  on or researching how to squeeze more profit out of the system.

One thing is for certain. I could sure use that $8,000 right now. My health care and other issues have taken a lot more from me than $8,000, but I’d settle for that. Wouldn’t you?

American College of Physicians Endorses Single Payer

For all you naysayers in the health care industry, whether you work for insurance companies, drug companies, or are consultants or analysts, the following posts from the Annals of Internal Medicine should convince you that you are on the wrong side of the issue, and that more and more physicians are coming around to the realization that single payer is necessary to improve the American health care system. The first article is authored by a panel, and the second by Woolhandler and Himmelstein.

I have been asking these questions, and many others like them for some time: What gives you the right to deny your fellow Americans universal health care? What right do you have to prevent them from getting lower cost medical care and lower cost drugs? What gives you the right to defend the profiteering in health care that has created a dysfunctional, broken, and wasteful system? The answer to these questions is the same – GREED. and your desire to protect your jobs. Well, according to these articles, you may be coming to the end of the line in that regard.

Here are the articles in full, thanks to Don McCanne:

Annals of Internal Medicine

January 21, 2020

Envisioning a Better U.S. Health Care System for All: A Call to Action by the American College of Physicians

By Robert Doherty, BA; Thomas G. Cooney, MD; Ryan D. Mire, MD; Lee S. Engel, MD; Jason M. Goldman, MD; for the Health and Public Policy Committee and Medical Practice and Quality Committee of the American College of Physicians

U.S. health care costs too much; leaves too many behind without affordable coverage; creates incentives that are misaligned with patients’ interests; undervalues primary care and public health; spends too much on administration at the expense of patient care; fails to invest and support public health approaches to reduce preventable injuries, deaths, diseases, and suffering; and fosters barriers to care for and discrimination against vulnerable individuals.

The ACP’s Vision of a Better Health Care System for All

The ACP believes the United States can, and must, do better and offers the following 10 vision statements for a better health care system for all.

1. The American College of Physicians envisions a health care system where everyone has coverage for and access to the care they need, at a cost they and the country can afford.

(Nine more vision statements listed.)

The accompanying policy papers offer specific recommendations, supporting rationales, and evidence on ways the United States can move to achieve ACP’s vision.

In “Envisioning a Better Health Care System for All: Coverage and Cost of Care” (1), ACP recommends transitioning to a system of universal coverage through either a single payer system, or a public choice to be offered along with regulated private insurance. Although each approach has advantages and disadvantages, either can achieve ACP’s vision of a health care system where everyone has coverage for and access to the care they need, at a cost they and the country can afford. The evidence suggests that publicly financed and administered plans have the potential to reduce administrative spending and associated burdens on patients and clinicians compared with private insurers. Other approaches were considered by ACP, including market-based approaches, yet ACP found they would fall short of achieving our vision of affordable coverage and access to care for all. The ACP asserts that under a single payer or public option model, payments to physicians and other health professionals, hospitals, and others delivering health care services must be sufficient to ensure access and not perpetuate existing inequities, including the undervaluation of primary and cognitive care.

The ACP proposes that costs be controlled by lowering excessive prices, increasing adoption of global budgets and all-payer rate setting, prioritizing spending and resources, increasing investment in primary care, reducing administrative costs, promoting high-value care, and incorporating comparative effectiveness and cost into clinical guidelines and coverage decisions.

In “Envisioning a Better Health Care System for All: Health Care Delivery and Payment Systems” (2), ACP calls for increasing payments for primary and cognitive care services, redefining the role of performance measures to focus on value to patients, eliminating “check-the-box” reporting of measures, and aligning payment incentives with better outcomes and lower costs. The position paper calls for eliminating unnecessary or inefficient administrative requirements, and redesigning health information technology to better meet the needs of clinicians and patients. The ACP concludes there is no one-size-fits-all approach to reforming delivery and payment systems, and a variety of innovative payment and delivery models should be considered, evaluated, and expanded.

In “Envisioning a Better Health Care System for All: Reducing Barriers to Care and Addressing Social Determinants of Health” (3), ACP calls for ending discrimination and disparities in access and care based on personal characteristics; correcting workforce shortages, including the undersupply of primary care physicians; and understanding and ameliorating social determinants of health. This position paper calls for increased efforts to address urgent public health threats, including injuries and deaths from firearms; environmental hazards; climate change; maternal mortality; substance use disorders; and the health risks associated with nicotine, tobacco use, and electronic nicotine delivery systems.

These are just a partial summary of the recommendations in the 3 position papers; considered together, they offer a comprehensive and interconnected set of policies to guide the way to a better a health care system for all. We urge readers of this call to action to review the 3 papers for a complete understanding of ACP’s recommendations and the evidence in support of them.

The ACP rejects the view that the status quo is acceptable, or that it is too politically difficult to achieve needed change. By articulating a new vision for health care, ACP is showing a willingness to try to achieve a better U.S. health care system for all. We urge others to join us.

https://annals.org/aim/fullarticle/2759528/envisioning-better-u-s-health-care-system-all-call-action

Better Is Possible: The American College of Physicians’ Vision for the U.S. Health Care System

21 January 2020 Vol: 172, Issue 2_Supplement

The following link provides full free access to nine papers in this special Annals of Internal Medicine/American College of Physicians Supplement on a bold new prescription for the U.S. health care system:

https://annals.org/aim/issue

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Annals of Internal Medicine

January 21, 2020

The American College of Physicians’ Endorsement of Single-Payer Reform: A Sea Change for the Medical Profession

By Steffie Woolhandler, MD, MPH; David U. Himmelstein, MD

For a century, most U.S. medical organizations opposed national health insurance. The endorsement by the American College of Physicians (ACP) of single-payer reform marks a sea change from this unfortunate tradition.

Canada’s generally positive experience is among the strands of evidence underpinning the ACP’s endorsement. A single-payer reform that reduced insurance overhead to 2% (the level for Canada and traditional Medicare) could save more than $200 billion annually. In addition, our multipayer system imposes complexity and expense on providers; the Cleveland Clinic has 210 000 000 different prices. Single-source payment could streamline reimbursement—for example, by replacing per patient hospital payment with global budgets and establishing uniform billing and documentation requirements. Hospitals and doctors could save billions on billing-related costs and repurpose those savings to expand care, making universal, first-dollar coverage affordable.

Achieving universal coverage would be costlier under the “public choice” model the ACP co-endorses along with single payer. Multipayer systems incorporating for-profit insurers have not gleaned large administrative savings. For-profit insurers’ overhead is high everywhere, and the persistence of multiple payers would hinder efforts to streamline providers’ billing-related work.

Moreover, real-world experience with 2 public choice models—Medicare’s Advantage program and the Consumer Oriented and Operated Plans (CO-OPs) under the Patient Protection and Affordable Care Act (ACA)—warns that in health insurance competition, public option good guys finish last.

Although no reform achieves perfection, evidence indicates that a well-structured single-payer reform might resolve our nation’s coverage and affordability problems, preserve the choices patients value, and allow doctors to focus on what matters most: caring for our patients.

https://annals.org/aim/fullarticle/2759531/american-college-physicians-endorsement-single-payer-reform-sea-change-medical

PNHP release:

https://pnhp.org/news/doctors-prescribe-medicare-for-all-single-payer-reform-endorsed-by-americas-largest-medical-specialty-society-and-recommended-in-open-letter-from-thousands-of-physicians/

Here is Don’s Comment:

Welcome to a bright new day in health care reform.

The American College of Physicians (ACP) is the largest physicians’ organization dedicated to patient care (the AMA has traditionally functioned primarily as a physicians’ guild). “ACP recommends transitioning to a system of universal coverage through either a single payer system, or a public choice to be offered along with regulated private insurance.”

ACP has proffered a large volume of material that presents a multitude of problems with our current expensive but underperforming health care system. They present many options for reform that have been under consideration, but, as mentioned, they single out two for their vision of a better U.S. health care system for all: 1) single payer, or 2) a “public choice” with regulated private insurance.

Included in the AIM supplement is an important paper by Steffie Woolhandler and David Himmelstein. They discuss the clear advantages of a Canadian-style single payer model, but they caution us about the deficiencies of the for-profit insurers that we have in the United States, and the failures of our experimentation with public choice models – CO-OPs and Medicare Advantage. (To understand better the problems with a private plan and public choice approach, you should read not only the full Woolhandler/Himmelstein paper at the link above, but also the voluminous material on this topic at pnhp.org.)

There is much more material in this AIM supplement, especially on delivery reform and addressing social determinants of health, but it is important to not get buried under the reams of material such that you might be distracted from the overriding imperative of ACP’s vision for reform – the pressing need to enact and implement the essential infrastructure on which we can build the rest of reform – a single payer national health program.

Still think you know better than the College of Physicians? You still think that physicians will not take Medicare for All because many don’t take traditional Medicare? You think that implementing Medicare for All/Single Payer will be destructive to medical care? Think again.

These physicians are more concerned with provide everyone with health care and not to make huge profits for themselves, insurance companies, drug companies, hospitals, investors, stockholders, and other stakeholders such as you and your employers. You are standing in the way.

Two Perspectives on Health Care

Dear Readers,

Sorry for the delay in getting back to writing in this new year, I have not seen too many things to write about, and have also been busy with personal issues.

So, the following post from an unknown individual via Joe Paduda, who informs us that this person is a good friend and colleague, shows just how broken and dysfunctional our health care system really is.

This post is followed by one from Don McCanne about the Canadian system, and differentiates their system with what is being proposed in the US under a Medicare for All system advocated by Bernie Sanders, Elizabeth Warren, Dr. McCanne, and the Physicians for a National Health Plan (PNHP), among others.

Joe’s post: The Greatest Healthcare System in the World

Dr. McCanne’s post was written by Caitlin Kelly in The American Prospect on January 8th. Here is her article in full, followed by comments by Don McCanne.

The American Prospect

January 8, 2020

What Medicare for All Really Looks Like

The Canadian system, also called Medicare, guarantees coverage to every resident north of the U.S. border.

By Caitlin Kelly

Canadian health care is publicly funded and privately delivered, approximately the same vision that single-payer enthusiasts have for the American system. It even shares the same name as our largest government-run insurance provider: Medicare. But contrary to persistent American partisan mythmaking, no government officials sit in doctors’ offices or haunt hospital hallways with a checklist of all the services they’ll question and deny. They don’t dictate hands-on care. Canadians face little government interference or oversight of their health care, although, for historical reasons, their doctors retain much more power than patients.

The familiar and dreaded words “co-pay,” “deductible,” “pre-existing condition,” and “out of network” are meaningless here, in English or French, Canada’s two official languages. Patients don’t waste time chasing pre-authorizations or fighting medical bills, while physicians save thousands of administrative hours.

As Americans’ life expectancy is dropping and maternal mortality is ranked shockingly high among other wealthy nations, Canadian health outcomes fare better; Canadian women live two more years than their American counterparts, men three.

But the system is far from perfect. Outpatient care, like physical and occupational therapy or prescription medicine, is paid for out of pocket. In some places, there’s no mandate to use electronic records, so patient information can be difficult to access. And medical care of impoverished and remote First Nation and Inuit communities is openly acknowledged as abysmal.

Canada provides coverage for about 35 million, one-tenth the population of the United States. But how they’ve set up their health care system, and how it evolved over the decades, is instructive, especially given the robust debate during the presidential primary about overhauling our current system. It can inform how U.S. policymakers—and Canadians, for that matter—approach cost control, physician payment, and services for vulnerable communities. Rather than scaring Americans with well-structured narratives about the alleged horrors of Canadian Medicare, we could take the opportunity to learn from it.

A Difference in Bedrock Philosophies

A fundamental conceptual difference also divides how Canadians and Americans view their relationship to using government-financed or -run services. Classic American insistence on the bedrock values of individualism, self-reliance, and shunning government aid as a sign of moral failure differs radically from that of Canadians, who are more committed politically and economically to health care equity as a collective good.  [Emphasis mine] Consistently receiving free health care and heavily subsidized university and college tuition fees means that Canadians of all ages and income levels experience firsthand a consistent, quantifiable return on their tax dollars.

“One thing I wish Americans would understand is that ‘who’s going to pay?’ is actually a distraction,” says Dr. Danielle Martin, executive vice president and chief medical executive of Women’s College Hospital in Toronto. “It’s ‘how will you organize delivery of it?’ Payment is just the first step on a worthy and interesting journey. The conflation of single-payer and wait times is false. We have wait times because of a million other issues, like we can’t get physicians to work in rural areas.”

Could This Work in the U.S.?

“The Canadian system is good, but underfunded,” says Steffie Woolhandler. “The American system is shitty but over-funded.”

https://prospect.org/health/what-medicare-for-all-really-looks-like/

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Comment by Don McCanne

Our goal is to establish a single payer model of a dramatically improved version of our Medicare program that would ensure affordable, accessible, high quality health care for everyone in our nation. The model that is closest to that vision is the Canadian Medicare program – a series of provincial single payer programs. It is not the same system as what we propose.

It is helpful for us to understand the Canadian system since it has many beneficial features that would help us improve equity and access in our own system. Also it has some deficiencies, and it is important to understand those so that we can avoid them.

The excerpts from The American Prospect article by Caitlin Kelly give you an inkling of what the Canadian system is all about. This fairly long article should be read in its entirety for a few reasons:

*  People need to understand that we are not transporting the Canadian health financing infrastructure to the United States; rather we are building a new, better-than-Canadian Medicare for All.

*  When people reject single payer Medicare for All because of certain undesirable features of the Canadian system, it is important to understand what those features are and how we would guard against them in the United States.

*  When people say that we cannot afford Medicare for All it is important to understand and explain to them how we are already paying enough to fund a better-than-Canadian system, but we need to redirect the spending of the $600 billion in recoverable administrative waste that characterizes our dysfunctional multi-payer system.

*  The most common complaint about the Canadian system is the excessive queues for some non-urgent services. People need to understand that our Medicare for All would have enough funding to ensure adequate capacity in the system through central planning and budgeting of capital improvements, not to mention including adequate funding to improve queue management.

*  Perhaps the most important lesson from Canada: “Classic American insistence on the bedrock values of individualism, self-reliance, and shunning government aid as a sign of moral failure differs radically from that of Canadians, who are more committed politically and economically to health care equity as a collective good. Consistently receiving free health care and heavily subsidized university and college tuition fees means that Canadians of all ages and income levels experience firsthand a consistent, quantifiable return on their tax dollars.”

Notice that McCanne leaves us with the same statement that I emphasized above. That is the real reason we don;t have free medical care and free college. We gained our independence from Britain when the values of individualism, self-reliance, freedom, liberty, and the right to private property were the prevailing values.

Canada, on the other hand, became independent (sort of) during the latter half of the nineteenth century, when modern liberalism emphasized the greatest good for the greatest number. This was in opposition to the classical liberalism of the American experiment begun a century earlier.

Both articles point out just where we are deficient, and where and how we can make improvements, but only if we abandon the profit-making, overly administratively bureaucratic, wasteful, and bloated current system for a more efficient Medicare for All single payer system that guarantees health care for all Americans. Then there will never be any surprise bills or upfront charges required.

Friday Morning Catch-Up

It’s been a while, so I thought I’d play catch-up this morning with some relevant postings from Don McCanne and Joe Paduda.

First up is an article from The New York Times of December 3rd by Margot Sanger-Katz. The article, “Why the Less Disruptive Health Care Option Could Be Plenty Disruptive” explains that moderate Democratic plans for health care that does not fall in line with those proposed by Bernie Sanders and Elizabeth Warren can be as disruptive as not implementing Medicare for All.

Sanger-Katz writes: “The single-payer health plans proposed by Senators Bernie Sanders and Elizabeth Warren are often assailed as being too disruptive. A government plan for everyone, the argument goes, would mean that tens of millions of Americans would have to give up health insurance they like.

Democratic presidential candidates with more moderate brands have their own proposal: a “public option” that would preserve the current private insurance market, while giving people the opportunity to choose government insurance.

A public option would be less disruptive than a plan that instantly eliminated private insurance. But a public option that is inexpensive and attractive could shake up the private market and also wind up erasing some current insurance arrangements. Conversely, a public option that is expensive and unattractive might not do much good at all.

A public option would cover a smaller population at first, and might have to negotiate with hospitals for good deals, just as other insurance companies do. In those circumstances, several economists said, the public option might look a lot like existing insurance: pretty expensive, and covering a limited set of doctors and hospitals.”

Next, Health Affairs published an article by Tara Straw, also on December 3rd, that examines how low-income workers fare poorly under the ACA. According to Ms. Straw, “The Affordable Care Act (ACA) extended health coverage to more than 20 million people and strengthened consumer protections for millions more, but it didn’t dramatically change employer-sponsored coverage, the primary source of private health insurance. Employer coverage often works well, allowing many people to enroll in comprehensive health benefits using employer contributions that make premiums affordable. But compared to middle and upper-income employees, low-income workers are often offered less robust coverage, get less employer help with their premiums, and must pay a greater share of their income toward health care costs. Among workers with job-based coverage, those with income below 200 percent of the poverty line spend 14 percent of their income on premiums and out-of-pocket costs, on average. That’s far more than people between 200 and 400 percent of poverty, who spend 7.9 percent of their income, and people over 400 percent of poverty, who spend only 4.5 percent.

Some low-income workers are actually worse off with an offer of employer-sponsored coverage than without one because it locks them out of premium tax credit (PTC) eligibility in the ACA’s health insurance Marketplaces, a prohibition known as the “firewall.”

Under the ACA, the worker’s share of the employee-only premium must not exceed 9.86 percent of family income (in 2019), irrespective of the cost of family coverage, and the plan must cover at least 60 percent of expected medical costs. When an employer’s coverage offer meets that low federal bar, the ACA’s firewall provision makes low-income workers and their family members ineligible to receive a PTC for Marketplace coverage. However, employer coverage that meets the ACA standard may be more expensive and less comprehensive than Marketplace coverage. For example, under the ACA standard, a worker making $18,000 (about 150 percent of poverty) could pay up to nearly $1,800 toward premiums for single coverage in an employer plan. But if allowed to purchase a benchmark Marketplace plan, the worker’s expected contribution, net of the PTC, would be less than $750 (4.15 percent of income in 2019).

Again from Health Affairs, comes the following on national health spending in 2018:

Abstract

US health care spending increased 4.6 percent to reach $3.6 trillion in 2018, a faster growth rate than the rate of 4.2 percent in 2017 but the same rate as in 2016. The share of the economy devoted to health care spending declined to 17.7 percent in 2018, compared to 17.9 percent in 2017. The 0.4-percentage-point acceleration in overall growth in 2018 was driven by faster growth in both private health insurance and Medicare, which were influenced by the reinstatement of the health insurance tax. For personal health care spending (which accounted for 84 percent of national health care spending), growth in 2018 remained unchanged from 2017 at 4.1 percent. The total number of uninsured people increased by 1.0 million for the second year in a row, to reach 30.7 million in 2018.”

Additionally, CMS published the National Health Expenditure Fact Sheet (NHE).

Next, Christopher Cai and James Kahn wrote in Health Affairs that Medicare for All would improve hospital financing. According to Cai and Kahn, “Hospitals account for more than one trillion dollars of health expenditures annually, and analysts have raised concerns that a shift to single payer, or Medicare for All, might adversely affect hospital care. A common narrative has emerged in the popular press and in medical journals, suggesting that Medicare for All would decrease reimbursements and force hospitals, particularly rural hospitals, to cut back on much needed services or even close altogether. These concerns have received increased attention with Elizabeth Warren’s recently released financial proposal for Medicare for All. Understandably, these points have raised concern about the feasibility of Medicare for All. But is this narrative evidence based?

Their conclusion states that “Under single payer, patients could choose any doctor and hospital, everyone would be insured, and bureaucratic burdens would be greatly diminished. Furthermore, under global budgeting, payment levels would be monitored and adjusted over time by a panel of health care experts.

And lastly, here is a post from Joe Paduda of a Gallop poll that says Americans can’t afford healthcare, According to Joe, Gallup reported that quarter of Americans have put off treatment for serious medical conditions because they can’t afford it.

These are the reasons they can’t afford it:

  • US physicians make twice what docs in other countries do
  • Drug costs are much higher here than elsewhere
  • Hospitals are making bank
  • Administrative costs are twice what they are in other developed countries.

Physician incomes by specialty exceed $400,000. No wonder Americans can’t afford health care. The doctors are making more than they are.

So, the future of health care as we know it looks very bleak from these and other experts on the matter. It would be criminal for any rational person to not explore the Medicare for All/ single Payer option, rather than to continue to prop up a market-based system that is out of control and getting worse every year.

But so long as many Americans claim they like their private health insurance, whether it is from their employer or they purchase it directly from an insurance carrier, the fact remains that no other solution will fix the problems other than Medicare for All.

All Americans need to realize this before it is too late.

Wise Words on Medicare for All

POLITICO

November 25, 2019

Politco published yesterday an interview with William Hsiao, the architect of Taiwan’s single payer system. The article is re-posted in full:

POLITICO

November 25, 2019


“There’s a Fear Factor, a Fear of Change.”

William Hsiao knows more about single payer systems than pretty much any other American. What does he think about ‘Medicare for All’?


By Maura Reynolds

Plenty of Americans have opinions about single-payer health systems like “Medicare for All,” and some have even studied them closely. But vanishingly few individuals in the world have actually built one from scratch.

One who has is William Hsiao.

A health care economist now retired from Harvard University, Hsiao designed a national health care system for Taiwan in the 1990s, and helped manage that country’s transition from American-style employer-based insurance to a national single-payer system. He has also designed single-payer reform programs for Cyprus, Colombia and China. And not too long ago, after Vermont voted in 2011 to enact a statewide single-payer system, he worked on what would have been called Green Mountain Care, a project that eventually collapsed because of concerns over financing.

This all gives Hsiao a nearly unique vantage point on the current U.S. debate over Medicare for All. And while he’s a fan of single-payer health care, which he thinks leads both to better health and greater efficiency, he’s a pessimist about its chances to take root in the United States.

The reason? It’s not the economics. It’s the politics.

Given the public’s attachment to doctors and concerns about their own health, Hsiao says there’s a powerful “fear factor” associated with any major change — one easy for opponents to exploit, and hard to overcome. Fans of Medicare for All haven’t yet grappled with the heavy lift of educating the public enough to overcome people’s attachment to the status quo, and the powerful forces that can fan their anxieties.

Opponents of change “have done it before,” he says. “They were very effective in using keywords. The American Medical Association used the words ‘socialized medicine.’ People don’t know what that is. Most Americans do not like ‘socialized’ anything. But if you told most Americans that public schools are ‘socialized education,’ they would be really surprised. Fortunately, we had public schools set up before any powerful interest groups were formed.”

Hsiao was born in China, came to live in the United States when he was 12, and eventually became an insurance actuary. In the late 1960s and early 1970s, he worked for the Social Security Administration, eventually becoming the deputy chief actuary. In that position, Hsiao worked to implement not only the program’s retirement benefits but also the then-new Medicare and Medicaid health care programs for the elderly and disabled. Hsiao says that work convinced him of the value of social insurance and that government has a critical role in providing safety net programs for its citizens.


In recent years, Hsiao, now 83, has consulted with Sen. Bernie Sanders on his Medicare for All plan, and also supports Sen. Elizabeth Warren’s version. But his reality-check prediction is that it will take two more election cycles, at least, before the political groundwork for Medicare for All will be laid. With powerful lobbies like insurers, hospitals and drug companies dug in against such plans, he points to two other forces that will need to play key roles: big employers, which he sees as nearing an inflection point where they will insist on a better system; and doctors, who are increasingly being paid as salaried employees, which is changing their views of private insurance. “When the United States has a majority of its doctors being on salary, I predict American doctors will come out and support Medicare for All,” Hsiao said.


Hsiao spoke to Politico senior editor Maura Reynolds from his office in Cambridge, Mass., about what the challenges are, why he believes the change needs to happen, and how we might actually pay for it.

This transcript has been edited for length and clarity.

Reynolds: What’s the most important thing that you think proponents of Medicare for All don’t understand about single-payer systems?

Hsiao: The most important thing is that there’s a fear factor, a fear of change. There is a group of people who are opposing Medicare for All, and that includes the private insurance industry, pharmaceutical companies and, of course, some doctors and hospitals. They fear their income may be affected. So, for the common people, the fear is that they don’t understand how it would impact their health care, as well as their health insurance. And for the vested interest groups, they are in fear of their income and revenues.

Reynolds: Aren’t those fears justified?

Hsiao: I think they’re totally unjustified, but there’s a history to it. The last time the United States talked about universal health insurance was under President Truman. Subsequently, President Clinton also tried to propose a plan. And each time, the vested interest groups put on a very effective and powerful campaign to block it by offering common people a great deal of misinformation. In the late 1940s, the American Medical Association led the fight and called universal health insurance “socialized” medicine. And the Clinton plan, there were TV ads that said it would make medical care and claim filing much more complicated. Both of them, those kinds of public campaigns, of course, are untrue.

Reynolds: Is there a case that proponents of single payer should be making to the public that they aren’t making now?

Hsiao: I would actually show film clips from countries that have Medicare for All, like Canada, Taiwan, Germany and other countries. Taiwan educated people first that everyone would be covered by the same health insurance, a comprehensive plan, much better than what most of the people had then. That’s what I think persuaded people.

Reynolds: Many Americans say that they prefer market-based solutions as a lever for public policy, and those can be easier political lifts.

Hsiao: Markets have a serious failure in health care. That’s been proven empirically in the United States and throughout the world. I’ll describe the fundamental failure. You and I, common people, we have a symptom, a headache, a fever. We have pain. We go to a physician for diagnosis and treatment. That’s not like buying a pair of shoes or buying a shirt where the buyer and seller pretty much have an equal position. We go to physicians seeking their expertise. Even if you watch TV ads for drugs, the drug advertisers say, “Talk to your doctor.” That’s because even in their advertisement, they know you would not understand all of the possible effects of that drug.

So the physician holds a superior position in the marketplace. That’s proven. As a result, physicians can charge you any price, particularly if you are in surgery. If you operate on people’s vital organs, like brain, heart, eyes, and even orthopedics — people are willing to go bankrupt to go see a doctor if they need, let’s say, heart surgery. In medicine, actually, there is an opposite effect [from the way the market usually works]: People believe that doctors who charge higher fees must be better. That’s because they don’t understand medicine. So they figure if you can charge higher fees, you must be a better doctor. Those are market failures.

I’ll give you another example. A few decades ago, American doctors who were trying to do the right thing for their patients, for exactly the same service, would charge the poor nothing. If you were rich, they would charge you, let’s say, $8,000 for an operation. If the doctor thinks you are an average earner, he might charge you only $4,000. At the time, this was praised as doctors performing a social service. But that also tells you what kind of market power doctors have over patients. Can you imagine you go to a car dealer; you want to buy a Chevrolet. The Chevrolet dealer sees you as an average citizen and tells you, “That’s $25,000.” For rich people, “That’s $50,000.” You would say, “Wow. There’s something wrong with this market.”

Reynolds: How do you explain the health care industry’s resistance to current measures to increase transparency in pricing?

Hsiao: That’s very unique to the United States. United States has many insurance companies. The insurance companies negotiate with, let’s say, hospitals for the price, for a discount from their list price. By the way, their list price is not based on any facts of the cost; It’s a price that hospitals would like to charge. There’s no cost study to support that price. So if you are an insurance company, you say, “I can bring 50,000 patients to your hospital.” The hospital may give you an 80 percent discount from the list price. If you are representing a company that employs 200 employees and their families, they say, I’ll give you only a 25 percent discount. If you are an insurance company representing only two employees, I may not give you any discount. That’s why the hospitals don’t want to publish their price, because they may have five to 10 different prices, depending on which insurance company negotiates with them and how many insured people they can bring to their hospital.

Reynolds: What’s a better way of setting prices for that hospital?

Hsiao: I would set the price based on the actual cost of the hospital and give them a small margin of profit, so they can have some flexibility to improve and to expand. That’s how Medicare sets its prices.

Reynolds: Right, but many players in health care say Medicare pays far too little — and that if a Medicare for All system were to force doctors and hospitals to accept Medicare prices for everything they do, they’d go out of business. Do you think that’s a fair argument?

Hsiao: No, that’s misinformation. In the United States, in the same community, hospitals have different costs partly because they’re managed differently. Some hospitals are managed well and some hospitals are not managed that well. This was studied three decades ago: In Boston, for example, for a normal baby delivery, the cost and charges could vary three times between hospitals. That’s one other piece of evidence that the market doesn’t work: that in the same community, the price could be varying that much. So those opponents who claim they’re going to lose money, they may be high-cost hospitals. They may be poorly managed or they may be too small to operate. They should have gone out of existence a long time ago.

Reynolds: But hospital closures aren’t a minor problem. There’s real concern about rural hospitals being the first to close, right?

Hsiao: Yes, you should see them differently. Rural hospitals serve a social purpose. But that’s a special category.

Reynolds: One issue any reform faces is that health costs in the U.S. are just far higher than other countries. Why is that?

Hsiao: Efficiency, duplication, very high salaries for some people. Our surgeons, particularly surgeons dealing with vital organs, are making half a million dollars or more every year. Meanwhile, your family doctors and pediatricians are only making $200,000 each year.

Reynolds: And in other countries, is there less disparity between the different levels of—?

Hsiao: Specialties. Yes, there may be a 50 percent differential. Here, we have a differential of 2.5 or 3 times. That’s how the market works. When you’re dealing with people’s vital organs, with people in fear of their lives, you can charge them much higher.

Reynolds: One of the big arguments in the presidential campaign right now is about how the country would actually pay for a universal system. There’s a lot of discussion over whether taxes would increase, particularly for the middle class. There’s less discussion about whether we should retain an employer-based system, and whether employers should contribute. You’ve recently written that the growth of the gig economy, of less formal forms of employment, is also creating problems for the employer-based model. What’s your recommendation for a better financing system for the United States?

Hsiao: I would base the financing of health care on income because, in an advanced economy, some people’s incomes are from lots of things — rent, dividends, interest and capital gains — not just wages. So the first principle is to tax people based on their income. But I support what Senator Warren has proposed, a tax on financial transactions. You add on only a little bit on each financial transaction, [but] you can generate tremendous amounts of income.

Under Senator Sanders’ proposal, and I worked on the cost of it, you can save close to $800 billion a year — $800 billion a year — from inefficiency, from fraud and abuse of claims, and from duplication of services and also, from using your buying power to bargain with pharmaceutical companies for a reasonable price. That $800 billion has to be used partly to pay for the uninsured people and the underinsured people. Even then, every American, on average, could save $1,000 every year. Those are the numbers.

Now, if you tax rich people more, or like Senator Warren proposes, then, of course, rich people would not save [money]. But 90 percent or more of Americans will find they actually can save money from Medicare for All. That point has not been made strongly at all by the proponents of Medicare for All.

Reynolds: You’ve been around these issues for a long time. Do you think that we’re actually at a moment now in the United States where the American public is ready for this kind of sweeping health care change? Or do you think that we’re not there yet?

Hsiao: My honest answer, even though I know that this is recorded, is that I don’t think we are there yet.

Reynolds: Why is that?

Hsiao: We’re not there yet because the common, average American is not educated yet and there is a lot of misinformation being directed at them. And you haven’t even seen the insurance industry and pharmaceutical industry come out yet with really well-organized campaigns against it. The private insurance industry’s annual revenue is $1.3 trillion. The pharmaceutical industry’s annual income is $400 billion.

They only have to use one-thousandth of 1 percent of their revenue to fight [this]. They can elect the key decision-makers in Congress, [the Senate and the House of Representatives], because they can mobilize literally a billion dollars. And those powerful, wealthy, well-organized, vested interest groups have not come out openly yet. That’s the reality of American money, politics.

Reynolds: And you think when those monied interest groups do start fighting, that they will swamp this new interest in Medicare for All?

Hsiao: Yes. Look at what happened with Clinton’s plan. [It was] only the insurance companies who came out in an organized way for the Clinton plan, and the Clinton plan couldn’t even get a hearing before the U.S. Congress. No committee in the U.S. Congress held a hearing about what Clinton proposed. Of course, Hillary Clinton overplanned the Clinton plan. She planned out every detail; she left no decision for congressmen and senators. But still, not even one hearing. However, I do think two elections from now, the United States may see Medicare for All.

Reynolds: Why two elections?

Hsiao: To make a big change like this, you need to educate the public. You need to sharpen the issues and sharpen the key points. Right now, there’s a lot of confusion in the public’s mind and even among the political candidates.

Reynolds: But it sounds like you feel that economically, there really isn’t any question that either single-payer or a public option is the right answer for the United States. The question in your mind is the politics.

Hsiao: I think that most people who specialize in this field, the majority at least, think that single payer is the right solution because it’s much more efficient. You create a unified electronic record that can improve the quality of care and also give patients much better information about their history and their treatments.

I see changes in America. American employers find health insurance, the costs are rising faster than they can afford. As a result, because of the costs of health insurance for their employees, they can’t give them raises. Meanwhile, their employees demand higher cash wages, as well as to keep their health insurance. That can’t last that long.

Reynolds: So do you think that the employers hold the key to solving this problem?

Hsiao: They do. They are silent right now. But if you look at three powerful, big companies — Amazon, JPMorgan, Berkshire Hathaway — they have united together trying to form a health company, trying to innovate to do something. That tells you these corporations find this burden something they cannot continue to afford. That’s one change.

Another change is American doctors are supporting Medicare for All in larger numbers. American doctors today, 47 percent of them are salaried now. They are not in private practice. The doctors who oppose Medicare for All, the older doctors who are in private practice, they like the autonomy of their own office and they also do not want any interference from any semi-government agency. But the salaried doctors today find that the paperwork imposed on them by insurance companies is so horrendous that they cannot really devote enough time to the patients. They are in support of Medicare for All. When the United States has a majority of its doctors being on salary, I predict American doctors will come out and support Medicare for All. The American Medical Association, the American Hospital Association will not be able to say, “We are against it,” like they did before.

Reynolds: Doctors hold the blame for scuttling a national health care system after World War II, but you think that they hold the key to solving that problem when the next generation of physicians is in the majority?

Hsiao: Yes, and that majority is going to emerge in the next five years. Look at the figures. Already 47 percent of American practicing doctors are salaried. And every year that number increases by 1 or 2 percentage points.

https://www.politico.com/news/agenda/2019/11/25/health-care-economics-072145

It would seem that Dr. Hsiao believes that if either Sanders or Warren would be elected next November, neither one would be able to get Medicare for All passed through the Senate. He states that it would take two election cycles to educate the public, get doctors on board, have employers demand change, and the state of the US health care system get worse before single payer would be feasible,

So, it is incumbent upon any Democrat interested in running for President in 2024 or 2028 to be able to convince voters that the time is right for single payer. What Dr. Hsiao is also saying, although not in so many words, is we will have to continue with the ACA for some time to come, especially if former Vice President Biden is elected, or someone else is who advocates keeping the ACA and improving it. Otherwise, the Orangutan and his Russian-asset House and Senate members will repeal it if the Democrats

Don’t Listen to the Noise Coming From Naysayers

Quote of the Day re-posted this article from Common Dreams on why those in the Democratic Party are wrong to dismiss Medicare for All. You hear them during the debates, and as any well-informed advocate of MFA knows, their arguments are red herrings and even outright lies and misinformation.

Here is the article:

Published on Wednesday, November 20, 2019 by CNN

Democratic Naysayers Are Wrong on Medicare for All

“Americans know that their current private health care payments, whether insurance premiums or out-of-pocket, are nothing other than ‘taxes’ they pay to stay alive.”

Supporters rally for universal health care in Chicago. (Photo: Shutterstock)

The American political debate over health care is absurd. Americans pay twice as much as any other nation for health care, and then are told daily that they “can’t afford” to switch to a lower-cost system very similar to those of Canada and Europe. If President Donald Trump and the plutocratic Republican party were the only ones carrying this ridiculous message, it would be understandable. Yet this message is also coming from media pundits aligned with the Democratic Party and the most conservative wing of the party.

Let’s be clear on the central point. Medicare for All, as first proposed by Bernie Sanders and endorsed by Elizabeth Warren, is affordable precisely because it is cheaper, much cheaper, than the current system.

America’s health care system relies on local monopolies (such as a health care provider centered at the sole major hospital in a city) and national monopolies, notably pharmaceutical companies holding exclusive patents.

In other countries, the government sets delivery prices and typically pays the health bills through the budget. In the US, the monopolists set the prices.

The sky-high revenues end up as huge corporate profits, wasteful administrative costs, useless and even harmful advertising and lavish salaries. Health care CEOs are making gargantuan salaries, many exceeding $10 million per year.

Who loses? Almost all Americans, whose insurance costs and out-of-pocket outlays inevitably lead to lower income because of unaffordable health care costs, untreated chronic illnesses, premature mortality and personal bankruptcies. Single-payer systems such as in Canada and Europe are cheaper, fairer and have better outcomes.

A recent international comparison of the performance of 11 national health systems on five main dimensions (care process, access, efficiency, equity and health care outcomes) ranked the US health system dead last.

Despite all of this, the US pundits profess to be alarmed about the prospect of Medicare for All. There has been a wave of op-eds and columns published (for example, here and here and here) declaring that Medicare for All would lead to massive tax increases, and that Sanders’ and Warren’s support for Medicare for All threatens to reelect Trump. It’s ridiculous.

Both Sanders and Warren poll well against Trump, ahead in the overall popular vote (though like all Democrats, facing headwinds of the Electoral College).

And at this stage of a national campaign, the goal should be to explain to voters the vast benefits of a single-payer system rather than to prejudge the politics based on self-fulfilling fear-mongering.

Yes, one way or another, taxes would rise with Medicare for All, but private health outlays would go down by much more. Total health costs would fall.

That idea is not so hard to understand.

One influential pundit, economist Paul Krugman, has come around. In the 2016 election cycle, Krugman railed against Medicare for All. Yet after Warren laid out her proposal, Krugman supported Medicare for All. In truth, he was simply returning to the economically sound observations that he had long made before 2016.

The pundits seem to believe that Americans will rebel at “higher taxes.” Actually, Americans are much smarter than that. They know that their current private health care payments, whether insurance premiums or out-of-pocket, are nothing other than “taxes” they pay to stay alive. They’ll agree to pay higher taxes to the government if those new taxes eliminate larger private health care bills — again, there are “taxes” by any other name — that they now pay.

Some mainstream pundits are simply repeating what they hear from Democratic Party conservatives and centrists, the wing that has been dominant since Clinton’s election in 1992. They are following the lead of Nancy Pelosi, Pete Buttigieg and others who are trashing Medicare for All.

What in the world are these leading Democratic Party politicians doing in opposing the transition to a fairer, more efficient and lower cost health care system? I would suggest it’s not a lack of understanding. It’s the power of campaign financing. These Democrats are funded by the status quo. The health sector contributed $265 million to federal campaigns in 2018, of which 56% went to Democrats. The sector spends nearly $500 million per year on lobbying. Money talks. Meanwhile, Americans go bankrupt or die early.

There remains the issue of the best way to raise budget revenues for Medicare for All. The basic answer is to use progressive taxation to fund the program. In this way, the nation as a whole will pay much less for health care and the vast majority of households will as well. The highest income households will end up paying a bit more because their funds will not only finance their own health care but will help to pay the health care costs of the poorest households as well.

Sanders rightly proposed a menu of options to pay for Medicare for All, including payroll and income taxation. Warren has proposed one specific approach: progressive taxes on the super-rich and the corporate sector but also a surprisingly regressive “head tax” on companies. She took great pride in not charging a penny of new income or payroll taxes on middle class households. But the proposed head tax on companies would hit wages indirectly and regressively.

Still, both Sanders’ and Warrens’ approaches would result in a more equitable and less expensive system. For most households, overall health care costs will decline.

The most worrisome thing about Warren’s statement as she introduced her Medicare for All plan, is her emphasis on “not one penny” of new middle-class taxes. Here we go again. The Democrats have, for far too long, copied the Republican mantra about “no new taxes,” even as our public debt soars, our infrastructure and public services collapse and inequality reaches stratospheric dimensions.

To honor the silly stricture of “no new taxes” directly paid by middle-class households, Warren ended up endorsing a regressive head tax paid by the employer, which would end up hitting lower-wage workers even though its paid by their employers.

Let’s hope this blunder is a one-time stumble for Warren. Most importantly, both Sanders and Warren are pointing the correct way to reform America’s costly, unfair and inefficient health care system. And this is a goal that most Americans support.

Jeffrey D. Sachs

Jeffrey D. Sachs is the Director of The Earth Institute, Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University. He is Special Advisor to United Nations Secretary-General Ban Ki-moon on the Millennium Development Goals, having held the same position under former UN Secretary-General Kofi Annan. He is Director of the UN Sustainable Development Solutions Network. He is co-founder and Chief Strategist of Millennium Promise Alliance, and is director of the Millennium Villages Project. A recent survey by The Economist Magazine ranked Professor Sachs as among the world’s three most influential living economists of the past decade. Sachs is the author, most recently, of The Age of Sustainable Development,” 2015 with Ban Ki-moon.

Neoliberals Can’t Fix Health Care

Don McCanne’s Quote of the Day blog returns us to a previous post I wrote about the ACA and neoliberalism, as well as others. The reader might also want to review posts about MEMEnomics.

In the following article from The Milbank Quarterly, not known as a radical publication, but rather as a financial one, John McDonough discusses some of the other reasons why neoliberals cannot fix health care.

As his title suggests, it has a lot to do with the non-medical facets of the health care system in the US — namely, the shareholders and stakeholders who profit from the status quo, and not just the insurance companies and pharmaceutical industry.

That a pro-business publication would publish this article attests to the reality that the problem with enacting Medicare for All/Single Payer is not just a political one, nor one made difficult by the power and influence of the industry itself, by insurers, drug manufacturers, device manufacturers, durable medical equipment companies, etc.; but also the investor class.

Here is McDonough’s article in full:

The Milbank Quarterly
November 2019
Shareholders, Stakeholders, and US Health Care
By John E. McDonough

August 19, 2019 was a big day for The Business Roundtable (TBR), the Washington, DC non-profit association of chief executive officers of major US companies. The organization released a new “Statement on the Purpose of the Corporation” signed by 183 CEOs declaring that the interests of workers, customers, communities, and “other stakeholders” should be as important as the interests of a company’s shareholders. This represented a significant change from its 1997 Statement that declared “the principal object of a business is to generate economic returns to its owners.”

While actions, not statements, will reveal real intent over time, this change was noteworthy—including for the US health care sector. The subject has deep roots in American society, especially in the advocacy of the late economist Milton Friedman, who derided corporate social responsibility as “fundamentally subversive” and asserted that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.”

In the 1970s and 1980s, Friedman’s notion powered a movement in the United States, Great Britain, and around the globe called “neoliberalism” that promoted deregulation, defanged labor unions, shrunken government, and ever lower taxes. From business schools to high cathedrals of capitalism “greed is good” became more than a movie line from Wall Street and its iconic Gordon Gekko. Binyamin Applebaum’s new book, The Economists’ Hour, lays out the neoliberal narrative, warts and all, in compelling detail.

What about US health care and this neoliberal era in which we still breathe? The connections are multiple, deep, and noteworthy. For starters, of the 183 CEO signers of the TBR statement, only 11 come from companies primarily embedded in the health sector, such as Pfizer, CVS Health, and Siemens, far less than a proportionate share of health care’s 18% jumbo slice of the US economy. And it is not difficult to view TBR’s statement as whitewash, especially when signers include CEOs of Johnson & Johnson and Mallinckrodt Pharmaceuticals, companies that are neck deep in the nation’s opioid marketing scandal.

Influential US political and economic historians refer to the period from the late 1970s through today as the “Reagan era,” crowned during the presidency of Ronald Reagan who declared in his inaugural address that “(i)n this present crisis, government is not the solution to our problem, government is the problem.” His term in office ushered in the modern era of tax cuts, growing inequality, wage stagnation, diminished unionization, and repeated assaults on government legitimacy. The “Neoliberal Era” may be a better fit.

Coincidentally or not, in the early 1980s US national health spending as a percent of gross domestic product (GDP) split from rates in other advanced nations toward its current extreme outlier status. US spending on health increased from about 8% of GDP in the late 1970s to 17.8% in 2017, far ahead of the nation with the second highest rate of national spending on health, Switzerland, at 12.2%.

In return for this massive societal investment in medical care, we have the world’s most technologically advanced health care system along with the highest prices in the world for any category of medical services or products one can imagine. The rush of private investment capital into our medical sector has resulted in cutting-edge medical care, advanced drugs and medical devices, and the highest salaries of any professionals in American society.

In these 40 years, we also have seen three consecutive years of declining life expectancy, a deep anomaly among our international peers, humiliating rates of infant and maternal mortality, shocking levels of gun violence, and extreme incidence of overweight and obesity. As economist John Komlos has documented, during World War II, native born Americans were the tallest among advanced nations, both men and women—we are now among the shortest. For good measure, Americans are also among the most dissatisfied with our health care system. For what it is worth, money doesn’t buy us good health or happiness.

In this epoch, we have seen enormous growth in private investor funding into a sector formerly dominated by nonprofits or government, in hospitals, physician practices, home health, hospice, air ambulances, and much more. The pharmaceutical industry has always been for-profit, yet its extraordinary concentration has ballooned its pricing structure. The for-profit health sector keeps evolving, assuming new forms. As Gondi and Song document, between 2010 and 2017 the value of private equity deals involving acquisition of health-related companies, mostly hospitals and physician practices, increased 187% reaching $42.6 billion.

Could the investor dominance of much of US health care explain at least part of our outlier status on health spending and outcomes? It is hard to imagine that the investor-driven corporatization of American society could have left medical care untouched. Even today, the most common complaint from conservatives and Republicans about US health care is that government regulation thwarts the free market.

The notion that we could put this massive bulk of toothpaste back into the tube seems preposterous. The economic and political power of the incumbent system would easily stymie any serious challenge, including the apparent one, a nationalized “Medicare for All” structure. Assuming anything of this magnitude could get through Congress—or the Supreme Court—is a daunting stretch. And yet, the real frustrations of Americans with a system organized first and foremost to serve money and power before patients deserve attention.

If, as the Business Roundtable advocates, we are embarking on a new national conversation concerning the role of the for-profit corporation in American society, perhaps we should also instigate a parallel and sustained national examination and conversation about the history, experience, and results from for-profit corporatization of our health and medical care sector. It is clear that this revolution produces good and bad results for American society and for the world. Is it time for a reckoning?

John E. McDonough, DrPH, MPA, is a professor of public health practice at the Harvard University TH Chan School of Public Health in the Department of Health Policy and Management.

Shareholders, Stakeholders, and US Health Care

References

  1. The Business Roundtable. Statement on the Purpose of the Corporation. Washington, DC. August 19, 2019. https://opportunity.businessroundtable.org/wp-content/uploads/2019/09/BRT-Statement-on-the-Purpose-of-a-Corporation-with-Signatures.pdf. Accessed October 30, 2019.
  2. Friedman M. The social responsibility of business is to increase its profits. New York Times Magazine. September 13, 1970.
  3. Fink L. Larry Fink’s 2019 letter to CEOs: profit and purpose. BlackRock. January 2019. https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter. Accessed October 30, 2019.
  4. Komlos J, Buar M. From the tallest to (one of) the fattest: the enigmatic fate of the American population in the 20th century. Economics and Human Biology. 2004;2:57-74.
  5. Gondi S, Song Z. Potential implications of private equity investments in health care delivery. JAMA. 2019;321(11):1047-1058.

 

Published in 2019
DOI: 10.1111/1468-0009.12432