Category Archives: investors

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.

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