Category Archives: Single Payer

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

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

The Trump Administration Cracked Down on Medicaid. Kids Lost Insurance. — ProPublica

In case you think Medicare for All is a pipe dream, here is an article from ProPublica that reports that even children are vulnerable to losing their medical coverage when they need critical surgery and other life-saving treatments.

If you don’t care if adult Americans cannot get adequate medical care, then perhaps you should care that children do. After all, it could be your kid who needs it. Would you really sacrifice your kids to the almighty dollar and profit?

One salient point to mention, the Petersen’s are from northern Idaho. Idaho is a Red state and voted for Trump. While there is no way to tell if Mrs. Petersen voted for Trump, it can be assumed that she probably did. So much for making America great again. Your kid dies because the President hates Medicaid.

Here is the article link:

Weeks before 4-year-old Paul Petersen’s surgery to close a hole in his stomach, he lost coverage. The administration’s latest enforcement of the Affordable Care Act burdened many Idaho Medicaid recipients, as a million kids nationwide lost coverage.

Source: The Trump Administration Cracked Down on Medicaid. Kids Lost Insurance. — ProPublica

Seven Years Good Luck

Despite LinkedIn’s algorithm to the contrary, today is the seventh anniversary of this blog. It was seven years ago that I began to write about Medical Travel and Workers’ Comp.

And although it has morphed into a blog about health care issues, and more recently, about Medicare for All, it is an accomplishment that it has lasted this long.

As I am sure happens to many a blogger or writer, one runs out of things to say, so they fall back on re-posting what others have written to keep themselves in the game. Such has been my experience of late.

This is no accident. Having been diagnosed with ESRD, and attending to the protocols involved with receiving treatment and dealing with it on a daily basis, I have had to slow down the pace of writing, concentrated on other issues, or just took a break from it by not working on it period.

However, with the Democratic primary campaign heading towards its next phase, I thought it would be a good idea to review the positions of each of the major candidates now debating regarding health care for Americans.

This review is a follow-up to previous posts on this blog about the Democratic debates and Medicare for All, namely Medicare for All and the Democratic Debates and The Debate Continues.

Since then, I have concentrated on posts that single out aspects of some of the candidates positions on providing health care to more people, but each and every article posted has shown that those positions will not lead to the outcome that will provide universal health care to all Americans.

So, here are the plans for health care of each of the candidates currently still debating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: https://www.npr.org/2019/09/10/758172208/health-care-see-where-the-2020-democratic-candidates-stand

Since August, five of the last eight posts I wrote addressed some aspect of why those advocating a public option or keeping private insurance are wrong, and why we have not had universal health care.

The New York Times, as part of a series of articles published in their Sunday magazine about the year 1619, included an article as to why universal health care has been rejected in the US.

The article, Why doesn’t the United States have universal health care? The answer has everything to do with Race, traces the opposition to universal health care to after the Civil War, when the South was devastated, and the Freedmen’s Bureau addressed the smallpox virus that was spreading across the South. It was argued then by white legislators that it would breed dependence.

But, other articles posted since August, have criticized calls for a public option, such as the article, Public Option A Bad Policy, which was re-posted from The Nation earlier this month.

A second article, Private Insurance Failure to Lead to Medicare for All, re-printed from The New York Times two weeks ago, was written by a former CEO of a health insurance company, and currently professor of health care finance at the Weatherhead School of Management at Case Western Reserve University.

His observations about where private insurance is leading us should be read by those who are supporting candidates who advocate keeping private insurance.

Physicians for a National Health Program (PNHP) president Adam Gaffney, in Boston Review, put it simply: “It’s the financing, stupid.

Emmanuel Saez and Gabriel Zucman, writing in The Guardian four days ago, stated that Medicare for All would cut taxes for most Americans, and that not only would universal healthcare reduce taxes for most people, it would also lead to the biggest take-home pay raise in a generation for most workers.

This is something that Elizabeth Warren has not been able to address in the debates, instead talking about how it will lower costs for people. She has not been wrong in doing so, because if the average family pays $5,000 in taxes and has medical costs twice that, moving to a single payer system will save them money, even if their taxes were to increase by a small percentage. Their medical bills would fall far below the $10,000 level. However, Warren will be releasing a plan to pay for it.

Saez and Zucman, in a chapter in their book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, called private insurance a poll tax.

According to Saez and Zucman,

“…private insurance premiums are akin to a huge private tax. Although most workers get insurance through their employers – and thus employers nominally foot the bill – the premiums are a labor cost as much as payroll taxes are. Just like payroll taxes, premiums are ultimately borne by employees. The only difference is they are even more regressive than payroll taxes, because the premiums are unrelated to earnings. They are equal to a fixed amount per employee (and only depend on age and family coverage), just like a poll tax. The secretary literally pays the same dollar amount as an executive.”

Listening to the candidates other than Sanders and Warren, they would rather keep the status quo so that stakeholders can profit from the dysfunction in the system than address the problem of health care head-on.

It is as if we said we wanted to go to the Moon, but opted to go part of the way, saying we will get there someday, but not now, as it is too expensive, people like looking at the Moon without knowing there are men up there and spacecraft parts, and that we shouldn’t mess with it until we clean up down here.

It is better to advocate going all the way, then not at all. If you fail, then you know you must do it again until you get what you want. Thus, was the case with passing the ACA. It did not happen overnight.

This video, from a president who knew how to speak in complete and intelligible sentences, illustrated what it took to get Medicare and Medicaid passed.

Just like President Kennedy’s call to go to the Moon in the 1960s, so too did he call for universal health care as far back as 1962 when he made this speech in New York’s Madison Square Garden.

We cannot afford to do anything less, because the stakes are that important. Medicare for All must be the one and only goal. Anything else is a half-measure destined to fail.

Private Insurance Failure to Lead to Medicare for All

Here is an article from The New York Times from a former insurance executive and professor of Health Care Finance, thanks to Don McCanne. Comment from Don to follow.

The New York Times

October 15, 2019

This Is the Most Realistic Path to Medicare for All

By J.B. Silvers

Much to the dismay of single-payer advocates, our current health insurance system is likely to end with a whimper, not a bang. The average person simply prefers what we know versus the bureaucracy we fear.

But for entirely practical reasons, we might yet end up with a form of Medicare for All. Private health insurance is failing in slow motion, and all signs are that it will continue. It was for similar reasons that we got Medicare in 1965. Private insurance, under the crushing weight of chronic conditions and technologic breakthroughs (especially genetics), will increasingly be a losing proposition.

As a former health insurance company C.E.O., I know how insurance is supposed to work: It has to be reasonably priced, spread risks across a pool of policyholders and pay claims when needed. When companies can’t do those fundamental tasks and make a decent profit is when we will get single payer.

It’s already a tough business to be in. Right now the payment system for health care is just a mess. For every dollar of premium, administrative costs absorb up to 20 percent. That’s just too high, and it’s not the only reason for dissatisfaction.

Patients hate paying for cost-sharing in the form of deductibles and copays. Furthermore, narrow networks with a limited number of doctors and hospitals are good for insurers, because it gives them bargaining power, but patients are often left frustrated and hit with surprise bills.

As bad as these problems are, most people are afraid of losing coverage through their employers in favor of a government-run plan. Thus inertia wins — for now.

But there’s a reason Medicare for All is even a possibility: Most people like Medicare. It works reasonably well. And what could drive changes to our current arrangement is a disruption — like the collapse of private insurance.

There are two things insurers hate to do — take risks and pay claims. Before Affordable Care Act regulations, insurance companies cherry-picked for lower-risk customers and charged excessive rates for some enrollees.

Those were actually the first indications of market failure. Since the enactment of the Affordable Care Act, insurers have actually had to take these risks as they were supposed to all along and provide rebates of excessive profits.

With insurers under such pressure, we’re now facing another sort of market dysfunction. Insurance companies are doing what they can to avoid paying claims. A recent report says that Obamacare plans average an 18 percent denial rate for in-network claims submitted by providers. Some reject more than a third. This suggests that even in a regulated marketplace like the Obamacare exchanges, insurers somehow manage to dispute nearly one out of every five claims.

These are systemic failures that can and should be fixed by regulation of the exchanges, better information on plan performance and robust competition. Unfortunately, consumers often still can’t make informed choices, and the options they have are limited.

But even if we fix these problems, there are two bigger factors looming that threaten the integrity of the entire system. Insurance at its root assumes that the payout required cannot be determined for each individual but can be estimated for the whole group. We can’t predict who will be affected by trauma or a broken bone, but in the aggregate, it is possible to estimate what will happen to the insured group as a whole. Some will suffer losses while the majority will be fine, and all will pay a fair average premium to cover the expenses that result.

Yet with the increases in chronic conditions and the promise of genetic information, these insurance requirements are not met. Someone with diabetes or rheumatoid arthritis will have the same condition and similar costs in each future year. And the woman with a positive BRCA gene is much more likely to develop breast cancer. In these cases, known costs simply must be paid. Instead of spreading these across all enrolled populations, they must be financed across time for the increasing numbers with such conditions. Loading private insurance companies with these expenses results in uncompetitive rates and market failure.

There is only one solution: pooling and financing some or all of these at the broadest levels. In a nutshell, that is how we get a single-payer government system.

It is how we got Medicare. The cost of care to the elderly was known at the individual level for virtually everyone, so private insurance just wouldn’t work. So we had to finance this largely predictable cost through the government and its enormous pool of taxpayers.

It has been a tremendous, albeit expensive success. For the most part, people on Medicare like it a lot. This is the reason such a disruptive change is even a political possibility.

We will face the same need sometime in the future for the rest of us. Then a form of Medicare for All will look better than the alternative — a failing private insurance system.

J. B. Silvers is a professor of health care finance at the Weatherhead School of Management at Case Western Reserve University.

https://www.nytimes.com/2019/10/15/opinion/medicare-for-all-insurance.html?action=click&module=Opinion&pgtype=Homepage

About J.B. Silvers, PhD:

https://weatherhead.case.edu/faculty/j-b-silvers

Comment by Don McCanne

J.B. Silvers is both a former insurance executive and currently a professor of health care finance. What is his lesson for us? The indications of market failure of the private insurance model are already there, and private insurance “will increasingly be a losing proposition.”
“There is only one solution: pooling and financing some or all of these (health care costs) at the broadest levels. In a nutshell, that is how we get a single-payer government system.”
The sound bite? Private insurance has already failed us and establishing a single health care financing pool is the only solution that will work for all of us – Single Payer Medicare for All.

 

Public Option A Bad Policy

I’m back!

In case you missed me, I have been busy with personal matters and preparing for a trip out of town. Now that I am back, I have decided to pick up where I left off, and re-post an article from The Nation by Himmelstein and Woolhander on why private insurance or the public option is a bad policy choice. This article comes courtesy of Don McCanne, so thanks go to him.

Here is the entire article:

The Nation
October 7, 2019
The ‘Public Option’ on Health Care Is a Poison Pill
Some Democratic candidates are pushing it as a free-choice version of Medicare for All. That’s good rhetoric but bad policy.
By David U. Himmelstein and Steffie Woolhandler
Health care reform has been the most hotly contested issue in the Democratic presidential debates. Bernie Sanders and Elizabeth Warren have been pushing a single-payer Medicare for All plan, under which a public insurer would cover everyone. They would ban private insurance, except for items not covered by the public plan, such as cosmetic surgery or private rooms in hospitals. The other Democratic contenders favor a “public option” reform that would introduce a Medicare-like public insurer but would allow private insurers to operate as well. They tout this approach as a less traumatic route to universal coverage that would preserve a free choice of insurers for people happy with their plans. And some public option backers go further, claiming that the system would painlessly transition to single payer as the public plan outperforms the private insurers.
That’s comforting rhetoric. But the case for a public option rests on faulty economic logic and naive assumptions about how private insurance actually works. Private insurers have proved endlessly creative at gaming the system to avoid fair competition, and they have used their immense lobbying clout to undermine regulators’ efforts to rein in their abuses. That’s enabled them to siphon hundreds of billions of dollars out of the health care system each year for their own profits and overhead costs while forcing doctors and hospitals to waste billions more on billing-related paperwork.
Those dollars have to come from somewhere. If private insurers required their customers to pay the full costs of private plans, they wouldn’t be able to compete with a public plan like the traditional Medicare program, whose overhead costs are far lower. But this is not the case: In fact, taxpayers—including those not enrolled in a private plan—pick up the tab for much of private insurers’ profligacy. And the high cost of keeping private insurance alive would make it prohibitively expensive to cover the 30 million uninsured in the United States and to upgrade coverage for the tens of millions with inadequate plans.
Public option proposals come in three main varieties:
§  A simple buy-in. Some proposals, including those by Joe Biden and Pete Buttigieg, would offer a Medicare-like public plan for sale alongside private plans on the insurance exchanges now available under the Affordable Care Act. These buy-in reforms would minimize the need for new taxes, since most enrollees would be charged premiums. But tens of millions would remain uninsured or with coverage so skimpy, they still couldn’t afford care.
§  Pay or play. This variant (similar to the plan advanced by the Center for American Progress and endorsed by Beto O’Rourke) would offer employers a choice between purchasing private insurance or paying a steep payroll tax (about 8 percent). Anyone lacking employer-paid private coverage would be automatically enrolled in the public plan. The public option would be a good deal for employers who would otherwise have to pay more than 8 percent of their payroll for private coverage—for example, employers with older or mostly female workers (who tend to use more care and incur high premiums) or with lots of low-wage workers (for whom 8 percent of payroll is a relatively small sum). But many firms employing mostly young, male, or highly paid workers (e.g., finance and tech) would likely stay with a private insurer.
§  Medicare Advantage for All. The public option approach favored by Kamala Harris would mimic the current Medicare Advantage program. Medicare Advantage plans are commercial managed care products currently offered by private insurers to seniors. The Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, collects the taxes that pay for the program and passes the funds ($233 billion in 2018) along to the insurance companies. Under this approach, the public option would operate alongside the private Medicare Advantage plans and compete with them, as the traditional fully public Medicare program currently does.
No working models of the buy-in or pay-or-play public option variants currently exist in the United States or elsewhere. But decades of experience with Medicare Advantage offer lessons about that program and how private insurers capture profits for themselves and push losses onto their public rival—strategies that allow them to win the competition while driving up everyone’s costs.
IN US HEALTH INSURANCE, GOOD GUYS FINISH LAST
A public option plan that facilitates enrollees’ genuine access to health care can’t compete with private insurers that avoid the expensively ill and obstruct access to care. Despite having overhead costs almost seven times that of traditional Medicare (13.7 versus 2 percent), Medicare Advantage plans have grown rapidly. They now cover more than one-third of Medicare beneficiaries, up from 13 percent in 2005. Greed has trumped efficiency, and the efforts of regulators to level the playing field have been overwhelmed by insurers’ profit-driven schemes to tilt it.
Private insurers employ a dizzying array of profit-enhancing schemes that would be out of bounds for a public plan. These schemes, which continually evolve in response to regulators’ efforts to counter them, boil down to four strategies that are legal, in addition to occasional outright fraud.
§  Obstructing expensive care. Plans try to attract profitable, low-needs enrollees by assuring convenient and affordable access to routine care for minor problems. Simultaneously, they erect barriers to expensive services that threaten profits—for example, prior authorization requirements, high co-payments, narrow networks, and drug formulary restrictions that penalize the unprofitably ill. While the fully public Medicare program contracts with any willing provider, many private insurers exclude (for example) cystic fibrosis specialists, and few Medicare Advantage plans cover care at cancer centers like Memorial Sloan Kettering. Moreover, private insurers’ drug formularies often put all of the drugs—even cheap generics—needed by those with diabetes, schizophrenia, or HIV in a high co-payment tier.
Insurers whose first reaction to a big bill is “claim denied” discourage many patients from pursuing their claims. And as discussed below, if hassling over claims drives some enrollees away, even better: The sickest will be the most hassled and therefore the most likely to switch to a competitor.
§  Cherry-picking and lemon-dropping, or selectively enrolling people who need little care and disenrolling the unprofitably ill. A relatively small number of very sick patients account for the vast majority of medical costs each year. A plan that dodges even a few of these high-needs patients wins, while a competing plan that welcomes all comers loses.
In the employer market, cherry-picking is easy: Private insurers offer attractive premiums to businesses with young, healthy workers and exorbitant rates to those with older, sicker employees. As a letter this summer to The New York Times put it, like casinos, health insurers are profitable because they know the odds of every bet they place—and the house always wins.
The CMS, in theory, requires Medicare Advantage plans to take all comers and prohibits them from forcing people out when they get sick. But regulators’ efforts to enforce these requirements have been overwhelmed by insurers’ chicanery. To avoid the sick, private insurers manipulate provider networks and drug formulary designs. Despite the ban on forcing enrollees out, patients needing high-cost services like dialysis or nursing home care have switched in droves from private plans to traditional, fully public Medicare. And as a last resort, Medicare Advantage plans will stop offering coverage in a county where they’ve accumulated too many unprofitable enrollees, akin to a casino ejecting players who are beating the house.
Finally, Medicare Advantage plans cherry-pick through targeted marketing schemes. In the past, this has meant sign-up dinners in restaurants difficult to access for people who use wheelchairs or offering free fitness center memberships, a perk that appeals mainly to the healthiest seniors. But higher-tech approaches are just around the corner. Will Oscar, the health insurer founded by Jared Kushner’s brother—with Google’s parent company as a significant investor—resist the temptation to use Google’s trove of personal data to target enrollment ads toward profitable enrollees like tennis enthusiasts and avoid purchasers of plus-size clothing or people who have searched online for fertility treatments?
§  Upcoding, or making enrollees look sicker on paper than they really are to inflate risk-adjusted premiums. To counter cherry-picking, the CMS pays Medicare Advantage plans higher premiums for enrollees with more (and more serious) diagnoses. For instance, a Medicare Advantage plan can collect hundreds of dollars more each month from the government by labeling an enrollee’s temporary sadness as “major depression” or calling trivial knee pain “degenerative arthritis.” By applying serious-sounding diagnoses to minor illnesses, Medicare Advantage plans artificially inflate the premiums they collect from taxpayers by billions of dollars while adding little or nothing to their expenditures for care.
Though most upcoding stays within the letter of the law and merely stretches medical terminology, the CMS’s (rare) audits of enrollees’ charts indicate that Medicare Advantage plans are collecting $10 billion annually from taxpayers for entirely fabricated diagnoses. And that’s only a small fraction of their overall take from upcoding. Private insurers keep most of this pilfered money for their profits and overhead, but they use a portion to fund added benefits (for example, eyeglasses or slightly lower co-payments for routine care) that attract new enrollees and help private plans to seemingly outcompete traditional Medicare.
§  Lobbying to get excessive payments and thwart regulators. Congress has mandated that the CMS overpay Medicare Advantage plans by 2 percent (and even more where medical costs are lower than average). On top of that, Seema Verma, Trump’s CMS administrator, has taken steps that will increase premiums significantly and award unjustified “quality bonuses,” ignoring advice from the Medicare Payment Advisory Commission that payments be trimmed because the government is already overpaying the private plans. And she has ordered changes to the CMS’s Medicare website to trumpet the benefits of Medicare Advantage enrollment.
In sum, a public option insurer that, like traditional Medicare, doesn’t try to dodge unprofitable enrollees would be saddled with more than its share of sick, expensive patients and would become a de facto high-cost, high-risk pool. The CMS’s decades-long efforts to level the playing field have been thwarted by insurers’ upcoding, belying their promises of fair competition. And insurance companies have used their political muscle to sustain and increase their competitive advantage over traditional Medicare. The result: The public plan (and the taxpayers) absorbs the losses while private insurers skim off profits, an imbalance so big that private plans can outcompete a public plan despite squandering vast sums on overhead costs, CEO salaries, and shareholder profits.
SINGLE PAYER WOULD SAVE, PUBLIC OPTION WON’T
This year alone, private insurers will take in $252 billion more than they pay out, equivalent to 12 percent of their premiums. A single-payer system with overhead costs comparable to Medicare’s (2 percent) could save about $220 billion of that money. A public option would save far less—possibly zero, if much of the new public coverage is channeled through Medicare Advantage plans, whose overhead, at 13.7 percent, is even higher than the average commercial insurer.
Moreover, a public option would save little or nothing on hospitals’ and doctors’ sky-high billing and administrative costs. In a single-payer system, hospitals and other health facilities could be funded via global, lump-sum budgets—similar to the way cities pay fire departments—eliminating the need to attribute costs to individual patients and collect payments from them and their insurers. That global budget payment strategy has cut administrative costs at hospitals in Canada and Scotland to half the US level. The persistence of multiple payers would preclude such administrative streamlining, even if all of the payers are charged the same rates. (Under Maryland’s mislabeled global budget system, the state’s hospitals charge uniform rates but continue to bill per patient; our research indicates that their administrative costs haven’t fallen at all, according to their official cost reports.)
Similarly, for physicians and other practitioners, the complexity involved in billing multiple payers, dealing with multiple drug formularies and referral networks, collecting co-payments and deductibles, and obtaining referrals and prior authorizations drives up office overhead costs and documentation burdens.
The excess overhead inherent to multipayer systems imposes a hidden surcharge on the fees that doctors and hospitals must charge all patients—not just those covered by private insurance. All told, a public option reform would sacrifice about $350 billion annually of single payer’s potential savings on providers’ overhead costs, over and above the $220 billion in savings it could sacrifice annually on insurers’ overhead.
Finally, a public option would undermine the rational health planning that is key to the long-term savings under single payer. Each dollar that a hospital invests in new buildings or equipment increases its operating costs by 20 to 25 cents in every subsequent year. At present, hospitals that garner profits (or “surpluses” for nonprofits) have the capital to expand money-making services and buy high-tech gadgets, whether they’re needed or not, while neglecting vital but unprofitable services. For instance, hospitals around the country have invested in proton-beam-radiation therapy centers that cost hundreds of millions of dollars apiece. (Oklahoma City alone now has two.) Yet there’s little evidence that those machines are any better for most uses than their far cheaper alternatives. Similarly, hospitals have rushed to open invasive cardiology and orthopedic surgery programs, often close to existing ones. These duplicative investments raise costs and probably compromise quality.
Meanwhile, primary care and mental health services have languished, and rural hospitals and other cash-strapped facilities that provide much-needed care spiral toward closure. As in Canada and several European nations, a single-payer system could fund new hospital investments through government grants based on an explicit assessment of needs, instead of counting on private hospitals to use their profits wisely. That strategy has helped other nations direct investments to areas and services with the greatest need and to avoid funding wasteful or redundant facilities. Public option proposals would perpetuate current payment strategies that distort investment and raise long-term costs.
Because a public option would leave the current dysfunctional payment approach in place, it would sacrifice most of the savings available via single-payer reform. The bottom line is that a public option would either cost much more or deliver much less than single payer.
WHY NOT IMPORT GERMAN, SWISS, OR DUTCH HEALTH CARE?
Public option proponents often cite Germany, Switzerland, and the Netherlands as exemplars of how private insurers can coexist with thriving public health care systems. But they ignore the vast differences between those nations’ private insurers and ours.
The nonprofit German “sickness funds,” which cover 89 percent of the population (only wealthy Germans are allowed to purchase coverage from for-profit insurers), are jointly managed by employers and unions—a far cry from our employer-based coverage. The government mandates identical premium rates for all the sickness funds, takes money from those with low-risk enrollees and subsidizes others with older and sicker ones, and directly pays for most hospital construction. All sickness funds offer identical benefit packages, pay the same fees, and cover care from any doctor or hospital.
Although the details differ, a similarly stringent regulatory regime applies in Switzerland, whose system descended from Otto von Bismarck’s original German model, and as in Germany, the government funds most hospital construction. While for-profit insurers can sell supplemental coverage, only nonprofits are allowed to offer the mandated benefit package.
Since 2006, the Netherlands has been transitioning from the German-style universal coverage system to a more market-oriented approach championed by corporate leaders. However, the government pays directly for all long-term care, and a strong ethos of justice and equality has pressured both public and private actors to avoid any erosion of social solidarity. The Netherlands has long enjoyed ready access to care, and its system hasn’t descended (yet) into an American-style abyss. But under the new regime, hospital administrative costs have risen nearly to US levels, overall health costs have increased rapidly, doctors complain of unsustainable administrative burdens, and even in such a small nation, tens of thousands of people are uninsured. Insurers spend massively on marketing and advertising, and private insurers’ overhead costs average 13 percent of their premiums. Moreover, the United States and the Netherlands aren’t the only places where for-profit insurers’ overhead costs are high: They average 12.4 percent in Switzerland, 20.9 percent in Germany, and 26.2 percent in the United Kingdom.
Transforming the immensely powerful, profit-driven insurance companies of the United States into benign nonprofit insurers in the Swiss or German mold would be as heavy a lift as adopting Medicare for All. Nor can we count on the cultural restraints that have thus far softened the Dutch insurers’ rapacious tendencies and prevented a reversal of that country’s long-standing health care successes.
A final point: While allowing private insurers to compete with a public plan amounts to a poison pill, the same isn’t true for supplemental private plans that are allowed to cover only those items excluded from the public benefit package. While Canada bans the sale of private coverage that duplicates the public plan’s benefits, it has always allowed supplemental coverage, and that hasn’t sabotaged its system.
The efficiencies of a single-payer system would make universal coverage affordable and give everyone in the United States their free choice of doctors and hospitals. But that goal will remain out of reach if private insurers are allowed to continue gaming the system. Preserving the choice of insurer for some would perpetuate the affordability crisis that has bedeviled the US health care system for generations. Proponents of the public option portray it as a nondisruptive, free-choice version of single payer. That may be good campaign rhetoric, but it’s terrible policy.
David U. Himmelstein, MD and Steffie Woolhandler, MD, MPH are Distinguished Professors of Public Health at the City University of New York at Hunter College and are co-founders of Physicians for a National Health Program.

Why The US Doesn’t Have Universal Health Care – It Is Not What You Think

Landing Negroes at Jamestown from Dutch man-of-war, 1619.

Yesterday, The Sunday New York Times Magazine ran a series of articles titled, The 1619 Project.

According to the Times:

The 1619 Project is a major initiative from The New York Times observing the 400th anniversary of the beginning of American slavery. It aims to re-frame the country’s history, understanding 1619 as our true founding, and placing the consequences of slavery and the contributions of black Americans at the very center of the story we tell ourselves about who we are.

As a student of American history, I was fully exposed to the current literature of the time regarding slavery, slaveholders, and the impact it had on the African-American culture and people, through my introduction to such historians as Eric Foner, Eugene Genovese, Leon Higginbotham, and John Blassingame, as well as from my three African-American/Sociology courses as an undergraduate.

So, I believe that this series by the Times, is not only needed, but timely, given the racial animus we see day after day from the White House, the far right, and on the Internet.

Readers of this blog  have seen that I have advocated on behalf of Medicare for All/Single Payer, because of the many causes for our broken health care system.  However, it  is not solely based on economics, politics, or defending the profits of the insurers and pharmaceutical companies. But rather due to race, as Jeneen Interlandi writes.

According to Interlandi, the first federal health care program served freedmen after the Civil War, but white legislators argued that it would breed dependence.

This health care program, the medical division of the Freedmen’s Bureau addressed the health care crisis due to the smallpox virus spreading across the post-war South. And according to Jim Downs, white leaders were worried about black epidemics spilling into their communities, and wanted the former slaves to be healthy enough to go back to the plantation. However, they feared that free and healthy African-Americans would upend the racial hierarchy.

Interlandi describes how whenever there was some move to deal with health care, there was always some backlash or outright ignoring of the solutions to the problems facing the south in the post-war period and Reconstruction. Not only that, but when federal social programs were introduced, Southern Democrats (yes, but now they would be, and are Republicans) forced concessions to bar African-Americans from receiving the benefits of those programs, or the AMA barred black doctors, medical schools excluded black students, and most hospitals and clinics segregated black patients.

There is the story of the African-American doctor who discovered blood types, and died because he was refused admittance to a hospital because he was black. This story was brought to the attention of viewers of MASH when the subject of race was part of that episode’s plot.

In college, I wrote a paper on the Tuskegee Syphilis experiment that exposed African-American men to syphilis to observe the natural history of untreated syphilis; the African-American men in the study were only told they were receiving free health care from the United States government.[3]

So those of you who oppose single payer health care should stop and consider if being the only nation in the Western world to not provide its citizens with universal health care should continue to be based on racial prejudice or simply because you want to profit by not doing so.