Tag Archives: Medicare for All

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

Mirror, Mirror

Don McCanne brings us this post from the London Review of Books that describes in detail how the British NHS is being denationalized and privatized, in a mirror image of the push some Democrats are making about enacting Medicare for All.

Here in full is the article by John Furse. It is a cautionary tale for all those who support Medicare for All, and for those who want to keep the status quo, for-profit system here in the US. Remember that the NHS was endorsed by no less than Winston Churchill, by no means a flaming Socialist, and has been popular with the British people for seventy years. Can we say the same thing about our system?

London Review of Books

November 7, 2019
The NHS Dismantled
By John Furse

The Americanisation of the NHS is not something waiting for us in a post-Brexit future. It is already in full swing. Since 2017 Integrated Care Systems (ICSs) have been taking over the purchasing as well as the provision of NHS services in England, deciding who gets which services, which are free and which – as with the dentist and prescriptions – we have to pay for. Known in the US as Accountable Care Organisations (ACOs), ICSs are partnerships between hospitals, clinicians and private sector providers designed – and incentivised – to limit and reduce public healthcare costs, and in particular to lessen the demand on hospitals. Health Maintenance Organisations (HMOs), the forerunners of ACOs, were pioneered by the US health insurance provider Kaiser Permanente in 1953. President Nixon’s adviser John Ehrlichman explained to his boss the basic concept before the passage of the 1973 HMO Act: ‘The less care they give them the more money they make.’ In May 2016 Jeremy Hunt, then health minister, admitted at a Commons Health Committee hearing that Kaiser was a model for his planned NHS reforms. When a trial of ACOs was announced in the UK in 2017, it caused an outcry from campaigners and NHS England quickly rebranded them ICSs. But the Kaiser model isn’t new to healthcare policy in the UK: it has been the inspiration for the long and discreet process of the dismantling and reformation of the NHS since the 1980s.

In his report to the Conservative Party’s Economic Reconstruction Group in 1977, Nicholas Ridley wrote that “denationalisation should not be attempted by frontal attack but by preparation for return to the private sector by stealth. We should first pass legislation to destroy the public sector monopolies. We might also need to take power to sell assets. Secondly, we should fragment the industries as far as possible and set up the units as separate profit centres.”

After coming to power two years later, Thatcher was able openly to denationalise many industries, but the NHS, with its huge number of staff and institutions, its largely effective and equitable provision of healthcare and its great popularity, was a far more difficult proposition. In 1986 hospital cleaning services were privatised. In 1988 Oliver Letwin and John Redwood published Britain’s Biggest Enterprise: Ideas for Radical Reform of the NHS, which proposed turning the NHS into an independent trust and advocated joint ventures with the private sector and the introduction of fees.

The first major legislative step was the creation of the internal market. Kenneth Clarke’s 1990 NHS and Community Care Act split the NHS into ‘service purchasers’ and ‘service providers’: hospitals and GPs would compete for custom and the successful parties would be rewarded with greater funding. The influence of the HMO model and of the Kaiser consultant Alain Enthoven was acknowledged in Parliament by the then Tory MP Quentin Davies. ‘The fund-holding practice concept owes something to the system of HMOs in the United States … Elements of the Bill reflect some of the thinking of Professor Enthoven in his famous report and reflect his concept of an internal market.’ Enthoven was seen as an expert on ‘unsustainable growth’ in health expenditure and in 1985 his report ‘Reflections on the Management of the National Health Service’ had advised the Thatcher administration that ‘in competition doctors impose on themselves controls they would never dream of accepting if the government tried to impose them.’ ‘The system needed to be reconfigured,’ he later explained, ‘in such a way as to give incentives to motivate the self-interest.’

Letwin and Redwood’s ideas also had traction in Tony Blair’s 1997 National Health Service Act. Together, the 1990 and 1997 Acts turned NHS hospitals into trusts able to operate as commercial businesses. Many formed Private Finance Initiative partnerships to build and maintain hospitals – these deals, originally worth £11.4 billion, have lumbered the NHS with more than £80 billion of debt. Under New Labour a number of hospital trusts commissioned Kaiser and United Health, the largest US private health insurer, to run pilot programmes. ‘Consumer choice’ had been the mantra of the Thatcher era; under New Labour NHS patients became consumers and the goal ‘patient choice’.

These changes were minor compared to those introduced by the 2012 Health and Social Care Act (Letwin was by then a senior figure in Tory policy-making), which enabled hospital trusts to raise 49 per cent of their budgets from private patients and other sources, and to use NHS ‘brand loyalty’ to attract patients to their private services. In 2017 Swindon’s Great Western NHS Hospital advertised its private service saying: ‘Our patients benefit from a premium environment while having immediate access to specialist services often only available in large NHS hospitals.’

The Act gave more than 60 per cent of the NHS budget to local Clinical Commissioning Groups (CCGs), comprised of GPs and other clinicians, to be used to commission services from the private sector as well as from the NHS. Writing anonymously, one GP described the change as ‘how to get turkeys not only voting for Christmas but also plucking, basting and putting themselves in the oven’. Given their lack of business expertise, CCGs were provided with Commissioning Support Units run by private companies including KPMG, Price Waterhouse Cooper, McKinsey and Optum, the UK subsidiary of United Health. In practice, these companies now run the franchising of NHS services.

A key part of the 2012 Act, to which McKinsey was a significant contributor, was the abolition of the health minister’s responsibility for national healthcare provision. This was left to NHS England under its new director, Simon Stevens, a former health policy adviser to the Blair government appointed by David Cameron because ‘he knows more about NHS problems and market solutions than any man alive.’ In his previous role as a CEO of United Health, Stevens had led corporate opposition to the introduction of Obamacare. His ‘Five-Year Forward View’, launched in 2015, became the basis for NHS England’s Sustainability and Transformation Plans (STPs), drawn up with Optum and McKinsey. The STPs were supposed to create savings of almost £5 billion a year by 2020. As in the Kaiser model, costs are cut by reducing access to care. (Meanwhile, the revolving door continued to turn: senior government and NHS England figures who took prominent positions at Optum include Cameron’s health adviser Nick Seddon, NHS England’s commissioner David Sharp and its mental health director Martin McShane.)

The STPs divided England into 44 CCG-run ‘footprint’ areas, all of which were put under pressure to amalgamate hospitals and shrink specialist units. Hospital beds have been progressively cut: the UK’s bed-to-patient ratio is now one of the lowest in any developed country. Accident and emergency departments, which not only require expensive equipment and high numbers of staff but also take the brunt of social care failings, are in the process of being cut from 144 to about fifty. GP care is increasingly provided by ‘physician associates’, nurse practitioners and pharmacists, while patients are exhorted to use privately owned, profit-making online and app consultancies such as Doctaly, GP at Hand and myGP. Opening up new markets for US tech giants is a key factor in the reconfiguration of the NHS.

Enforced centralisation has resulted in ‘hub’ hospitals and fewer, larger GP practices: at least a thousand have closed since 2014 and the number with more than twenty thousand patients has tripled. With funding incentives from NHS England, GPs are merging their practices into competing, largescale organisations with names like Primary Care Networks and Super-Practices, or becoming partners in commercially driven Multi-Speciality Community Provider centres. These reduced and restructured services are open to takeovers by private companies. NHS hospitals now lease space on their own premises to private companies. Guy’s Hospital, in the absence of the funding it needed to develop adequate cancer facilities, rented space to the Hospital Corporation of America for private cancer suites that were given access to the hospital’s facilities. The merging of public and private provision in the same space usefully blurs the distinction between them. And the rationing of non-urgent operations such as hip replacements and restrictions on follow-up therapies – as well as increased waiting times – encourage patients to seek private treatment.

A recent report by the Strategy Unit, an NHS consultancy, acknowledges that ICSs are designed to ‘moderate’ demand and reduce spending, while their partners keep the savings they make if they run below budget. It cautions that, as with ACOs, there is ‘only limited assurance that providers will not game the system and that quality will not suffer … large financial rewards may flow out of the NHS.’ At the 2012 World Economic Forum, Stevens (then working for United Health) led proposals to replace public healthcare systems around the world with accountable care systems. His collaborators included Medtronic, the world’s largest producer of medical devices (a US company based in Ireland for tax purposes), Qualcomm Life, which designs medical technology, and Kaiser. Since his arrival at NHS England, the influence of such companies has grown: IBM is now a lead supplier of IT; Optum runs GP referrals services and is in a partnership with the second largest GP federation, Modality. The UK’s largest GP network, the Practice Group, is owned by the American company Centene. Similar companies, such as the Priory Group, are major players in mental healthcare provision and are involved in mental health ICSs.

Private companies, with their increased overheads, higher rates of borrowing and shareholder dividends, are inherently more costly to the public than state-funded services. Less obvious are the high costs of management and administration involved in franchising and marketing services. In the US these are estimated to account for more than 30 per cent of the $3.6 trillion spent on healthcare. A 2010 report commissioned by the Department of Health estimated management and administration costs at 14 per cent of total NHS spending, more than twice the figure in 1990. Commercial confidentiality laws and opaque NHS accounting make the costs of privatisation hard to quantify but privatisation is probably adding at least £9 billion a year to the NHS budget.

Stevens was recently praised by politicians and the media when he called for the repeal of Section 75 of the 2012 Health and Social Care Act, which requires competitive market tendering for the provision of services – ostensibly a move away from privatisation. But the real reason lies in the small print. Section 75 subjects private contractors to the Competition and Markets Authority. Its repeal will deregulate the sector and make ICSs more attractive to companies. Andrew Taylor, the founding director of the Co-operation and Competition Panel for NHS Funded Services, told a Commons committee hearing in May: ‘I don’t think anyone’s realistically talking about removing the private sector from the NHS. What the proposals do in effect is deregulate NHS markets. They don’t actually remove markets from the NHS.’

The Ridley Report’s proposals for denationalisation are being hurried to fulfilment. NHS property and land assets worth £10 billion are being sold to private developers. The fragmentation of a once fully integrated service into competing and commercially-driven units is well advanced and has been accomplished without proper public scrutiny, knowledge, consent or appropriate Parliamentary legislation. Successive governments have been assisted by the failure of the media to recognise the overall shape of the project and sufficiently analyse the disparate changes. ICSs will be fully up and running throughout England within 18 months.

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.