American Health Care Is an Engine of Inequality
It takes from the poor and working class to generate wealth for the already wealthy.
by Angus Deaton and Anne Case - NYT - April 14, 2020
In March, Congress passed a coronavirus bill including $3.1
billion to develop and produce drugs and vaccines. The bipartisan
consensus was unusual. Less unusual was the successful lobbying by
pharmaceutical companies to weaken or kill provisions that addressed
affordability — measures that could be used to control prices or invalidate patents for any new drugs.
The notion of price control is anathema to health care companies. It threatens their basic business model, in which the government grants them approvals and patents, pays whatever they ask, and works hand in hand with them as they deliver the worst health outcomes at the highest costs in the rich world.
The American health care industry is not good at promoting health, but it excels at taking money from all of us for its benefit. It is an engine of inequality.
Now is a difficult time to talk about the costs of health care. Doctors and nurses are risking their lives to fight the virus. We need more doctors and nurses. We need more beds, more ventilators and more protective equipment, and we need vaccines and drugs. High prices are not the best nor the only way to get drugs or vaccines that will win the war against the virus, but they can help.
The notion of price control is anathema to health care companies. It threatens their basic business model, in which the government grants them approvals and patents, pays whatever they ask, and works hand in hand with them as they deliver the worst health outcomes at the highest costs in the rich world.
The American health care industry is not good at promoting health, but it excels at taking money from all of us for its benefit. It is an engine of inequality.
Now is a difficult time to talk about the costs of health care. Doctors and nurses are risking their lives to fight the virus. We need more doctors and nurses. We need more beds, more ventilators and more protective equipment, and we need vaccines and drugs. High prices are not the best nor the only way to get drugs or vaccines that will win the war against the virus, but they can help.
Yet we cannot go on as we have been. America is a rich country that can afford a world-class health care system. We should be
spending a lot of money on care and on new drugs. But we need to spend
to save lives and reduce sickness, not on expensive, income-generating
procedures that do little to improve health. Or worst of all, on
enriching pharma companies that feed the opioid epidemic.
The crisis will, inevitably, change health care in countless ways. The industry might emerge as a superhero of the war against Covid-19, like the Royal Air Force in the Battle of Britain during World War II. If so, it might become even more untouchable than before. Or it may be seen as a financial predator that leaves many thousands with unpayable bills for coronavirus care.
But the virus also provides an opportunity for systemic change. The United States spends more than any other nation on health care, and yet we have the lowest life expectancy among rich countries. And although perhaps no system can prepare for such an event, we were no better prepared for the pandemic than countries that spend far less.
The first step to reform is to change the way we think about the health care system. Many Americans think their health insurance is a gift from their employers — a “benefit” bestowed on lucky workers by benevolent corporations. It would be more accurate to think of employer-provided health insurance as a tax.
One way or another, everyone pays for health care. It accounts for about 18 percent of G.D.P. — nearly $11,000 per person. Individuals directly pay about a quarter, the federal and state governments pay nearly half, and most of the rest is paid by employers.
The crisis will, inevitably, change health care in countless ways. The industry might emerge as a superhero of the war against Covid-19, like the Royal Air Force in the Battle of Britain during World War II. If so, it might become even more untouchable than before. Or it may be seen as a financial predator that leaves many thousands with unpayable bills for coronavirus care.
But the virus also provides an opportunity for systemic change. The United States spends more than any other nation on health care, and yet we have the lowest life expectancy among rich countries. And although perhaps no system can prepare for such an event, we were no better prepared for the pandemic than countries that spend far less.
The first step to reform is to change the way we think about the health care system. Many Americans think their health insurance is a gift from their employers — a “benefit” bestowed on lucky workers by benevolent corporations. It would be more accurate to think of employer-provided health insurance as a tax.
One way or another, everyone pays for health care. It accounts for about 18 percent of G.D.P. — nearly $11,000 per person. Individuals directly pay about a quarter, the federal and state governments pay nearly half, and most of the rest is paid by employers.
In 2019, employer-based insurance plans cost
an average of $21,000 for a family policy or $7,200 for a single
person. This system requires companies to calculate whether a worker’s
value to the company can cover both wages and benefits, a difficult test
for less-skilled workers. Wages fall or employers shed or outsource
these positions to companies with few benefits and fewer prospects for
career advancement.
Rising health care costs account for much of the half-century decline in the earnings of men without a college degree, and contribute to the decline in the number of less-skilled jobs. Employer-based health insurance is a wrecking ball, destroying the labor market for less-educated workers and contributing to the rise in “deaths of despair.”
Rising costs are an untenable burden on our government, too. States’ payments for Medicaid have risen from 20.5 percent of their spending in 2008 to 28.9 percent in 2019. To meet those rising costs, states have cut their financing for roads, bridges and state universities. Without those crucial investments, the path to success for many Americans is cut off. We face a looming trillion-dollar federal deficit caused almost entirely by the rising costs of Medicaid and Medicare, even without the recent coronavirus relief bill.
Every year, the United States spends $1 trillion more than is needed for high quality care. Of course, that waste is also someone’s income; executives at hospitals, medical device makers and pharmaceutical companies, and some physicians, are very well paid.
American doctors control access to their profession through a system that limits medical school admissions and the entry of doctors trained abroad — an imbalance that was clear even before the pandemic. That keeps their numbers down and their salaries up. As of 2012, doctors were the largest single occupation in the top 1 percent. The business model under which most doctors practice isn’t working; without the revenue from high-paid elective care, some hospitals are now resorting to furloughs and layoffs of doctors and nurses.
Hospitals, many of them classified as nonprofits, have consolidated, with monopolies over health care in many cities, and they have used that monopoly power to raise prices. Many Americans, even those with insurance, face bills that they cannot pay, or are hit with “surprise” medical bills charged by providers working at in-network hospitals who have opted not to accept insurance. Ambulance services and emergency departments that don’t accept insurance have become favorites of private equity investors because of their high profits. Medical device manufacturers have also consolidated, in some cases using a “catch and kill” strategy to swallow up nimbler start-ups and keep the prices of their products high.
The health care
industry has armored itself, employing five lobbyists for each elected
member of Congress. But public anger has been building — over drug
prices, co-payments, surprise medical bills — and now, over the
fragility of our health care system, which has been laid bare by the
pandemic. This anger could breach the protective cordon in Washington.
If it does, what will we get instead?
A single-payer system is just one possibility. There are many systems in wealthy countries to choose from, with and without insurance companies, with and without government-run hospitals. But all have two key characteristics: universal coverage — ideally from birth — and cost control.
Britain, for example, has the National Institute for Health and Care Excellence, which vets drugs, devices and procedures for their benefit relative to cost. The institute can sometimes delay the availability of good treatments, but it prevents the public system from spending money on expensive therapies of questionable value. It is designed to put the interests of patients ahead of providers.
In the United States, public funding is likely to play a significant role in any treatments or vaccines that are eventually developed for Covid-19. Americans should demand that they be available at a reasonable price to everyone — not in the sole interest of drug companies.
At the very least, America must stop financing health care through employer-based insurance, which encourages some people to work but it eliminates jobs for less-skilled workers. Employer-based health care is a particular nightmare in this pandemic. In recent weeks, millions have lost their paychecks and their insurance, and will have to face the virus without either.
We are believers in free-market capitalism, but health care is not something it can deliver in a socially tolerable way.
Anne Case and Angus Deaton, the 2015 Nobel laureate in economics, are professors at Princeton and the University of Southern California and the authors of “Deaths of Despair and the Future of Capitalism.”
https://www.nytimes.com/2020/04/14/opinion/covid-inequality-health-care.html?action=click&module=Opinion&pgtype=Homepage
Dozens of states across the US have issued orders to halt elective medical procedures as part of emergency shutdowns to curb the spread of Covid-19. As a result, hospitals and medical treatment clinics across the US are implementing layoffs, furloughs, and cuts to salaries and work schedules in response to declines in revenue.
The for-profit company which owns the hospital where Zeman worked decided to shut down the maternal delivery department at the end of March, putting her and many others out of a job, and leaving patients with far fewer options.
“They say it’s not related to Covid-19, but it’s a huge disservice to the women of the east side of San Jose. Doing this during a pandemic is terrible,” said Zeman. “They said it wasn’t financially stable to keep the unit open and so they’re closing. Our big concern is we’re a trauma center and there are no hospitals in this area that can take care of women and children’s services.”
Healthcare is a trillion-dollar industry in the US, where hospitals and clinics are overwhelmingly run as businesses and patients are the core of their revenue cycle. Americans are expected to have means to pay for their treatment, usually through expensive insurance linked to their jobs, though about 28 million people were uninsured in 2018, according to Kaiser Family Foundation.
“If you run healthcare as a business, if someone isn’t profitable for you, you lay [people] off, and that’s what we’re seeing,” said Dr David Himmelstein, distinguished professor of public health at City University of New York’s Hunter College and a lecturer in medicine at Harvard medical school. “The hospitals – exactly during a time of greatest need – are saying they don’t need these people.
“We have a healthcare system where you excel in normal times by stressing what’s needed the least, and then when we have an emergency and the need is greatest, you’re in financial trouble because you’re geared to do what’s profitable.”
According to the Bureau of Labor Statistics, 43,000 healthcare jobs were lost in March 2020 across the US, and the job losses in healthcare have increased as shutdowns persist through the pandemic. The HealthLandscape and American Academy of Family Physicians issued a report estimating by June 2020, 60,000 family medical practices will close or scale back, affecting 800,000 workers.
Corey Mertz, a registered nurse for nearly 21 years at a for-profit hospital in McMinnville, Oregon, saw his work schedule go from full-time, 32 to 40 hours a week, to less than 12 hours a week.
“For the last two to three weeks, we’ve cancelled all of our elective surgeries, most of our outpatient processes, and this has had a gigantic impact on our hospital,” said Mertz.
He filed for unemployment benefits last week, but had not received benefits or been able to get in contact with the state unemployment agency. Mertz’s hospital initially started training nurses to help departments with anticipated surges in coronavirus patients, but the training was stopped because the hospital hadn’t seen a significant influx of cases severe enough to be admitted.
“We all have a lot of uncertainty and angst about how long this will go on,” Mertz added.
The cuts and layoffs facing healthcare workers began as many areas of the US experienced surges in coronavirus patients, while hospitals struggle with shortages in supplies and protective equipment for workers.
Elizabeth, a medical assistant at a hospital in Fall River, Massachusetts, who asked not to use her last name for fear of losing her job, was furloughed in late March 2020, but was still waiting to receive information from her human resources department last week on how to maintain benefits and what to expect through the furlough process.
“We have no clue the headaches we’re getting into. This has never happened. I’ve been in the medical field for 21 years,” she said. “They want us to use our paid time off to cover our health insurance benefits, but if you’re collecting unemployment they’ll think you’re taking a paycheck, so that is going to interfere with unemployment and the unemployment benefits are already minimal. It’s not even half of our check.”
Fairmont regional medical center, the only hospital in Marion county, West Virginia, closed down at the end of March. A few days after the closure, West Virginia’s first coronavirus-related death occurred in the county.
“I think not having a hospital in this community, it means death for a lot of people,” said Patty Snyder, president of Retail, Wholesale and Department Store Union Local 550 which represented 120 employees at the hospital. Alecto Healthcare Services, which operated Fairmont, did not respond to a request for comment.
Snyder, one of hundreds of employees laid off due to the closure, worked as a cashier at the hospital for nearly 30 years. “This is going to have a catastrophic effect on this community. In the middle of this pandemic, we don’t have time to wait 20 to 30 minutes for an ambulance to get to us and [then] drive 20 to 30 minutes in either direction to a hospital.”
Alex Hlumyk, a certified medical assistant in Hubbard, Ohio, began his job at a physicians’ practice in a healthcare system owned by a private equity firm eight months ago, but was recently laid off after his practice told him there wasn’t enough money to keep him on the payroll.
Before his layoff, Hlumyk was screening patients for coronavirus and was frustrated he wasn’t offered any guidance on how to continue helping on the frontlines of the pandemic.
“I have the skills to help people during this pandemic and right now I can’t,” said Hlumyk. He filed for unemployment the day he was laid off, but was still awaiting benefit payments to begin, while worrying about being able to pay rent and payments on his car.
“These furloughs make the case that now more than ever our healthcare system should not be for-profit. We are among the most vital workers in the country right now, and there should be no reason that some people on Wall Street should determine the worth of our jobs when thousands upon thousands of lives are at risk.”
https://www.theguardian.com/us-news/2020/apr/14/healthcare-job-cuts-coronavirus-worker-layoffs
Rising health care costs account for much of the half-century decline in the earnings of men without a college degree, and contribute to the decline in the number of less-skilled jobs. Employer-based health insurance is a wrecking ball, destroying the labor market for less-educated workers and contributing to the rise in “deaths of despair.”
Rising costs are an untenable burden on our government, too. States’ payments for Medicaid have risen from 20.5 percent of their spending in 2008 to 28.9 percent in 2019. To meet those rising costs, states have cut their financing for roads, bridges and state universities. Without those crucial investments, the path to success for many Americans is cut off. We face a looming trillion-dollar federal deficit caused almost entirely by the rising costs of Medicaid and Medicare, even without the recent coronavirus relief bill.
Every year, the United States spends $1 trillion more than is needed for high quality care. Of course, that waste is also someone’s income; executives at hospitals, medical device makers and pharmaceutical companies, and some physicians, are very well paid.
American doctors control access to their profession through a system that limits medical school admissions and the entry of doctors trained abroad — an imbalance that was clear even before the pandemic. That keeps their numbers down and their salaries up. As of 2012, doctors were the largest single occupation in the top 1 percent. The business model under which most doctors practice isn’t working; without the revenue from high-paid elective care, some hospitals are now resorting to furloughs and layoffs of doctors and nurses.
Hospitals, many of them classified as nonprofits, have consolidated, with monopolies over health care in many cities, and they have used that monopoly power to raise prices. Many Americans, even those with insurance, face bills that they cannot pay, or are hit with “surprise” medical bills charged by providers working at in-network hospitals who have opted not to accept insurance. Ambulance services and emergency departments that don’t accept insurance have become favorites of private equity investors because of their high profits. Medical device manufacturers have also consolidated, in some cases using a “catch and kill” strategy to swallow up nimbler start-ups and keep the prices of their products high.
These are all strategies that lawmakers and regulators could put a stop to, if they choose.
They choose not to. And so we Americans have too few doctors, too few beds and too few ventilators — but lots of income for providers. While millions suffer, our health care system has turned into an inequality machine, taking from the poor and working class to generate wealth for the already wealthy.
They choose not to. And so we Americans have too few doctors, too few beds and too few ventilators — but lots of income for providers. While millions suffer, our health care system has turned into an inequality machine, taking from the poor and working class to generate wealth for the already wealthy.
If it does, what will we get instead?
A single-payer system is just one possibility. There are many systems in wealthy countries to choose from, with and without insurance companies, with and without government-run hospitals. But all have two key characteristics: universal coverage — ideally from birth — and cost control.
Britain, for example, has the National Institute for Health and Care Excellence, which vets drugs, devices and procedures for their benefit relative to cost. The institute can sometimes delay the availability of good treatments, but it prevents the public system from spending money on expensive therapies of questionable value. It is designed to put the interests of patients ahead of providers.
In the United States, public funding is likely to play a significant role in any treatments or vaccines that are eventually developed for Covid-19. Americans should demand that they be available at a reasonable price to everyone — not in the sole interest of drug companies.
At the very least, America must stop financing health care through employer-based insurance, which encourages some people to work but it eliminates jobs for less-skilled workers. Employer-based health care is a particular nightmare in this pandemic. In recent weeks, millions have lost their paychecks and their insurance, and will have to face the virus without either.
We are believers in free-market capitalism, but health care is not something it can deliver in a socially tolerable way.
Anne Case and Angus Deaton, the 2015 Nobel laureate in economics, are professors at Princeton and the University of Southern California and the authors of “Deaths of Despair and the Future of Capitalism.”
https://www.nytimes.com/2020/04/14/opinion/covid-inequality-health-care.html?action=click&module=Opinion&pgtype=Homepage
US for-profit healthcare sector cuts thousands of jobs as pandemic rages
by Michael Sainato - The Guardian - April 14, 2020
Maureen Zeman was a registered nurse for 29 years at a hospital in San Jose, California, before she was laid off with dozens of other nurses despite the coronavirus pandemic.Dozens of states across the US have issued orders to halt elective medical procedures as part of emergency shutdowns to curb the spread of Covid-19. As a result, hospitals and medical treatment clinics across the US are implementing layoffs, furloughs, and cuts to salaries and work schedules in response to declines in revenue.
The for-profit company which owns the hospital where Zeman worked decided to shut down the maternal delivery department at the end of March, putting her and many others out of a job, and leaving patients with far fewer options.
“They say it’s not related to Covid-19, but it’s a huge disservice to the women of the east side of San Jose. Doing this during a pandemic is terrible,” said Zeman. “They said it wasn’t financially stable to keep the unit open and so they’re closing. Our big concern is we’re a trauma center and there are no hospitals in this area that can take care of women and children’s services.”
Healthcare is a trillion-dollar industry in the US, where hospitals and clinics are overwhelmingly run as businesses and patients are the core of their revenue cycle. Americans are expected to have means to pay for their treatment, usually through expensive insurance linked to their jobs, though about 28 million people were uninsured in 2018, according to Kaiser Family Foundation.
“If you run healthcare as a business, if someone isn’t profitable for you, you lay [people] off, and that’s what we’re seeing,” said Dr David Himmelstein, distinguished professor of public health at City University of New York’s Hunter College and a lecturer in medicine at Harvard medical school. “The hospitals – exactly during a time of greatest need – are saying they don’t need these people.
“We have a healthcare system where you excel in normal times by stressing what’s needed the least, and then when we have an emergency and the need is greatest, you’re in financial trouble because you’re geared to do what’s profitable.”
According to the Bureau of Labor Statistics, 43,000 healthcare jobs were lost in March 2020 across the US, and the job losses in healthcare have increased as shutdowns persist through the pandemic. The HealthLandscape and American Academy of Family Physicians issued a report estimating by June 2020, 60,000 family medical practices will close or scale back, affecting 800,000 workers.
Corey Mertz, a registered nurse for nearly 21 years at a for-profit hospital in McMinnville, Oregon, saw his work schedule go from full-time, 32 to 40 hours a week, to less than 12 hours a week.
“For the last two to three weeks, we’ve cancelled all of our elective surgeries, most of our outpatient processes, and this has had a gigantic impact on our hospital,” said Mertz.
He filed for unemployment benefits last week, but had not received benefits or been able to get in contact with the state unemployment agency. Mertz’s hospital initially started training nurses to help departments with anticipated surges in coronavirus patients, but the training was stopped because the hospital hadn’t seen a significant influx of cases severe enough to be admitted.
“We all have a lot of uncertainty and angst about how long this will go on,” Mertz added.
The cuts and layoffs facing healthcare workers began as many areas of the US experienced surges in coronavirus patients, while hospitals struggle with shortages in supplies and protective equipment for workers.
Elizabeth, a medical assistant at a hospital in Fall River, Massachusetts, who asked not to use her last name for fear of losing her job, was furloughed in late March 2020, but was still waiting to receive information from her human resources department last week on how to maintain benefits and what to expect through the furlough process.
“We have no clue the headaches we’re getting into. This has never happened. I’ve been in the medical field for 21 years,” she said. “They want us to use our paid time off to cover our health insurance benefits, but if you’re collecting unemployment they’ll think you’re taking a paycheck, so that is going to interfere with unemployment and the unemployment benefits are already minimal. It’s not even half of our check.”
Fairmont regional medical center, the only hospital in Marion county, West Virginia, closed down at the end of March. A few days after the closure, West Virginia’s first coronavirus-related death occurred in the county.
“I think not having a hospital in this community, it means death for a lot of people,” said Patty Snyder, president of Retail, Wholesale and Department Store Union Local 550 which represented 120 employees at the hospital. Alecto Healthcare Services, which operated Fairmont, did not respond to a request for comment.
Snyder, one of hundreds of employees laid off due to the closure, worked as a cashier at the hospital for nearly 30 years. “This is going to have a catastrophic effect on this community. In the middle of this pandemic, we don’t have time to wait 20 to 30 minutes for an ambulance to get to us and [then] drive 20 to 30 minutes in either direction to a hospital.”
Alex Hlumyk, a certified medical assistant in Hubbard, Ohio, began his job at a physicians’ practice in a healthcare system owned by a private equity firm eight months ago, but was recently laid off after his practice told him there wasn’t enough money to keep him on the payroll.
Before his layoff, Hlumyk was screening patients for coronavirus and was frustrated he wasn’t offered any guidance on how to continue helping on the frontlines of the pandemic.
“I have the skills to help people during this pandemic and right now I can’t,” said Hlumyk. He filed for unemployment the day he was laid off, but was still awaiting benefit payments to begin, while worrying about being able to pay rent and payments on his car.
“These furloughs make the case that now more than ever our healthcare system should not be for-profit. We are among the most vital workers in the country right now, and there should be no reason that some people on Wall Street should determine the worth of our jobs when thousands upon thousands of lives are at risk.”
https://www.theguardian.com/us-news/2020/apr/14/healthcare-job-cuts-coronavirus-worker-layoffs
Americans are paying for health care with more than money
-
Americans now spend close to $3 trillion a year for health
care, around 18 percent of our GDP. That works out to almost $9,000 per
person in Maine, almost twice as much per person as the average for
other wealthy nations that provide health care for all their people.
Not only do we pay more, but we pay in far more ways than
any other country. Some are obvious. They include health insurance
premiums, “out of pocket” co-pays and deductibles, and payments for
health care products and services that are not covered by insurance.
Out-of-pocket payments are increasing every year as insurers shift more
of the rising costs to their customers and employers to their employees.
We also pay in ways that are not so obvious. We all pay
federal, state and local taxes to support programs such as Medicare and
Medicaid, health care for federal, state and local employees, military
personnel, the Veterans Affairs and many others. Since
employment-related health insurance is tax exempt, we also pay around
$250 billion a year in the form of lost tax revenues, that is then made
up by higher taxes on all of us.
Other ways we pay are almost invisible, but we feel them
anyway. Workers no longer bargain for increased wages or better working
conditions. In a weak economy, any small gains they have made in total
compensation have been more than consumed by increases in health care
costs. As a result, real wages are declining.
At a recent national health care conference
I attended, there was a panel discussion about the effects health care
costs on a small central Maine town. Employee health care costs have
risen dramatically over recent years. Benefits for the town’s 11
employees now total $18,000 each for a total of almost $200,000. This
has forced severe cutbacks in other services such as road maintenance,
public safety, libraries, education, and (ironically) emergency medical
services. Diminished public services and a deteriorating quality of life
is one more way we pay for our health care.
This should come as no surprise. During the past sixty years
or so Americans have generously poured money into our health care
system through thousands of channels that are individually difficult and
collectively impossible to control.
Since Americans view health care as a business,
we’ve allowed our health care system to become populated by thousands
of profit seeking companies (some nominally nonprofit), each trying to
maximize profits and competing for a larger share of an ever-growing
pie. Many of these private businesses are heavily subsidized by
tax-supported health care programs and tax breaks. So far, we have been
unwilling to put any effective restraints around the growth of this huge
pot of gold.
This is not a failure of capitalism or corporations, They
are simply doing what they are supposed to do — create wealth for their
owners. It’s a massive failure of public policy. It’s the fault of all
of us, including our political leaders, for failing to put any
meaningful constraints around our health care system to keep it
affordable for everybody.
The result has been the creation of a gargantuan
medical-industrial complex that has become the pac-man of public and
private budgets. It is riddled with inefficiency and waste including unjustifiably high prices and excessive use of lucrative services and products, many of them without demonstrated value or downright harmful,.
The Affordable Care Act begins to make some timid efforts
at addressing this problem. Nobody I know thinks they will be
sufficient. After seven years of “RomneyCare” (after which the
Affordable Care Act was patterned), Massachusetts now has almost
everybody insured, but it has the highest health care costs of any state in the country. Some public figures there are beginning to suggest moving toward a statewide single-payer system.
As I’ve written before,
the market forces the ACA is trying to harness have not, will not and
cannot solve this problem. As most other wealthy countries have done, we
need to channel the many existing health care revenue streams together
into a single funnel with a publicly managed flow-control valve, and
then muster the political will to use it. That is what our neighbors in
Vermont are now in the process of trying to do.
As one Canadian conference participant put it, “It breaks
my heart to see Americans destroying your schools, libraries and public
safety to pay for health care.”
It breaks my heart, too. We can do a lot better.
Where’s the outrage over our failed health care system?
For the next few months we’ll be bombarded by messages from
the Obama administration urging people, especially young, healthy
people, to sign up for insurance provided under the Affordable Care Act.
Without them, premiums for that insurance will soon climb to
unaffordable levels.
We’ll also hear plenty of noise from the ACA’s opponents. It
will be hard to get any other health policy messages across during the
upcoming PR blitz.
But there are some other important and noteworthy things
going on in the policy world. Perhaps the most important is the growing
interest in the origins of the high costs of medical care in the U.S.,
now about double that of other wealthy countries.
That interest has been fueled by the ACA. By requiring many
Americans to buy private health insurance, the federal government is now
obliged to see to it that insurance remains affordable. Whether they
are actually able to do so remains to be seen.
Because of that, both government and the lay media have now joined academicians
in paying a lot more attention to the costs of medical care in the U.S.
and how they compare to those in other countries. That attention was
jump-started last March by a Time Magazine article titled “Bitter Pill” by journalist Stephen Brill, who looked at hospital charges and their causes. He concluded
that while many of those paying the bills suffered badly from the high
costs, those selling health care products and services were prospering,
helping to create an island of affluence for themselves and a sea of
poverty for everybody else.
That was followed by Medicare’s public release of the prices
it was being charged in various regions throughout the country,
revealing huge variations without any persuasive explanation as to why these variations should exist.
More recently, the New York Times has published an ongoing
series by Elizabeth Rosenthal examining the costs of medical care for
various procedures throughout the U.S., and comparing them with those in
other countries. So far she has examined three common types of care: colonoscopy, pregnancy and hip replacement.
In each case, she found prices in the U.S. were both variable and
extremely high by international standards, some up to 10 times the
prices for comparable care in other countries. When asked why, one
expert commented, “They’re charging these prices because they can.”
In other words, as economist George Akerlof predicted in his Nobel Prize-winning paper “Selling Lemons,”
in a market where the sellers have a great deal of information (and
therefore power) and the buyers have little or none, the buyers (most of
us) are being ripped off big time.
In most countries that have enacted programs of universal
health care, two things have taken place. First, health care prices were
restrained so as to keep their national programs affordable. Profiteering from illness is not allowed.
Second, the importance of medical care in maintaining a healthy population was put in perspective.
Medical care can be very effective in fixing what’s already broken, but
not very effective in preventing the breakage in the first place.
What are now called the “social determinants of health”
turn out to be much more important than medical care in maintaining a
population’s health. They include lifestyle factors such as a healthy
diet; exercise; restraint in the use of substances such as alcohol,
tobacco and other drugs; and the presence of robust social policies that
help minimize excessive disparities of wealth and income within the
national population.
Although the ACA does move the ball toward the goal of
universal health care, we are still a long way from scoring. It attempts
to curb some of the worst abuses of the health insurance industry, but
it doesn’t eliminate the incentives to try them anyway. It will leave
many people out, and although it makes some efforts to control overall
costs and promote healthy living, many experts believe those efforts are
inadequate.
As Akerlof predicted, the medical-industrial complex is
becoming increasingly corrupt. It is now one of our largest and most
profitable industries. Much (but not all) of what it is doing is legal,
but it has lost its moorings and is forgetting about its health care
mission in the pursuit of profits and growth.
The MBAs have taken over. We are all paying the price.
I don’t blame only the corporate health care providers,
pharmaceutical and device manufacturers and insurance industry. After
all, they are just doing what they are supposed to do for their
“stakeholders” — profit and grow.
I also blame all the rest of us for letting it happen. What
we are witnessing is a massive failure of public policy that is not
permitted in any other wealthy country. It is being enabled by the
timidity of experts in academia and the media, who are paid to be
truth-tellers but who until very recently ignored the elephant in the
room — rampant corporatism that is subverting the interests of most of
the American public and the mission of our health care system. I blame
the passivity of a public that consistently permits our politicians to
fail to do their jobs to protect our interests.
Where’s the outrage?
https://bangordailynews.com/2013/08/15/health/wheres-the-outrage-over-our-failed-health-care-system/
Health Care Spending: A 21st Century Gold
Rush
Winston Churchill once remarked, “Americans will always
do the right thing, once they’ve exhausted all alternatives.”
His observation, at least the second half of it, is proving
itself as we continue to struggle with our health care system,
especially its out-of-control costs that are crippling the
budgets of businesses and government alike.
There is a lot of money in our health care system, and no enforceable budget. That leads to carelessness when it comes to spending that money.
What are some of the reasons health care costs continue to rise? Here are a few examples.
For at least the past 40 years, I’ve heard colleagues say, “We’d better get our fees and charges up now, because next year they’re really going to crack down on us.” It has never happened, yet. The problem is intensifying as outpatient “providers” have morphed from being real people into being corporations.
The Los Angeles Times reported on a case where a teacher’s group health plan was billed $87,500 by an “out of network” provider for a knee procedure that normally costs $3,000. Her health plan was willing to pay it. Outraged, the teacher ratted on the orthopedic surgicenter to California’s attorney general. After the press got involved, the charge was “reduced” to only $15,000. Not a bad pricing strategy, from the surgicenter’s point of view.
There is a lot of money in our health care system, and no enforceable budget. That leads to carelessness when it comes to spending that money.
What are some of the reasons health care costs continue to rise? Here are a few examples.
For at least the past 40 years, I’ve heard colleagues say, “We’d better get our fees and charges up now, because next year they’re really going to crack down on us.” It has never happened, yet. The problem is intensifying as outpatient “providers” have morphed from being real people into being corporations.
The Los Angeles Times reported on a case where a teacher’s group health plan was billed $87,500 by an “out of network” provider for a knee procedure that normally costs $3,000. Her health plan was willing to pay it. Outraged, the teacher ratted on the orthopedic surgicenter to California’s attorney general. After the press got involved, the charge was “reduced” to only $15,000. Not a bad pricing strategy, from the surgicenter’s point of view.
A spreadsheet by Robert Burleigh of the charges
for his overbilled emergency-room visit, at his
home in West Chester, Pennsylvania, September
19, 2012. (Photo: Daniel Rosenbaum / The New
York Times)
The New York Times reported an incident where a student who needed emergency gallbladder surgery ended
up with a couple of “out-of-network” surgeons through no fault of his own. He was billed $60,000. His
insurance company was willing to pay only $2,000. He was left to deal with the rest of the bill on his own.
There are many more examples. Privately insured patients are not the only ones affected. Governors around the country are continuing to struggle with how to pay for their Medicaid programs. In Oregon, Democratic Gov. John Kitzhaber is trying to find ways to impose a fixed budget on Oregon’s Medicaid program without adversely affecting Medicaid beneficiaries. But, he acknowledges, disciplining Medicaid alone will not do the job. He hopes his approach will be adopted by most other health insurance programs.
In Maine, Republican Gov. Paul LePage is struggling not only with how to keep up with burgeoning current Medicaid costs, but also how to pay the state’s almost $500 million past-due Medicaid debt to hospitals. He has proposed lowering liquor prices to boost sales, and mortgaging Maine’s future liquor revenues to secure bonds to pay the debt. His Republican colleagues in the Legislature have described this idea as “creative.”
One of the central features of Obamacare is the creation of “health insurance exchanges,” or online marketplaces. But the law has recognized that many people will need help making the right choices. So it has created an army of “navigators” to help them. A recent Washington Post story points out that a huge number of such experts will be necessary (California alone plans to certify 21,000 of them). Their cost will be reflected in higher health insurance premiums and has sparked opposition from insurance brokers who view them as
There are many more examples. Privately insured patients are not the only ones affected. Governors around the country are continuing to struggle with how to pay for their Medicaid programs. In Oregon, Democratic Gov. John Kitzhaber is trying to find ways to impose a fixed budget on Oregon’s Medicaid program without adversely affecting Medicaid beneficiaries. But, he acknowledges, disciplining Medicaid alone will not do the job. He hopes his approach will be adopted by most other health insurance programs.
In Maine, Republican Gov. Paul LePage is struggling not only with how to keep up with burgeoning current Medicaid costs, but also how to pay the state’s almost $500 million past-due Medicaid debt to hospitals. He has proposed lowering liquor prices to boost sales, and mortgaging Maine’s future liquor revenues to secure bonds to pay the debt. His Republican colleagues in the Legislature have described this idea as “creative.”
One of the central features of Obamacare is the creation of “health insurance exchanges,” or online marketplaces. But the law has recognized that many people will need help making the right choices. So it has created an army of “navigators” to help them. A recent Washington Post story points out that a huge number of such experts will be necessary (California alone plans to certify 21,000 of them). Their cost will be reflected in higher health insurance premiums and has sparked opposition from insurance brokers who view them as
competition. That will be an expensive fight, without increasing the amount going to actual health care by a
single dollar.
Then there is the purchase of politicians by powerful corporate interests. When the Medicare prescription drug benefit was enacted in 2003, it was prohibited from negotiating lower drug prices, even though the veterans health system and many Medicaid programs are permitted to do so. The lead congressman pushing that provision retired from Congress soon after it was passed to take a lucrative job with the pharmaceutical industry. This has become standard practice in Washington.
And don’t forget the for-profit levels of compensation paid to the executives of nonprofit hospitals.
Meanwhile in Massachusetts, where Obamacare was born, health care costs are expected to rise six to 12 percent next year. Last year, their legislature passed a law capping increases in total private and public spending statewide, limiting them to the rate of growth of the Massachusetts economy. But the job of figuring out how to actually get it done was turfed to an “expert panel” of “stakeholders.” My bet is that such cost control will be difficult or impossible to achieve unless we simplify and centralize the way we finance health care.
Why does this financial abuse of taxpayers and patients continue? Because we let it. Americans often react to structural problems by simply throwing more money at them. We seem to be unable to say “no more.”
Maybe it’s time to revisit the part of Churchill’s comment about Americans always doing the right thing — by emulating the policies of most other wealthy countries. They have health care systems that are more popular than ours, provide better access to care, get better results, and are far less expensive.
Maybe it’s time to put everybody into a single, nonprofit system we can all support, within a budget acceptable to the majority of people. That arrangement would eliminate the political fights among people in different health insurance programs, each questioning change by asking, “How does it benefit me?”
Such a system would be best if done at a national level. But it could work initially at the level of individual states, such as Maine. That’s how the Canadians did it — one province at a time. If Maine could be one of the first states to do that, the people of Maine could truly say “Dirigo, I lead.”
Then there is the purchase of politicians by powerful corporate interests. When the Medicare prescription drug benefit was enacted in 2003, it was prohibited from negotiating lower drug prices, even though the veterans health system and many Medicaid programs are permitted to do so. The lead congressman pushing that provision retired from Congress soon after it was passed to take a lucrative job with the pharmaceutical industry. This has become standard practice in Washington.
And don’t forget the for-profit levels of compensation paid to the executives of nonprofit hospitals.
Meanwhile in Massachusetts, where Obamacare was born, health care costs are expected to rise six to 12 percent next year. Last year, their legislature passed a law capping increases in total private and public spending statewide, limiting them to the rate of growth of the Massachusetts economy. But the job of figuring out how to actually get it done was turfed to an “expert panel” of “stakeholders.” My bet is that such cost control will be difficult or impossible to achieve unless we simplify and centralize the way we finance health care.
Why does this financial abuse of taxpayers and patients continue? Because we let it. Americans often react to structural problems by simply throwing more money at them. We seem to be unable to say “no more.”
Maybe it’s time to revisit the part of Churchill’s comment about Americans always doing the right thing — by emulating the policies of most other wealthy countries. They have health care systems that are more popular than ours, provide better access to care, get better results, and are far less expensive.
Maybe it’s time to put everybody into a single, nonprofit system we can all support, within a budget acceptable to the majority of people. That arrangement would eliminate the political fights among people in different health insurance programs, each questioning change by asking, “How does it benefit me?”
Such a system would be best if done at a national level. But it could work initially at the level of individual states, such as Maine. That’s how the Canadians did it — one province at a time. If Maine could be one of the first states to do that, the people of Maine could truly say “Dirigo, I lead.”
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