Covid-19 is spreading rapidly in America. The country does not look ready
There are structural reasons why America finds a response to the pandemic hard.
by The Econonist - March 12, 2020
WHEN A NEW disease
first took hold in Wuhan, the Chinese authorities did not have the
luxury of advanced notice. Their initial strategy, in the crucial early
weeks of what would become the global pandemic covid-19, was obfuscation
and censorship, which did nothing to halt the spread of the virus that
causes the disease. Only now, months after the first cases were
reported, have new transmissions slowed to close to zero—and only after
an unprecedented, draconian lockdown for hundreds of millions of
citizens.
America, by contrast, had the luxury of several weeks’
notice. Yet the crucial early weeks when it could have prepared for the
spread of the disease were squandered, in a country with some of the
world’s best epidemiologists and physicians. As of March 11th, almost
1,300 Americans had been diagnosed with covid-19. Several times more
probably have the disease undetected and are transmitting it within
communities. And still the country looks behind in its preparations for
what now threatens to be a bruising pandemic. (For more coverage of
covid-19 see our coronavirus hub.)
America’s
decentralised authority, expensive health care and skimpy safety-net
will all make the pandemic response harder to deal with. The uncertainty
is high, but a plausible scenario—one-fifth of the population falling
ill, and a 0.5% fatality rate—would lead to 327,000 deaths, or nine
times that of a typical flu season.
How America got here was the
result of two significant failures—one technical, the other of
messaging. A country of America’s size could probably not have avoided a
serious outbreak of covid-19. But with enough information, the early
spread of the disease could have been slowed. That lowers the peak of
the outbreak, lightening the load on hospitals when they are most
overstretched, thereby saving lives. It also gives the health service
and the government time to prepare, and the population a chance to learn
how to respond.
However, in America the testing regime has worked
badly, because of faulty test-kits manufactured by the Centres for
Disease Control and Prevention (CDC) and tangles in administrative red tape between the CDC and the Food and Drug Administration (FDA),
another government agency. “The debacle with the tests probably
reflects underlying budget cuts. You can’t have surge capacity if you’ve
already been cut to the bone,” says Scott Burris, director of the
Centre of Public Health Law Research at Temple University. In 2010 the CDC
budget was $12.7bn in current dollars; today it is $8bn. Whether skimpy
budgeting, bureaucratic blockages or both were to blame is as yet
unclear and sure to be the subject of a future investigation.
When
there are just a few infections, the health system has enough
epidemiologists to track down and quarantine patients and their recent
contacts. Without surveillance, however, small clusters rapidly become
full-blown epidemics. This is where America finds itself today. The
estimated doubling time of the virus is six days. If that remains
constant, as is likely, the close-to-1,300 current cases are the bottom
of a sickening ride up an exponential curve of infections. “In literal
terms, we have no idea about the number of cases because nobody has
tested to any meaningful extent,” says Marc Lipsitch, a professor of
epidemiology at Harvard. “Tens of thousands of cases in the US seems plausible,” he adds.
A
successful testing regime also buys time for the right messaging. But
from the start, President Donald Trump has downplayed the chance of big
disruption to ordinary lives and the economy. His insistence that virus
hysteria was being amped up by his political enemies has distracted from
the crucial message, which is to get ready. His announcement on March
11th of a ban on most travel from Europe was confused (he initially
appeared to suggest it would apply to cargo), arbitrary (it excludes
Britain) and accomplishes little now that the virus is spreading from
within.
These mistakes cannot be undone. But what matters now is
giving people the right information and reinforcing hospitals ahead of
the inevitable deluge of cases. Unfortunately, the difficulties in
testing and honest messaging look set to persist.
Even
after the error in the test kits was detected, the increase in testing
has been slow. Andrew Cuomo, the governor of New York, and Bill de
Blasio, the mayor of New York City, have been begging the FDA
to speed up approval for automated testing, to boost capacity from
around 100 tests a day to the several thousand that are needed. A doctor
at a Chicago clinic says that she has received no kits, nor guidance on
when they will come. When she sees patients with covid-19-like symptoms
she has to send them to be tested at a nearby hospital.
Now
that kits are being delivered, researchers are reporting another
problem—a shortage of the components needed to extract genetic material
from samples. The White House promised capacity of 1m tests by March
6th. The CDC has stopped publishing data on the number of
tests performed. But the latest cobbled-together estimates, as of March
11th, are of 7,000 tests in total, well behind almost every developed
country with an outbreak.
Mr Trump has minimised the threat all
the same. On March 9th he blamed the “Fake News Media” and Democrats for
conspiring “to inflame the Coronavirus situation” and wrongly suggested
that the common flu was more dangerous. The same day, Nancy Messonnier,
an official at the CDC, was warning, correctly, that “as
the trajectory of the outbreak continues, many people in the United
States will at some point in time this year or next be exposed to this
virus.”
Correcting the course of the outbreak is vital because
America’s health infrastructure, like that of most countries, is not
equipped to deal with an enormous surge in serious cases. A recent study
of covid-19 in China found that 5% of patients needed to be admitted to
an intensive care unit (ICU), with many needing
intensive ventilation or use of a more sophisticated machine that
oxygenates blood externally. America has 95,000 ICU beds
and 62,000 mechanical ventilators, while only 290 hospitals out of 6,000
offer the most intensive treatment. Much of this equipment is already
being used for current patients, including those with seasonal flu.
Human capacity, such as the number of pulmonologists and specially
trained nurses, is also a limiting factor—although in Italy, where the
epidemic is raging, specialisms have begun to matter less. Mortality in
overwhelmed hospitals will certainly be higher.
To reduce the
chances of this happening, rates of transmission must be slowed by
encouraging social distancing and telework, and cancelling large
gatherings. (Sports events are already being called off: the National
Basketball Association season was suspended on March 11th.) But in
America authority over public health is largely delegated to the states
and some cities. It is for each locality to declare a state of
emergency; 13 had done so as of March 11th. The decentralised system
means that containment regimes will differ.
Mr Cuomo has ordered a
series of measures: a one-mile containment area in New Rochelle, site
of a cluster, serviced by the National Guard; and a state-produced line
of hand-sanitiser made by prisoners to ameliorate a shortage. At the
same time, New York City and Chicago have so far resisted closing their
public schools, noting that many poor households rely on them for meals
and child care. Many private universities are cancelling classes and
switching to tele-instruction (causing much difficulty for some
septuagenarian professors). Harvard gave its undergraduates five days’
notice to pack their things and leave.
Maintaining
a healthy population requires people not to spread the disease, but
also to seek treatment without worrying about crippling debt. America is
one of the few countries in the developed world that does not mandate
paid sick leave. A mere 20% of low-paid, service-sector workers can
count on it. Those without cannot stay at home, because a retail worker
cannot just fire up Slack and Zoom as a white-collar office worker
might.
Health care is also extraordinarily costly. People who are
uninsured, underinsured (ie, liable for a high share of their treatment
costs) or fearful of surcharges for using out-of-network hospitals and
physicians may keep away—particularly if their pay has recently fallen
or stopped altogether. “The idea that people should have skin in the
game kind of doesn’t work when you’re also playing with your neighbour’s
skin,” says Wendy Parmet, a professor of public-health law at
Northeastern University. Some insurers, as in Illinois or in California,
insist that patients will not be made to pay for testing. But as yet
there is no such policy at national level.
Last week Congress
passed an emergency appropriation of $8.3bn to fight the virus, which Mr
Trump signed into law. Almost all that money will be devoted to
front-line measures—such as test-kits, laboratory equipment and
additional staff. A bigger fiscal stimulus will probably be needed. Mr
Trump and Democratic leaders have sketched competing visions for what to
do. The president would like to provide tax credits directly to
stricken industries such as airlines, frackers and cruise-ship
operators, cut payroll taxes (usually paid every two weeks) and offer
paid sick leave to hourly workers. Democrats have proposed more generous
paid-sick-leave rules, expanded payments for programmes like
unemployment insurance and nutrition assistance, and guaranteed payment
of all testing and out-of-pocket treatment costs. The need is urgent,
but the haggling could drag on for some time.
Thus far in his
presidency, Mr Trump has faced a few crises. Most he generated himself,
including various trade wars and bouts of chest-thumping, which could
generally be defused. The virus, however, will circulate no matter how
much the president may wish it gone. Talking down the risks is not a
winning strategy. To fight the outbreak, America needs clear,
unvarnished public information and policies based on the best science.
Is the president capable of endorsing that? ■
In late January, as the new coronavirus was making its first incursion into the United States, the Supreme Court upheld
the Trump administration’s contested “public charge” rule, which
enables federal officials to deny green cards to immigrants who use
social safety net programs. The decision received scant media attention,
in part because it was overshadowed by the emerging epidemic. But
public health experts warn that the two stories are intimately, perhaps
disastrously, related: Infectious disease outbreaks have a long history
of preying on society’s most vulnerable, disenfranchised members.
Noncitizens who don’t have access to health insurance, nutritious food
or safe, affordable housing fall squarely into that category.
Doctors and immigration advocates have long worried that the public charge rule would
present a grave public health danger. The rule could deter millions of
noncitizens — even those who were not technically subject to its
provisions — from using programs like Medicaid, WIC and SNAP or from
seeking medical care of any kind, lest they imperil their immigration
status. That kind of avoidance would make those groups less healthy and
thus more susceptible to the vagaries of, say, an infectious disease
outbreak.
The administration was not blind to those risks. When it
first proposed the new rule, officials at the Department of Homeland
Security noted that it could very well lead to worse health outcomes
for immigrants, especially infants, children and women who were
pregnant or nursing. Yes, they acknowledged, vaccination rates might
fall as a direct result of what they were proposing. Yes, communicable
diseases might become more prevalent. But, the agency said, the new
regulations were essential to a goal more important than protecting
public health: making immigrants “self-sufficient.”
Many
changes to law and policy have been undertaken in the past several
years under the banner of “self-sufficiency” and its close cousin
“personal responsibility.” Social safety net programs like SNAP and TANF
have been cut; work requirements have removed thousands of people from
Medicaid; and immigrant communities have been subject to a roster of
anti-immigrant policies — not just the public charge rule, but also
family separations and abysmal treatment of detained migrants at the border, and ICE raids and mass deportations at home.
The wisdom of each of those measures will be sorely tested now, as the coronavirus threatens to morph into a full-blown pandemic.
More than 100,000 people across more than 80 countries have been
infected with the new virus — and more than 3,400 of them have died,
including at least 14 in the United States.
Proponents of closed
borders and small social safety nets have a tendency to highlight the
tension between citizen and noncitizen, to imply or explicitly state
that the only way to help one group is to deprive the other. But the
truth is, people on both sides are hanging by a thread.
Infectious
diseases, especially those like Covid-19, have a knack for penetrating
and exposing such false dichotomies. Already, citizens who are
underinsured or uninsured are being slammed with medical bills
that they can’t afford when they seek testing and treatment for the
virus. Unsurprisingly, experts say that many of them are bound to avoid
such care as the outbreak rages on. If quarantines become routine, tens
of millions of low-wage workers, many of whom don’t have health insurance or paid sick leave,
will not be able to stock up and stay home. One shudders to think what
will happen if the courts dismantle the Affordable Care Act in the next
year — a move that could ultimately leave 21 million or so more people without health insurance.
Among noncitizens, the effects of the public charge rule and other fear-based immigration policies have long been apparent.
New mothers are turning away free baby formula. Hungry families are
turning away food assistance. The chronically and even fatally ill are
avoiding hospitals and rejecting medical care. In 2019, The Atlantic reported
that at least 200 eligible families in a Virginia county had stopped
accepting WIC and that many were also turning down reduced-price
lunches. Both of those programs are exempted from the public charge rule
— using them will not count against a person’s visa or green card
application — but those families were too afraid to chance it.
It’s
easy to see how all this fear might feed on itself in the months ahead
and also where that might lead. If citizens struggling to cover their
own health care nurture resentments against any group perceived to be
getting help to which they themselves are not entitled — or worse, if
they grow xenophobic and subscribe to the notion that immigrants carry
diseases — they might be compelled to endorse policies even more
draconian than those already in play. That would create more anxiety
among noncitizen communities, which would lead to fewer people seeking
medical care when they need it. From there, the epidemic would only get
worse.
The best way to break this cycle of
fear and further contagion is to dispense with zero-sum thinking and
stitch together a safety net big enough, and strong enough, for
everyone.
On Monday, more than 700 public health experts laid out clear steps for doing exactly that. Among other things, they called on
the federal government to ensure that the outbreak response doesn’t
exclude — or worse, penalize — the poor. The doctors and scholars advised officials
not to cut existing safety net programs to pay for the work of battling
the current outbreaks. They also asked that “particular attention and
funding” be directed to local health centers in under-resourced
communities; that diagnostic tests, and any future vaccines or
treatments, be made widely available regardless of a person’s ability to
pay; and that health care facilities be clearly designated as ICE-free
zones. “Neither immigration status nor concerns over medical bills
should deter people from seeking care right now,” said Gregg Gonsalves,
an epidemiologist and infectious-disease expert at the Yale School of
Public Health.
That’s a moral position, but it’s also a practical one.
In
2018, before Covid-19 was known to humans, when the public charge rule
was still just a proposal, Wendy Parmet, a professor of law and public
health at Northeastern University, warned that the push for immigrant
self-sufficiency would be both dangerous and quixotic. “None of us can
be self-sufficient in the face of a widespread epidemic,” she wrote.
“That is just as true for noncitizen immigrants as everyone.” In a
pandemic, self-sufficiency can be self-deluding; our health is only as
good as our most vulnerable neighbor’s. https://www.nytimes.com/2020/03/06/opinion/coronavirus-immigrants-health.html
Economists conclude that Medicare for All (M4A) could be considerably less expensive than the current healthcare finance system
We
are economists interested in public policy and healthcare. Some of us
have worked to estimate the cost of alternative healthcare programs.
Others have reviewed such estimates. We believe the available research
supports the conclusion that a program of Medicare for All (M4A) could
be considerably less expensive than the current system, reducing waste
and profiteering inherent in the current system, and could be financed
in a way to ensure significant financial savings for the vast majority
of American households. Of course, the details would depend on the
design of the M4A system.
Compared with the current system,
Medicare for All would achieve considerable savings on administration
and by reducing payments to monopoly drug companies and hospital
networks. Within a few years of operation, M4A could save hundreds of
billions of dollars per year from these sources. Additional savings
will come when a rational healthcare finance system allows needed
investments in coordinated care and preventive care, as well as
reductions in fraudulent billing. Over time, global budgeting would slow
the rate of future healthcare costs significantly, as has been done in
Canada and other countries. Bending the cost curve could save more than
$2 trillion over the next decade, and even more with a well-designed
system. Costs will be predictable, enabling households and businesses
to plan in a way that is impossible today.
There are added costs
associated with Medicare for All. Universal coverage and increased
utilization, coming from reduction or elimination of cost sharing, will
add costs, but studies show that these added costs will be far less than
the savings outlined above.
The need for increased public funds
(replacing premiums) can be financed with some combination of payroll,
income, and wealth taxes. By eliminating insurance premiums and
out-of-pocket expenses, and lowering overall healthcare costs, Medicare
for All will result in enormous savings for almost all households, all
except the richest households who will pay more in taxes. Shifting the
burden from per-person payments for premiums and cost sharing to income-
and wealth-related taxation will magnify the savings for most
households. The current system is particularly burdensome for
middle-income working households who receive relatively little support
through Medicaid or other public programs but are responsible for health
insurance premiums either paid directly or by their employer as nonwage
compensation. A system that cuts costs and shifts financing to income
and wealth taxes will dramatically lower this burden, producing
significant savings for workers and businesses.
The net financial
savings will be accompanied by substantial improvements in productivity
through improved health, and the elimination of “job lock” coming from
the need to stay on a job to retain health coverage. Most important,
Medicare for All will reduce morbidity and save tens of thousands of
lives each year.
James G. Kahn, Professor, Institute for Health Policy Studies, School of Medicine, University of California, San Francisco
Jeffrey Sachs, University Professor and Director, Center for Sustainable Development, Columbia University
Anders Fremstad, Assistant Professor, Economics, Colorado State University
Robert Reich, Carmel P. Friesen Professor of Public Policy, Goldman School of Public Policy, University of California, Berkeley
Robert Pollin, Distinguished
University Professor of Economics and Co-Director of Political Economy
Research Institute, University of Massachusetts Amherst.
Leonard Rodberg, Professor Emeritus of Urban Studies, Queens College/CUNY
Emmanuel Saez, Professor of Economics, Director, Center for Equitable Growth, University of California at Berkeley
Gabriel Zucman, Associate Professor of Economics, University of California at Berkeley
Alison Galvani, Burnett
and Stender Families' Professor of Epidemiology, Director of the Center
for Infectious Disease Modeling and Analysis, Yale School of Public
Health
Gerald Friedman, Professor of Economics, University of Massachusetts at Amherst
Katherine Moos, Assistant Professor of Economics, University of Massachusetts at Amherst
Lindy Hern, Associate Professor of Sociology, University of Hawaii at Hilo
Lawrence King, Professor of Economics, University of Massachusetts at Amherst
Michael Ash, Professor of Economics, University of Massachusetts at Amherst
Markus P. A. Schneider, Associate Professor of Economics, University of Denver
Jeff Helton, Associate Professor Health Care Management
College of Professional Studies, Metropolitan State University of Denver
Mark Paul, Assistant Professor of Economics, New College of Florida
Elissa Braunstein, Professor & Chair, Department of Economics, Colorado State University
Dean Baker, Senior Economist, Center for Economic and Policy Research and Visiting Professor of Economics, University of Utah
Darrick Hamilton,
Professor of Economics and Sociology and executive director of the
Kirwan Institute for the Study of Race and Ethnicity at The Ohio State
University.
Stergios Skaperdas, Clifford S. Heinz
Chair and Professor of Economics Director, Center for Global Peace and
Conflict Studies University of California, Irvine
To add your name, write to gfriedma@umass.edu
Fundamental health reform like ‘Medicare for All’ would help the labor marketJob loss claims are misleading, and substantial boosts to job quality are often overlooked
Fundamental health reform like “Medicare for All” would be a hugely
ambitious policy undertaking with profound effects on the economy and
the economic security of households in America. But despite oft-repeated
claims of large-scale job losses, a national program that would
guarantee health insurance for every American would not profoundly
affect the total number of jobs in the U.S. economy. In fact, such
reform could boost wages and jobs and lead to more efficient labor
markets that better match jobs and workers. Specifically, it could:
Boost wages and salaries by allowing employers to redirect money they are spending on health care costs to their workers’ wages.
Increase job quality by ensuring that every job now
comes bundled with a guarantee of health care—with the boost to job
quality even greater among women workers, who are less likely to have
employer-sponsored health care.
Lessen the stress and economic shock of losing a job or moving between jobs by eliminating the loss of health care that now accompanies job losses and transitions.
Support self-employment and small business development—which
is currently super low in the U.S. relative to other rich countries—by
eliminating the daunting loss of/cost of health care from startup costs.
Inject new dynamism and adaptability into the overall economy by
reducing “job lock”—with workers going where their skills and
preferences best fit the job, not just to workplaces (usually large
ones) that have affordable health plans.
Produce a net increase in jobs as public spending boosts aggregate demand,
with job losses in health insurance and billing administration being
outweighed by job gains in provision of health care, including the
expansion of long-term care.
While the overall effect of fundamental health reform on the labor
market would be unambiguously positive, this does not mean policymakers
should ignore the distress caused by job transitions forced by this
reform. Specifically, policy support should be provided to help
displaced health insurance and billing administration workers move into
new positions. But we should not let critics of Medicare for All inflate
the scale of this transition challenge or falsely present the number of
jobs displaced in individual sectors as the net effect of
reform on labor markets. The number of health insurance and billing
administration workers who would need to transition implies an increase
in the rate of overall job market churn that is relatively small: Job
losses for these workers would be equivalent to one-twelfth the size of
economywide layoffs in 2018.
Background: The need for fundamental health reform
Currently, despite the significant gains in health care coverage
spurred by the passage of the Affordable Care Act (ACA) in 2010, roughly
23 million Americans between the ages of 19 and 64 are uninsured, and
another 64 million are underinsured (Collins, Bhupal, and Doty 2019).1 In addition to problems with access, the American health care system also suffers from excess costs.2
While excess health care cost growth has slowed notably in the last
decade, it would be prudent for policymakers to try to keep this cost
growth in check with significant policy reforms rather than simply
hoping for the best going forward. Some highly important health-related
prices have begun rising rapidly in the very recent past. Insurance
premiums, for example, rose 20% in 2019.3
Overall spending on prescription drugs rose more than 9% between the
fourth quarter of 2018 and the fourth quarter of 2019—the largest
year-over-year change since 2015.4
Bivens 2018b provides data demonstrating that health spending in the
U.S. is higher than in advanced peer countries and has risen faster over
time—and yet continues to buy worse health outcomes. The higher and
faster-growing spending of the United States is driven by faster growth
of prices, not by growth in the volume of health care goods and
services consumed. Further, international evidence shows that a key
component of controlling cost growth is a strong public role in setting
and negotiating the prices of health care goods and services.
A fundamental reform like Medicare for All (M4A) would make coverage
universal. Further, by providing a counterweight to (or outright
eliminating) the substantial market power that keeps prices high and
that is currently wielded by many key players in the health care sector
(e.g., insurance companies, drug companies, specialty physicians, and
device makers), such a reform could also have great success in
containing health care cost growth. This could in turn provide relief
from many of the ways that rising health costs squeeze family incomes.
An underappreciated benefit of such a reform is that it would also
lead to a much better functioning labor market in many areas. Job
quality would increase, job switching would become less stressful,
better “matches” between workers and employers would boost productivity,
and small businesses would be much easier to launch.
Despite the fact that M4A could deliver these large benefits to
efficient labor market functioning, the policy often comes under fire
from critics making highly exaggerated claims about the potential job
loss that could occur under such a reform. The grain of truth in some of
the claims is that, like any productivity improvement, the adoption of a
reform like M4A would require the redeployment of workers from one
sector (the health insurance and medical billing complex) to other
sectors (mostly the delivery of health care). But there is little in the
M4A-induced redeployment of workers that would greatly stress the
American labor market over and above the uncertainty and churn that
characterizes this labor market every year. Smart policy could make this
redeployment eminently manageable for those workers who would be
required to make the transition.
This brief highlights some labor market implications of M4A and
critically examines claims that large job losses in the health insurance
and billing administration sectors would make M4A an undesirable
policy.
Health reform as labor market policy: Key effects for workers
Fundamental reforms like M4A could greatly aid labor market outcomes
for U.S. workers. The most obvious benefits would be higher wages and
salaries, increased availability of good jobs, reduced stress during
spells of job loss, better “matches” between workers and employers, and
greater opportunity to start small businesses.
Higher cash wages and salaries
Medicare for All could increase wages and salaries for U.S. workers
by reducing employers’ costs for health insurance—freeing up fiscal
space to invest in wages instead. The share of total annual compensation
paid to American employees in the form of health insurance premiums
rather than wages and salaries rose from 1.1% in 1960 to 4.2% in 1979 to
8.4% in 2018.5
If this post-1960 increase had been only half as large—and employers
had spent the health cost savings on wages and salaries—the take-home
wages of American workers would have been almost $400 billion higher in
2018.6
Given that the share of total compensation spoken for by health
insurance premiums is starting from a high base today, any reform that
managed to slow the excess growth of health spending going forward would
go a long way in making space for faster growth of cash compensation.7
Increased availability of ‘good jobs’
Medicare for All could increase job quality substantially by making
all jobs “good” jobs in terms of health insurance coverage and by
increasing the potential for higher wages. While the definition of a
“good job” is always going to be a bit imprecise, the vast majority of
U.S. workers would say that a good job is one that pays decent wages and
that also provides the health insurance coverage and retirement income
benefits that most of today’s workers can only reliably access through
employment. Nearly half of jobs fail this test on account of health care
coverage alone: In 2016, 46.9% of workers held jobs in which their
employer made no contributions to the workers’ health care; for workers
in the middle fifth of the wage distribution, 42.9% held jobs in which
the employer made no contribution to their health care (EPI 2017).
By making health coverage universal and delinking from employment,
M4A would make it far easier for employers to offer good jobs in this
regard, as every job would now be accompanied by guaranteed
health care coverage. Further, as noted above, wages and salaries would
have substantial room to grow if health care costs were taken off of the
backs of employers. Schmitt and Jones (2013) estimate the share of good
jobs—jobs that clear a specified wage floor8
and provide health and retirement coverage—in overall employment each
year between 1979 and 2011. They then look at various policy changes
that would boost this share. They find that providing universal health
coverage would boost the probability that any given job in the economy
is a good job by almost 20%—and that’s even before any potential boost
to the share of jobs that are good jobs coming from cash wage increases
provided as employers shed health care costs.9
The boost to job quality from making health coverage universal would be
even greater for women workers, as women are currently less likely to
receive employer-sponsored health insurance benefits from their own
employers.10
Less damaging spells of joblessness
Medicare for All could make job losses and transitions less stressful
by delinking employment and access to health insurance, emulating the
universal access to health care offered by our rich country peers. The
U.S. is unique among the rich countries of the world in how much it ties
crucial social benefits—like health insurance and retirement income—to
specific jobs. Hacker (2002) has referred to this arrangement as the
“divided welfare state,” with some Americans having relatively full
access to health and retirement security while others have access to
virtually none, all based on the specific jobs they have. This makes
some jobs in the U.S. economy especially valuable, and hence especially
damaging to lose. Manufacturing workers without a college degree, for
example, likely incur enormous income and social benefits losses in the
event of job loss stemming from either automation or trade. The ability
of universal, public social benefits to make individual job losses less
damaging has been long recognized by social scientists (see, for
example, Estevez-Abe, Iversen, and Soskice 2001).
Smooth job transitions contribute to economic dynamism by helping
ensure that vacancies are filled quickly by appropriate workers and that
unemployed workers can quickly find new jobs that make good use of
their skills. Smooth job transitions will also be an important
components of meeting crucial policy goals such as mitigating greenhouse
gas emissions with wholesale changes in how energy is created. Policies
that make job transitions easier and inspire less resistance from
workers should be encouraged. Fundamental health reform that, like M4A,
guarantees access to insurance regardless of one’s current job status is
a key part of making such transitions easier.
Better labor market matches between workers and employers
Medicare for All could decrease inefficient “job lock” and boost
small business creation and voluntary self-employment. Making health
insurance universal and delinked from employment widens the range of
economic options for workers and leads to better matches between
workers’ skills and interests and their jobs. The boost to small
business creation and self-employment would be particularly useful, as
the United States is a laggard in both relative to advanced economy
peers.
Substantial evidence indicates that our current system of
employer-sponsored insurance (ESI) creates significant “job lock”—a
condition in which workers who don’t want to lose their current ESI stay
in their current jobs rather than make transitions that would better
meet their needs. In a comprehensive review of this literature, Baker
(2015) finds:terature, Baker (2015) finds:
The likely range of a job-lock effect is a reduction in
turnover—the rate at which people leave jobs—of 15–25 percent among
workers with EPHI [employer-provided health insurance, or ESI]. With
normal turnover for prime-age workers (people ages 25–54) in the range
of 15–20 percent per year, this job-lock effect implies a reduction in
annual turnover of around 4 percentage points among prime-age workers
with [employer-provided health insurance, or ESI].
Making employment decisions based on access to ESI rather than on
other criteria—such as work–life balance, cash wages, and commuting
distance—can lead to employment “matches” that are less productive and
that decrease overall worker welfare relative to job choices that are
not constrained by the availability of health insurance.
More small-business formation
Despite policymakers’ frequent claims that they seek to support small
businesses in the U.S. economy, the United States has a notably small
share of small-business employment relative to our rich country peers.
In 2018, for example, the U.S. was dead-last among the members of the
Organisation for Economic Co-operation and Development (OECD) in its
share of self-employment, at just 6.3% of employment. Countries that are
frequently portrayed in U.S. business reporting as being choked by
regulation—like Spain, France, and Germany—have far higher shares of
self-employment, at 16.0%, 11.7%, and 9.9%, respectively (OECD 2020).
Besides a low share of self-employment, the U.S. also had
significantly lower shares of overall employment in small businesses,
across nearly all industrial sectors. The latest OECD data show that the
U.S. share of employment in enterprises with fewer than 50 employees is
lower than in any other country except for Russia (OECD 2018, Figure
7). In an earlier overview of trends in employment by firm size, Schmitt
and Lane (2009) highlight how health care policy plays two key roles in
potentially explaining cross-country trends. First, because health care
is nearly universally provided in other rich countries, workers
choosing to start their own businesses in those countries do not face a
cost confronting would-be entrepreneurs in the U.S.: the loss of ESI.
Second, small businesses in the U.S. are at a distinct disadvantage in
recruiting employees because the cost of providing health care coverage
is significantly higher for small companies.11
Employment effects of fundamental health reform: gains in health
care, losses in insurance and billing—with likely economywide net job
gains from rising economic demand
Like all positive productivity gains, Medicare for All would be more
likely to increase the total number of jobs in the U.S. economy, even as
health reform leads to the redeployment of workers from some sectors
and into others.
Despite the many labor market benefits of fundamental health reform
like M4A, many critics have claimed that such reform would lead to a
loss of jobs. This claim is misleading. One small grain of truth to it
is that the universal provision of health insurance would allow people
who would strongly prefer not to work (or not to work full
time), but who have remained in their current jobs in order to retain
health insurance, to be free to quit. This type of voluntary reduction
in labor supply following a health reform would be strongly
welfare-improving. For example, the ACA was clearly associated with a
large increase in parents with young children transitioning to part-time
work (see Jørgensen and Baker 2014). To the degree this occurred
because these parents no longer needed to work full time to obtain ESI,
and they preferred spending more time with their children for reasons of
work–life balance, it should be seen as a clear win for the policy.
Generally, people expressing concern about job loss stemming from a
policy are concerned about involuntary job loss that leads to a higher
level of unemployment in the economy. Unemployment is almost entirely a
function of the level of aggregate demand: spending by households,
businesses, and governments.12
The effect of fundamental health reform on the level of aggregate
demand depends in turn on the balance of increased public spending and
the means of financing this spending. All else equal, more public
spending will boost aggregate demand and create jobs, while higher taxes
will reduce aggregate demand and restrain job growth. Further, the
progressivity of taxes used to finance fundamental health reform will
also condition its effect on aggregate demand. The more progressive the
taxes that finance health reform, the less they will drag on job growth.
Increased public spending combined with progressive tax increases would
almost certainly boost the level of aggregate demand and lead to lower
unemployment, all else equal.
While the overall number of jobs and the level of unemployment in the
economy is largely a macroeconomic issue determined by aggregate
demand, claims that fundamental health reform like M4A will lead to job
loss sometimes sound plausible because it is easy to envision the specific jobs that
might be displaced: jobs in the health insurance and billing
administration sectors. But these job displacements would be balanced by
likely job gains in other sectors—most particularly in health care
delivery. The health insurance coverage expansions of M4A will boost
demand for health care goods and services, and workers will need to be
hired to meet this demand.
Job losses in the health insurance and billing administration sectors
A recent analysis of the economic effects of M4A (Pollin et al. 2018)
includes the projection that up to 1.8 million jobs in the health
insurance and billing administration sector (the divisions of hospitals
and doctors’ offices dedicated to administrative processing of bills and
payments) could be made redundant. These potential 1.8 million lost
jobs are frequently presented as if they constitute the net employment
effect of M4A.13
This is a deeply flawed misrepresentation of Pollin and his colleagues’
work. In fact, their estimates are a gross (not net) measure of job displacement or
“churn”—the regular process of workers starting and leaving jobs during
the course of their work lives. Relative to the scale of other gross
measures of job churn, the churn associated with M4A is not large.
It is true that one source of cost savings from the introduction of
M4A is the reduced demand for insurance and billing administration. In
turn, this reduced demand would shift employment out of these sectors.
This could certainly cause challenges and economic distress for the
workers within these sectors who are directly affected. But for some
perspective, it is worth noting that 21.5 million workers were laid off
in 2018 (BLS 2020b). If the 1.8 million workers that Pollin et al.
(2018) identify as potentially being displaced by M4A were forced to
transition over the four-year phase-in commonly identified with M4A
plans, this would increase the national rate of layoffs by about 2%. It
is also worth noting that even within just the finance and insurance
sectors, there have been 1.7 million layoffs in the past four years (BLS
2020b). And yet it’s safe to say that very few people even in the
business press have made any note of this. This is not a shock: Our
economy generates a huge amount of job churn every year. This churn is
the hallmark of growth in productivity—getting more economic output with
fewer inputs. While productivity growth can indeed put downward
pressure on jobs in the sector experiencing it directly, Autor and
Salomons (2018) demonstrate that productivity gains within a given
sector strongly boost job growth in other sectors, as
the savings to households and businesses stemming from enhanced
productivity increase purchasing power that supports demand for these
other sectors’ outputs.
If workers in the insurance or billing administration sectors were
particularly hard-pressed for reemployment prospects because of
geographic isolation or low average levels of educational credentials,
their displacement might pose particular concern to policymakers. But
employment in the health insurance and billing administration sectors is
not particularly geographically concentrated,14
and Pollin et al. (2018) show that 56.5% of workers in these sectors
have a four-year college degree or more education, a far greater share
than the overall labor force (in 2018, 37.6% of workers had a four-year
degree or more education, according to EPI 2020b).
Substantial likely job gains in the health care sector
While it may seem counterintuitive, fundamental health reform like M4A is almost guaranteed to substantially expand employment
in the health care sector overall, even taking reduced billing
administration employment into account. Often people hear that
fundamental reform is aimed at cost containment and then imagine that
part of this cost containment will take the form of fewer jobs providing
health care, but this is not necessarily the case. As noted before, the
U.S. is an outlier in terms of how much it spends on health
care, but its health care workforce as a share of the total workforce is
not out of line with shares in other countries. For example, in 2017
the health care workforce in the U.S. was equal to 13.4% of the overall
workforce, while the share averaged 12.9% in the 20 other richest OECD
countries.15 Additionally, seven of these other countries had health care workforce shares equal to or higher than the U.S.’s 13.4%.16
Pollin et al. (2018) estimate that expanded access to health care
could increase demand for health services by up to $300 billion
annually. Given the current level of health spending and employment,
this would translate into increased demand for 2.3 million
full-time-equivalent workers in providing healthcare.17
Obviously all of the workers displaced from the health insurance and
billing administration sectors could not necessarily transition into
these jobs seamlessly, but well over 10% of workers in the health
insurance sector, for example, are actually in health care occupations
(e.g., they are doctors or nurses).18
Further, several M4A plans have provisions to pay for long-term care
services. Reinhard et al. (2019) have estimated that in 2018, Americans
provided roughly 34 billion hours in unpaid long-term care. If this care
was divided up among full-time paid workers, it would require 17
million new positions. Of course, not all of this currently unpaid care
would be converted into paid positions in the job market. But if even
10% of unpaid care translated into new jobs, it would create enough new
demand for workers to essentially offset the displacement of workers in
the health insurance and billing administration sectors.
The upshot: M4A creates a small amount of manageable churn but increases the overall demand for labor and boosts job quality
The job challenge relating to a fundamental health reform is managing
a relatively small increase in job churn during an initial phase-in
period. Most Medicare for All plans explicitly recognize and account for
the costs of providing these workers the elements of a just transition.
As noted previously, this sort of just transition is far easier when
health care is universally provided.
Besides this challenge, the effect of fundamental reform like M4A on
the labor market would be nearly uniformly positive. The effect of a
fundamental reform like M4A on aggregate demand is almost certainly
positive and will therefore boost the demand for labor. The number of
jobs spurred by increased demand for new health care spending (including
long-term care) will certainly be larger than the number displaced by
realizing efficiencies in the health insurance and billing
administration sectors.
Finally, the introduction of fundamental health reform like
M4A—particularly reform that substantially delinks health care provision
from specific jobs—would greatly aid how the labor market functions for
typical working Americans. Take-home cash pay would increase, job
quality would improve, labor market transitions could be eased for
employers and made less damaging to workers, and a greater range of job
opportunities could be considered by workers. The increased flexibility
to leave jobs should lead to more productive “matches” between workers
and employers, and small businesses and self-employment could increase.
Fundamental health reform would benefit typical American families in
all sorts of ways. Importantly, contrary to claims that such reform
might be bad for jobs, this reform could substantially improve how labor
markets function for these families.
About the author
Josh Bivens joined the Economic Policy Institute in
2002 and is currently EPI’s director of research. His primary areas of
research include macroeconomics, social insurance, and globalization.
He has authored or co-authored three books (including The State of Working America, 12th Edition)
while working at EPI, has edited another, and has written numerous
research papers, including many for academic journals. He appears often
in media outlets to offer economic commentary and has testified several
times before the U.S. Congress. He earned his Ph.D. from The New School
for Social Research.
Republicans Want Medicare for All, but Just for This One Disease
Everyone’s a socialist in a pandemic.
by Farhad Manjoo - NYT - March 11, 2020
All it took was a pandemic of potentially unprecedented scale and severity and suddenly it’s like we’re turning into Denmark over here.
In
the last few days, a parade of American companies that had long
resisted providing humane and necessary benefits to their workers
abruptly changed their minds, announcing plans to pay and protect even their lowest-rung employees harmed by the ravages of the coronavirus.
Uber and Lyft — which are currently fightingstate efforts
to force them to pay benefits to drivers and other “gig” workers —
announced that, actually, a form of paid sick leave wasn’t such a bad
idea after all. Drivers who contract the new virus or who are placed in
quarantine will get paid for up to two weeks, Uber said. Lyft offered a similar promise of compensation.
It wasn’t just sick leave. Overnight, workplaces across the country were transformed into Scandinavian Edens of flexibility.
Can’t make it to the office because your kid has to unexpectedly stay
home from school? Last week, it sucked to be you. This week: What are
you even doing asking? Go home, be with your kid!
Then politicians got into the act. The Trump administration — last seen proposing to slash a pay raise for federal workers and endorsing a family leave policy that doesn’t actually pay for family leave
— is now singing the praises of universal sick pay. “When we tell
people, ‘If you’re sick, stay home,’ the president has tasked the team
with developing economic policies that will make it very, very clear
that we’re going to stand by those hard-working Americans,” Vice
President Mike Pence said on Monday, offering the sort of rhetoric that wouldn’t be out of place on the pages of Jacobin.
And
wasn’t it almost funny how everyone and their doctor was suddenly
extolling the benefits of government-funded health care for all? When
the Trump administration told Congress that it was considering
reimbursing hospitals for treating uninsured Americans who contracted
Covid-19, Republicans who had long opposed this sort of “socialized
medicine” were now conceding that, well, of course, they didn’t mean it
quite so absolutely.
“You can look at it as socialized medicine,” Representative Ted Yoho, a Republican from Florida, told HuffPost. “But in the face of an outbreak, a pandemic, what’s your options?”
As
I said, it’s almost funny: Everyone’s a socialist in a pandemic. But
the laugh catches in your throat, because the only joke here is the sick
one American society plays on workers every day.
The truth is
that we’re nowhere near turning into Denmark. Many of the newly
announced worker-protection policies, like sick leave and flexibility,
are limited, applying only to the effects of this coronavirus (the
exception is Darden’s new sick-leave plan, which the company says is
permanent). The administration’s proposed relief plan could well be vaporware. And Republicans’ interest in universal health care is ephemeral. Call it Medicare For All But Just For This One Disease.
But
there’s an even deeper tragedy at play, beyond the meagerness of the
new benefits. The true embarrassment is that it took a pandemic for
leaders to realize that the health of the American work force is
important to the strength of the nation.
As the coronavirus
spiders across the planet, I’ve been thinking about the illness as a
very expensive stress test for the global order — an acute,
out-of-nowhere shock that is putting pressure on societies at their
weakest points. Some nations, like Iran and perhaps Italy, are teetering
under the threat; others, like South Korea, are showing remarkable
resilience. The best ones will greet the crisis as an opportunity to
build a more robust society, even better prepared for a future unseen
danger. The worst will treat it as a temporary annoyance, refusing to
consider deeper fixes even if they somehow stagger through this crisis.
It
is not yet clear how well the American system will respond, but the
early signs are far from encouraging. What we’re learning is that our
society might be far more brittle than we had once imagined. The virus
has laid bare our greatest vulnerability: We’ve got the world’s biggest
economy and the world’s strongest military, but it turns out we might
have built the entire edifice upon layers and layers of unaccounted-for
risk, because we forgot to assign a value to the true measure of a
nation’s success — the well-being of its population.
Much of the danger we face now grows out of America’s tattered social safety net — the biting cost and outright lack of health care and child care and elder care, the corporate war on paid leave, and the plagues of homelessness and hunger.
As the virus gains a foothold on our shores, many Americans are only
now waking up to the ways these flaws in the safety net cascade into one
another. If companies don’t pay workers when they’re off sick, they’ll
have an incentive to work while ill, endangering everyone. If you don’t
cover people’s medical bills, they may not seek medical help,
endangering everyone.
There may be a silver
lining here: What if the virus forces Americans and their elected
representatives to recognize the strength of a collectivist ethos? The
coronavirus, in fact, offers something like a preview of many of the
threats we might face from the worst effects of climate change. Because
the virus is coldly indiscriminate and nearly inescapable, it leaves us
all, rich and poor, in the same boat: The only way any of us is truly
protected is if the least among us is protected.
So what if we used this illness as an excuse to really, permanently protect the least among us?
I
would like to imagine this bright future. But I’ll confess I’m not
optimistic. More than a decade ago, America stumbled through the Great
Recession without imposing many significant fixes for the excesses of
our financial system. The titans of Wall Street were protected and working people were left with scraps.
The
coronavirus might teach us all to value a robust safety net — but
there’s a good chance we’ll forget the lesson, because this is America,
and forgetting working people is just what we do.
We are five Americans living in social democratic Norway. We think
that our experiences provide a unique perspective as to why it is that
so many Americans so strongly support the reforms called for by the
platform of Sen. Bernie Sanders. Our time in Norway also helps to
explain why it is so challenging for many Americans to imagine Sanders’
proposals in concrete terms. We draw from our dual reality of living in
Norway while looking over—with critical eyes—at what’s going on in the
United States.
"As Americans living in Norway, we have profoundly experienced what
policies like universal health care, parental leave, free higher
education, the right to vacation and sick pay mean for our lives. To
experience the everyday effect of these policies has strengthened our
political convictions."
The five of us moved from all corners of the U.S .to Norway, for
different reasons. Despite these differences, we’ve all come to the
conclusion that the Sanders campaign provides necessary answers to
challenges that the U.S. faces. The five of us are constantly reminded
of the many ways in which our lives in Norway stand in stark contrast to
the lives of our friends and family back home. Americans often explain
their political choices by drawing on concrete life experiences—it’s
also the same with us. Notably, the years we’ve lived in Norway have
provided us with visceral proof of the type of society it’s possible to
create together and the time it may take for these possibilities to feel
real. Everyday social democracy: Three stories
Erika: “When I lived in the U.S., I was deeply engaged in movements
for universal healthcare, and for workers and women’s rights.
Nonetheless, I didn’t truly understand the impact of the rights I was
championing until I first moved to Norway. When I arrived, I was five
months pregnant with my first child and I was excited about the prospect
of a new life in a land with generous public provisions. At the same
time, I was scared and unsure, mostly because I couldn’t fathom a system
where I could be seen by a doctor, right way, without significant
paperwork or cost to me or my partner. With my first pregnancy check-up
in Norway a week after arrival, I experienced firsthand my new reality.
It felt strange and incredible to have access to these services, with no
questions asked.
I had a difficult childbirth and was completely exhausted for several
weeks after my son was born. At the time, I was enrolled in a demanding
master’s program, for free! My twin sister, living in the US, gave
birth to twin daughters in that same time period. She had felt the
pressure to begin to work again almost right away and based on
everything I knew, it never occurred to me that I shouldn’t do the same.
I took 10 days off after the birth and slogged my way through the snow
to go to my classes, leaving my son’s Norwegian father to use his
parental leave and stay home with our son. I remember feeling proud of
my strong work ethic when I completed my studies, but also feeling
exhausted—both mentally and emotionally.
Two years later, I gave birth to my second child. In the years that
had passed since the first, I’d continually seen Norwegian friends and
colleagues taking 8 months to a year’s parental leave—paid leave from
their jobs, from their studies, from all parts of life outside of caring
for a newborn. This time, there was no doubt in my mind that I would do
the same. With a huge feeling of relief, I took the weeks I needed
before the birth and I took the months after. Although my politics had
been far to the left when I lived in the US, it was only first after I’d
lived some years in Norway that I actually felt I deserved to receive
universal health care and paid parental leave. It was only then that I
understood the everyday, emotional impact of what it was to have that
right.”
Jen: “In recent years, I have been genuinely surprised upon learning
that neither my sister nor my cousin, despite both having higher degrees
and full-time positions, were not receiving paid vacation or sick leave
from work. This past Christmas, my uncle, past age 70 and in poor
health, left me equally thrown when he told me he wasn’t retiring
because he ‘simply couldn’t afford to’. And yet, well beyond hearing
these everyday realities, the thing that surprises me most is my family
members responding to my shock with mild amusement and telling me that
I’ve simply ‘been in Norway too long.’
Are they right? Have I been in Norway so long that I no longer
understand the everyday realities of the American worker? When did it
happen that I could no longer imagine the type of work life they talk
about? I’ve always had a good work ethic and I’ve understood
that you have to work hard to earn money. But after so many years in
Norway, the lack of work/life balance in the U.S. experience has started
to feel almost inhumane.
This new personal understanding happened a few years ago, at a point
when my husband and doctor became so worried about the pressure I felt
from work that they convinced me to take a bit of time away. When they
called it “sick leave” I remember feeling strongly that I didn’t fit in
this category. My experience from the U.S. had been that it was only
those with serious illnesses or life problems who took sick leave.
Nonetheless, they convinced me to take the break I so desperately
needed. I was paid during my leave, so I did everything I could to make
the most out of what felt like an undeserved opportunity. I went on
hikes, I read and wrote, and I met regularly with my doctor and
psychologist. I was away from work for two months and the experience
changed my life. I felt healthier and more focused, both at work and in
my personal life. It was the first time I understood the significance of
Norwegian sick leave policies. Taking sick leave and taking stock is
not a rare thing in Norway. The policy reflects a holistic view of what
it means to work. It recognizes that when an employee’s health isn’t
good, they are less effective during the work day. It’s therefore a
no-brainer that the employer meets the employee where they’re at.
Tony: “I grew up in Vermont. I say that because Bernie Sanders has
really formed the way I think, even if I haven’t always been as
conscious of this as I am now. But while I ‘grew up with Bernie’, it
wasn’t until I came to Norway that I fully understood the significance
of the ideas he stands for. In the U.S., market liberalism is just
what... is. As a Bachelor’s student in Political Science at the
University of Vermont, I was surrounded by this perspective. My goal
was to have a good-paying career, even if I wasn’t happy or interested
in what I was doing. And I wasn’t alone—many students in the U.S.
struggle with this expectation.
"Only Bernie Sanders has taken seriously the aim of building a more
just, less brutal society—and this is reflected in the growth of the
movement behind him. It's here that the power of the Sanders campaign
lies—it speaks to regular people who want an easier everyday and a
better chance to live good, secure lives."
I moved to Norway in fall 2016 because, with its free higher
education, it was my only economically feasible chance of accessing a
Master’s degree in International Relations. In my first few years in
Norway I was introduced to Marxist philosophy, which I had never seen in
four years with my previous higher education. But even more important
than new theoretical perspectives, was that despite the fact that I was
living on a student budget in Norway, I nonetheless experienced a
quality of life that was equivalent to my privileged peers in the
U.S.—those who had much more money than me. It was a new and strange
experience to not worry about each and every financial decision I made. I
realized that there were a breadth of political realities around the
world and that the one in the U.S. is rather...unique. My experiences in
Norway convinced me to shift from being a completely normal American
“liberal” to locating myself much further left, politically.” Grassroots social reform takes time
As Americans living in Norway, we have profoundly experienced what
policies like universal health care, parental leave, free higher
education, the right to vacation and sick pay mean for our lives. To
experience the everyday effect of these policies has strengthened our
political convictions. Of the Democratic candidates, only Bernie Sanders
has taken seriously the aim of building a more just, less brutal
society—and this is reflected in the growth of the movement behind him.
It’s here that the power of the Sanders campaign lies—it speaks to
regular people who want an easier everyday and a better chance to live
good, secure lives. Nonetheless, without everyday, real life experience
with comprehensive state support, it is not difficult for us to imagine
how these reforms feel like a move outside the comfort zone for many
Americans. Such a shift requires more than a short lived electoral
campaign. It’s not coincidental that the Sanders campaign resembles more
of a grassroots movement. For us, just as for many in the U.S. who are
knocking on doors, phoning people they don’t know and contributing in
other ways, there’s more at stake than winning a primary election
against Joe Biden. It’s about creating a broad movement of people who
can create the sense that reform is both possible and results in a
better way of life. From experience, we can say that the process takes
time—but it’s worth it. https://www.commondreams.org/views/2020/03/10/five-americans-living-social-democratic-norway-explain-why-bernie-sanders-so
This Is One Anxiety We Should Eliminate for the Coronavirus Outbreak
A patient can do everything right and still face substantial surprise medical bills.
by David Anderson and Nicolas Bagley - NYT - March 15, 2020
In his recent Oval Office speech, President Trump pledged that Americans won’t receive surprise bills for their coronavirus testing.
The
goal is good; we need people who are lightly symptomatic to be tested
without fear of high personal costs. But it was an empty promise. Unless
swift action is taken, surprise bills are coming. And they could
exacerbate a public health crisis that is already threatening to spiral
out of control.
As demand for coronavirus testing surges and beds
start to fill with the sick, hospitals and clinics will roll out
contingency plans that call on any available resources in their
communities. Test samples will be sent to whichever private laboratories
have capacity, patients will be transferred from overloaded hospitals
to less-crowded locations and physicians and nurses will make greater
use of telemedicine.
Emergency rooms will be slammed with visits
from the worried well and the dangerously sick alike. College students
are already being sent home and will seek treatment far from the
universities that offer them health insurance.
All of this will be chaotic.
To
their credit, health insurers recognize the need to eliminate
out-of-pocket spending that might discourage people from seeking care.
At a meeting earlier this week with Vice President Mike Pence, they
publicly committed to eliminating deductibles and co-pays for
coronavirus testing. The federal government is also taking some needed steps to eliminate or ease cost-sharing.
But
insurance companies aren’t the ones sending surprise bills. They’re
coming from private labs and emergency-room doctors and other providers
of health care services — and they weren’t at Vice President Pence’s
meeting.
A patient with insurance through work or the health-insurance exchanges can be surprise-billed
when she seeks medical care at a hospital or clinic that’s in her
insurance “network” — but then receives medical care from a person or an
institution that’s outside the network.
That out-of-network
provider will first send a bill to the patient’s insurer. But if the
insurer doesn’t pay the full amount, the provider may bill the patient
directly for the remaining balance. Because the provider is basically
free to name its own price, these surprise bills can be wildly inflated.
In
a coronavirus pandemic, a patient can do everything right and still
face substantial surprise bills. Take someone who fears that she may
have contracted Covid-19. After self-quarantining for a week, she
develops severe shortness of breath. Her partner rushes her to the
nearest in-network emergency room. But she’s actually seen by an out-of-network doctor — who may soon send her a hefty bill for the visit.
Matters
get worse if the in-network hospital is approaching capacity and the
patient is healthy enough to be sent to a hospital across town with
spare beds. If the second hospital is outside her insurance network, she
could potentially receive a second surprise bill. A third could come
from the ambulance that transfers her — it too might not be in-network,
and no one will think to check during a crisis. She could get a fourth
surprise bill if her coronavirus tests are sent to an out-of-network
lab. And so on.
Even in normal times, patients with private insurance receive roughly one surprise bill for every 10 inpatient hospital admissions.
These are not normal times.
Federal law currently provides little protection. The Affordable Care Act does cap an individual’s out-of-pocket spending — but the cap only applies to in-network care. For surprise bills, the sky is the limit.
Reputable
providers will appreciate that now is not the time for price gouging.
But many won’t and will seek to exploit people’s medical needs for
financial gain, much as they did before the coronavirus began to spread.
They may calculate that can collect enough money charging exorbitant
fees for out-of-network services — and still make it to an airport ahead
of a mob carrying pitchforks and torches.
We need more than gauzy
commitments from the president. We need a law to ban bills incurred
from out-of-network providers for medical care associated with the
coronavirus outbreak. Unless that commitment is ironclad, people may not
believe it. And if they don’t believe it, they won’t get tested.
To date, Congress — cowed by a furious public relations campaign led by private equity and specialty physicians — has been unable to pass a law banning routine surprise billing. Though Congress has moved closer to a watered-down deal in recent months, neither the House nor the Senate has actually passed a bill.
The
coronavirus should refocus Congress’s attention. At a minimum, the
legislature should quickly pass a temporary measure to limit
out-of-network charges for coronavirus testing and treatment.
In the meantime, states can take action. About half have already passed surprise-billing laws,
including California and New York, two of the hardest-hit states. But
the laws in many states are patchy: Some cover only emergency room care,
others don’t contain a legal mechanism for cutting back on excessive
bills, and none are tailored for the current outbreak.
Already, reports of people who have received eye-popping bills for coronavirus testing or emergency room visits
are circulating. As these stories proliferate, people will become even
more reluctant to get tested or treated when they should. That will
obscure the spread of the virus, complicate efforts to adopt measures
for social distancing, and lead to unnecessary deaths.
It’s a
national disgrace that the United States didn’t ban surprise bills in a
time of relative prosperity and security. It could become a public
health calamity if we do not end them in a world with coronavirus. https://www.nytimes.com/2020/03/15/opinion/surprise-billing-coronavirus-.html?referringSource=articleShare
“An Act to Lower Health Care Costs” seems like it would be a sure
winner in Augusta, but not so fast. It was accepted as an emergency bill
by the Legislative Council on Oct. 23 by a 6-4 vote split on party
lines.
Then came the process of writing a large, complex policy bill
resulting in the bill appearing in print only recently, on Feb. 18, when
it was referred to the Committee on Health Coverage, Insurance and
Financial Services.
Senate President Troy Jackson is the sponsor. There are seven Senate
co-sponsors, all Democrats, and just two House co-sponsors, also
Democrats. One is House Speaker (and U.S. Senate candidate) Sara Gideon.
The other is Denise Tepler, who chairs the House committee in
possession of the bill.
One-party sponsorship never bodes well for a bill. A cynic might call
this a win-win for Democrats. Either the bill will pass, in which case
the party can claim bragging rights on one of the hottest issues in
Augusta, or it will fail and Democrats can spend the fall reminding
voters of who wanted to reduce health care costs and who wouldn’t go
along.
The bill is big — 16 pages big — and therein lies the rub. With just
six weeks left in the session, it is difficult to do justice to a bill
that makes sweeping policy changes in that short amount of time. A bill
in a hurry means a bill that may skip some important steps in the
legislative process.
This bill that was referred to committee on Feb. 18 went to public
hearing on Feb. 25. As is customary at this point in a session, the
Legislature has abandoned the usual two weeks’ notice for public
hearings. Augusta lobbyists had to scramble to read, research and digest
the proposal. Because this is what they do, they were able to come up
with an initial reaction to the health care bill of bills. The rest of
us? Not so much.
The results of the hastily convened hearing were not surprising. Two
citizens with budget-busting personal medical bills testified in favor,
as did organizations representing citizen interests such as AARP,
Consumers for Affordable Health Care and Maine Equal Justice.
The health industry was less enthusiastic. Though the committee
discussed ideas for controlling health care costs in meetings between
sessions, some major players were not brought along. Testifying against
the bill were the Maine Hospital Association, Maine Medical Association,
MaineHealth (an integrated health care system and the state’s largest
private employer) and Northern Light Health. They expressed strong
support for the goal of lowering health care costs but had concerns
about “administrative burden,” “underpayment by government payors” and
“mandatory, artificial growth targets.”
Jeffrey Austin of the Maine Hospital Association summed it up. Though
MHA supported other reform bills, “This bill is too big, has too many
unknowns and is not really targeted to what Maine needs.”
Also opposed was the Maine Department of Professional and Financial
Regulation, which would have additional responsibilities under the plan.
Said DPFR: “The Bureau [of Insurance] does not have the resources or
expertise to staff the Commission, even for a short period of time, as
envisioned by the bill.”
LD 2110 would establish an 11-member Commission on Affordable Health
Care that would restrict health care cost growth, set health care
quality goals, enhance provider transparency, protect patient access to
health care services and set spending targets for public payors and
prescription drug spending.
In addition to the 11-member board, the bill proposes a 12-member
Advisory Council with members from the administration (Administrative
and Financial Services, Corrections, Health and Human Services, Attorney
General’s Office) and the Maine Education Association, Maine Municipal
Association, University of Maine and Maine Community College System.
The commission’s scope of work is massive. There would be “health
care cost growth benchmarks” established. There would be annual “public
cost trend hearings.” Factors would include “unanticipated events”
(disease outbreaks, natural disasters), “severity or complexity of
patient conditions,” “unanticipated administrative costs,” new
pharmaceuticals or technologies, specialty services and costs related to
government regulations. There would be an annual report.
Entities that exceed established cost growth benchmarks would be
required to submit a “performance improvement plan.” A fine of up to
$500,000 would be imposed for failing to make a “good faith effort” to
develop such a plan.
Just two days later, on Feb. 27, the bill had its first work session,
at which the bill was summarily tabled without discussion. This could
signal a behind-the-scenes effort to negotiate with the opposition.
Leadership’s deadline for getting bills out of committee cometh (March
10). Adjournment is April 15.
Sen. Jackson deserves credit for taking health care costs head-on,
but the bill should come back in next year’s Legislature to get the
consideration it deserves. https://www.ellsworthamerican.com/opinions/columnists-opinions/jill-goldthwait/theres-no-fast-fix-when-it-comes-to-health-care/
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