The Healthcare Crisis and a Medicare for All solution

The Healthcare Crisis and a Medicare for All Solution
Bob Sheak – April 21, 2019

The Health Care Crisis is Now

The story of the U.S. healthcare system is best told with documented and verifiable facts. When that is done, the evidence tells us that the U.S. healthcare system is failing in critically important ways to provide accessible and affordable health care to tens of millions of Americans. At the same time, health care costs are going up, while corporations in the healthcare business have been making enormous profits and corporate CEOs extraordinary salaries and bonuses. Consider aspects of the healthcare crisis.

Inadequately insured

According to a report authored by Sarah R. Collins for the Commonwealth Fund (Feb 2019), “45 percent of U.S. adults ages 19 to 64 are inadequately insured in 2018 [uninsured + underinsured],” that is over 87 million of 194 million in this broad category, about the same percentage as in 2010, when then President Obama signed the Affordable Care Act into law (https://www.commonwealthfund.org/sites/default/files/2019-02/Collins_hlt_ins_coverage_8_years_after_ACA_2018_biennial_survey_sb.pdf).

(You can see a summary of the main features of the Affordable Care Act” at: http://kff.org/health-reform/fact-sheet/summary-of-the-affordable-care-act.)

The Commonwealth Fund report is based on data collected by the Princeton Survey Research Associates from “a random, nationally representative sample of 4,225 adults ages 19 to 64 living in the continental United States.” The surveys and reports go back to 2001. Aside from estimating the total number of people who had inadequate healthcare insurance, the chief finding of the most recent report for 2018 is that there has been in a shift in the composition of the inadequately insured. The number of uninsured adults went down from 2010 through 2018, though increased during the first two years of Trump’s reign, while the number of underinsured went up.

The uninsured

Collins reports that the number of people reporting being uninsured went down from 20% of Americans in this category in 2010 to 12% in 2018, when 23.3 million people were uninsured at the time of the survey. That’s good and reflects the effects of the Affordable Care Act, which came into law in 2010. But the estimates vary somewhat from study to study. A recent Gallup survey reported by Dan Witters on January 23, 2019 finds that 13.7 uninsured rate for adult Americans, or 26.6 million were uninsured in 2018, higher by 3.3 million than the Commonwealth Fund estimate (https://news.gallup.com/poll/24634/uninsured-rate-rises-four-years-high.aspx?g_source=link_NEWSV9&g_medium=NEWSFEED&g_campaign=item_&g_content=U.S.%2520Uninsured%2520Rate%Rises%2520to%2520Four-Year%2520High). Other estimates are even higher. In the “summary” that accompanies Bernie Sanders “Medicare for All Act of 2019,” the number of uninsured Americans is said to be “34 million” (https://www.sanders.senate.gov/download/medicare-for-all-act-of-2910?id=ODD31317-Ef09-4349A0D40510991EF748&download=1&online=file) The number from Sanders is higher probably because it includes children ages 18 years and younger and elderly Americans ages 65 and older. John Alker and Olivia Pham report on how the downward trend in children’s health un-insurance rates have been reversed in the wrong direction during the Trump years (https://ccf.georgetown.edu/2018/11/21/nations-progress-on-childrens-health-coverage-reverses-course). Here’s what Alker and Pham write.

“For the first time since comparable data was first collected in 2008, the nation’s steady progress in reducing the number of children without health insurance reversed course. The number of uninsured children under age 19 nationwide increased by an estimated 276,000 to about 3.9 million (3,925,000) in 2017, according to newly-available data from the U.S. Census Bureau (Figure 1). The rate of uninsured children ticked upward from the historic low of 4.7 percent in 2016 to 5 percent in 2017 (Figure 2). Both of these changes were large enough to be statistically significant.”

They continue:

“Also notable was the lack of any statistically significant progress on children’s coverage in any state across the country in 2017, with the exception of the District of Columbia. Nine states saw statistically significant increases in the rate of uninsured children in 2017. In order of magnitude of change, they are: South Dakota, Utah, Texas, Georgia, South Carolina, Florida, Ohio, Tennessee, and Massachusetts. No state saw its number of uninsured children decline, except for DC.”

Whatever the exact numbers on the uninsured, they all depict a grave situation for tens of millions of Americans, access to healthcare for whom is severely jeopardized and limited to the use of hospital emergency rooms or no care. Trump is doing his best to make it worse, as I’ll document later in this essay. In confirmation of this assertion, Sarah Kliff reports, “Under Trump, the number of uninsured Americans has gone up by 7 million” (https://www.vox.com/2019/1/23/18194228/trump-uninsured-rate-obamacare-medicaid).

The underinsured

The Commonwealth Fund survey reported by Sarah R. Collins indicates that the number of underinsured adult Americans increased from 26% in 2010 to 33% in 2018, or 64 million Americans in 2018. The underinsured here “refers to adults who were insured all year or part of the year but experienced one of the following while insured: out-of-pocket costs, excluding premiums, equaled 10% or more of income; out-of-pocket-costs, excluding premiums, equaled 5% ore more of income if low income (<200% of poverty); or deductibles equaled 5% or more of income.” This is a conservative measure, as Collins points out, because it does not include “premiums” or copayments or those who were insured but decided not to use the insurance at all because of high copayments. There are a host of reasons that help to explain the large and rising number of underinsured Americans. The overriding reason is that medical costs are rising, while wages and average family incomes are barely changing or declining in an economy with fewer opportunities for stable fulltime employment at decent wages and benefits. As the report puts it: “‘Growth in Americans’ incomes [for most Americans from wages/salaries] has not kept pace with the growth in health care costs.”

Collins identifies additional reasons. People who purchase marketplace health care plans, part of ACA, and all of those who buy plans directly from insurance companies have seen their health care insurance go up, with high deductibles and copays. Also, the ban against insurers excluding people because of pre-existing conditions has had the unintended consequence of increasing healthcare costs, as the number of people “with greater health needs, and thus higher costs, are now able to get health insurance in the individual market.” Trump wants to give states the right to lift this ban. And a last point. Collins reports that employers who provide health care as a benefit to their employees are “asking workers to shoulder an increasing share of health costs.”

Some consequences

There are negative health-related consequences identified in the Commonwealth Fund study for both the uninsured and underinsured, including: not being able to fill a prescription; skipping a recommended test, treatment, or follow-up; not going to a doctor when there was a medical problem; not getting the care of a specialist; less likely to get preventive care; less likely to get cancer screenings. In addition, when the underinsured have difficulty in paying for their medical bills, they sometimes go into debt to pay these bills, while spending less on other necessities like rent or food and sometimes being unable to afford prescribed drugs. The summary to Sanders “Medicare for All Act of 2019” gives the following examples. (You can find links to the bill, the summary, and how to finance it at: https://www.sanders.senate.gov/newsroom/press-release/sanders-14-senators-introduce-medicare-for-all.)

“As tens of thousands of American families face bankruptcy and financial ruin because of the outrageously high costs of health care and 30 percent of US adults with private health insurance delay seeking medical care each year due to cost….”

“Today, about one out of five Americans cannot afford to fill the prescriptions given to them by their doctors because we pay, for far, the highest price in the world for prescription drugs.”

More on how many Americans who have health insurance can’t afford to use it

It’s worth repeating the point from Sanders that “30 percent of US adults with private health insurance delay seeking medical care year due to cost.” Helaine Olen authored an article for The Atlantic Monthly on this point titled “Even the Insured Often Can’t Afford Medical Bills” (https://www.theatlantic.com/business/archive/2017/06/medical-bills/530679). Here’s some of what she writes.

“Just because a person is insured, it doesn’t mean he or she can actually afford their doctor, hospital, pharmaceutical, and other medical bills. The point of insurance is to protect patients’ finances from the costs of everything from hospitalizations to prescription drugs, but out-of-pocket spending for people even with employer-provided health insurance has increased by more than 50 percent since 2010, according to human resources consultant Aon Hewitt.”

“At the same time, the most recent Report on the Economic Well-Being of U.S. Households, an annual survey conducted by the Federal Reserve Board, found that 44 percent of adult Americans claim they could not come up with $400 in an emergency without turning to credit cards, family and friends, or selling off possessions. When this reality combines with healthcare bills, the consequences can be financially devastating…. A poll conducted earlier this year by Amino, a healthcare-transparency company, with Ipsos Public Affairs, found that 55 percent of those they surveyed claimed they had at least once received a medical bill they could not afford. No surprise, then, that the Consumer Financial Protection Bureau reported earlier this year that medical debt was the most common reason for someone to be contacted by a debt collector.”

Where one lives influences access to adequate health insurance

In an article for Consumer Reports, Donna Rosato refers to another important fact: “More than ever before, if you buy your own health insurance, where you live will determine your choice of health plans and what you will pay for them—and the geographic differences may be dramatic” (https://www.consumerreports.org/health-insurance/cost-of-individual-health-insurance-depends-more-than-ever-on-where-you-live).

Under the Affordable Care Act, states have set up health insurance exchanges on which individuals can buy insurance. This is a large market. Rosato quotes Karen Pollitz, a senior fellow at the Kaiser Family Foundation, who says that “[n]early 20 million Americans buy their own health insurance [and] About 60 percent of people who buy individual health insurance get some kind of subsidy [under provisions of the Affordable Care Act] that reduces their costs.” They other 40 percent are on their own because they “make too much to qualify for financial help.”

There are some state governments that are “passing laws to preserve consumer protections the ACA put in place,” and “are implementing innovative programs to reduce costs for insurers, which can lead to more choice and lower rates for consumers. However, other states are loosening regulations “and are finding ways to sell less costly insurance that doesn’t meet the ACA’s required minimum standards.” The uncertainty in the health care market has been greatly compounded by the Trump administration to subvert the ACA. For example, there will be less support for some people: “The Centers for Medicare and Medicaid Services (CMS), which oversees the ACA health insurance exchanges, announced that it is slashing funding to organizations that help people shop for coverage. Nonprofit organizations that provide navigators in states that use the federal Healthcare.gov online marketplaces will be $10 million for the 2019 plan year, down from $37 million for 2018 and $63 million in 2017.

What are some of the effects? One study cited in Rosato’s article analyzes the rate proposals for 2019 of 10 states and Washington, D.C., finding that “the proposed rates represent everything from double-digit drops compared with 2018, to increases of more than 30 percent. In Minnesota, for example, the average premium on the benchmark Silver plan is expected to be 11 percent less this year compared with last, or $552 a month.” Why? “… Minnesota, and a few other states, have instituted reinsurance programs to reimburse insurers who cover sicker, higher-cost customers, which in turn has helped insurers stem premium increases.” By contrast, in Maryland, the average premium on benchmark Silver plans is projected to be 36 percent higher, or $869 a month, in 2019. Insurers there say the rate hikes are necessary because rising premiums are driving out healthier people willing to take the risk of going without insurance, now that Congress has done away with the financial penalty for doing so” [or the individual mandate]. In Iowa, the governor approved a plan “that allows residents to buy something called a ‘health benefits plan,’ which is inexpensive but isn’t insurance at all.” The plan offers limited benefits, caps annual amounts of coverage, and does not require insurers to accept people with pre-existing conditions.

Wait Times – lengthy in many places

Suzanne Gordon has written an in-depth, highly-informative book in defense of the Veterans Health Administration entitled Wounds of War: How the VA Delivers Health, Healing, and Hope for the Nation’s Veterans (2018). Despite under-funding by the U.S. Congress, a national shortage of primary-care doctors, and attacks by the Trump administration, the VHA continues to provides holistic, integrated care based on a team approach at its facilities, involving active coordination among all those who have any role in a patient’s medical needs and with access to the electronic records of all participating veterans around the country available online at every facility. Wait times at the VHA, overall outcomes from medical treatment, the record of treating those with “mental illness,” and inpatient palliative care are better than in comparable private sector practices. Nonetheless, Trump and Republicans in the U.S. Congress have reduced the funds going to the VHA in efforts to subvert and shrink it. Gordon writes:

“By late 2017 the concept of ‘choice’ dominated the discussion of veterans’ health care and how it should be delivered. Congress was considering multiple bills that would, in one form or another, make the Veterans Choice program [through which eligible veterans could acquire health care outside of the VHA system] permanent and relax its previous limits on using doctors or hospitals outside the VHA. In addition, some members of Congress sought to shrink the VHA’s own health care network by creating a facility closing commission that would insulate Capitol Hill and the White House from unpopular decisions to shutter local medical centers and lay off staff. If that approach gained traction, veterans’ reliance on the private health care industry would increase, regardless of their individual choice, because he VHA services would be curtailed” (p. 353).

Trump’s “choice” scheme when added to his other healthcare reduction policies will lead to increases in wait time as well as increasing costs and fragmented treatment. Consider wait time. Gordon refers to a 2017 survey of fifteen major metropolitan areas conducted by the health-care industry consulting firm Merritt Hawkins, which assembled “broad wait-time information industry-wide” The Merritt study found “that the wait times to get a first appointment with a physician [outside of the VHA] are up 30 percent since 2014, with an average of 24 day, up from 19.4 in 2014.” The study also found that in many parts of the country, “the wait times are far longer than that, especially to see certain kinds of doctors.” Gordon continues as follows. “This is a very serious problem not only in rural areas but also in cities, including ones that are awash in medical schools and hospitals. Residents of the Boston area, for example, must spend an average of 109 days to find a family practitioner who is still taking on new patients and up to a year to get an appointment with a cardiologist. And: “Even patients with good health insurance can face long wait times – particularly for primary care physicians and geriatricians.

The Trump administration is making a bad situation worse

Trump, the Republican Party, and their right-wing allies in the healthcare industries favor legislative measures that would, if they have their way, help the insurance and pharmaceutical corporations and other healthcare-based industries to further consolidate their control of the U.S. healthcare system. The results are and will be: overall cut backs of federal government spending on healthcare programs; no letup in rising prices for prescription drugs; a decline employer-supported healthcare benefits; the further evisceration of the ACA; changes in the rules so that states have more and more responsibility for how much to fund Medicaid programs; price increases for Medicare coverage; the continuation of channeling funds away from Veterans Health Administration to for-profit alternatives. The effects will be to exacerbate the healthcare crisis, causing additional tens of millions of Americans to end up without any healthcare insurance, or to be underinsured, or to be precariously insured with healthcare insurance that is very expensive and with limited benefits.

Steffie Woolhandler and David U. Himmelstein give us a summary of what Trump’s administration has already done and what it plans to do (https://annals.org/aim/fullarticle/2729989/medicare-for-all-rivals-new-offshoots-old-health-policy-roots).

“…reforms under the Trump administration have moved to shrink the government’s role in health care by relaxing ACA insurance regulations; green-lighting states’ Medicaid cuts; redirecting U.S. Department of Veterans Affairs funds to private care; and strengthening the hand of private MA [Medicare Advantage] plans by easing network-adequacy standards, increasing Medicare’s payments to these plans, and marketing to seniors on behalf of MA plans.” And, “A recent administration white paper… presents the administration’s plan going forward: Spur the growth of high-deductible coverage, eliminate coverage mandates, open the border to foreign medical graduates, and override states’ ‘any-willing-provider’ regulations and certificate-of-need laws that constrain hospital expansion. The president’s recently released budget proposal [for 2020] calls for cuts of $1.5 trillion in Medicaid funding and $818 billion in Medicare provider payments over the next 10 years.”

The authors continue.

“Thus far, the effects of the president’s actions—withdrawing coverage from some Medicaid enrollees and downgrading the comprehensiveness of some private insurance—have been modest. His plans would probably swell the ranks of uninsured persons and hollow out coverage for many who retain coverage, shifting costs from the government and employers to individual patients. The effect on overall national health expenditures is unclear: Cuts to Medicaid, Medicare, and the [deregulation and shredding of the] comprehensiveness of insurance might decrease [government] expenditures; however, deregulating providers and insurers would probably increase them.”
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Kimberly Amadeo presents a timeline on the healthcare related actions of the Trump administration, particularly Trump’s executive actions to roll back Obama’s Affordable Care Act (https://www.thebalance.com/how-could-trump-change-health-care-in-america-4111422). Here a few examples.

“On October 12, 2017, President Trump stopped reimbursing insurers who waived deductibles and copayments for 6 million low-income customers.” Amadeo continues: “He blamed Congress for not appropriating the funds to cover these ACA subsidies. A study showed that the subsidy allowed insurance companies to cover 3.2 million people. They would, in turn, provide enough revenue to lower premiums for everyone by 20-40 percent.” However, once the reimbursements were stopped, “insurance companies said they must raise customers’ premiums by 20 percent.” Further: “The Congressional Budget Office estimates Trump’s move to stop reimbursements will cost the government at least $194 billion over the next 10 years.”

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act, which repeals the individual mandate provision of the ACA in 2019 that required all adult Americans to get health insurance. The Administration hopes that this will remove the incentive for healthy people to get insurance. “The CBO estimated,” Amadeo writes, “13 million people “would drop coverage as a result,” health care costs would rise because there would be “fewer healthy people paying premiums,” “[h]ealth insurance companies will be left with just the sicker people,” “fewer people will get preventive care or treatment for chronic diseases,” “[p]eople without insurance [will] use expensive emergency rooms as a substitute for primary care,” and consequently, “costs will increase for everyone.”

“On January 11, 2018, the Trump administration allowed states to impose work requirements on Medicaid recipients. At least 10 states asked for this permission. They will cut off benefits for ‘able-bodied’ recipients unless they have a job, are caregivers, or are in school, a proposed change that would affect about 6 percent of Medicaid recipients, mainly single adults who don’t have children. The administration also “encouraged states to submit waivers that make other Medicaid changes. For example, states asked to charge Medicaid recipients premiums. Some wish to limit the time recipients can receive benefits. Others want mandatory drug testing.”
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Sarah Kliff reports on Trump administration’s proposed annual budget for FY 2020, released to the public in March 2019, and how it will affect healthcare (https://www.vox.com/policy-and-politics/2019/4/1/18290422/trump-mulvaney-health-plan-graham-cassidy).The healthcare parts of the proposed budget are “modeled after the Graham-Cassidy-Heller-Johnson bill proposed in September 2017” (referred to as Graham-Cassidy). The Congressional Budget Office (CBO) has analyzed the proposal and “estimated the plan would cause millions to lose coverage.” What does it propose? It would “repeal the Affordable Care Act entirely, including consumer protections preexisting conditions and an expansion of Medicaid, that gave millions of low-income Americans coverage.” Additionally, Klifff writes, “The Obamacare subsidies that enable 8.8 million Americans use to purchase private coverage on the health law’s marketplaces would cease to exist.” It would “allow states to give insurers flexibility in choosing what gets covered (and not covered), like maternity care.” Here is more of what Kliff reports.

“The rules around private insurance would change a lot, in a way that is much less friendly to sicker Americans. The mandate that private Obamacare patients not be charged for preventive care visits would go away. Current limits on out-of-pocket spending for Obamacare enrollees would be abolished too, a change that could be especially challenging for those with costly medical conditions.

“In Obamacare’s place, Graham-Cassidy would create something it calls a Health Care Grant Program, which would give states a lump-sum to fund its health care programs. States would also have the option to allow insurers to charge sicker people higher premiums. They could let insurers set higher prices for pregnant women, too (this was common practice before the Affordable Care Act). States could let insurers opt out of Obamacare’s essential health benefits requirements, which currently mandate that health plan cover a core set of services including prescription drugs and maternity care.” The response of states would vary. “States that like Obamacare could try and keep the system running, using the money from their new health care grants. They could keep requiring insurers to charge sick people the same premiums as healthy people, keep the essential benefits package in place, and try to pay for their Medicaid expansion.” But even these states would probably find that quite difficult, “because Graham-Cassidy would cut spending on these programs significantly.”

Such changes would reduce government spending by $230 billion on health care compared to spending under the Affordable Care Act, according to an earlier analysis by the Congressional Budget Office of the Graham-Cassidy proposal. The CBO concluded: “Some states ‘would find it particularly challenging to reach current enrollment levels using the available subsidies,’ and “determined that ‘if this legislation was enacted, millions of additional people would be uninsured compared with CBO’s baseline projections.’ The increase in uninsured would largely come from rolling back the Medicaid expansion. That program, which covers 61 million Americans and has grown significantly under the Affordable Care Act, would face a $1 trillion budget cut over the course of a decade.”

No successful limits on the rising health costs

Despite the ACA and prior efforts to stem the rising costs of healthcare in the United States, the long-term trend has seen a steady rise in national healthcare expenditures. Statista documents that the United States has the highest level of health spending based on GDP among developed countries. In 2019, such spending represented 17.8 percent of the GDP, up from 5 percent in 1960 (https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960). Spending rose into the 17 percent for the first time in 2009 and peaked at 18.0 percent in 2016 [the last year of Obama’s presidency], declining to the current 17.8 percent with a price tag of $3.3 trillion. Most of the small decline occurred in public spending during the Trump years, while private spending continued to rise. Yusra Murad reports for Morning Consult on estimates from the Centers for Medicare and Medicaid Services Office of the Actuary on projected future spending on healthcare in the U.S. This source indicates that national expenditures on health care will reach 5.96 trillion in 2027, or 19.4 percent of GDP, that is, without significant changes in the healthcare system (https://morningconsult.com/2019/02/20/cms-estimates-annual-u-s-health-care-spending-to-hit-5-96-trillion-by-2027).

Other “wealthy” countries do better

The aging of the population and concomitant increase in Medicare coverage in the U.S. explain part of why healthcare expenditures are increasing, but the power of big insurance and pharmaceutical companies and their price-setting power explains a major part as well. Researchers Gerard F. Anderson, Peter Hussey, and Varduhi Petrosyan at the Johns Hopkins University Bloomberg School of Public Health conclude that “the higher overall health care spending in the U.S. was due mainly to higher prices — including higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services” (https://www.sciencedailey.com/releases/2019/01/190107161700.htm).

While the demographics of other developed nations are changing in ways that are like the U.S., they have been better able to keep healthcare costs lower than the U.S., while also devoting more resources to healthcare. I’ve already discussed many of the negative consequences of the U.S. healthcare system, but note here that, among “developed” nations, the United States is last in infant mortality rates, in maternity mortality rates, in life expectancy. (One cautionary note: Virtually all “developed” countries are responding to fiscal challenges and economic difficulties by introducing “austerity” measures that may well affect their healthcare systems in negative ways.)

Some confirmatory evidence

First on expenditures, the researchers at Johns Hopkins find that the U.S. remains a high-spending outlier in terms of per capita health care spending, which was $9,892 in 2016. That amount was about 25 percent higher than second-place Switzerland’s $7,919. It was also 108 percent higher than Canada’s $4,753, and 145 percent higher than the Organization for Economic Cooperation and Development (OECD) median of $4,033. And it was more than double the $4,559 the U.S. spent per capita on health care in 2000 — the year whose data the researchers analyzed for a 2003 study.”

Second, the U.S. system “has less access to many health care resources” than other nations in the OECD organization (i.e., “developed” or “wealthy” countries). The researchers found that in 2015, the most recent year for which data were available in the U.S., there were only 7.9 practicing nurses and 2.6 practicing physicians per 1,000 population, compared to the OECD medians of 9.9 nurses and 3.2 physicians.” Other evidence shows that in 2015 the U.S. “had only 7.5 new medical school graduates per 100,000 population, compared to the OECD median of 12.1, and just 2.5 acute care hospital beds per 1,000 population compared to the OECD median of 3.4.” Further, the researchers point out this: “Although the U.S. ranked second in the numbers of MRI machines per capita and third in the numbers of CT scanners per capita — implying a relatively high use of these expensive resources — Japan ranked first in both categories, yet was among the lowest overall health care spenders in the OECD in 2016.” One the researchers, John F. Anderson, says that “[i]t’s not that “we’re getting more; it’s that we’re paying much more.”

In an article for Modern Healthcare, Harris Meyer also analyzes some of the reasons for why healthcare costs are higher in the U.S. than in Canada and other “developed” or “wealthy” nations
(https://www.modernhealthcare.com/article/20180407/NEWS/180409939/why-does-the-u-s-spend-so-much-more-on-healthcare-it-s-the-prices).

Higher administrative costs in the U.S.

Harris opens his article by comparing the medical practice of Dr. John Cullen’s four-physician medical practice in Valdez, Alaska, with Dr. Trina Larsen Soles 12-physician general practice in Golden, British Columbia to help us understand in a concrete way why administrative costs are higher in the corporate-dominated U.S. healthcare system than in the universal healthcare system of Canada.

With fewer physicians, Cullen’s practice in Alaska “employs three full-time staffers who work on insurance and patient billing [and a] fourth full-timer focuses on obtaining prior authorizations from nine private and public insurers.” In addition, “Cullen and his partners often must call and write letters to convince insurers to approve coverage or pay claims.” Cullen, president-elect of the American Academy of Family Physicians, is quoted: “It’s an incredible bureaucratic mess to get anything done for patients.” Larsen Soles, “president of Doctors of BC, which represents British Columbia physicians in fee negotiations, has a very different situation. She and her eight colleagues have “one full-time staffer assigned each day to billing the province’s public medical services plan, its public workers’ compensation plan and its quasi-public auto insurance company.” Further, she and the other eight physicians “don’t get involved in billing or utilization-review issues.” Soles sums it up saying, “I can focus on patient issues, not administrative issues.”

Meyer cites a 2013 Health Affairs study co-authored by Dr. Steffie Woolhandler for additional evidence. I’ve referred earlier to some of Woolhandler’s work on healthcare. She is a health policy professor at Hunter College and a co-founder of PNHP. Woolhandler’s study “found that administrative costs accounted for 25.3% of U.S. hospital spending in 2010, compared with 19.8% in the Netherlands, 15.5% in England, and 12.4% in Canada.”

Higher prices

For additional evidence, Meyer then draws on a study by Dr. Ashish Jha, a professor of global health at Harvard, who co-authored an article published in the Journal of the American Medical Association (JAMA) comparing the spending on healthcare in the U.S. with “10 other wealthy nations.” Jha concludes that the high relative spending on healthcare system in the U.S. compared to the other 10 is due not only to higher administrative costs but also to “much higher prices for medical services and pharmaceuticals and much higher pay for physicians and nurses.” Thus, it is not surprising that Jha found that “17.8% of GDP in the U.S. went to healthcare versus an average of 10.8% in the other 10 countries.

Meyer gives other examples of the evidence documenting the relatively high healthcare prices in the U.S. MRIs cost twice as much in Kansas as in London, and that makes no sense.” And, another example, “the U.S.’ per-capita pharmaceutical spending was more than twice as high as average spending in the other 10 countries—$1,443 versus $680.” Meyer also cites evidence from The U.S. International Federation of Health Plans, which “reported in 2015 that coronary artery bypass graft surgery cost $78,318 on average in the U.S., compared with $34,224 in Switzerland and $14,579 in Spain,” and that “[a]bdominal CT scans cost an average of $844 in the U.S., compared with $483 in New Zealand, $233 in South Africa, and $85 in Spain. Average payment for an MRI was $1,119 in the U.S., $455 in South Africa, and $215 in Australia. Indeed, virtually everything related to healthcare in the U.S. costs more than other comparable nations. Healthcare executives, and specialist and generalist physicians earn considerably more than their counterparts in the other nations.

Profits and lucrative compensation for CEOs

Just one last example of why healthcare costs are so high in the U.S. In the summary of Sanders’ “Medicare for All Act of 2019, there is a glimpse of an answer. (Go to https://www.sanders.senate.gov for a copy). “The ongoing failure of our health care system is directly attributable to the fact that – unique among major nations – it is primarily designed not to provide quality care to all in a cost-effective way, but to maximize profits for health insurance companies, the pharmaceutical industry and medical equipment suppliers.” And: “the top five health insurance companies last year [2018] made nearly $21 billion in profits, led by UnitedHealth which made almost $12 billion alone.” “…the top 65 healthcare CEOs made $1.7 billion in compensation in 2017 including $83.2 million for the CEO of UnitedHealth Group, $58.7 million for the CEO of Aetna; and $43.9 million for the CEO of Cigna.” “…last year pharmaceutical companies made over $50 billion in profits. A 2013 study showed that in 2010, the United States paid, on average, about double what was paid in the United Kingdom, Australia, and Switzerland for prescription drugs. Since 2014, the cost of 60 drugs commonly taken has more than doubled, and 20 of them have at least quadrupled in price.”

Moving toward incremental or comprehensive reform of the U.S. health care system

Steffie Woolhandler and David U. Himmelstein identify the options being advanced by Democrats, and find they fall into two categories, a Medicare for All plan and public-option plans (https://annals.org/aim/fullarticle/2729989/medicare-for-all-rivals-new-offshoots-old-health-policy-roots). There is a third option as well, that is, proposals to expand Medicare so that it would be available to people under 65 – at 55 or even 50, and then incrementally reducing he age-limit over time to include even younger categories of people. Perhaps, eventually, Medicare expansion would become Medicare for All. In the meantime, however, the present healthcare insurance, pharmaceutical, medical, equipment, for-profit nursing, homes, sectors would continue as major forces in healthcare.

Woolandler and Himmelstein discuss several public-options, “most of which would offer a public plan alongside private plans on the ACA’s insurance exchange. The public-option plans “envision a…plan that would pay Medicare rates and use providers who participate in Medicare.” They see some positive features in these plans, including reforms that would offer additional insurance choices and minimize the need for new taxes because enrollees would pay premiums to cover the new costs.” (Premiums are now $135 a month.) But, according to their analysis, “these plans would cover only a fraction of uninsured persons, few of whom could afford the premiums; do little to improve the comprehensiveness of existing coverage; and modestly increase national expenditures.” They prefer the Medicare for All option, though they worry about whether it will end up increasing healthcare costs. Despite their concern, an analysis by economist Robert Pollin indicates the passage of Senator Bernie Sanders’ Medicare for All Act of 2019 would reduce costs, even while making a more comprehensive array of medical services available to all eligible U.S. residents and to all citizens.

I’ll spend the rest of this essay describing Bernie Sanders’ “Medicare for All Act of 2019.” The text of the bill is available along with accompanying summaries, there is a companion bill in the House, it has been widely lauded on the liberal/left, given wide coverage by the media, especially online, and has done well in early polls.

Medicare for All – covering everyone and costing less

On April 10, Bernie Sanders (I-Vt) introduced the Medicare for All Act of 2019, Senate Bill 1129, along with 13 co-sponsors. Already 63 national organizations and unions have endorsed the bill. Representative Pramila Jayapal (D-WA) introduced a similar bill (HB 1384) earlier in March with 100 other co-sponsors. The House bill is being revised to make it consistent with the Senate bill. The Sanders’ bill is 100-pages long and is loaded with subject titles and subtitles, definitions, cross references, and exhaustive detail. The bill can be accessed at Bernie Sanders’ Senate website, along with a summary and a statement how the bill will be financed. There are links to these documents on Sanders’s Senate website as well as in various other online sites (e.g., https://www.commondreams.org/sites/default/files/medicare_for_all_act_of_20192.pdf).

The bill proposes to cover every single resident of the U.S., though it remains for the Secretary of Health and Human Services to flush out the meaning of “resident.” In this first iteration of the bill, there are points that will need clarification or modification. Title X of the bill is about “Transition,” that is the steps to be taken in shifting from the current healthcare system to the new one. The bill says that there will be a five-year transition to go from the present to the new healthcare system. But it lacks clarity and detail on just how this transition will be carried out, as the private insurers are replaced by the Medicare for All system and as eligible residents move from being uninsured or insured to being given universally-available healthcare.

Nonetheless, the bill represents a huge first step in the right direction.
It has helped to spur a serious national conversation. One unexpected effect is that private health insurance (and for-profit hospital) stocks are, as Jake Johnson reports, in “free fall as Medicarefor All gains momentum” (https://commondreams.org/news/2019/04/18/private-health-insurance-stocks-free-fall-medicare-all-gains-momentum). Johnson quotes a Bloomberg report, “Together, the shares of hospitals and insurers lost $28 billion in market value on Tuesday” (April 16), with the slide downward continuing into Wednesday. The plunge affected the stocks of Anthem, UnitedHealth, Centene, Humana, etc., and occurred just a few days after Sanders introduced the Medicare for All bill in the Senate and after he pushed the plan in a “special” program on the right-wing Fox News. Johnson also quotes a tweet from University of California, Berkeley professor and economist Robert Reich who “argued that tumbling insurance stocks are ‘a sign that Medicare for All is real,” and “marks [the] beginning of end of for-profit health insurance’s business model of seeking healthy people and avoiding sick people.” National Nurses United echoed Reich’s message in a tweet as follows: “Insurance industry stocks dropping as the Medicare for All movement heats up—we’ve got some serious people power on our hands!”

#1 – The Anticipated Benefits (mostly quoted from the “summary” of the Sanders’ bill)

Coverage for all.

In the summary of the Bill, the purpose is clearly stated: “The Medicare for All Act will provide comprehensive health care to every man, woman, and child in our country – without out-of-pocket expenses.”

“This legislation will create a federal universal health insurance program to provide comprehensive coverage for all Americans including patient and outpatient hospital care; emergency services; primary and preventive services; prescription drugs; mental health and substances abuse treatment; maternity and newborn care; pediatrics; home- and community-based long-term services and supports; dental, audiology, and vision services.”

What will this bill mean for patients?

“As a patient, all your basic needs are covered. You choose your doctor. No deductibles, no surprise bills for out-of-network services, no copays. If you change jobs, you don’t have to change insurance plan or worry about losing the coverage you and your family depend on. No more worrying about whether you can afford to get the care you need, or how to pick the right insurance plan for your family.”

What will it mean for providers?

“Health care providers can spend more time with their patients and less time on paperwork. A universal health care system will allow the country to invest more resources in provider education and training and make smart investment to avoid provider shortages and ensure communities can access the providers they need.”

What will it mean for employers?

Instead of struggling to provide health insurance to employees, businesses will simply pay a payroll tax – just like they do for Medicare now.”

More Freedom, more security

“Under this bill, Americans will benefit from the freedom and security that comes with finally separating health insurance from employment. That freedom would not only help the American people live happier, healthier and more fulfilling lives, but it would also promote innovation and entrepreneurship in every sector of the economy. People would be able to start new businesses, stay home with their children or leave jobs the don’t like knowing that they would still have health care coverage for themselves and their families. Employers would be free to focus on running their business rather than spending countless hours figuring out how to provide health insurance to their employees. Working Americans wouldn’t have to choose between bargaining for higher wages or better health insurance. Parents wouldn’t have to worry about how to provide health insurance to their children. Seniors and people with serious or chronic illnesses could afford the care necessary to keep them healthy without worry of financial ruin. Millions of people will no longer have to choose between health care and other necessities like food, heat and shelter.”

#2 – Will it reduce healthcare expenditures/costs?

From the Sander’s documents

The issue of costs of the Medicare for All Act is addressed in the text of Sanders’ Medicare for All bill and in the summary of it, but there is a lack of detail in this first iteration. This is not surprising for the first draft of any legislation. The issue of costs is discussed in Title VI of the Medicare for All bill, which deals with the “Health Budget; Payments; Cost Containment Measures.” The text does not answer the question with many specific costs estimates, but instead offers in legislative language definitions, what the components of the health budget will be, how the “Secretary” of Health and Human Services will allocate funds among the components, including 1 percent of the budget for “Temporary Worker Assistance” for up to five years following the date benefits first become available.” There is also in Title VI text on how the “Application of Payment Processes Under Title XVIII” will work and a “standardized and documented review process,” how accurate “valuation of services” will be done, and assurance that there will be “internal tracking of reviews,” along with a section on how periodic audits by the Comptroller General will be built into the new healthcare system.

In the 5-page summary of the bill, “Financing Medicare for All,” there are references to two studies that have made cost estimates (no details) and that find the Senate’s Medicare for All legislation would, if implemented, reduce total healthcare expenditures, including reductions in administrative costs and prices for prescription drugs. And there are verifiable generalizations about what the cost savings will be to various groups. Businesses will no longer have to devote resources to employee health benefits. Families will no longer face bankruptcy. Top healthcare CEOs will no longer get multi-million dollar-compensation packages. However, on the specific financing and costs of the bill, the document just lists in bullet-format the financing options. There is again no detailed analysis of how much the Medicare for All Act will cost and who will pay less and who will pay more, except that the healthcare insurance companies will be gone, drug prices will be negotiated, and individuals and families will have no premium, deductibles, or copays and will at the same time of access to healthcare with many benefits..

An economic analysis of the costs of Medicare for All

Robert Pollin and his colleagues at the Political Economy Research Institute (PERI) at UMass, Amherst, produced a 200-report in November 2018 on Sanders’ earlier 2017 version of Medicare for All, very similar to the 2019 bill. It documented that, if that bill had been signed into law, U.S. healthcare expenditures would have fallen by 9.6 percent “while also providing decent health care coverage for all Americans” (https://commondreams.org/2018/11/30/depth-analysis-team-umass-amherst-economists-show-viability-medicare-all).

Then, on March 20, 2019, Pollin published an updated analysis in a long article on “The Case for Medicare for All,” published on the “opinion” page of The Wall Street Journal (WSJ).

Pollin writes that if the 30 million uninsured people and 86 million underinsured people (a higher number than citied earlier in this essay) are provided with publically-financed , single-payer healthcare under Sanders’ Medicare for All bill, “the overall costs of treatments would rise by about 12%, from $3.3 trillion to $3.6 trillion.” But “Medicare for All could also eliminate 19% of total health-care of total system costs.” The first source of major savings would come in dramatically reduced administrative costs “in contracting, claims, processing, credentialing providers and payment validation – all of which would be unified under one federal agency.” The second source of major savings “would come from the government negotiating down prescription-drug prices, which would eliminate about 6% of total system costs.” Taking into account the expanded coverage and cost reductions, Pollin estimates that “Medicare for All could operate with an overall budget of $2.93 trillion – nearly 10% less than current spending.” The government already spends “$1.9 trillion for Medicare, Medicaid and smaller public programs.” Therefore, government would have to raise another $1 trillion “out of what businesses and families now pay to private insurers.” Finally, he identifies plausibly how this $1 trillion can be raised, as follows.

#1 – “We propose that all businesses that currently purchase health insurance for their employees be mandated to pay 92% of what they now spend into Medicare for All – saving 8% of their healthcare expenditures. Larger firms that haven’t provided coverage for every worker would pay $500 for each uninsured worker, while small business would be exempt from these premiums. This measure would raise $600 billion.” Then: “After two to three years, this system could make a transition to a 1.78% tax on gross receipts or an 8.2% payroll tax, either of which would generate the needed $600 billion.”

#2 – “The remaining $400 billion would come from two measures: a national sales tax of 3.75% on non-necessities, which would generate about $200 billion, and a wealth tax of 0.38%, after exempting the first $1 million of all families’ net worth for another $200 billion.”

#3 – Pollin and his colleagues also propose taxing long-term capital gains as ordinary income.

Under the Medicare for All plan, families would get comprehensive healthcare coverage, with no premiums, deductibles, or copays to private insurers. The highest income brackets would pay more for healthcare, but most families would pay less or nothing. Pollin gives this example: “Net health-care spending for middle-income families that now purchase insurance for themselves would fall by fully 14% of their income.”

Concluding thoughts

The time for Medicare for All has come – rather late. It is a plan that provides universal coverage and potential costs savings in total U.S. healthcare spending. Thus, it makes economic sense while also advancing and institutionalizing values of fairness and collective responsibility and assuring all of us that we have healthcare. However, as you know the political road to the passage of Medicare for All will not be easy. It threatens the economic interests of powerful private healthcare businesses, raises taxes on high-income individuals/families, upsets right-wing interests in the Republican Party, makes moderate wings of the Democratic party wary, and conflicts with the dominant neoliberal ideology that says government can never do anything right and always makes things worse. This neoliberal view has been challenged by many liberal/leftist economists (e.g., see Mariana Mazzucato’s book, The Value of Everything: Making Taking in the Global Economy). If moderate forces win out, there may be incremental reforms but without expanding coverage much or at all, without controlling corporate price gauging, and with the continuation of rising and unsustainable healthcare costs. If right-wing forces win out, the healthcare crisis will be worse. The battle is on.

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