If you really want to scare the heck out of people, tell
them that you favor medicare-for-all. It gets the juices going. People say they
do not want to pay for someone else’s insurance, they do not want to be forced
to change their doctors or their hospital, they like their current insurance plan,
and they do not want socialized medicine. Some say we cannot afford it; it will
bankrupt the nation. Understanding healthcare is complicated. It requires deep
dives into minutia. Most would rather listen to nails on a blackboard, so I’ll
paint a picture in broad strokes and leave the details to others.
I start with the belief that good healthcare is a human
right. Everyone should have access to good healthcare regardless of economic
status and should be able to choose their own doctor and medical care
facilities. We can’t do that in America today.
Definitions are hard to come by. I’ve heard so many people
say they hate Obamacare but like the Affordable Care Act. Everyone running for
President this year has a different version or approach to the issue of
healthcare. Some suggest a massive overhaul of our insurance system over a four
or five year period, while others would move more slowly. Nevertheless, let’s
start with the basics.
“Medicare-for-all” is an insurance plan that covers
everyone in the country. It is not socialized medicine and it isn’t free. Today,
people must choose from among 5,977 health insurance companies[i],
or their employer chooses for them. Most people who have insurance belong to a
network of doctors and hospitals with which the insurance company has negotiated
rates.
Therefore, if you have health insurance with company X, you
must choose your doctor and hospital from their network. If you go to a doctor or
hospital that is not in that network, you pay dearly. So, you really can’t
choose any doctor or hospital, just those in the network. Many people experience
this when they go to a hospital in their network for an operation, but get a surprise
bill from the anesthesiologist who is not in their network. Medicare-for-all
will let you choose any doctor and any hospital in any state because they will
all be in the same network. This alone should increase competition and lower
prices, especially among specialists.
Employers provide healthcare for 55.7 percent of the
population. However, we know that 61% of companies shop for new insurance plans
each year. When an employer changes its insurance carrier, employees must shop
for a new doctor and hospital. The Bureau of Labor Statistics points out that
nearly two million people lose their jobs or change employers each month,
another four million quit their jobs, and nearly a half a million people retire
each month. Looking for new doctors and hospitals is normal for millions of
people. Medicare-for-all would eliminate that search.
Most employers pay about 80% of an employee’s healthcare
premium. Some argue that that cost will go away, to be replaced by a tax for
healthcare. Some worry that the $1,000 per month or more that a company pays for
employee healthcare will then increase bottom line profits, with the employee
experiencing increased taxes.[ii]
There is no reason for that to happen under a single insurance plan if it is
designed properly. Competition for workers won’t allow companies to pass on
that cost to the employee. Companies will either increase worker pay or
subsidize the health care tax.
Nearly every retiree in the US has Medicare as his or her
primary health insurance. That runs about $100 per month. Many retirees have
the Medicare Advantage plan to supplement their basic plan. That runs about
$100 per month. Others have a “Medigap” insurance plan to cover healthcare
costs not covered by Medicare. These plans are typically between $260-400 per
month. The typical retiree, with modest co-pays, can have outstanding medical
coverage. Should not everyone in the country have the same opportunity? High-quality healthcare is the norm in most industrialized nations. There is also no
reason why medicare-for-all can’t have differing levels of plans so that
people can choose the kind of coverage they want to pay for their care; larger
co-pays, and deductibles
It will not be easy to change to a single insurance plan. Several
fundamental issues need resolution. We must agree that good healthcare is a
basic human right regardless of income. We need to agree that everyone needs to
be covered and needs to contribute to the plan. If we can’t agree on that, no
system will be effective.
The fractured healthcare
system in the US needs fundamental change because it is not efficient. It is
an amalgamation of lots of unrelated processes. Try to construct a flowchart of
how a hospital works and you will throw up your hands in despair. We pay about
18 percent of GDP for healthcare, nearly twice that of other nations. Our
outcomes are at the bottom of the OECD[iii]
countries. Hospitals account for 33% of healthcare costs.[iv]
The government’s Center for Medicare and Medicaid Services estimates that
hospitals could save $23 billion dollars a year simply by tightening up their
supply chain processes.[v]
Let’s use the emergency room visit as an example. You see
your doctor because you don’t feel good. She checks you out, does an EKG, and determines
you are having heart problems. Get thee to the ER. You arrive and the first
thing they do is hook you up to an EKG machine. Why don’t they have the results
of the one your doctor did? Oh, the doctor uses a different electronic file
system than the hospital; they don’t talk to each other. After a few hours of
tests and observation, they tell you to go home. A few weeks later, you see the
bill: $30,000 for a day in the ER, $2,000 for the MRI, and $45 for the
mini-aspirin they gave you and it goes on for pages. Wow! Actually, you find
out that your insurance paid $13,000 and your co-pay is $300. Without
insurance, you would be stuck with the entire bill instead of only $13,300. If
you can’t pay the collection agency will put a lien on your house, freeze your
checking account, and threaten to take your first-born. How much does it really
cost to spend a day in the ER or a night in the hospital?
If a single insurance company covers everyone in the
country, hospitals, outpatient surgery centers, medical labs, ambulances, drug
manufacturers and other medical providers will have to come to grips with
their costs and their processes. If they don’t change their systems,
medicare-for-all won’t work, or at least it will be difficult to implement.
Prescription drugs account for about 10% of healthcare
costs. US drug prices are about three times more than in Europe or Canada for
the same product.[vi]
It is now against the law for Medicare to negotiate pricing with big pharma.
We could change that law and save over $100 billion dollars per year. Pharmaceutical
companies spend $30 billion a year in advertising and promotion, $20 billion of
which is directed at doctors.[vii]
The United States and New Zealand are the only two nations that allow
pharmaceutical companies to promote to the consumer.[viii]
Let’s cut that expenditure in half and save another $15 billion dollars.
MRI machines cost as much as $3 million dollars to purchase
the top of the line and require extensive building construction to ensure
personnel safety; $3,300,000 in round numbers. The average charge for an MRI is
$2,600. So it takes about 3 years to pay off the investment, at which time the
price should come down to a few hundred dollars. The US has four times as many
MRI machines per million people than most other countries; France has 5.8
machines per million people.[ix]
We have seen fits and starts for decades with no
discernable improvement in the system. So, what can we do to keep the process moving
toward a single insurance plan? Medicare is a major contributor to the
healthcare economic pot. Let’s start there: reduce payments for pharmaceuticals
by two thirds, outlaw pharmaceutical advertising in all media, streamline FDA
approval processes to increase research into needed drugs, and improve hospital
supply chains. We can continue to require hospitals to post their prices: real
prices, defined as the lowest payment they currently receive from any insurance
plan. This will force hospitals to increase lean management processes, work
toward 6 Sigma standards, and take the waste out of their processes. These
steps alone will reduce healthcare costs by hundreds of billions of dollars each
year.
Yes, the devil is in the details, and healthcare is
complicated, but there are any numbers of big-ticket items that we can fix quickly.
Big Pharma will oppose it, the AMA will oppose it, hospital groups will oppose it,
and members of Congress who get financial contributions from those groups will oppose
it. I guess if all those folks are against improving the system, it must be the
right thing to do.
[i] National Association of Insurance Commissioners
2016
[ii] Chris Weigant – The One Problem “Medicare-for-All”
Must Address – Chris Weigant.com
[iii] Organization for Economic Cooperation and
Development (OECD) 2019
[iv] Kaiser Family Foundation 2017
[v] Susan Morse – Hospitals Could Save About $10
Million a Year In Supply Chain – Health Care Finance – 2017
[vii] Beth Mole – ARS Technica - 2019
[viii] Reuters - 2017
[ix] OECD – Number of MRI Units per Million Population -
2019
