By Bryan Nehman
WBAL NewsRadio, August 8, 2019
Health insurance has changed dramatically since its inception in the early 1900s, when Blue Cross Blue Shield charged 50 cents a month for coverage. Dr. Laura Kaplan-Weisman details the history of health insurance and the dire need for single-payer reform.
Dr. Kaplan-Weisman’s conversation with WBAL was based on her August 2, 2019 op-ed in the Baltimore Sun, titled “Why Americans can’t afford health care: the history.”
By Jack Bernard
Like the Dew, August 7, 2019
“For every $1 increase in taxes, we’re talking about more savings through getting rid of premiums, copays, and deductibles. So overall people would do better, and more importantly they would never need to worry about not getting the care that they need.”
– Adam Gaffney, M.D. (President, Physicians for a National Health Plan, on Medicare for All)
The Governor of North Carolina is working hard to get Medicaid expansion approved. And, his efforts should be commended: 40,000 good paying new jobs and an additional half million state residents with insurance, which will also have a positive effect on financially hard pressed NC hospitals which are now writing off medically uninsured as bad debt.
However, Medicaid expansion only a stop gap measure. As someone with an extensive health policy background who has researched and written about the topic in newspapers around the nation, I agree 100% with Dr. Gaffney regarding Medicare for All. Single payer is not only a moral imperative and completely feasible, it is the only way to control our nation’s runaway health expenditures.
I’m a confirmed capitalist. I’ve been a VP or SVP for several large for-profit healthcare firms. Generally, private enterprise is more efficient than government.
However, the exception to the rule is healthcare financing. Medicare’s overhead is 2% versus 12% for the for-profit insurance companies.
Repeated OECD (Organization for Economic Co-operation and Development) analyses illustrate that we pay much more per capita than any other affluent democracy for healthcare… each year, every year. For example, France is considered to have the best healthcare system in the world while we are 37th (WHO, 2000). Yet, France’s 2017 per capita expenditures were $4902.  Our per capita health expenditures were $10,209…over double theirs.
And it’s not just France; all developed nations have greater involvement of government in their healthcare financing systems versus here and all cover 100% of their citizens at a much lower per capita cost than here. For example, here are per capita costs for other democracies: Israel-$2833; New Zealand- $3,682; Australia- $4543; Canada- $4826; and Denmark- $5182.
Part of the reason for the difference in cost is our emphasis on private insurance companies. Clearly, single payer is the ultimate solution… but is opposed by the massive and influential healthcare industrial complex for obvious self-interested reasons. Therefore, insurance companies and drug companies…assisted by the outrageous SCOTUS decision in Citizens United permitting “dark money” …are spending tens of millions to prevent Medicare for All, which would cut their obscene profits as well as ridiculous executive compensation.
One of the fallacies these companies and their lobbyists perpetuate is that we are more expensive due to better quality here. Yet, healthcare outcomes in the USA (as measured by mortality and morbidity statistics) are worse than other democracies.
A recent study analyzed quality, access, efficiency, equity, general health among 7 developed nations (US, Canada, New Zealand, Germany, Australia, UK and the Netherlands). We ranked last (Commonwealth Fund, 2010).
Yes, this is partially due to our unique American life style (lots of guns, fast cars, etc.). But a large part of the difference is because many of our states have high proportions of uninsured. They are getting inferior care, causing unnecessary death and disease.
For example, our maternal deaths are much higher than other advanced nations (ProPublica, 5-12-17). Per the ProPublica study, “60 percent of such deaths were preventable”.
Infant deaths are another example of poor outcomes here versus every other advanced nation. Our national rate of death per 1000 live births is 5.8, as opposed to much lower rates in other democracies: Israel- 3.0; Italy- 3.0; France-3.5; UK-3.8. (World Bank data, 2015)
Rates vary among states. Per the CDC (2017), North Carolina has a 9/1000 live births infant mortality rate.  Our rate is worse than Uruguay, Lebanon, Romania, Bulgaria, Chile, Albania and so on.
National infant mortality rates here vary widely by race/ethnicity: Non-Hispanic black: 11.4; Hispanics:5.0 and Non-Hispanic white: 4.9. To give you a reference point, the deaths per thousand for Black infants in the USA is worse than Turkey, Peru, Libya, Thailand and so forth.
How the most religious democracy in the world (Pew, 7-31-18) can justify letting its citizens go without needed care is beyond reasoning. Helping the unfortunate is supposed to be a basis of Judeo-Christian doctrine. How can we as a nation be content and just ignore this level of hypocrisy?
Single payer is not only right morally, it’s right from an efficiency and quality standpoint. However, it will not happen unless two things occur: a. the Democratic Party presents a unified block in supporting true Medicare for All (as the debates showed, they are not yet there) and b. what’s left of the GOP moderates in Congress finally have the courage to do what is right versus playing to their base (an even tougher fight). Our citizenry must pressure both parties now, not later.
Jack A Bernard is a retired SVP with a national healthcare corporation. He was Chair of the Jasper County, Ga. Board of Commissioners and Republican Party. He was also on the Board of Health for Jasper County and is currently on the Fayette County BOH. Bernard has over 100 columns published annually, primarily in the South.
By Gretchen Jacobson, Rachel Fehr, Cynthia Cox, and Tricia Neuman
Kaiser Family Foundation, August 5, 2019
The Medicare Advantage, individual (also known as non-group), and fully-insured group (employer) health insurance markets are three distinctly different markets. Each of these private insurance markets has unique features that affect the profitability for insurers, and which in turn affect coverage for eligible people. These markets are dominated by many of the same health insurers, with most of the country’s largest health insurers offering plans in all three markets.
Average Gross Margins
Gross margins for Medicare Advantage plans averaged $1,608 per covered person per year between 2016 and 2018 – about double the average annual gross margins for plans in the individual and group markets ($779 and $855 per member per year, respectively).
Gross margins do not necessarily translate into profitability since they do not account for administrative expenses. Nonetheless, gross margins are an indicator of financial performance and signal how much insurers retain, including profits, after paying for enrollees’ covered medical expenses.
Variation in Gross Margins Over Time
In every year since 2006, average gross margins for Medicare Advantage plans have exceeded those of plans in the individual and group markets. The increase in average gross margins in the past few years has primarily been due to a sharp increase in the size and number of plans receiving bonus payments for high quality ratings, with total bonus payments more than doubling between 2015 and 2018.
Simple Loss Ratios
Simple loss ratios, or the percentage of premium income that insurers pay out in claims, provide further context about the financial status of each of these markets. Despite differences in gross margins, medical expenses comprised a similar share of total premiums collected (simple loss ratios) across plans in the Medicare Advantage, individual, and fully-insured group markets. Between 2016 and 2018, the medical expenses of Medicare Advantage enrollees averaged about 86% of the total premiums collected by Medicare Advantage plans (primarily federal payments for Medicare-covered benefits), which is similar to the individual market (84%) and fully-insured group market (84%) three-year averages.
As with the gross margins, the simple loss ratios do not account for administrative expenses, and medical loss ratios as defined by the ACA are generally higher because the ACA calculation makes adjustments for taxes, fees, and quality improvement expenses.
Reconciling Gross Margins and Simple Loss Ratios
Although loss ratios are similar across the three markets, gross margins are much higher for Medicare Advantage plans because both medical expenses and premiums are substantially higher for Medicare Advantage enrollees. In other words, a 5% margin, for example, in the Medicare Advantage market is a larger amount than a 5% margin in the individual or group market. People on Medicare tend to use more health care and incur higher medical expenses than people in the individual and group markets, and the federal payments (premiums) to Medicare Advantage plans are tied to the medical expenses of people in traditional Medicare.
Total Gross Margins
After aggregating gross margins across all plans and enrollees in this analysis, total gross margins were highest for the fully-insured group market for all years between 2006 and 2017. However, as of 2018, the Medicare Advantage market has caught up to the group market, with both markets reaching $27 billion in total gross margins in 2018. The rise in total gross margins for the Medicare Advantage market is primarily due to a steady increase in people enrolling in Medicare Advantage plans over the past decade. Total gross margins in the individual market remain significantly lower than the fully-insured group or Medicare Advantage markets, reaching $18 billion in 2018, in part because fewer people are covered in the individual market.
Discussion
This analysis suggests insurers are profitable in each of the three markets. There is a particular focus in policy debates right now on Medicare Advantage plans. Several Medicare-for-All and other health reform proposals would allow private insurers to administer benefits under a new Medicare-like public option, which could be lucrative and attractive for health insurers, depending on how payments to plans are set. Based on the history of Medicare Advantage plans, setting payments to private plans at the appropriate rate remains a challenge, given competing goals of broadening plan choice and fiscal accountability. With a new public program or option, policymakers are likely to face similar challenges, depending on their goals and priorities.
By Don McCanne, M.D.
In the Discussion in this KFF Issue Brief the authors state, “Several Medicare-for-All and other health reform proposals would allow private insurers to administer benefits under a new Medicare-like public option, which could be lucrative and attractive for health insurers.” This report confirms, in fact, that the private Medicare Advantage plans have been highly lucrative, currently with a gross margin of $1,608 per covered person per year – about twice that for plans in the individual and group markets – money that is diverted from patient care.
As you observe politicians walking away from single payer Medicare for All and endorsing a Medicare public option, it begins to make a little more sense. They are telling us that they want us to have the option of enrolling in a private plan, while the insurers are there to be sure that the private plan option is a Medicare Advantage plan.
If you don’t understand the problem here, read the August 5 Quote of the Day from Robert Kuttner, “Harris’s Fake Medicare-for-All Plan,”: https://pnhp.org…
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By Michael Hiltzik
Los Angeles Times, August 5, 2019
The most perplexing aspect of our current debate over healthcare and health coverage is the notion that Americans love their health insurance companies.
This bizarre idea surfaced most recently in the hand-wringing over proposals to do away with private coverage advocated by some of the candidates for the Democratic nomination for president. Oddly, this position has been treated as a vote-loser.
During the first round of televised debates on July 30 and 31, only four of the 20 candidates raised their hands when asked if they would ban private insurers as part of their proposals for universal coverage: Sens. Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont and Kamala Harris of California, and New York Mayor Bill de Blasio. Harris later backed away, releasing a “Medicare for all” proposal that would accommodate private insurers at least for the first 10 years.
She should have stood her ground. The truth is that private health insurers have contributed nothing of value to the American healthcare system. Instead, they have raised costs and created an entitled class of administrators and executives who are fighting for their livelihoods, using customers’ premium dollars to do so.
“Health insurers have been successful at two things: Making money and getting the American public to believe they’re essential,” says Wendell Potter. He should know, since he spent decades as a corporate communications executive in the industry, including more than 10 years at Cigna.
The insurers’ success in making themselves seem essential accounts for the notion that Americans are so pleased with their private coverage that they’ll punish any politician who dares to take it away. But the American love affair with private insurance warrants close inspection.
Let’s start by examining what the insurers say are their positive contributions to healthcare. They claim to promote “consumer choice,” simplify “the health care experience for individuals and families,” address “the burden of chronic disease” and harness “data and technology to drive quality, efficiency, and consumer satisfaction.” (These claims all come from the website of the industry’s lobbying organization, America’s Health Insurance Plans (AHIP).
They’ve achieved none of these goals. The increasingly prevalent mode of health coverage in the group and individual markets is the the narrow network, which shrinks the roster of doctors and hospitals available to enrollees without heavy surcharges. The hoops that customers and providers often must jump through to get claims paid impose costly complexity on the system, not simplicity. Programs to manage chronic diseases remain rare, and the real threat to patients with those conditions was lack of access to insurance (until the Affordable Care Act made such exclusion illegal).
Private insurers don’t do nearly as well as Medicare in holding down costs, in part because the more they pay hospitals and doctors, the more they can charge in premiums and the more money flows to their bottom lines. They haven’t shown notable skill in managing chronic diseases or bringing pro-consumer innovations to the table.
Insurers cite these goals when they try to get mergers approved by government antitrust regulators. Anthem and Cigna, for example, asserted in 2016 that their merger would produce nearly $2 billion in “annual synergies,” thanks to improved “operational” and “network efficiencies.”
The pitch has a long history. The architects of a wave of health insurance mergers in the 2000s also proclaimed a new era of efficient technology and improved customer service, but studies of prior mergers show that this nirvana seldom comes to pass. The best example may be that of Aetna’s 1996 merger with U.S. Healthcare in a deal it hoped would give it access to the booming HMO market.
According to a 2004 analysis by UC Berkeley health economist James C. Robinson, the merger became a “near-death” experience for Aetna. The deal was expected to bring about “millions in enrollment and billions in revenue to pressure physicians and hospitals” to accept lower reimbursement rates, he wrote.
“The talk was all about complementarities, synergies, and economies of scale… The reality quickly turned out to be one of incompatible product designs, operating systems, sales forces, brand images, and corporate cultures.” Aetna surged from 13.7 million customers in 1996 to 21 million in 1999, but profits collapsed from a margin of nearly 14% in 1998 to a loss in 2001.
Even when they don’t happen, insurance merger deals cost customers billions of dollars. That’s what happened when two proposed deals — Aetna/Humana and Anthem/Cigna — broke down on a single day in 2017. The result was that Aetna owed Humana $1.8 billion and Anthem owed Cigna $1.85 billion in breakup fees — money taken out of the medical treatment economy and transferred from one set of shareholders to another.
In reality, Americans don’t like their private health insurance so much as blindly tolerate it. That’s because the vast majority of Americans don’t have a complex interaction with the healthcare system in any given year, and most never will. As we’ve reported before, 1% of patients account for more than one-fifth of all medical spending and 10% account for two-thirds. Fifty percent of patients account for only 3% of all spending.
Most families face at most a series of minor ailments that can be routinely managed — childhood immunizations, a broken arm here or there, a bout of the flu. The question is what happens when someone does have a complex issue and a complex claim — they’re hit by a truck or get a cancer diagnosis, for instance?
“We gamble every year that we’re going to stay healthy and injury-free,” Potter says. When we lose the gamble, that’s when all the inadequacies of the private insurance system come to the fore. Confronted with the prospect of expensive claims, private insurers try to constrain customers’ choices — limiting recovery days spent in the hospital, limiting doctors’ latitude to try different therapies, demanding to be consulted before approving surgical interventions.
Indeed, the history of American healthcare reform is largely a chronicle of steps taken to protect the unserved groups from commercial health insurance practices.
When commercial health insurance became insinuated into the American healthcare system following World War II via employer plans, it quickly became clear who was left behind — “those who were retired, out of work, self-employed, or obliged to take a low-paying job without fringes,” sociologist Paul Starr wrote in his magisterial 1982 book, “The Social Transformation of American Medicine.”The process even left those groups worse off, Starr observed, because insurance contributed to medical inflation while insulating only those with health plans. “Government intervention was required just to address the inequities.”
Insurers wouldn’t cover the aged or retirees, so Medicare was born in 1965. Insurers refused to cover kidney disease patients needing dialysis, so Congress in 1973 carved out an exception allowing those patients to enroll in Medicare at any age. (So much for addressing the “burden of chronic disease.”)
Individual buyers were charged much more for coverage than those buying group plans through their employers — or barred from the marketplace entirely because of their medical conditions — the Affordable Care Act required insurers to accept all applicants and, as compensation, required all individuals to carry at least minimal coverage.
The health insurance industry’s most telling contribution to the debate over healthcare reform has been “to scare people about other healthcare systems,” Potter told me. As a consequence, discussions about whether or how to remove private companies from the healthcare system are chiefly political, not practical.
The Affordable Care Act allowed private insurers to continue playing a role in delivering coverage not because they were any good at it but because their wealth and size made them formidable adversaries to reform if they chose to fight it. They were sufficiently mollified to remain out of the fray, but some of the big insurers then did their best to undermine the individual insurance exchanges once they were launched in 2015.
Even as individual Americans fret over losing their private health insurance, big employers have begun to see the light. Boeing, among other big employers, is experimenting with bypassing health insurers as intermediaries with providers by contracting directly with major health systems in Southern California, Seattle and other regions where it has major plants. It would not be surprising to see the joint venture of Amazon, Berkshire Hathaway and JP Morgan Chase try a similar approach in its quest to bring down costs.
That’s an ironic development, since the private insurers first entered the market precisely by offering to play the role of intermediaries for big employers. But instead of fulfilling the promise of efficiency and cost control, they became rent-seeking profiteers themselves.
There’s no doubt that it will take years to wean the American healthcare system off the private insurance model; Kamala Harris’s proposal may be merely a recognition of the necessary time frame. It’s true that some countries with universal healthcare systems preserve roles for private insurance, including coverage for services the government chooses to leave out of its own programs or providing preferential access to specialists, at a price.
But the private insurers’ central position in America’s system is an anachronism dating back some 75 years. The sooner it’s dispensed with, the better — and healthier — America will be. The next time a debate moderator asks presidential candidates if they favor doing away with private insurance, let’s see all the hands go up.
By Don McCanne, M.D.
Remember that poll question that asked if you would want comprehensive health care benefits for life paid for by equitable taxes that everyone could afford, or would you rather churn through private insurance intermediaries that restrict your choices of physicians, hospitals, and medications, and that create financial and administrative barriers to keep you from getting the care you should have? Of course you don’t remember that question because it isn’t being asked. Yet we are being told that we should not support a single payer model of Medicare for All because some people want to maintain the option to have the latter.
Including private plan options under Medicare for All greatly increases the administrative waste, inequities, and costs of the system. Michael Hiltzik explains why we should just get rid of the useless private insurers instead. That view needs to be expressed loud and clear in today’s political discourse.
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By Robert Kuttner
The American Prospect, August 1, 2019
In the extensive jousting over Medicare for All, Kamala Harris has evaded scrutiny for the most insidious aspect of her plan: It significantly expands for-profit insurance at the expense of true Medicare by promoting more use of commercial products spuriously known as “Medicare Advantage” and calling that a version of Medicare for All.
One of the successes of Republicans and the insurance industry in recent decades has been to take private, for-profit insurance plans whose business model is based on denying needed care—and brand them as “Medicare.” This tactic, ironically, proves the popularity of universal public programs; Medicare is held in such high regard that private companies feel the need to steal its brand. As the saying goes, hypocrisy is the tribute that vice pays to virtue.
Two examples are the “Medicare” drug benefit, which is purely private, and so-called Medicare Advantage plans, which Harris would dramatically expand.
Unlike true Medicare, Medicare Advantage plans are commercial products offered by private insurers. Medicare’s only role is to collect your taxes and pass them along to these insurance companies.
There are two key differences between Medicare Advantage and standard public Medicare. The first is that a Medicare Advantage plan is an intensely “managed” HMO. The plan dictates what doctors and hospitals you can see, what drugs are covered, which conditions can be treated by which procedures at insurer expense. By contrast, standard Medicare does not limit your choice of doctor and hospital, or what the doctor can order.
Why would patients put up with such restrictions? Because there are some things that standard Medicare doesn’t cover. That’s why more-affluent older people with standard Medicare tend to purchase what’s known as “Medigap” insurance, to cover what Medicare doesn’t—starting at about $4,000 and a lot more for true comprehensive first-dollar coverage.
Medicare Advantage is no more expensive to seniors than standard Medicare—because insurers are so relentless at restricting what’s actually permitted as opposed to what’s nominally covered. But with true Medicare for All, those gaps in what’s covered would be eliminated—and there would be no need for commercial “Medicare Advantage.”
Medicare Advantage insurers use one other sneaky and perverse trick. They try to save costs by targeting their marketing to younger, healthier seniors, less likely to get sick. True Medicare doesn’t need do to that because it is for everyone. With commercial “Medicare Advantage,” insurers make their profits precisely to the extent that they deny care one way or another.
That’s what’s so insidious about Harris’s approach. She would expand the commercial part of the system, falsely branded as a variant of Medicare, and take us further away from true seamless and universal coverage.
Thus the real meaning of “Medicare Advantage.” Advantage: industry. Disadvantage: consumers and patients.
According to some, many seniors like Medicare Advantage, and so it would be folly for Democrats to kill it, just as they supposedly like their employer-provided plans. But this is akin to saying that a refugee “likes” crossing rough seas on a makeshift raft. These plans are popular only given the lack of good alternatives.
In the presidential debates, Harris’s critics have gotten all tangled up in issues of how much her plan would cost and the meaning of the ten-year phase-in. They have missed the single worst thing about it—the reliance on more private insurance. It is a travesty to use the term “Medicare” to characterized this deceptive front for expanding the reach of the commercial insurance industry.
By Don McCanne, M.D.
One advantage of Kamala Harris having modified the Medicare for All proposal by adding the option of private Medicare Advantage plans is that it provides an opportunity for gifted authors in the policy arena, like Robert Kuttner, to explain in clear language why we should not include private insurance plans, including Medicare Advantage, in a comprehensive, universal, affordable, equitable, single payer Medicare for All program. The nation needs to understand this.
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By Jack Bernard
Atlanta Journal-Constitution, August 3, 2019
“Georgians need better options – reduced costs, enhanced access, and improved quality of care’’— Gov. Brian Kemp
I recently read a piece by an M.D. (The Hill, May 17), which advocated abolishing insurance and going back to a direct contracting model. A decade ago, I had an op-ed in the AJC opposite the head of the Georgia Medical Association who was making a similar case.
Frankly, I have also heard this argument made before by physicians I know. I agree that we cannot continue on the present path. But I disagree on the corrective course of action.
We simply cannot go back to the fantasized “good old days” when physicians negotiated prices with each patient. Trading chickens for an office visit is just not feasible in 2019.
I’ve been in healthcare for decades, as Georgia Director of Health Planning, SVP/VP at national healthcare firms, a state Board of Health member and as a health reform columnist. I was also a Republican chairman of a county commission, responsible for obtaining healthcare insurance for our employees.
During my career, the healthcare proportion of the GNP for the U.S.A. has more than doubled, to 17%. The proportion of GNP spent on healthcare for other nations is much lower, for example: Israel, 7%; Italy, 9%; and Canada/UK/Netherlands, 10%.
Per OECD statistics, all these developed nations have universal access while spending much less per capita than the U.S. And, their mortality/morbidity stats are better, not worse.
I’m a capitalist, not a socialist. But if the current multi-payer, for-profit insurance system doesn’t work, there’s an obvious solution: single-payer. It’s one of the few instances where government intervention is not only effective in achieving the goal of universal coverage, it is more efficient.
The only thing lacking is political will. We can thank the healthcare-industrial complex, their lobbyists and bought politicos in both parties for this frustrating situation.
President Trump came into office stating that Obamacare was a “disaster” and that he would provide lower-cost, high-quality healthcare for all Americans. In March 2017, he tweeted “healthcare is coming along great” and last March that the GOP “will soon be known as the party of healthcare.”
Despite these promises, he and the GOP have produced nothing of real value, succeeding only in eliminating the unpopular “individual mandate” which incentivized uncovered people to get coverage. His current “reform” efforts are merely aimed at reducing insurance policy coverage so that people can get cheaper bare-bones policies.
Meanwhile, Trump’s moves have increased the number of uninsured people by 1.3 million from 2016 to 2018 while the number of Americans having access and cost issues has gone up considerably in every category surveyed, according to the Commonwealth Fund.
During Trump’s term, due to cost considerations, more Americans did not fill needed prescriptions, get recommended tests, visit doctors when ill, or get needed dental work.
Further, the number of citizens contacted by a medical collection agency for unpaid bills increased from 25 million to 30 million.
Unfortunately, improving access while restraining cost increases and improving quality (per Gov. Kemp) is virtually impossible under the current scenario. In the meantime, we must live with what we have in our healthcare financing world and attempt to improve upon it.
Gov. Nathan Deal refused to take federal funding to expand Medicaid, even though the first 3 years would have cost the state nothing. Despite his shortsightedness, 450,000 Georgians are now covered by the ACA. Georgia still has one of the highest uninsured populations in the nation.
Kemp is more open to expansion (90% paid for by the Feds, if approved by them) but is apparently planning to make expansion limited, restricting coverage for the poor via cost sharing or work requirements, while increasing paperwork. Other states (Kentucky, Arkansas) attempting to utilize similar federal waiver approaches have had rough waters.
A consulting firm is drafting a federal Section 1115 waiver for Kemp’s consideration. After a comment period, the waiver would then go to the feds before year’s end.
We can only hope that Georgia’s waiver is designed to help more Georgians obtain coverage rather than furthering ideological and political goals.
If not, please make your feelings known.
By Laura Kaplan-Weisman, M.D.
Baltimore Sun, August 2, 2019
As increasing numbers of Americans are unable to afford health care, we must ask: Why does our health insurance system look like this? How did we get here, and how can we move to a health system that works for everyone?
To begin, we must understand that our health insurance system wasn’t designed for economic or ethical reasons. In fact, it wasn’t “designed” at all, but pieced together over the last century.
One hundred years ago — just after the discovery of antibiotics — the average life expectancy was 54 years. Doctors’ fees were low, but treatment options were limited, unregulated and had variable efficacy. Health insurance simply didn’t exist in the U.S.
As we developed new treatments and standards, the quality of medical care increased, but so did the costs. Blue Cross first sold health insurance as a nonprofit in 1929. Their plan cost 50 cents a month and only covered inpatient hospital care. By 1940, only 9% of Americans had health insurance.
During the labor shortage of World War II, President Franklin D. Roosevelt banned businesses from increasing wages, so employers competed by offering benefits such as health insurance, which wasn’t taxed as income. By 1950, half of Americans had health insurance; by 1960, two-thirds were covered, and the system of employer-sponsored private insurance had taken root.
This was also a time of critical change for the health insurance industry, as many insurers converted from nonprofit to for-profit status, changing the concept of insurance — and health care generally — from a public good to a commodity. From then on, insurers had a strong financial incentive to block a national health program.
President Harry Truman proposed a single-payer national health plan in both 1945 and 1948, but it was quickly killed by the combined forces of the Chamber of Commerce, American Medical Association (AMA), American Hospital Association and the major insurers, whose scare tactics included the threat of “socialized medicine.”
In the early 1960s, Presidents John F. Kennedy and Lyndon B. Johnson proposed what we now know as Medicare, a scaled-back version of Truman’s national health program that only covered the elderly and disabled. The AMA and insurance industry fought back, hiring Ronald Reagan as the spokesman for their anti-Medicare campaign. Reagan warned that if Medicare passed, “we are going to spend our sunset years telling our children, and our children’s children, what it once was like in America when men were free.” Fortunately, Medicare was voted into law in 1965 and fully implemented less than one year later, immediately improving health care access for the elderly and disabled. But our failure to achieve a national health plan further entrenched the employer-based and profit-oriented insurance system in the U.S.
In the meantime, every other industrialized nation has since adopted a universal health system, at far lower costs and with far better outcomes compared to the U.S. Even though America spends the most on health care — 18% of GDP and rising — we have the highest infant and maternal mortality rates, the lowest overall life expectancy, and the highest rate of preventable death among industrialized countries.
How do we explain the uniquely American disconnect between high spending and poor health? The main culprit is commercial health insurance, which drains billions of health care dollars in profits and overhead, and requires hospitals and doctors to maintain massive billing departments to deal with hundreds of different insurers, each with their own rules and requirements. Administration eats up more than a quarter (25.3%) of American hospital budgets, compared to 12% in Canada’s single-payer system.
It’s not too late to go back to the drawing board on health care. In fact, we only need to go back to Medicare — an efficient and popular program. We can improve Medicare’s coverage to include vision, hearing, dental, mental health and long-term care, and then expand it to cover all ages. A well designed single-payer system can save $504 billion annually on paperwork and profits, plus $113 billion more on prescription drugs.
As a primary care physician, I see more and more of my patients avoiding care due to uninsurance or skyrocketing copays and deductibles. Each day they postpone care, they get sicker. And each year that we as a nation fail to reform our health system, we will spend more money and watch our nation’s health fall further behind. A majority of Americans and their physicians now support Medicare for All. It’s time for our elected leaders to follow.
Dr. Laura Kaplan-Weisman is a family physician in Gaithersburg.
By Chris Girod, FSA, MAAA, Sue Hart, FSA, MAAA, Dave Liner, FSA, CERA, MAAA Tom Snook, FSA, MAAA, Scott Weltz, FSA, MAAA
Milliman Research Report, July 2019
In 2019, the cost of healthcare for a hypothetical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $28,386, according to the Milliman Medical Index (MMI).
2019 MMI Components of Spending
30% $1,888 Physician
29% $1,864 Outpatient
19% $1,195 Inpatient
20% $1,282 Pharmacy
2% $137 Other
2019/2018 Annual Increase in Spending
3.6% Employer subsidy
4.1% Employee contribution
3.8% Employee out-of-pocket
4.0% Employee total
3.8% Total for employer + employee
By Don McCanne, M.D.
For 2019, the cost of health care for a typical family of four covered by an employer sponsored PPO is $28,386. Although that is split between employer and employee contributions, it actually represents the employee’s costs since the employer contribution is paid by forgone employee wage increases. That is an increase of 3.8% over last year, higher than the current 1.6% rate of inflation.
Keep in mind that this represents the relatively healthy workforce and their young, healthy families.
The median family income in 2016 was $59,039. Although this is not the same as the family represented by the MMI, it does provide a perspective that high health care costs remain a major problem, calling for effective health care financing reform. Single payer, anyone?
By Don McCanne, M.D.
Although the cost of health care for a typical family of four is $28,386, the cost for an average individual is $6,348. The table of the breakdown in the 2019 MMI components of spending is for an average individual, not a family.
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By Marcia Angell, M.D.
USA TODAY, August 2, 2019
The usual response to Sen. Bernie Sanders’ Medicare for All proposal is: “It sounds good, but how can we pay for it?” But Medicare for All will, over time, actually cost less than the current system, while providing universal care.
The notion that it is unaffordable stems partly from a misunderstanding of government estimates of future health expenditures. The Congressional Budget Office, the official source of these estimates, deals only with expenditures by the federal government, not with out-of-pocket costs. Most people don’t understand that. They naturally assume that when the CBO predicts an increase in health costs, it is referring to total costs. Not so.
In addition to government costs, total expenditures also include huge out-of-pocket costs to American families — rapidly increasing premiums, deductibles and copayments and prescription drug costs. The CBO doesn’t consider these. While income taxes for some people would have to rise to cover higher government costs, in Bernie’s plan those increases would be offset by the elimination of all out-of-pocket costs. Altogether, then, total expenditures would probably be less than in our current system, and they would certainly rise more slowly.
Obamacare didn’t fix costs, coverageÂ
Most important, Medicare for All would cover everyone. Obamacare has certainly benefited millions of people. But it has left 30 million people still uninsured, and by continuing to rely on the private insurance industry, it has not contained costs or controlled the inflation of costs.
Bernie’s plan is not some wild, disruptive idea. Medicare has been in effect for senior citizens for a half-century, and it is the most popular part of our system. Many 64-year-olds can hardly wait to be 65 so they are eligible. Bernie’s plan would simply extend Medicare to all age groups. Moreover, Medicare for All would not be a “government-run” system or “socialized medicine,” as opponents often argue. It is merely government-financed. The delivery of care by providers would remain private, as it is now for senior citizens. Patients would have free choice of providers, without being confined to networks by insurance companies, and they would not lose their insurance because of job loss.
Many defenders of the current system argue that we should not force people to give up their private insurance, which polls suggest many of them like. But I’ve never personally met anyone who actually likes their private insurance, because it almost always entails micromanagement and onerous out-of-pocket costs. It’s just better than nothing, and they don’t want to lose what they have without being confident of a better replacement. Medicare for All is that better replacement.
Bernie’s plan would improve on Medicare by broadening the benefit package to encompass all health services (including dental, eye and hearing care) and eliminating all out-of-pocket costs. He calls for a four-year transition, beginning with dropping the Medicare eligibility age from 65 to 55, and covering all children. This is different from a “public option,” which would allow private insurance companies to skim off the healthier, more profitable customers while leaving the sickest to the public system. Instead, in the first year, everyone 55 and older would automatically be in Medicare.
Current system is unsustainable
Now, our patchwork system for those under age 65 treats health care as a commodity sold to those who can afford it or whose insurance companies will cover it. Some patients receive excessive care, and some none at all. This market-based system costs more than twice as much as the average in other advanced countries, while the outcomes are generally worse. Overhead costs are among the highest in the world. Private insurance companies, for example, spend about 12% to 18% of their revenue on overhead; Medicare spends less than 2%.
Prices in the health care system consistently rise faster than the background inflation rate because they can. Witness the big drug companies, which charge whatever the market will bear even as their profits soar. The same is true of many for-profit providers and health facilities, such as outpatient imaging centers. As prices go up, payers reduce benefit packages and increase out-of-pocket costs to try to lessen the impact. I believe an important part of Medicare for All should be to move to a largely nonprofit-provider system to curb the incentive to raise prices.
The next time you hear someone say Medicare for All sounds good but wonder how we could possibly pay for it, the answer is that we’re already paying more than enough to cover it. But too little of that money is going for actual health care and way too much for profits and overhead. And the current system is unsustainable. Not only can we afford Medicare for All, we can’t afford anything else.
Dr. Marcia Angell, former editor in chief of The New England Journal of Medicine, is on the faculty of Global Health and Social Medicine at Harvard Medical School and is the author of “The Truth About the Drug Companies: How They Deceive Us and What to Do About It.”
By Marcosa J. Santiago, M.D.
The Laconia (N.H.) Daily Sun, August 2, 2019
Medicare, now 54 years old, is the government managed health insurance plan for seniors age 65 and older. Medicare had improved health outcomes for seniors where chronic diseases, and multiple health conditions requiring several medications, are common. A beneficiary of Medicare for 13 years, my initial contentment turned to uncertainty when supplemental, individual, and employer sponsored private-for-profit insurance premiums and drug costs sky-rocketed. The American health care system became a consumer driven, free market, multi-payer, complex infrastructure of private insurance and drug companies. The result is unchecked freedom of private corporate insurance and drug industry to impose excessive price gouging on premiums and drugs. On average, premiums rose 19.6 percent. On the ACA exchanges, older Americans, those aged 50-64 who do not yet qualify for Medicare, but must have coverage, get hit the hardest. Drug examples: insulin maker Novo Nordisk’s Novolog price jumped from $289 in 2013 to $540 this year, and Sanofi’s Lantus from $244 to $431. Unaffordable premiums and drug costs are clearly the principal problem of U.S. health care. When a majority of Americans began voicing opposition and demanding reform to this practice, private corporate insurance and drug industry started vigorous misinformation against true health care reform. The opposition’s intent is to strengthen the private stronghold to pocket more profits instead of providing adequate health care to all Americans.
The most disturbing campaign of the corporate insurance and drug industry which created the dysfunctional, inequitable, and collapsing health care infrastructure is to promote themselves as the solution. The problem cannot be the solution, as in “Obamacare,” where taxpayer-subsidized premiums and enforced enrollment entrenches instead of reduces private insurance and drug companies’ role. The number of Americans with health care insurance increased through taxpayer subsidy and Medicaid expansion, coverage for pre-existing conditions was guaranteed, children could stay on their parent’s plans until age 26 and so forth. This gave an illusion of progress but did not address the problem of health care multi-payer infrastructure. We’re paying more, but get less health care compared to other countries. Shameful results cannot be ignored — increased administrative wastes, continuing plague of millions uninsured and underinsured, bankruptcy due to medical bills, sky-rocketing premiums, drug prices, co-pays, out of pocket expenses, and surprise bills for out-of-network care.
“Go Fund Me,” bake sales, social media begging to pay for medical needs, are praised as American generosity, hiding shameful inequity and inadequacy of America’s crumbling health care infrastructure.
Sugar coating non-existent values of private-for-profit insurance that cost lives marches on. Examples: “Protect Our Care”, a misnamed insurance-industry lobby group; incremental or piecemeal approaches that guarantees the existing situation at the expense of American health care.
Protecting Medicare and expansion to cover all Americans such as “Medicare For All” are no longer muted voices; 70 percent of Americans now support “Single Payer Medicare for All.” As Medicare gained popularity, variations of proposed bills carrying the copy-cat Medicare name blossomed: “Medicare Buy-In”, “Medicare with Public Option,” and others. The latest outright push for private insurance/drug industry grip on America’s for-profit health care system is Kamala Harris’ plan with the copied label “Medicare for All.” Medicare copy-cats try to put blinders on consumers promising: “if you like your insurance you can keep it,” “excellent benefits at a price you can afford,” and “choices.” For the majority of Americans, the price you can afford offers bare-bone coverage; “choices” are severely limited by the “in-network” system.
The American health care system, as it stands, is beyond patching. Failures of the piecemeal strategy should be faced candidly, and plans retaining the private for-profit insurance and drug industries is a strategy to repeat failure.
There should be no compromise in health care. The only sensible solution is abandoning the crumbling infrastructure, and adapting a robust publicly financed, non-profit single payer national health program covering necessary medical care for all Americans. Premiums would disappear, 95 percent of all households would save money. There will be no financial barriers to care such as co-pays and deductibles, freedom of choice for doctor and hospital, insurance would no longer be tied to jobs, coverage is lifelong — no second guessing if the plan you can afford would cover maintenance and unexpected medical needs. Doctors would have freedom to deliver care without private insurance obstruction.
“True Medicare For All” bills have provisions for retraining and job placement for would-be unemployed private for-profit workers.
Now in Congress, are Rep. Jayapal’s HR-1384 in the House, and Sen Sanders’ S-1129 in the Senate. Both are the Medicare For All Act of 2019 that would establish an American single-payer health insurance — the cure for America’s moribund multi-payer health care system.
Call your representative/legislators to support these bills.
Dr. Marcosa J. Santiago is a retired child psychiatrist.
By Leonard Rodberg & Don McCanne
Common Dreams, July 13, 2007
Private health insurance was an idea that worked during part of the last century; it will not succeed through the 21st Century. With jobs increasingly service-based and short-term, the large employment-based risk pools that made this insurance system possible no longer exist. Medical care has become more effective and more essential to the ordinary person, but also more costly and capital-intensive. The multiple private insurance carriers that emerged during the last century can no longer provide a sound basis for financing our modern health care system.
Alone among the nations of the world, the U.S. has relied upon private insurance to cover the majority of its population. In the mid-20th Century, when medical care accounted for barely 1% of our gross national product, medical technology was limited, and jobs lasted for a lifetime, health care could be financed through such employment-based, premium-financed health insurance. But the time for private insurance has passed.
Health care has now become a major part of our national expenditures. The premium for an individual now averages more than $4,000 per year, while a good family policy averages more than $10,000 per year, comparable to the minimum wage and nearly one-fourth of the median family income. As a consequence, though the US spends far more on health care than any other nation, we leave millions of our people without any coverage at all. And those who do have coverage increasingly find that their plans are inadequate, exposing them to financial hardship and even bankruptcy when illness strikes.
If we believe that everyone should have health care coverage, and that financial barriers should not prevent us from accessing health care when we need it, then it has become clear that the private health insurance system cannot meet our needs. Health care has simply become too expensive to be financed through private insurance premiums.
Supporters of insurance companies claim that they create efficiency through competition. However, the truth is that insurance industry is increasingly concentrated, with three national firms, UnitedHealth, Wellpoint, and Aetna, dominating the industry. And the high and rising cost of health care shows that whatever competition there was in the past has not worked to hold down costs.
Supporters of private insurance also claim that it expands consumer choice. However, the choice of plans that these companies offer is not what consumers want; it is the choice of their physician and hospital, exactly the choice that private insurance plans, in the guise of managed care, increasingly deny us.
What has been the response of the health insurance industry to this situation? To protect their markets and try to make premiums affordable, they have reduced the protection afforded by insurance by shifting more of the cost to patients, especially through high-deductible plans. They have also targeted their marketing more narrowly to the healthy portion of the population, so as to avoid covering individuals with known needs for health care. Yet premiums continue to rise each year, increasing by nearly 70% above inflation in just the last six years.
The so-called “universal health care” proposals being put forward by mainstream politicians would simply expand the current system without addressing any of its problems. They would simply mandate that either our employers provide us with coverage or we, as individuals, purchase our own coverage in the private insurance market. These plans cannot work in the face of the high cost of premium-based coverage for even the average person. (Some proposals would offer the option of buying a competing public plan, under the theory that the public program would be more efficient and effective. The flaw here is that the public plan would attract those who are unable to afford private coverage or who are paying high premiums or have no insurance because of pre-existing conditions. Placing these high-cost individuals in a separate government pool would make it unaffordable for most other people. This “death spiral” would cause the public plan to fail.)
The main impetus for renewed interest in health care reform has been the rapid rise in costs over the last few years. Yet, while most of these proposals give lip service to the need to control costs, none actually addresses the problem in a serious way. (The introduction of health information technology and “disease management”, which some of them urge, are mere placebos; they may make politicians feel better, but studies have shown they will do little to reduce costs and may actually increase them.)
Everyone acknowledges that coverage for low-income individuals must be subsidized. But what about the average-income individual and family? If they must now be subsidized as well, we might as well throw in the towel and recognize that a more efficient, more equitable financing system has to be adopted if it has any chance of providing coverage while being affordable to the society. An individual mandate to purchase private insurance cannot provide good coverage while remaining affordable, while employer-provided coverage also can no longer be sustained as the premium costs to the employer become increasingly unaffordable.
The private insurance industry spends about 20 percent of its revenue on administration, marketing, and profits. Further, this industry imposes on physicians and hospitals an administrative burden in billing and insurance-related functions that consumes another 12 percent of insurance premiums. Thus, about one-third of private insurance premiums are absorbed in administrative services that could be drastically reduced if we were to finance health care through a single non-profit or public fund. Indeed, studies have shown that replacing the multiplicity of public and private payers with a single national health insurance program would eliminate $350 billion in wasteful expenditures, enough to pay for the care that the uninsured and the underinsured are not currently receiving.
Such a single payer plan would make possible a set of mechanisms, including public budgeting and investment planning, that would allow us to address the real sources of cost increases and allow us to rationalize our health care investments. The drivers of high cost such as administrative waste, deterioration of our primary care infrastructure, excessive prices, and use of non-beneficial or detrimental high-tech services and products could all be addressed within such a rationalized system.
In sum, we will not be able to control health care costs until we reform our method of financing health care. We simply have to give up the fantasy that the private insurance industry can provide us with comprehensive coverage when this requires premiums that average-income individuals cannot afford. Instead, the U.S. already has a successful program that covers more than forty million people, gives free choice of doctors and hospitals, and has only three percent administrative expense. It is Medicare, and an expanded and improved Medicare for All (Medicare 2.0) program would cover everyone comprehensively within our current expenditures and eliminate the need for private insurance. This is the direction we must go.
Leonard Rodberg is Research Director of the New York Metro Chapter, and Don McCanne, Senior Policy Fellow, of Physicians for a National Health Program, www.pnhp.org.
By Don McCanne, M.D.
Breaking news? An article Len Rodberg and I wrote a dozen years ago? Well, watching today’s political intrigue around concepts to address the problems of high costs and inefficient and inequitable performance of our health care financing system might make you think that the political actors have not yet discovered the problems with our obsolete private health plans (not to be confused with the highly regulated individual plans of some other nations).
This article was written at about the same political stage in the process that led to the election of President Obama as we are now in the process leading up to the 2020 presidential election. At that time there was growing support for a single payer national health program, but elements supporting the private insurance industry were being infused into the political process, with considerable support by the media.
The neoliberals who controlled the Democratic Party were already laying down, behind the scenes, the political groundwork to keep single payer advocates out of the process. The private insurance industry moved in, generously providing advice on health policy to the Clinton and Obama camps. There was already some discussion of introducing a public option as an effort to gain the support of those who were advocating for single payer. Barack Obama abandoned his support of single payer and instead advocated for policy proposals that eventually became the Affordable Care Act. Of course he won the nomination, and the election, and then the process was off and running. We are now living with Obamacare, a program that has kept the private health plans in play (at a time that we also have seen growth in the private Medicare Advantage plans and transfer of Medicaid to private managed care organizations).
So where are we now? The same article we wrote then could be written today. In spite of all the hype about the advances brought about by Obamacare and the prospects of, yes, adding a public option, we really haven’t addressed the fundamental flaws with our health care financing system.
But this time it’s different. Sen. Bernie Sanders and some of his colleagues, including Rep. Pramila Jayapal, have provided us with the definitive single payer model of Medicare for All – a vastly superior model that would ensure that health care would be affordable and accessible for absolutely everyone forever. But is it really different now? Just as in 2007, the single payer model is being crowded out by demands that people should be able to keep their private health plans, maybe with the addition of a public option, and the media across the board is supporting that concept. With the encouragement of the insurance industry, some are now even advocating for private Medicare Advantage plans as an option not just for the elderly but for everyone, but this is merely a plot to hijack the Medicare for All label and gift it to the private insurance industry.
Last time we said we wanted a seat at the table, and we weren’t even granted that. No more! This time we need to take over the whole table. We cannot afford to make room for the private insurance industry.
Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.
By Pramila Jayapal
Washington Post, August 1, 2019
In the wake of the second Democratic presidential debate, it is clear that Medicare-for-all has become a defining issue of the 2020 election. Earlier this year, when I introduced our comprehensive, 120-page “Medicare for All Act of 2019,” I expected attacks from big pharma and for-profit insurance companies. But I did not expect misrepresentations from Democratic presidential candidates about what the bill is and is not.
Let’s be clear about the scale of this crisis. The United States currently spends an astronomical $3.6 trillion per year on health care — almost double what peer countries spend — and it is set to increase within 10 years to $6 trillion annually. Pharmaceuticals such as basic insulin cost up to 10 times less in Canada for the exact same drugs. Approximately 500,000 Americans turn to bankruptcy each year because they cannot afford medical costs — and that includes people with insurance.
With so much at stake, facts matter. So let’s get them right.
First, it is a myth that Americans love private insurance. The vast majority of Americans are deeply frustrated with the health-care system — even if they have private insurance. Opponents and pundits often quote polling that suggests support for Medicare-for-all drops when you tell people that their private insurance plan would go away. But when polls accurately describe Medicare-for-all, and explain that you can keep your doctor or hospital, the majority support increases. People are happy to get rid of private insurance; they just want to know they can keep their doctors and hospitals, even if they switch or lose their jobs. Medicare-for-all would let them do so.
Second, it’s wrong to assert that taxes will rise without talking about what health care currently costs Americans in premiums, co-pays and deductibles. The average American family with employer-sponsored insurance incurs more than $28,000 dollars in health-care costs per year, of which about $15,800, or 56 percent, is paid by employers. And many argue they still can’t get the care they need. Americans are smart enough to be asked questions like: Would you be willing to pay more in taxes each month if you saved more money by not paying private insurance premiums, deductibles and co-pays and were guaranteed high-quality health care?
Third, it is simply false that labor unions don’t want Medicare-for-all. Sure, they fought hard for employer-sponsored health insurance plans for their workers. But they, above all others, recognize that the rising costs of insurance premiums are directly related to stagnating wages and, more and more, the pressure of those costs hurts worker power at the bargaining table. Take a look at the unprecedented number of unions that have endorsed our bill, all of which know Medicare-for-all is necessary.
Fourth, comparisons of Medicare-for-all to the GOP’s push to “repeal and replace” the Affordable Care Act are simply unfounded. Republicans are the only ones trying to take away health care. There is absolutely no daylight between leading on Medicare-for-all and fighting to shore up the ACA right now, or stopping the GOP from stripping care away. The Affordable Care Act made profound improvements to our health-care system. But it was never meant to be the end goal, since it does not address the real disease in our system: a profit motive that leaves millions either without access to care, bankrupt or unable to afford medication in the world’s richest country. We can strengthen the ACA and work toward Medicare-for-all at the same time. Even former president Barack Obama agrees.
Fifth, we simply cannot expect to bring down the costs of health care in the United States without taking on the for-profit insurance and pharmaceutical corporations, which are raking in billions of dollars at the cost of American lives. Incremental steps such as a public option might sound appealing but would still leave more than 10 million people without coverage while keeping in place a costly private-insurance middleman that eats up 25 to 30 percent in administrative waste and profits. If we want to achieve true universal health care while containing costs, Medicare-for-all is the only answer.
Finally, Democratic candidates should stop using one-liners from industry front groups and Republican playbooks — such as “Medicare-for-all would shutter hospitals,” or telling seniors that “Medicare goes away as you know it. All the Medicare you have is gone.” These claims — amplified by contributions from the private health-care industry — are designed to incite fear and sow confusion. I’ve spoken with several hospital CEOs who see Medicare-for-all as a lifeline for their hospitals — particularly safety-net and rural hospitals that are barely surviving under the current system. And my Medicare-for-all bill improves Medicare for seniors by adding additional benefits such as dental, vision, hearing and long-term care.
As the debates continue, I hope that my fellow Democrats will take a good look at our bill and get the facts right. The Medicare-for-all movement has overwhelming public support, unprecedented grass-roots organization, and a serious plan that is ready to change our health-care system right now.
Health care is the top issue for voters, and they deserve to know the truth about the solutions we are proposing. I’m willing to debate Medicare-for-all with anyone — but we owe it to all Americans to stick to the facts.
Pramila Jayapal, a Democrat, represents Washington’s 7th Congressional District in the U.S. House.
