By Mark Krasnoff, M.D.
PNHP Missouri, February 5, 2016
I’ve practiced general internal medicine for over 20 years, and I’ve personally witnessed the average American’s health care burdens descend into a national financial crisis. Yes, crisis.
On January 5, 2016, the Kaiser Family Foundation and The New York Times revealed their joint survey indicating 20 percent of insured Americans have serious problems paying their medical bills. Some 63 percent must sacrifice most or all of their savings; 75 percent are forced to cut back on food, clothing or other essentials. Medical bills financially cripple 44 to 45 percent of those who have a significant illness, whether they got sick while insured or not. For far too many, health care insurance is actually bankruptcy insurance, and for many others, it merely slows the fall to bankruptcy. This is not what being insured is supposed to mean. Why are we accepting this?
Hidden costs of uncontrolled insurance
Think of all the ways health care insurance separates us from our money: we are financially hammered at every turn by copays, deductibles, coinsurance, soaring drug costs, limited and ever-changing physician panels, hospitals covered and drug formularies. In addition to direct costs, the wage increases we Americans used to be able to expect are now being replaced with inadequate employer-provided “coverage.”
“Great news this year, everybody, you only have to pay 6 percent more for health insurance. Of course, there’s no pay raise, but, hey, we’re all still lucky just to be privately insured!” Why are we accepting this?
I’ve witnessed the steady decline in the average American’s ability to pay for the basic health care they need to stay alive. In just one example, albuterol, a drug that gives quick relief from asthma when you can’t breathe, was once generic and inexpensive until a new way to deliver the drug was needed (for environmental reasons). The HFA delivery system was patented and priced so high that many asthma patients could no longer afford the medication that enabled them to breathe and stay out of the emergency room. To this day, all three brands of albuterol HFA inhalers are still not generic.
In another example, new studies established a set dosing pattern for colchicine, an inexpensive generic drug used for decades to treat painful gout. You guessed it; it suddenly became an expensive patented medication again, and now those patients who can no longer afford the drug miss three or more days of work when they get an attack of gout. Why are we accepting this?
The best forms of prescription insulin, the hormone replacement drug that controls diabetes and prevents amputations, blindness and kidney failure, are so expensive, many patients cannot adequately control their diabetes. They develop premature kidney failure and must go on dialysis, or they have an amputation which could have been delayed or prevented. At that point, they are prematurely disabled. They can no longer work and must either pay for their own expensive health insurance or go uninsured for two years, then transition to Medicare. Does this sound like the best health care system in the world to you?
A young patient of mine told me she doesn’t know which type of a rare disease she has because, in the United States, the genetic test that would identify it is too expensive. If she were in Europe, she would know.
Someone’s making money
Drug companies charge Americans the world’s highest out-of-pocket prices for medication, consequently making those same drugs cheaper for Europeans and others whose governments negotiate a lower price for their citizens. So we Americans, in effect, subsidize cheaper drugs for Canada, Europe, Japan, Taiwan and other countries.
The drug companies also orchestrate inversions to lower their American tax bills. They go abroad, pay low taxes to the countries that demand lower prices, but don’t pay taxes on their corporate profits in America, where they charge the highest prices. So not only do we subsidize the cost of drugs in other countries, those countries also get to tax the corporate profits the drug companies make in America – the taxes America should be able to collect. Why are we accepting this?
It affects everybody
I recently spoke with a retired corporate attorney who had one of the best retirement arrangements one can have in America. I consider him to be at the “top of the food chain,” so to speak, able to afford the best health care America has to offer. Nonetheless, the night before he was due to have lithotripsy for his painful kidney stone, his urologist’s office called to say that they could not perform the procedure at the facility the attorney chose because it wasn’t a participating provider in his insurance plan. In this instance, one of the wealthiest Americans was in a worse position than the average Frenchman or Canadian.
Why are we getting shafted?
What do other countries in the developed world have in common that we don’t? They have public health insurance (or some close approximation of it) that provides health care for all. They have health insurance that negotiates on behalf of consumers for lower drug prices yet still allows the drug companies to make a profit. They have health insurance that lets you see almost any doctor in the country with no restrictive panels. They have health insurance with about half the per capita cost of care, even as they cover every citizen.
Why are we accepting this?
The truth is we do not accept this, but we feel helpless to bring about change. The majority of Americans want national health insurance, like that envisioned by Teddy Roosevelt and Harry Truman, but they see it as a political impossibility. The truth is that it is actually an inevitability. An unsustainable system, which we have now, cannot be sustained. The only question is how much will we sacrifice before we come around to the only viable solution to the problem?
For-profit private health insurance is not working for the great majority of Americans
It defies logic to think that private health insurance could ever play a productive role in health care. It is a defective product that adds to the cost of care and divides the pie without adding any value to the system. Yet, any single-payer-based-alternative proposal gets branded a fantasy by the opposition and servile media. But the real health care fantasy is that a gigantic industry that siphons 30 percent of each health care dollar can somehow cover its costs, make a profit and reduce the cost of care just by denying payments for unnecessary tests and medical care.
Think how untenable their business model is. They collect their money up front from employers, employees and now, the U.S. taxpayers through Medicare Part C (which came before Part D and Obamacare). They then pay for care by cutting deals from a relatively weak position, with providers, hospitals, drug companies and device manufacturers. They impose claim restrictions and charge their customers for a portion of the very costs against which those customers supposedly are insured.
Their profits depend on the difference between the premiums they collect and their costs of delivering care and doing business. Their mission, as a private, for-profit health insurance company, is not to provide the best care for the lowest price, but to make health care insurance more expensive than the actual cost of health care. That difference is the profit for their shareholders.
I’m not saying the industry’s motives are nefarious or that the industry should be maligned; we all agreed to this system, and we have continued to endorse it in the name of free enterprise. But the reality is that it’s a rigged system, and the deck is stacked against the American consumer.
Compare private insurance with Traditional Medicare
For proof that private for-profit health insurance is less efficient in providing care, consider the history of Medicare. In the old days under Medicare Part A and B, it was against the law for any private health insurance company to duplicate Medicare services. Everyone got the same benefits and could see any doctor in the entire country who accepted Medicare payment. Everyone paid Medicare taxes and Medicare premiums, and when you became disabled or reached age 65, you were insured by Medicare A for hospital care, Medicare B for 80 percent of outpatient care, and you paid a private supplement for the other 20 percent of outpatient-care costs.
Medicare’s not all Traditional anymore
But now, Privatized Medicare Part C gives some of our tax money to insurance companies that sign up the healthiest pool of Medicare patients they can find. These companies offer perks like gym memberships, but do their best to avoid insuring the older, sicker, more-expensive patients. (So, all men are created equal, but now some are more equal than others.) The idea behind this privatization of Medicare is that the private companies will reduce the overall cost to Medicare. If that’s true, and cost reduction is the goal, you’d expect that this privatized Medicare would receive fewer Medicare tax dollars per enrollee than traditional Medicare, thus saving the taxpayers money. But that’s not the case. Medicare Part C (which they call “Medicare Advantage,” and I call “Taking Advantage of Medicare”) actually gets more money per enrollee, and costs all of us more money. Why are we accepting this?
Traditional Medicare (A & B) has an incredibly efficient 3 to 4 percent overhead, way below the 15 to 30 percent costs of private health insurance companies. Traditional Medicare makes no profit; if it did, that money would go to the U.S. Treasury.
The Affordable Care Act (Obamacare) limits health care insurance companies to a 15 percent profit, but that profit is considerably higher than Medicare’s zero profit. The 15 to 30 percent overhead is 5-10 times traditional Medicare’s 3 to 4 percent overhead. Medicare Parts A & B also have had lower health care inflation – lower than Part C, even lower than non-Medicare private insurance that benefits from covering a selected younger, healthier population.
No chance for affordability today
Today, there is hardly a single patient encounter that does not involve some accommodation to meet the demands of insurance companies or drug companies, whether it’s choosing a medication, a test, a consultant, a laboratory, a radiology facility, a skilled-care facility or a rehabilitation plan. And despite all their bureaucratic mandates – and, in part, because of them, the cost of health care keeps going up rather than down.
So, there is no chance for affordability while insurance companies are calling the shots. There is no chance to rein in drug prices without being able to negotiate with suppliers en masse as other countries do. Our entire health care system is out of control.
The answer is Improved and Expanded Medicare for All
Traditional Medicare A & B has a phenomenally efficient 3 to 4 percent overhead and a proven, 50-year track record that affirms that Medicare, in its traditional (A & B) configuration, is, so far, the most cost-effective, cost-controlling way of delivering health care in America. If we improve that construct and offer it to all Americans, we’ll have Medicare for All – improved, expanded Medicare for everyone.
Medicare for All will mean almost all doctors and hospitals will compete for your business, creating a real free market between patients and caregivers. Don’t like your doctor or hospital? Switch whenever you feel the need. In addition, your employer will no longer be burdened by the risk of hiring a 50- or 60-year-old, and older employees will be free to change jobs without risking loss of health insurance. Now that’s a free market – for everyone.
Medicare for All is simple, efficient, fair and logical, and that’s why politicians who are beholden to special interests will try to obstruct it every step of the way. Don’t let them win. We – the collective we – have to wake up and support those true leaders who are informed, immune from industry influence and courageous enough to make it happen. Improved Medicare for All is the answer.
Dr. Mark Krasnoff is a board member of the Missouri chapter of Physicians for a National Health Program.