AMERICAN HEALTH CARE: WHAT MOST PEOPLE DON’T REALIZE

      There are those who believe that health care lends itself to the usual market forces, meaning that competition will bring about the best products at the lowest prices. For instance, comparative quality ratings and pricing for items such as autos and vacuum cleaners allow us to obtain the best products at the lowest possible costs.

But do these principles apply to health care? Clearly not, for several reasons. For example, if we suddenly become ill and need an ambulance, we summon the nearest local provider with its prevailing charges (which can be substantial), then taken to a nearby medical facility and usually charged exorbitant rates for emergency and/or hospital services.  If you are lucky enough to possess decent insurance, you will be billed according to whatever has—or has not—been agreed to with the ambulance service and hospital as reasonable compensation, and you will usually be required to ante up for any co pays or deductible amounts in your contract. All prices are entirely out of your control and obviously not subject to free market forces. And so it goes through the entire spectrum of medical care that includes drugs and devices, doctors’ fees, and numerous tests and additional services. At the end of this process, you are apt to receive an incomprehensibly large bill that is not coupled with reality or market forces, and even if you aren’t responsible for most of the payment, the money must come from somewhere, for your insurance carrier is not a philanthropical organization.

So, how much are we contributing as a nation to these healthcare expenditures? The bills total approximately $3 trillion annually, or about 17% of our overall economy. Of that total, hospital bills account for 40-50%; tests and ancillary services, 20-30%; doctors, 20%; drugs and devices, 15%: and nursing homes 5%. These amounts generally are twice the total expenditures of other western countries, which generally range from 6-11% of their respective economies. Since our outcomes seem not superior to those of the aforementioned nations, some experts even argue that our illness and mortality rates are even worse than those of other countries. But complicating factors such as obesity, poor lifestyle choices and others, may account for poor outcomes in this nation. Nevertheless, at best, our healthcare system is providing no clear advantage over those of other nations.

So how do we explain all this? We are overpaying for virtually all components of our health care system. We are doing so because there are few if any restraints on the charges. For instance, Obamacare put no controls on the pricing of drugs or clinical care. Pharmaceutical companies’ charges are not only unrestrained, but they can often “game” the system to overcharge for older, generic drugs. The insurance carriers were granted unrestricted leeway in setting premiums and deductibles in exchange for allowing policies that provide maternity and preventive care and that mandate coverage for patients with preexisting conditions.  Hospitals can pad their bills through the use of opaque charges that include all sorts of add-ons and “facility” fees, making them all but impossible to decipher. Fortunately, Medicare serves as a partial restraint on many of these excesses: For instance it applies a so-called Disease Related Grouping (DRG) system to bundle and restrain allowable hospital charges for given diseases/and or treatments. Although this system does restrain charges somewhat, medical purveyors often use other means’ to circumvent these amounts, and hospitals can still bill private insurers at higher rates, depending on prior agreements. Also, coding of procedures and even physician’s services has become a science of gaming to extract the highest possible tariffs. In all cases, those who are uninsured—and are least likely to afford them—receive the highest bills.

In order to understand these large expenditures, we can learn from other countries’ experiences. Although there are several contrasting systems, they all employ governmental price controls coupled with universal participation. In Germany and France, for instance, all individuals must be insured. Most people purchase state sponsored insurance, with premiums based upon one’s income. Private insurance is allowed and may supplant the base insurance for the few who can afford deluxe services. In Canada and Australia, a single payer system is used, analogous to Medicare for all, making private insurance unnecessary. In the United Kingdom and Denmark, an extensive health care structure includes a single payer system with state ownership of hospitals and medical infrastructure. Notably, all these systems couple price controls for services, together with the requirement for participation by the entire population, a factor that spreads the costs widely and is sufficient to cover all those with “pre-existing” conditions.

The U.S. could adopt any of these methods, but a single payer (“public option”, or Medicare for all) would seem to be the most direct and cost-effective. Administrative costs for Medicare average about 2-3%, in comparison to about 20-30% of most private insurers. Even under the mandate by the ACA (“Obamacare”) to limit these costs provided by private insurers to 15% of total outlays (the other 85% devoted the health care), this is still a significant amount. Moreover, private companies can encourage larger medical bills, thus increasing the overall size of their pool but passing on the costs to those who are insured. This means that the 15% could be substantially greater as a portion of the larger pie, allowing CEOs and other directors to receive millions in compensation.

Expanded Medicare would not preclude the addition of supplemental private insurance, as we now have in combination with its basic coverage. An overall plan must be empowered to limit prices for all drugs, procedures, and hospital bills, which would control the entire cost structure of the medical system, allowing us to emulate costs of other western countries. Nationwide pharmaceutical prices must be subjected to negotiated limits as placed by Medicare or related agencies.  A single payer system would also simplify record keeping and unify documents, reducing time required by physicians and office personnel.

Obviously this is but a start, and other issues must be addressed that are too numerous to enumerate here.

In all cases, rational solutions must contain two vital components: 1) Mandatory participation by the entire population. 2) Careful and rational control of all expenditures

Any program lacking these two vital components will be, at best, too costly, or, at worst, socially unacceptable or disastrous.

 

 

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LOSE OBAMACARE AND WE ALL SUFFER

Although Trump’s food policy agenda is unclear, his anti-regularity, anti-science leanings in general should be a major cause of concern to all of us.

If the Affordable Care Act (“Obamacare”) is repealed, not only could 22 million Americans face the devastating prospect of losing their health insurance, but all of us would lose several other health benefits as well.

First we would lose the opportunity to see how many calories are in thousands of foods, for, starting May 1st, 2017, we could lose the ACA rule that requires the listing of calories on menu boards of chain restaurants, movie theaters, supermarkets, delis, and convenience stores. The new administration could scrap the whole effort—as some in the food industry have urged. Moreover, the Federal Drug Administration (FDA) has told companies to disclose added sugars on Nutrition Facts labels by 2018. Since the new administration will likely sack the current physician FDA leader (Robert Califf, MD) in favor of a politically motivated layman, this regulation also could well be eliminated or delayed for years.

Second, the Obama administration proposed voluntary targets for cutting sodium (salt) in foods, which, as I have explained, would save tens of thousands of lives every year (http://www.mortontavel.com/2014/10/06/). Again, the present administration could scrap the whole effort—as some in the food industry have urged.

With regard to our children, two members of the Trump campaign’s agriculture advisory committee have worked to roll back the progress we’ve made in improving school lunches and removing junk foods from school vending machines. Can anyone doubt the potential damage of this measure?

The new administration may be inclined to grant the food industry’s request to continue to use heart-damaging trans fat (http://www.mortontavel.com/2014/) in many processed foods.

What about safe food protections? Who knows what to expect from a president whose campaign accused the “food police”—the FDA—of inspection “overkill.”

All these threats, as noted above, serve as a potential detriment—if not an outright danger—to the health of the general population. We should all follow these issues closely and become engaged, whenever possible, in the political process itself.

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SHOULD WE OPT FOR A SINGLE PAYER SYSTEM FOR MEDICAL CARE?

When considering the best way to solve our country’s medical care woes, I am reminded of Winston Churchill’s famous statement about democracy as a form of government, in which he stated in effect: It’s a terrible system, but everything else is worse. This same statement might apply to a single payer system in medical care, for it probably beats everything else, as I explain below.

First, a truly effective system will not be achieved unless we solve the many associated issues that include tort reform—to control the exorbitant costs of physician medical malpractice insurance in many states—excessively high cost of drugs, inappropriate use of expensive tests and treatments, and several others. But all these issues can be solved, given the desire and, hopefully, willingness of our legislative bodies to work together for the benefit of all.

Although the Affordable Care Act (ACA) represents a step forward for this country, it does not address the problem of waste and complexity in the system in the way that a single-payer system would.  James Burdick, MD, a transplant surgeon at Johns Hopkins University School of Medicine and author of the forthcoming book Talking About SINGLE PAYER!, argued that a single-payer system is “a more economical way to use healthcare resources. You could reduce expenses and still improve quality. That’s a tremendous opportunity that you don’t have in many other fields.”  Of course, as he pointed out, this would virtually eliminate the entire commercial insurance industry—with $730 billion in revenues and a workforce of 470,000. (Maybe these same workers could be involved in more productive work such as restoring our nation’s wobbly infrastructure!) But Dr Burdick also maintains that a single payer system would likely restore doctors’ authority. And those who favor this system say that for all practices, administrative costs would plummet because there would be only one set of payment rules and forms, with the result that prior authorizations, narrow networks, and out-of-pocket payments would be eliminated.

There also appears to be evidence of growing physician support for a single-payer system. For instance, a 2014 survey of Maine physicians disclosed that nearly 65% of respondents preferred the single-payer option over trying to fix the current system—up from 52% in a 2008 survey. Physicians in general now seem more open to a single-payer system.

Americans are warming up to the idea too. Notwithstanding the Republicans constant calls for abandoning the ACA, a majority of the population (51%) now supports Medicare for all, according to a national poll released this past year. Many experts believe that the movement for a single-payer system may start at the state level, since much of the public continues to mistrust Washington. But a firm judgment about this issue probably awaits the results of the next national election.

One way to reduce medical expenses would be to shift at least some costs to the recipients themselves. Medical insurance might be best reserved only for big ticket items, such as catastrophic events. Using the analogy of automobile insurance, would Americans buy insurance to pay for routine maintenance and fuel for their cars? This would suggest that one should only be provided with very high-deductible forms of insurance. For instance, emergency rooms should be best reserved for broken bones, gushing wounds, and other genuine emergencies, not sniffles and sprains. A full medicine chest and a bit of common sense would comprise a more effective strategy.

In reality, a government-run single-payer system is the only way to provide effective basic medical health therapy and management, but for those who desire a higher level of care—and can afford it—there should be a private-pay system, contrasting with the Canadian system. This would, de facto, constitute a two-tiered system. This might be objectionable to egalitarians that wish to have a “one size fits all” system, but would be the most pragmatic approach.

Usually those against single payer system trot out the usual vague objections that we are becoming “socialistic.”  But what about our current Medicare system, is that not socialistic? I might add further that I personally have worked at a VA hospital, and, despite all the current noise, found that once patients were able to access the system, the care is quite good. Its main problem seems to be gaining initial entry into an overburdened system in a timely manner. By contrast, it is highly unlikely that a random assortment of for-profit HMOs would do a better job serving the high-utilization health needs of our veterans.

Whether we like it or not, basic healthcare is like a utility—something everyone needs, and in the best interest of our society, everyone should receive. Although there are many variations of the general theme as I have enumerated above, we are moving inevitably toward a single payer system. When it finally arrives, I believe everyone will be relieved, if not pleased, even including the Republicans!

Interestingly, under rules provided by the ACA, which most Republican lawmakers are determined to repeal, all members of Congress and their staffers must purchase coverage through an online exchange, just like everyone else who doesn’t receive insurance from an employer. But Senator Ted Cruz, for instance, can opt out of the system, for he obtains his health insurance from his wife’s employer, Wall Street powerhouse Goldman Sachs. That means that if Cruz is successful in overturning the ACA, he’ll still be covered even as 11 million others lose their insurance. That, apparently, is their problem, not his!