According to the story by Medpage Today News Editor Joyce Frieden on December 4, Health and Human Services (HHS) Secretary Alex Azar used an appearance at the American Enterprise Institute (AEI), a right-leaning think tank, to trash “Medicare for All,” a plan to expand Medicare — which currently serves only Americans ages 65 and older as well as some disabled patients — to cover everyone in the U.S.
It’s an idea that has garnered vocal support from many Democrats (including some headed for Congress in 2019) and these days, quiet support from a majority of Americans, including a slight majority of Republicans.
The Secretary’s Argument: Medicare for All Won’t Work
Azar contends Medicare’s fatal flaw is that “it depends on paying providers Medicare rates.” Doctors and hospitals will opt out of such a system, he says, despite a huge flood of new patients, and seniors will lose access. In any event, Medicare for All “would be completely destructive to hospitals and doctors,” and more to the point, “it will cause the complete and utter destruction of the employer-sponsored health insurance system in the United States. There is simply no way private sector insurance could compete against that…”
So now we know what he’s concerned about. (For those readers who remember “Harry and Louise” — the famous ad campaign that defeated the Clinton health reform plan in 1997 — it was sponsored by the insurance industry.)
The Secretary’s Solution
Mr. Azar does concede that although “we pride ourselves on having a more private care system than other nations, we pay far more for healthcare, both per capita and as a percentage of GDP than they do, and still don’t cover all Americans.”
The problem, he says, is the patients.
His solution? Patients need to pay for a larger proportion of their care — have more “skin in the game,” it’s usually said — so they will be more prudent in seeking care, and better, “price-conscious consumers.” Tax-free accounts would be useful for paying insurance premiums and out-of-pocket costs. (It is not reported whether he added that the biggest savings would go to those in the highest tax brackets, or that some 44% of Americans are too poor to owe any federal income tax.)
Another solution to the cost problem, according to a panel at the AEI symposium, is to increase competition in various healthcare markets — by reducing foolish federal regulations and the “patchwork of regulations at the state level.”
The fallacy in this argument is that competition in a “perfect” market will allow consumers to get what they want at prices close to cost. In general, markets are about power, not competition. A perfect market which produces the desired result is a special case, where there are so many buyers and sellers that no one has market power, entrance and exit to the market for both sides is easy, there is full transparency on both sides, and goods are easy to evaluate and compare — say, gasoline at the gas station level.
Needless to say, there are few healthcare markets that look anything like this. Indeed, healthcare markets are extraordinarily opaque: what does your insurance cover (many people don’t find out until they get sick); what disease will you have? What treatment will you need? What is the price of a hospital admission, where everyone pays a different price that depends not just on which insurer you have, but which plan you bought?
The one party in this situation with no market power, no leverage, of course, is the consumer — particularly when she is ill.
Market failure in medicine should be particularly familiar to Azar — after all, he was president of Eli Lilly, a large American pharmaceutical manufacturer, before he came to HHS.
Lilly’s flagship product is insulin: its scientists were the first to figure out how to produce insulin from cattle and pigs in 1920; and it was the first to put a synthesized insulin, Humulin, on the market in 1982. Since then, a variety of insulins have entered the market. But instead of driving prices down, prices of all insulins have moved up — a lot. Humulin went from $16.53 a vial in 1997 to $148.70 in 2017, almost a 900% increase. There is indeed fierce competition among manufacturers of insulin; it just is not price competition.
Why Medicare for All is a Better Solution
First of all, we have had a good trial of private insurance and the market-based approach — that would be the Affordable Care Act, with government subsidies paid to insurers and regulations to protect consumers.
It failed. It extended insurance coverage to more Americans (most of them with aid of federal premium subsidies) but did nothing to bend the cost curve. Indeed, even though we pay more for healthcare than any other country in the world (with at best average results), our costs are still going up.
Recently, two independent academic teams, one from the University of Massachusetts and one (funded in part by the Koch brothers) from George Mason University (GMU), demonstrated that Medicare for All would (University of Massachusetts) or could (GMU) significantly lower overall costs. And not necessarily because of reduced fees to providers, as Azar believes, but largely by reducing the huge administrative costs our complicated system generates, which add little value to patient care.
(A note regarding current Medicare hospital and physician fee schedules: yes, Medicare currently pays too little for some services, but also too much for others. The physician fee schedule is currently controlled by an American Medical Association committee known as the RUC (RBRVS Update Committee). The committee is not statutory: Medicare officials could dismiss it and put together a broader committee, including consumers, economists, patients and so forth, to rebalance fees.)
Today there are a variety of approaches to Medicare for All, as well as a question of whether it can co-exist with employer sponsored insurance which covers most Americans. (I would say yes, for now at least.)
But every proposal should include four elements: a single, comprehensive plan (everything “medically necessary”, including glasses and hearing aids); free choice of provider; more extensive price control (by negotiation or notice-and-comment rulemaking) covering drugs, tests, imaging, and other benefits; strictly nonprofit providers; and insurers limited to processing paperwork, as is now done in traditional Medicare.
In 1965, Congress passed Medicare and Medicaid as the first phase of a health plan to cover all Americans — something that President Franklin Roosevelt envisioned as the crowning achievement of the New Deal. Medicare has lasted more than 50 years: it is familiar to anyone who has a parent (or grandparent) and widely popular. It is more cost-effective than commercial health insurance. Medicare for All will save the country money.
Winston Churchill is said to have remarked: “The Americans will do the right thing — after they have tried everything else.” Well, we have. Medicare-for-All-type programs work everywhere else, and it works here for the elderly and disabled. Let’s have a go for the rest of us.
Caroline Poplin, MD, JD, is an attorney and internist in Bethesda, Maryland. She is a former staff internist for the National Naval Medical Center, and currently practices medicine part-time at the Arlington Free Clinic in Virginia. She also consults for law firms on Medicare and Medicaid fraud.
Source: MedicalNewsToday.com
