April 22nd, 2009
Editor’s Note: The author of this post, Merton Bernstein, would like to thank Dr. Christina Daw for her research assistance.
Science does not permit ideology to foreclose inquiry; it requires facing facts and following where they and logic lead. Hence many cheered when President Barack Obama announced that science is back, that predisposition will no longer be permitted to trump reality. Everyone knew he was talking about stem cell research.
Who could have guessed that the Obama administration and key congressional players would exclude single-payer/Medicare-for-all programs from consideration even though that means ignoring the cost savings of hundreds of billions of dollars in private plans’ nonbenefit costs? Further, administration health experts advertise their focus on avoiding incentives for unnecessary treatment, but pay no mind to the expensive distortions that follow from physicians’ ownership interests in high-cost equipment and services. Odd that the scientific method does not apply to medical care where science should govern.
Snubbing And Chiding Single-Payer Advocates
Until the day before the Health Care Summit, no advocate of single-payer/Medicare-for-all had been invited to rub shoulders at the White House conference with the hordes of insurance and drug manufacturer officials and lobbyists, right-wing think-tank pundits, major employers and their organizations, and hospital executives — all deeply implicated in the design, execution, and defense of the current dysfunctional medical care insurance nonsystem — the supposed object of “reform.” An 11th hour invitation came only after a threatened demonstration by doctors, nurses, and medical students who back a single-payer proposal sponsored by 94 members of the U.S. House of Representatives. Even the legendarily unbiased Congressional Budget Office had shortly before issued two large studies of medical care, totaling about 400 pages, containing only a few cursory paragraphs about single payer/Medicare-for-all.
The president opened and closed the one-day summit with his usual splendidly composed summary of hurdles to providing medical care to all and curbing costs. He had sharp words only for “bleeding-heart liberals,” chiding them for inattention to costs although they repeatedly stress the huge savings single-payer/Medicare-for-all could deliver. It is his experts who persistently ignore those cost savings while pursuing possibly desirable but unproven methods of reducing costs. So, for example, claims are made for vast savings by health information technology (IT), such as computerization of patient records, which might reduce medical errors if a uniform nationwide system becomes operational — years hence. Similarly, it is unproven that paying health care providers based on outcomes would be feasible; with hundreds of millions of billings, assessing the efficacy of each treatment seems impossible — and impossibly costly.
Savings From Medicare-For-All
Medicare-for-all would save hundreds of billions every year. Private insurers expend enormous sums for insurer commissions, advertising, Wall-Street-scale executive compensation, and profits. In contrast, Medicare spends little or nothing on these unnecessary, unproductive activities. Health care providers and private plans struggle with thousands of different billing schedules. As the New York Times reported: “The average provider — doctors or hospitals — has between 5 and 100 reimbursement rates for the same procedure. . . . A hospital chain may have 150 rates for the same procedure.”
In contrast, Medicare districts employ only one. That helps explain why Medicare’s nonbenefit expenditures require only 4 percent of benefit outlays while private plans expend far more — on the order of 20% for publicly traded companies and as much as 31% of premium for some. We are talking real money. A recent McKinsey Quarterly article found that medical care insurer billing consumes more than $300 billion a year, costing 15 percent or more of medical outlays. Medicare-for-all would make do on a sliver of that. (Harvard Medical School economist Rashi Fein tells the story of a former colleague working at a Montreal hospital, where three people processed bills there, primarily for traveling Americans. Later he worked at Chicago’s Michael Reese Hospital, where the billing facility, jammed with clerks at computers, stretched a football field’s length in two directions.)
Understand that Medicare uses private insurers to administer its program and pays private providers to deliver care; patients select their providers, a choice many private plans limit. Medicare confines its payments to a fee schedule it promulgates after receiving the advice of the Medical Payment Advisory Commission (MedPAC), which comprises a variety of practitioners and others. That price constraint reduces costs. But the big savings come from simplified billing/payment procedures.
In addition, Medicare delivers its benefits at lower cost than means-tested programs like Medicaid and the Children’s Health Insurance Program (CHIP). Absorbing all such programs (and there are many) into Medicare would save tens of billions more and speed up providing care.
Opponents dismiss Medicare-for-all as a “one-size-fits-all” formula. Well, who among us knows how to estimate when we or a family member will need medical care? Who among us can gauge when a heart attack may strike or a drunken driver will cross the median? In this world full of uncertainty, we all share the same need for assured medical care — that’s the size Medicare-for-all fits.
The Effects Of Conflicts Of Interest
Studies repeatedly show that medical care providers with ownership interests in labs and high-cost devices like computed tomography (CT) scan and magnetic resonance imaging (MRI) machines prescribe those services far more than those who do not own any. Medical societies should ban such conflicts of interest; if they don’t, Medicare, which attempts to curb them, should forbid them completely. That would save billions and confine providers to their proper role: treatment based on medical grounds uninfluenced by profit.
So why do the Obama medical care gurus, Senator Baucus and Senator Grassley, and the Congressional Budget Office exclude Medicare-for-all, although it would save far more than any rival plan? In large measure, that results from the propaganda war on single-payer. President Obama says that it would be impractical to try to substitute Medicare for “legacy” private plans because so many are “accustomed to” them. But “accustomed to” simply does not describe plans that are melting down, disappearing, and becoming constantly more unaffordable.
Further, Medicare does not charge higher rates for pre-existing conditions or for elderly and female patients as private plans do, thereby encouraging employers to discriminate in employment. Moreover, with everyone covered for all needed medical care, the greater part of malpractice compensation — medical repair — would be met without the delay and expenses of medical malpractice disputes and litigation.
Yet the Obama, Baucus, Grassley, CBO, and other playlists exclude consideration of Medicare-for-all. With rising discomfort with the price tag of recovery programs, those desiring comprehensive health care cannot afford to disregard a program with such enormous savings. If Medicare-for-all gets “on the table” before the Senate Finance and House Ways and Means committees, the CBO must report its vast savings and its greater efficiency and effectiveness compared with more expensive alternatives. Only by censorship — only by treating Medicare-for-all as nonexistent — can lesser alternatives be discussed with a straight face.
And censorship is not compatible with science.Email This Post Print This Post
Don't miss the insightful policy recommendations and thought-provoking research findings published in Health Affairs.