Why We Can't Afford "Medicare for All" - Megan McCardle Thinks She Has The Answers

One of the hyper-expensive medical "toys" driving up health care costs - the 3T MRI machine. The costs of such machines, including proton beam therapy and cancer drugs are making access to medical care more and more prohibitive.

In his extensive Barbados Advocate column (April 30, p. 14, 'Addressing the loss of health care professionals') David Jessop shed light on exactly why medical costs are soaring in all the nations of the world. As he wrote:

"Around the world, public health care systems are in crisis. From India to Australia, nations in the developing and developed world are struggling to meet the expectations of their local populations."

What reasons does he give for this crisis? He lists the following as primary culprits:

- A surge in the nature and volume of demand as populations age and birth rates continue to increase

-  The preceding occurring at the same time a desire for low taxes has made it difficult for governments to garner the necessary resources to respond to societal expectations

- Sustained loss of medical professionals causing shortages in many 3rd world nations, because they are picked off by nations such as the U.S.  - which itself is finding it can't cope with the expansion of medical services (e.g. via Medicaid in the ACA) combined with an M.D. shortage.

This combination in addition to overuse of medical resources by certain groups, has led to the condition in which much of the world is in a health care crisis.

The bottom line is this: It is futile to talk about "managing" health care costs when so little money is made available by many nations to support their current medical needs. In effect, medical care today  - from treating cancers to severe disability and chronic disease (e.g. kidney and liver disease) is bloody costly and intensive of medical resources by nature.

This leads to a Hobson's choice for many governments: either raise taxes to support their local populations' access to medical care to the level needed, or cut access as the Republicans are now doing with their "American Health Care Act" that will effectively remove access for 20 million or more via Medicaid.

Aging populations in whatever country definitely carry major impacts on its health costs. According to a paper ( Death and Taxes: Why Longer Lives Cost  Money)  produced by the UK Institute of Economic Affairs:

"Long-term healthcare and nursing home costs are strongly associated with age and cannot be driven down by healthier lifestyles.."

To be specific, the incidence of both certain cancers (e.g. prostate) and Alzheimer's disease are  directly related to age, not necessarily "unhealthy" lifestyles. The risk of Alzheimer's alone doubles every year after the age of 65, no matter who you are, what your gender or income or life style choices. Ditto with prostate cancer which is becoming more and more expensive to treat as new, more refined treatment techniques come onstream, - such as focal therapies (e.g. focal cryotherapy) and proton beam therapy,

In the case of prostate cancer, which I've been battling for five years now, I've seen at every stage the cycle of treatments and tests and how they multiply costs. Even if you'd prefer to not add to the medical loss ratio (the ratio of unhealthy subscribers to the healthy ones that support them.) it's virtually impossible once you get that PSA test result - if much higher than normal - to avoid the first prostate biopsy.  That biopsy, if it shows one or more cores at the Gleason 7 score level or higher, sends you down the path of more tests, therapies, treatments. Unless you don't give a shit, in which case your primary doc may "fire" you for being a "non-compliant patient". She wants you to continue your life under her care (including specialist referrals)  without facing the worst consequences of a cancer that can kill (29,000 deaths in the U.S. each year).

In my case, the first biopsy proved positive with three cores then affected and I had to make the decision to get either the robotic (Da Vinci) surgery or radiation. I chose the latter, for which I received high dose brachytherapy treatment at UCSF and paid my bit at about $1,200 - because by then I had Medicare.  The total price for all aspects of the treatment, including  CT scan, spinal epidural, Ir 192 needles insertion,  and follow-up came to just over $55,000.

I thought that was the end of it but the cancer remained and PSA tests showed the need for more biopsies as well as MRI scans, and even a 3D staging biopsy which finally showed the cancer at least concentrated at one location in the interior, e.g.

Total costs by now totaled over $85,000 including all the various tests such as CT scans, MRI scans, MRI fusion biopsy, Prolaris genetic test, and so on. 

SO given this it is easy for Bloomberg writer Megan McCardle to blab in her recent column about "adverse selection" say if Medicare was ever to expand into "Medicare for all".  McCardle's point is that such a program would ensure ever higher premiums year by year since the sickest people - or those who need expensive treatments and tests -  are the most likely to make use of it. Hence one gets what the insurance bunch calls "adverse selection"  Technically, the term is defined by insurance wonks as:

Adverse selection is a concept in economics, insurance, and risk management, which describes a situation where market participation is affected by asymmetric information. When buyers and sellers have different information, it is known as a state of asymmetric information

But I argue, as does David Jessop, that this kind of economic concept has no place in health care delivery because people are not cars, homes, or fancy jewels. Look, if populations are continually growing that logically  means sick conditions and diseases must grow with them-  whether cancers, Alzheimer's, kidney disease or whatever. Even the healthiest person following a rigorous diet  can get cancer or be injured in an auto accident. Hence, the notion of "asymmetric insurance" for a risk pool managed by a health insurer is ludicrous. There can be no such thing because one will know from the get go that every manner of sickness and disability can only expand, especially for older age groups.

The subtext for McCardle's arguments is the medical loss ratio suffered by putative health insurers, including exchanges -is too great. Hence, so many now abandoning the ACA as too "expensive" to support- so why even consider 'Medicare for all'?  In this regard, if the number  of sick patients in any risk pool is 'significant' - say more than about 1 in every 20-  the private insurers' profits take a nosedive. The medical loss ratio has increased beyond acceptable levels, so the shareholders will not like it.  This is precisely why health insurers - with the exception of Medicare - have become ,more leery of accepting too many oldsters or chronically sick patients. It means major loss of profits. Thus, the imperative becomes one to deny needed care rather than to provide it, especially for pre-existing conditions.

Some on the Right are so desperate to justify cuts to Medicare - as well as Medicaid -  that they argue (as one letter writer did in a recent WSJ contribution) that  pre-existing conditions must be factored in for insurance rates because if they are not known then it is a case of "asymmetric information", i.e. the patient knows he already has some type of cancer but not the insurance company or health exchange with which s/he seeks coverage. Hence, the demand to report all pre-existing conditions before being insured, the better to fix deductible and premiums ab initio - if at all.

To which I and Jessop respond: As a health insurer you're supposed to be in the business of helping people get appropriate treatments for their illnesses, not deny them.  Are you going to deny them the care and make them severely ill, or  go bankrupt, to appease insurance wonks? Or Republican tax cut fetishists?

But McCardle has even bigger budget "fish" to fry than adverse selection might interject. She writes:

"A far bigger problem is what this might do to hospital budgets. Why? Because Medicare doesn't  necessarily pay enough to keep those hospitals running."

She is correct that Medicare controls some of its costs by shifting them to private insurers (she calls it "off loading") which is why Medicare supplemental (e.g. Plan F) insurance exists to make up the difference, As she points out:

"The hospital's fixed costs are mostly getting covered by higher reimbursements from private payers."

Allowing this isn't "necessarily cheating". Well, that's very generous of her!  But her underlying theme is that in a Medicare for all scenario all who buy in would also have to get private insurance from someplace because the single payer (government) simply wouldn't be able to handle all the costs.

There are two aspects she overlooks that could lower costs for all, and make a Medicare for all system more palatable.

First, a large part of increased Medicare costs is due to a program called "Medicare Advantage" (MA) which was created by BushCO and the Republicans with their Medicare Modernization Act of 2003. It basically confected a privatized form of Medicare ("Part C"), with the express purpose of bleeding regular (traditional) Medicare into insolvency by blowing up to $20-25 billion or more a year (based on gamed "risk scores")  and funneling much of it from the older program. Unless this (MA) program is killed (the sooner the better),  no other cuts will matter - because MA will metastasize to the point every $ is swallowed up.. For those who wish to read the details on why MA is hurling Medicare into insolvency check out the content in these links:

https://www.publicintegrity.org/2014/06/04/14840/why-medicare-advantage-costs-taxpayers-billions-more-it-should

 And:  https://www.medicareresources.org/blog/2015/11/04/is-medicare-on-the-brink-of-insolvency/

Second,  Medicare monies are being bled down by drug costs to the tune of $250 b over ten years, because it isn't allowed to bargain for the best prices like the VA.

Even so, fixing the above distortions Medicare will simply be brought more into a financial equilibrium i.e. to avoid insolvency. It would not really enable a dramatic expansion to "Medicare for all".  For that to occur, wait for it, taxes would have to be increased and significantly as in western European nations such as Germany, France.

As Jessop concedes the choice is one between more taxes or less health care.  So if citizens think higher  taxes (by 25 % even for "middle classes")  are the worst thing in their lives, what could happen? Well,  what if they are laid up in a hospital bed with severe disability, pneumonia  or leukemia? Is going bankrupt more to their liking?  Again, for most Americans - who are tax hating Pollyannas-  they are convinced they're never going to get to that extreme fate so they make the bet those dire medical disasters won't happen to them.  But it's a terrible bet because they can happen to any of us! (As I found out when I learned I had prostate cancer that had to be treated.)

Make no mistake that 'Medicare for all'  would be the for profit medical  industry's biggest nightmare because they'd no longer be able to reap profits by invoking medical loss ratios - preventing sick people from getting care instead of delivering it. Hence, they and their  political lackeys and extremists will be prepared to fight like junkyard dogs to prevent it, including the perverse use of propaganda.

McCardle's final cautionary argument against a single payer system is that it would lead to drastic cost cutting, i.e."hospitals would probably have to resort to draconian measures  which might result in patient lives lost".   Perhaps. But the way to avoid such drastic cost cutting is to ensure enough taxes are available to pay for the care needed by the sick segment of a populace. After all, if everyone was a picture of health and had the genes never to fall ill, health insurance would barely be needed - unless a person crossed a road recklessly.

McCardle writes at the end of her piece:

"I'd want to be  a lot surer before I started running a mass experiment for our nation's physical and fiscal health"

But then she can afford to exercise patience, being a highly paid Bloomberg scribe. Many citizens, especially in Trump country - and now facing (in 18 OH counties, after the retreat of Anthem) no more naxalone for opioid overdoses cannot.  It's a matter of priority for getting scarce medical resources and paying for them!

In this regard, the citizen needs to inform himself as much as possible about what the real arguments are for and against 'Medicare for all'. And also ask himself if he is willing to pay significantly more in taxes to be assured of better access to health care.

Perhaps the issue is best summarized by WSJ letter writer Clay Creasey (June 6, p. A16):

"It is time for intelligent conservatives to realize that the vested interests of our current health care system (insurers, drug companies and lawyers) are selling us down the river. They claim single payer is socialism. In fact, it could be the single biggest contributor to economic growth  "

See also:

http://smirkingchimp.com/thread/william-rivers-pitt/73390/we-are-not-broke-trashing-the-austerity-lies

TIME's Exposé of the Medical Complex's Price Gouging - And Why We Need to Expand Medicare, NOT Cut It! (Pt. 1)

Well, one never ceases learning! The recent (March 4) TIME 24,200+ word article ‘Bitter Pill’ delivered a shock to me and I thought I was au fait with most aspects of our payola health care system. As it turns out, what I knew barely scratched the surface of how Americans are being gouged and their pockets repeatedly picked to the tune of $750 billion a year in medical wastrel spending.


While the putative journalist cognoscenti usually dismiss TIME as “bubble gum” piffle for the hoi polloi, the fact is that it often contains salient and insightful essays. And every now and then ‘TIME’ hits one out of the park with a thorough investigative piece worthy of The Columbia Journalism Review. Such was the case with ‘Bitter Pill’.


The article ranges over 5 effective sub chapters from how people are clobbered in routine care, to the issue of catastrophic and “prestigious care”. One of the stories (p. 18) is that of Sean Recchi, 42, who learned he had non-Hodgkins lymphoma. Before the guy could even be examined for treatment, and before a treatment plan was devised, he had to cough up $48,900 in advance. This was more than the total I had to pay for my prostate cancer treatment back in September.

The total cost to pay for Sean’s initial treatment including initial chemo came to $83,900. Further shocks awaited after 344 lines of hospital bills were printed out, most by a little known automatic program called ‘Chargemaster’ – which computes most of the medical billing.


In perusing the Chargemaster billing, Sean and his wife found one generic Tylenol pill came to $1.50. Cheap? NO! As the article notes you can buy 100 of them on Amazon.com for $1.49, and this without a hospital’s purchasing power. Similar other outrageous mark-ups were found including $283 for a simple chest x-ray for which the hospital was usually paid $20.44 when it treats a patient on Medicare.


Meanwhile, there were Recchi’s blood and lab tests which came to $15,000, while TIME noted that had Sean been old enough for Medicare the full tab would have been “a few hundred dollars”. TIME learned that M.D. Anderson the putative ‘non-profit’ that delivered Rechhi’s care earned a profit of $531 million in the most recent report it filed with the U.S. Dept. of Health and Human Services. As the article put it:

“That’s a profit margin of 26% on a revenue of $2.05 billion, an astounding result for such a service-intensive enterprise.”


Meanwhile the President of M.D. Anderson is paid handsomely, with a total compensation of $1,845,000 last year. TIME notes this salary is “nearly triple the salary paid to the president of the entire University of Texas system” of which M.D. Anderson is a part!


TIME concludes in the case of the Recchis:

“You see nothing rational- no rhyme nor reason- about the costs they faced in a marketplace they enter through no choice of their own. The only constant is the sticker shock for patients who have to pay.”


No wonder, as the article goes on to observe, “people spend almost 20% of the gross domestic product on health care” compared to less than 10 percent in most developed nations.  And further:


‘Yet in every measurable way the results of our health care system produce no better results and the outcomes are often worse than those other countries.”


How did such an atrocious abomination of a system come to be? LOBBYING! TIME cites the Center for Responsive Politics that the Medical Industrial Complex (organizations representing doctors, hospitals, HMOs, nursing homes, Big PhRMa etc) spent $5.36 billion since 1998 lobbying in Washington, which dwarfs that $1.53 b spent by the defense and aerospace industries. No surprise then that with this noisome establishment of parasites we are set to spend $2.8 trillion this year on health care.

No wonder our national debt is exploding (along with monstrous defense spending) !


Note also that this same Medical Industrial Complex is also the one – in league with the Peter G. Peterson bunch, screaming to prevent special bidding by Medicare (say for the best prescription drug prices)-  that has sought to prevent expanding Medicare beyond its current population. But that expansion, by virtue of more rigorous control of costs via standardization, is exactly what would cure our overspending in the medical arena.


Another case highlighted was that of Janice S. (p. 22). Janice made the mistake of calling for an ambulance after experiencing chest pains. It is a “mistake” most of us are asked to make to save our lives, if we even think there’s a remote hint of a heart attack. But see, “Janice” had been out of work for a year and had no insurance. (She was 64, one year shy of Medicare)


As she was rushed to the Stamford Hospital, she might well have jumped out if she’d known in advance she’d be billed $995 for the ambulance ride, $3,000 for seeing the doctors (most of it racked up as waiting time) and $17, 000 for the “testing” – all in all $21, 000 for what turned out to be a false alarm.


One of the series of tests done was “Troponin I” for which she was billed $199.50 each by the hospital’s charge master. Had she been on Medicare, she’d have paid only $13.94 for each Troponin test. Meanwhile, she was billed $157.61 for a CBC (complete blood count) while if she’d been on Medicare, the bill would have come to $11.02.


TIME’s article takes note that many “grouse about Medicare’s payment rates” but goes on to add (ibid.):

“But an annual expense report that Stamford Hospital is required to file with the federal Department of Health and Human Services offers evidence that Medicare’s rates for the service Janice S. received are on the mark”


In actuality, in perusing the Hospital’s actual filing it charged patients $293.2 million for tests similar to the lab tests of Janice S. but which actually cost $27.5 million. In other words, Stamford charged about 11 times its costs.

What is an even worse travesty in all this over-billing, is that “no hospital’s charge master prices are consistent with those of any other hospital, no do they seem to be based on anything objective, like cost”.
HUH? Are you kidding me? And then you have dildo-brains like Boehner’s Repukes and Tea Peas screaming to let Medicare eligibility rise to age 70??

Re: the variant charge master billings, TIME reports “they were set in cement a long time ago and just keep going up almost automatically”.  Great! A deus ex machine billing monster with no one in control!

The TIME author (Steve Brill) adds (p. 23):

“That so few consumers seem to be aware of the charge master demonstrates how well the health care industry has steered the debate away from why bills are so high to who should pay them”
Most revealing? The exorbitant difference between the costs actually indicated and the charges Brill spied by all these “non-profits”. As Brill puts it (p. 26):


“Judging from the difference I saw in the bills examined between a typical charge master price and what Medicare says the item cost, this would mean that ‘$39.3 billion’ in charity care cost the hospitals less than $3 billion to provide. Incredibly, “under Internal Revenue Service rules, nonprofits are not prohibited from taking in more money than they spend”. Holy Samoley! Would that those of us with de-mutualized insurance shares had even half that benefit after taking losses on paper of more than 50%! (A recent court case in January, 2013 in California has asserted the IRS has the right that all such shares have ‘zero’ cost basis, hence if such shares are sold you pay capital gains taxes whether it’s a loss or gain)

Meanwhile, given the monstrous cost vs. profit imbalance of these Non-profits, TIME puts the kibosh on the widely spread meme that “a cut to the provider, i.e. hospital, must also be a cut to the (Medicare) beneficiary”.

Not with those 11x profits over costs astounding profits it ain’t! Be aware of that, folks, as the sequester heats up and those 2% cuts to Medicare providers are exacted. If you hear or see them crying ‘Foul!” you know they are full of shit.


In the meantime, dear readers, maybe this first blog instalment will have imparted a few important lessons:


1) Make sure all your medical ducks are in a row, say before calling for an ambulance for chest pain.

2) Be sure to find out, if and when you do go to a hospital, whether it uses the infamous ‘charge master’.

3) If you must go the charge master route, demand a 50% or better discount on the test(s), e.g. blood test, or refuse to accept it (after you are informed of the charge master price) in the first place.

4) Push your reps for Medicare to be expanded at least to people younger than the current Medicare eligibility age, say to 64 or 63. Fight like holy hell to prevent the eligibility age being raised to 70!

And stay tuned for more in Part II!

Cuing One of the Biggest Election Landslides in the Last 20 Years

Colorado College students yell 'Obamanos!' in 2008. They will be yelling even more if the new health care law is overturned by the Roberts Supreme court, and - along with tens of millions of women and the medically under-served, propel Obama to a landslide victory in 49 of 50 states.


It boggles the mind, at least the mind of the sane, as they peruse assorted columns, and gibberish spouted by the Republicans and their corporate consevative enablers. Evidently then, only a very few perceptive GOOpers appear to get it: that if the Obama Patient Protection and Affordable Care Act is knocked down by the 5 conservo Supremes, or even if just the individual mandate is knocked down (essentially laying waste to the rest of the bill) then the Republican Party stands to be on the losing end of the biggest electoral landslide in the past 20 years come November. No ifs, ands, or buts!

This despite the fact that some of the detached- from -reality columnists (e.g. Kimberly Strassel of the WSJ, today 'The GOP's Health Care Eeeyores', p. A13), believe - to the contrary - that if the law goes down the Reeps can still prevail. According to her:

"The Republicans can argue that any fallout from partial or full repeal of the law - higher prices, the loss of some provisions - is the fault of a Democratic administration that strapped the market to a shoddily considered, partisan bill..."

Well, good luck on that one, Kim! But I'd suggest that before you count your chickens....errr...or 'elephants' ...you first get your team to hire some first rate PR firm. Say like 'Institute of Crisis Management, PR' - the bunch currently trying to salvage the rep of pink slime! (Hmmm......pink slime and repukes, kind of a symmetry there!) The fact is that any person not already brain- dead knows it was only Obama and the Dems that attempted to try to DO anything to change this nation's ridiculously messed up health care! All the GOP did is block every initiative, unless it was one that held the sick to private markets and ....escalated rejection via pre-existing conditions, and vastly higher costs! The worst travesty of all in this, is that the bill the Reeps ended up rejecting was effectively one that the REEPS themselves came up with!

This was as an alternative to what they dismissed as "Hillary care" in 1993-94, thereby waging their massive PR campaign while asserting THEIR (individual mandate) version was best.

THEN, when Obama decided to implement it....what do they do? They run as far away from it as if it was the original Hillary bill as opposed to what THEIR thinktanks (like Heritage Foundation) hatched!

Make no mistake that any voter that has more than 15 years of political history in his or her noggin will see what hypocrites the Reeps are and hence THEY will be the ones on the losing end come November.

This political negativity will be consolidated, reinforced as more and more people -families now benefiting from the law (e.g. the part that permits youngsters to remain on their parents' plans until age 26) see what else will befall them if the Roberts Supreme Court overturns even one part of it, but especially the crucial individual mandate.

For example, if the Roberts court overturns it, we will face a health miasma and a system in total chaos. Families, the very sick, the most vulnerable and children will once again be turned away because of having pre-existing conditions,......rubber stamped as anything from severe childhood measles to falling off a swing and breaking an arm.

The insurance companies will also be allowed to restore what they call "lifetime caps" - meaning that once your medical insurance pays out a cumulative total of say $150,000, maybe for pancreatic cancer treatment or chemo over 3 years, and the cap is at $150,000 - then you get no more treatment no matter how desperate, sick or near death you may be.

WHO do you think the victims will blame for this? Obama, who mightily struggled to get something done...or the Repukes who blocked everything that'd make a difference? (I give two guesses but the first doesn't count. )

Insurance companies will also likely cease payment for the cost of preventive services including: mammograms, flu shots, colonoscopies, and other well-child visits. Of course, the young adults - already saddled with massive college debt - will now have to contend with possibly massive insurance debt as well. Or, they could try going without and hoping they get no serious illness, or find themselves in a serious auto accident - say which makes them quadriplegic.

Even more dire, without the projected expansion of Medicaid, and facing measly state budgets, more than 32 million Americans will find themselves at the mercy of the fates and....charity clinics. But even 10,000 such clinics will not be able to handle the load, and let's recall many public clinics were cut last year because it was believed by the Reeps that military spending (say for a new combat air brigade at Ft. Carson, Colo.) was more important - at a cost of $1b, then spending $800 million on free clinics!

Beyond that will be the monumental added paper waste that will fuel an increase in our deficit - which, to hear the Reeps, is a very critical matter. Well, if that's so, why would you not do everything to contain monetary waste instead of wanting to overturn a law that controls it?

Consider: One huge cost-saving measure of Obama's Patient Protection and Affordable Care Act was that it controlled the insurance companies medical loss ratio. This is the amount consumed by paper pushing (administration) and profits, which the law would limit to 15-20%. Without the law, as today's Denver Post Editorial observes, that fraction could easily rise back up to 30% or more. Possibly up to a third not being directed toward claims at all, but paper pushing and $10b a year in profits likely spent on fancy cruises to the Caribbean to entertain insurance money changers, investment banker moguls, PhrMA reps and new physicians, politicos.

WHO do you think the voters will be most angry with when they process all that, after the Supremes knock down the law? WHO?

And we won't even get into the 45 million child bearing-age women who will now also be denied access to affordable birth control. These women are already furious at how the Reeps have dragged them through the mud and associated birth control access with sexual excess.

Do the Reeps and those like Kim Strassel now believe all those women (voters) will be willing to forgive and forget? If so, then they're smoking something maybe way too strong to be legal.

The fact is if this court becomes activist* and knocks down the Patient Protection and Affordable Care Act, it will be the biggest impetus to Dem participation in the November election ever seen. Already the college kids, like at Colorado College, are getting organized (see photo) like they were for Obama in 2008. They know the Reepos offer nothing and believe in nothing that redounds to the benefit of ordinary workers and citizens.

---
Footnote: By "activist" court I mean one that over reaches and upends the will of an elected congress. If the Roberts' court overturns the Patient Protection and Affordable Care Act or even the individual mandate in it, this will render it activist since it will have arrogated to itself the will of the congress that passed the bill. So, are we a nation for which congressional legislation means something, or a nation which allows high courts to trump that legislation?