A COMMODITY?

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The authors of the Declaration of Independence didn’t think health care was an “unalienable right that was endowed by our creator” and health care wasn’t one of the many rights that were added to the nation’s constitution in 1791. 

Back then nursing care supported the ill and sped their recovery. Amputations prevented some deaths.  But most of the treatments doctors employed were pretty awful.  Consider—the December morning in 1799 when 67 year old George Washington awoke desperately ill.  He was retired and lived at Mt. Vernon.  The previous day Washington felt well and went out in the snow to “mark trees that were to be cut down.”  Upon awakening the day in question he couldn’t talk and had trouble breathing.  His wife Martha sent for one doctor, then another.  She and her husband were two of the country’s richest people and obviously didn’t need subsidized care.

During the day three prominent physicians came to their home and plied their trade.  The doctors were among the country’s best and they worked hard.  On 4 occasions they bled the sick man and removed a lot of blood.  His throat was swabbed, he gargled, his feet were covered with wheat bran, and he was given an emetic to induce vomiting.  Nothing worked.  When Washington’s breathing got worse he dressed, thanked his 3 doctors, and made arrangements for his burial.  That night he died. (As related by his secretary Tobias Lear)

Before 1800 the educated elites relied on the teachings of the ancients, like the Greek physician Hippocrates, who believed that illness was “due to an imbalance of blood, phlegm, black bile, and yellow bile and the Roman Galen who dissected monkeys and wrote about their anatomy. 

Mankind was not aware of the microscopic creatures who lived in, around, and on us until the late 1700s. 

During the 1800s we gradually learned about their existence.  We started believing and understanding that they were the source of many of our maladies, and we began to take precautions.

In the 1900s our abilities exploded:  We learned how to safely transfuse blood. Hormones were isolated.  Antibiotics and drugs that fought viruses and parasites were developed. Experts learned and taught others how to replace eye lenses that were opaque.  Vaccines were crafted.  Thousands of medical gadgets were devised.  Surgeons were taught how to proceed after they cut a person open, and a large number of effective drugs became available.

In 1965 over 100 million Americans were introduced to socialized medicine—Medicare and Medicaid.  Most loved it. 

In 2003 the entire human genome was “sequenced”.  Scientists determined the exact order, the way the 3 billion pairs of human DNA nucleotides (building blocks) lined up, and our ability to attack and “cure” genetic conditions got a big boost.  

The push and pull between medical care as a shared endeavor or a wealth producing commodity started in the 1900s and intensified over time.  In the last half of the 20^th century “health care” increasingly became a major part of the U.S. economy and obstacles and inequalities were created.  This book seeks to make sense of the wonders that were developed and the challenges we face.

As Elisabeth Rosenthal of Kaiser Health News put it: “there’s money to be made by billing for everything and anything.” And hospitals currently intentionally submit amplified bills for their services.

Each hospital has an all inclusive list of “items billable to a person or a health insurance provider.”  Called “charge masters” they have long been secret in most states; but starting in 2019 they will be posted on line.  They do not include physician charges, and they are intentionally inflated–or in the “speak” of the University of California San Francisco Hospital:  “they are not the amount that either you or your insurer will actually pay. Out-of-pocket costs will be impacted by insurance plan coverage, co-pays and deductibles, if any, (etc.) – so our list should not be used to estimate the actual final cost you will incur.” 

Insurance companies like to flaunt them to demonstrate how much money they are saving their patrons.  And hospitals can claim that overstated prices are useful when they negotiate contracts with insurance companies.  The “fair” cost, the amount insurance companies (on average) really pay for most emergency and hospital visits, is accessible to anyone who has a smart phone. They merely have to open Healthcarebluebook.com or some similar service, and type in their zip code.  

Medicare strictly regulates the amount the government shells out to hospitals.  The agency is constantly updating what it pays for an illness or operation; 98% of American hospitals accept what the Feds dole out as payment in full. 

Exaggerated bills punish the ill and wounded who are cared for in a hospital that does not have a contract.  They hassle the person who is seen in an “out- of-network” facility or who was cared for by a doctor who was not covered by an agreement.  And they are especially harmful to people who don’t have health insurance. 

Paradoxically the people who try to collect the most exorbitant amounts of money commonly tend to blame the injured party. 

 I believe that once hospitals start charging people without insurance fairly, a form of BACK STOP INSURANCE makes sense.  As detailed in the “alternative approach” chapter, when corporations have a big stock offering, they obtain insurance.  If some of the stocks and bonds are not sold on the open market, the investment firm that is handling the transaction has to buy them.  

We need to take a similar approach to people who can afford insurance but don’t have a policy.  Health insurance is rarely used by some because they have a healthy life style, they’re young, and they are lucky.  And because bodies have an innate ability to fight off invaders and heal wounds.

If one of these people is in a “higher income” category,  and they haven’t purchased medical insurance, and they get sick or are injured, they would be best served if the system has “automatically enrolled them in a “backstop” insurance plan.”  If they are seen in an emergency room or are hospitalized the facility should be able to submit a claim and it should be paid by the government.  At tax time the IRS can then decide how much the person owes for a year’s worth of “backstop insurance.”  (As conceived by Matthew Fielder, NEJM:  May 2, 2019.)³

II. HEALTH INSURANCE: Some employer policies are unusable because the co-pays are so high.  In addition to taking care of the people with pre-existing conditions, we need a law or regulations that make health insurance affordably-useable.  There should be caps on premiums and co-pays; out of pocket payments should be based on income—should mirror earnings

Several of the Democratic candidates for president believe in Medicare for All.  Like all “rights” this form of care must be paid for.  That usually means taxes, and people who promise more taxes aren’t usually elected.  In addition to something like the current payroll tax– the government would have to collect the money employers contribute to a person’s insurance and the excess insurance company profits. 

 As an old retired M.D. and a socialist at heart I favor Medicare for all.  But as a realist I’m worried. 

In the 60s and 70s affordable health care was available to those who wanted it via Blue Cross and programs like Kaiser (my people.)   Then insurance companies entered the market and did what insurance companies do.  They risk adjusted.  People who live in the low lands near the Mississippi River pay more for flood insurance, and we in California pay more for earthquake insurance.  Private insurers didn’t sell affordable policies to people with pre existing conditions.  Premiums for the young and healthy were relatively cheap. 

Over the subsequent decades the young, healthy and employed started choosing private insurers; people with problems joined Blue Cross and Kaiser.  Year by year medical care improved and it also became increasingly costly:  CAT scans; MRI’s; organ transplants; angioplasties; artificial joints; and ICU’s aren’t cheap.

As their population increasingly had fewer healthy clients and more people with costly problems, Blue Cross and Kaiser started “hemorrhaging money.”  Ultimately they were on the verge.  After Hilary’s very reasonable Health Care adjustments were rejected, many Blue Cross companies and Kaiser said “uncle”.  They adopted a risk adjusted approach.

Over the subsequent decades people forgot that affordable health care, like the roads or schools, was once widely available.  The young, healthy, and employed grew up assuming they would be able to buy insurance that was good and affordable. It was their “right.”  Understandably, they don’t want to give it up.  And we need their votes. 

My approach:  lower the Medicare age, and keep dropping it. Make affordable Medicare purchasable for those who want it.   At the same time, over a few years–SUBSTANTIALLY LOWER THE MEDICAL LOSS RATIO.  Under the Affordable Care act companies get to keep 15 to 20 % of premiums for expenses, bonuses and stock holders.  The overhead of Medicare allegedly is 3%.  If insurance companies could keep 8% of the premiums, they should still be profitable.  If a yield of 5% isn’t enough, a company can leave the market. And some will. Over time healthy people will increasingly migrate to Medicare.  We may never get to Medicare for All but we’ll get close.  

As a result of the current medical loss ratio, the heads of the health insurance companies are doing quite well. In 2018 as a result of exercised stock options and stock awards, the one year compensation of the head of 49.5 million member UnitedHealth insurance, the nation’s largest, was over $18 million. The leader of Anthem, the 40.2 million policy, second largest was $14.2 million.⁴    

III. We should also extend some of the benefits of the Affordable Care Act (ACA) to traditional Medicare.  The ACA (Obamacare) created an annual lid on the amount people are forced to pay for their care.  In 2018 it was $7350.  By contrast, traditional Medicare, has no cap, no maximum amount a person can be charged.  When people see a doctor or are hospitalized, they are responsible for “copayments, coinsurance, and other gaps in coverage.”  If someone has a very serious illness and is hospitalized for months, the government stops paying the bill “after the 150^th day in the hospital. 

People can buy an insurance policy that pays the bills that are not covered by Medicare. There are 10 levels of “Medigap” plans.  If a person doesn’t buy one of them when they enroll in Medicare, the policies are subsequently only available (most of the year) to people who pass an insurance physical.   

Medicare Advantage plugs a number of the holes in traditional Medicare.  Currently (according to AARP) 44 million Americans are insured by Medicare.  The number opting for Medicare Advantage rose to 20 million in 2018 and it’s going up.  Advantage plans are capitated.  The government gives the insurer a dollar amount per person per year, and “everything” is covered.  Plans may include limited dental care and gym memberships.  Out-of-pocket costs were capped at $5,215 per year in 2018.  (November 14, 2018, NEJM.org.)

According to Wiki “You cannot have both a Medicare supplement (Medigap plan) and a Medicare Advantage plan at the same time.”  It’s time to identify and close the Medicare gaps.

IV: Extra money for health care was supposed to come from a few additional sources.  Congress recently abolished the Medical Device tax, the health insurance tax , and the tax on Cadillac plans.

I suggest re-opening the question of what happens when university and nonprofit hospitals make hundreds of millions of dollars. Should they be taxed? Should they return some of the tax funds they received from the government for use elsewhere in the health care system? Or perhaps charitable and university hospitals should (like the for-profits) generate a bill for the service rendered. The amount charged would be similar to the sum Medicare or insurance companies would actually pay. (Inflated excessive charges should be treated as potential tax fraud.) The institution’s outlay could then be deducted from the hospital’s gross income.  If an institution performs a lot of charity work and has no net income they would owe no taxes.  If they generate a large profit, they, like for-profit corporations, could pay a tax.

Summary:   if our goal is to make quality health care affordable and available :

1.  We need to fix the drug price problem.
2. Pevent hospitals from generating outrageous inflated bills for their services.
3. Eliminate out of network charges. 
4. Eliminate balanced billing. 
5. Allow the medical loss ratio (MLR) to whither. 
6. Put a cap, an upper limit, on the out of pocket Medicare bills that unsuspecting seniors are sometimes forced to pay.
7.  And we should allow people to buy into Medicare. 
8. And perhaps tax the excess profits of University and Charitable hospitals

Is health care a commodity?

https://www.theberylinstitute.org/blogpost/947424/215160/Thoughts-from-a-Commodity

https://www.enttoday.org/article/health-care-as-a-commodity-competition-should-be-focus-of-health-reform-lecturer-says/   https://journals.lww.com/annalsplasticsurgery/Citation/2009/01000/Is_Health_Care_a_Commodity_.1.aspx

https://www.theberylinstitute.org/blogpost/947424/215160/Thoughts-from-a-Commodity

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