Americans can be pretty misinformed about how the U.S. healthcare system works. So, first things first. Let’s cut through the BS and popular beliefs about how things operate to get to the basics about who’s calling the shots and why we’re in this mess. Let’s do some myth-busting.
MYTH 1
The problem with the American healthcare system is greedy for-profit insurers who are making money “hand-over-fist”. We just need to get rid of insurance companies, take the profit out of the equation and that will solve the problem.
FACT: No doubt about it. There are some for-profit insurance companies out there. And some are better than others. And their shareholders do want to make as much money as possible from what they’ve invested. But, did you know most health insurers in the U. S. are actually NOT-FOR-PROFIT companies? In fact, the dominant insurer in most states is a Blue Cross-Blue Shield company, most of which are NOT-FOR-PROFITS. And, they typically controlling 50% or more of the insurance market in any given state. And guess what, those not-for-profit insurance companies are more than likely purchasing your care from a NOT-FOR-PROFIT hospital system. And that hospital system probably controls 30-50% of your local market. It may also be the largest employer in your community, giving it a lot of clout with policymakers. More about all these “not-for-profits” in a later column. By the way, most of these guys also don’t pay taxes like you.
MYTH 2
Most Americans get their health insurance from their employers. And they don’t want to give up their freedom of choice to participate in some “socialist” government-run healthcare system as they have in other countries.
FACT: Slightly more than 50% of Americans do get their insurance through their employer. However, nearly as many Americans already get their healthcare through a hodgepodge of government-run programs in the U.S. And, newsflash: All of those programs have their separate administration adding to the inefficiency of the system – rather than just having one single system to cover everyone. These existing programs include:
Medicare provides care for the elderly and the long-term disabled;
Medicaid provides care primarily for low-income children, low-income pregnant women, some families, certain disabled individuals, low-income seniors without Medicare, and some adults depending on the state. Medicaid also provides long-term care for low-income elderly and Medicare subsidies for low-income elderly;
State Children’s Health Insurance Program (S-CHIP) provides health insurance for low-income children without other coverage;
Veterans Administration (VA) provides care for qualifying veterans with service-related illness or injury and/or who may qualify because they are low-income;
Tricare insurance and military healthcare for active-duty military, retirees and their dependents;
Indian Health Service (IHS) provides care to qualified Native Americans based on U.S. treaty obligations and federal law;
Obamacare subsidies to purchase health insurance on public health exchanges established under the Affordable Care Act (ACA);
Federally-Qualified Health Center (FQHCs) and Rural Health Centers (RHCs) that receive reimbursement through the Medicaid program;
Community Mental Health Centers (CMHCs) funded through the Substance Abuse and Mental Health Services Administration (SAMHSA);
Disproportionate Share (DSH) funding for hospitals that provide services to communities that serve a “disproportionate” number of poor people; and
Graduate Medical Education (GME) funding distributed through the Medicare program and used to train doctors and provide care, primarily in hospitals.
I could go on and on, but I’m sure you get the picture. We have a lot of taxpayer-funded programs out there, and they’re already covering a lot of people. In fact, nearly 50% of Americans are covered by some form of public insurance, receive subsidies to purchase insurance, or receive care from taxpayer-funded providers. And, this doesn’t even include all the programs and services funded by states (Medicaid is jointly funded by states and the federal government, but largely state-run) and local governments. So, sorry to break it to you, but the U.S. isn’t some bastion of private, for-profit healthcare. It just isn’t.
FACT: Most developed countries (as well as some developing countries) that have national healthcare systems have mixed public and private healthcare systems (JUST LIKE WE HAVE CURRENTLY FOR MANY AMERICANS). Across the OECD nations, approximately 25% of healthcare spending is private. Even in the grand-daddy of national healthcare programs, the British National Health Services (NHS) people can get care through private programs. The difference is that everyone has access to some kind of care through the NHS if they need it. Additionally, much like America’s Medicare program and our employer-provided health care, British citizens pay for their healthcare through monthly contributions.
Finally, I hate to burst everyone’s bubbles, but the idea of a national healthcare system was first put forward by the conservative German Chancellor Otto von Bismarck, the architect of the modern German state — not exactly a socialist. And, his rationale for the program was to drive economic growth for the newly formed nation, with a healthy German population. (Don’t worry, we’ll profile many different systems in later columns. We’ll also profile the history of U.S. national health insurance proposals which were originally proposed by the Republicans.)
MYTH 3
Obamacare (Affordable Care Act) was a failure because it was poorly-designed, and Americans don’t want people telling them they have to buy insurance. It can’t be fixed, so we should just chuck it, and start over.
FACT: I’m sad to say that I was an on-the-ground observer of the “failure” of Obamacare through my work in Washington, DC. And, I hate to break it to all those haters out there, but it hasn’t been a failure. The uninsured rate before the passage of the law was a whopping 46.5 million (17.8%) Americans, with many people going without insurance because they simply couldn’t buy it. No one would sell them health insurance, at any price. And, not necessarily because they were sick. You could be denied for something as simple as having taken anti-depressants during a challenging period in your life –or maybe just because you were over the age of 40. Obamacare got rid of one the more inhumane features of American healthcare – medical underwriting for individual insurance purchasers — which allowed companies to deny you insurance altogether, or to make it so prohibitively expensive that you couldn’t afford it.
After the passage of Obamacare, the uninsured rate dropped to a low of 26.7 million (10%) in 2016, immediately before the end of President Obama’s second term. This is all while BOTH political parties, aided by the healthcare industry, did their level best to kill it off – which is why health insurance premiums have continued to rise.
The reality though, is that lots of people played a huge role in crippling the ACA. The Republicans largely didn’t want the law at all and didn’t want a law that they didn’t help craft. But, a whole lot of Democrats didn’t want the law either, because it didn’t include the public option. And once the battle lines were drawn, the law, which was known to be flawed at its passage, was doomed to not have any of those problems fixed because neither side could budge. The balance of forces that had allowed its passage was too fragile to touch.
But, neither party could leave well enough alone. First, the Democrats botched the roll-out of the law. Then the Republicans attacked Medicaid expansion in the courts and yanked the funding for crucial parts. Then the Democrats refused to make regulatory changes to address the yanked funding and blow to Medicaid. Then industry forces started asking for special dispensation for the parts of the law that had been disabled……then on and on and on…..The result – a massive taxpayer-subsidized transfer of wealth to all the Blue Cross-Blue Shield Plans that were already the dominant players in the market. And Boom! All those plans now had massive pricing power and up went insurance rates. The good news – all those problems can easily be addressed to fix the law and continue driving down uninsured rates. More about that and what happened to the law in a later article.
MYTH 4
America has the best healthcare you can buy, as long as you can afford it.
FACT: Definitely, we have a problem with the affordability of healthcare – even if you have insurance. According to a 2019 study by the Consumer Bankruptcy Project more than half a million Americans file for bankruptcy annually because of debt they piled up due to illness. Americans are also borrowing like crazy to pay medical bills, with the New York Times citing a recent study by Gallup and West Health that we borrowed a whopping $88 billion to pay for medical bills last year. And that doesn’t include the people who just plain go without care – even when they have insurance – because they just can’t afford it. According to a June 2019 Henry J. Kaiser Foundation Issue Brief, “at least one-fourth of insured (emphasis added) adults [report] it is difficult to afford to pay their deductible (34%), the cost of health insurance each month (28%), or their co-pays for doctor visits and prescription drugs (24%).” HOUSTON, WE HAVE A PROBLEM. Not only is the healthcare system eating up our economy, but I pretty much guarantee you that there isn’t much of anything being done in the industry to make it more affordable. The American Hospital Association is suing the Trump administration to block it from implementing very modest proposals to even make it possible for consumers to know the price of their care. Astounding.
FACT: Sorry America, but we don’t. The U.S., which had healthcare outcomes that were similar to many other developed countries in the 1970s has been in a downward spiral ever since. During the same period, we’ve poured more and more money into the system. Again, in 2019 we saw American life expectancy decreased for the third year in a row. And, although we continue to make improvements in many areas, Americans are sicker, experience more medical errors, get sick and die from treatable causes, and have higher rates of infant mortality and pregnancy complications than people in other developed countries. This is not because we aren’t spending enough on healthcare but is the result of a whole series of differences in how we approach health in America. We’ll talk a lot more about this in some later articles.
MYTH 5
American healthcare costs are so high because people abuse the system, use too much care, and use the wrong kind of care – like going to the emergency room when they don’t need to.
FACT: Americans do use the emergency room more often than people in other developed countries (except Canada). Care in that setting is not cheap. And, we do tend to use more expensive tests and expensive drugs, than people in other countries. This is partly because we have a lot more specialists and fewer primary care doctors. We also have higher rates of chronic disease. But, the biggest problem is the actual cost of the services we use. The price you pay is more, and we pay more to the people who deliver those services. A recent study by Harvard concluded that “the main drivers of higher health care spending in the U.S. are generally high prices – for salaries of physicians and nurses, pharmaceuticals, medical devices, and administration.” As you can see, there are a lot of misconceptions about our system. Tackling those myths is key to understanding what we’re dealing with, and what we can do better. Please share your comments and questions. And let’s figure out how we can do better by the American consumer.
Talk to you next week.
D
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