What I wish everyone was really talking about in the healthcare debate

By 2025 it’s estimated half of the American population will have some kind of chronic disease. People suffering from chronic diseases are the most frequent users of healthcare, accounting for about 80 percent of hospital admissions, 90 percent of prescriptions filled, and 75 percent of all physician visits.

$1 out of every $5 spent in the U.S. will go to healthcare. More tests, more medications, and more hospitalizations will continue to strain the budgets of families, communities, and businesses.

But the staggering healthcare costs facing our country are not all due to the illnesses of our people and the healthcare they need—even though that’s what the leaders of hospital systems, insurance companies, and pharmaceutical companies would have us believe.

The prices of almost everything in American healthcare are too high and the way we pay for it too complex. Healthcare businesses from pharmaceutical companies to hospitals to electronic medical record makers feel entitled to too much—ever-growing revenues and profits—and they are dependent on the inefficient multi-payer billing and insurance system.

The Institute of Medicine estimates some $750 billion annually is wasted in healthcare in six areas: unnecessary services ($210 billion), inefficient delivery of healthcare ($130 billion), excess administrative costs ($190 billion), inflated prices ($105 billion), prevention failures ($55 billion), and fraud ($75 billion).  

Sometimes I hear people complain about doctors’ pay and it’s understandable because that’s who we make contact with, and some do really make a lot of money. But administrators and executives, the unseen dudes in suits who outnumber doctors by 5:1, often far out-earn them and are arguably paid far too much.

Many healthcare executives and middle managers don’t want to acknowledge that their high pay and overabundant existence are a part of the problem—sucking up billions of dollars at the same time that they control the kind of healthcare doctors, nurses, and other health workers provide.

William Caron, president of MaineHealth, the parent organization of Maine Medical Center, makes over $1 million every year and he’s no exception. The Press Herald found that presidents and CEOs at 36 of Maine’s nonprofit hospitals and their parent organizations earned an average base salary of $339,000 during the 2011 fiscal year—or $480,000 on average when taking into account bonuses.

That’s roughly $17 million we’re paying annually just to employ 36 people, and that’s not including all other higher-level administrators.

The inadequate public discussion on these costs of care reminds me of the one-sided discourse around Vermont’s supposed single-payer failure.

The ACA has increased access to basic insurance coverage, but it has not solved the affordability issues because executives in the healthcare industry still feel entitled to making as much money as possible.

A good healthcare system involves paying for things we need—like for primary care doctors to spend a half-hour talking about nutrition with diabetic patients, for cardiologists to help heart disease patients without pushing ineffective surgeries, or for a nurse to visit frail patients at home.

And it involves pricing power to keep the costs for drugs and services reasonable, so sociopaths like “pharma bro” Martin Shkreli aren’t able to get rich at the expense of everyone else.

A multi-payer system can work if the costs are negotiated down and over-profiting is prohibited (as appears to be the case in countries like Germany). But a single-payer system, or one that is largely single-payer, would work to provide greater affordability, equality, and quality, taking financial burdens off of individuals and businesses, and giving doctors and nurses more freedom and resources to care for patients.

Single-payer would cut down on the waste of administering healthcare created by hundreds of insurance companies and dozens of electronic health record companies that help hospital systems compete with each other.

Though there’s some debate, traditional non-privatized Medicare’s overhead costs are only about 3 percent of its total budget, as Don Berwick, MD, a Harvard Medical School professor and former head of Centers for Medicaid & Medicare Services, notes.

That’s far less overhead than what private insurance companies take for their administration and profits, on average 20 percent, and less than the 6 percent overhead of privatized Medicare (Medicare Advantage).

Consider this visualization of administrators in our current multi-payer system, tracking the growth of “managed care” health plans in the 1990s:

Though moving to a single-payer system will mean the loss of jobs in both lower- and upper-level administrative positions in insurance companies, doctors offices and hospitals, the rising costs of healthcare premiums are preventing employers from budgeting for more hiring, for investment, and expanding their enterprises.

Maybe businesses move abroad to avoid taxes, but I would wager healthcare costs are also a factor. The middleman, the insurance company, is not improving employee health and is making it more expensive to employ people.

An analysis by the RAND corporation showed that in just ten years, between 1999 and 2009, U.S. healthcare spending nearly doubled, climbing from $1.3 trillion to $2.5 trillion (all while some 40 million Americans went uninsured). We are now spending almost $4 trillion annually.

Although family income grew throughout that decade, much of that income and would-be raises went to paying for their healthcare, either in premiums or higher cost-sharing. In 2009, the average family had just $1,140 more in annual income than in 1999, according to the RAND study.

“Had healthcare costs tracked the rise in the Consumer Price Index, rather than outpacing it, an average American family would have had an additional $450 per month—more than $5,000 per year—to spend on other priorities,” RAND researchers wrote.

This all comes full circle when businesses can’t expand because of their healthcare cost liabilities and when people have less disposable income to buy the goods and services businesses produce.

I would love to see a movement away from the traditional arguments concerning a national healthcare program, with phrases like “we don’t need more socialism in this country or “I’m not paying for the healthcare of others.” (And if you want to talk about where we need less socialism, I would really love to see an end to social welfare for the military industrial complex).

We already pay for one another, and I’m not just talking about paying into Medicare and Medicaid. The health insurance companies we are covered by are communal pools. We pay premiums every month and those premiums go towards paying for the healthcare of others.

Call healthcare premiums what you want but our monthly healthcare premiums are taxes. And for many with high deductibles these premiums don’t provide much benefit. As a recent New York Times article noted, Even the insured face crushing medical debt due to sky high deductibles.

What’s most infuriating is how much money health insurance executives make. 

Screenshot 2016-01-09 at 9.27.51 AM

We even subsidize those who aren’t part of our own insurer’s pool. As Senator Bernie Sanders notes on his site, “Uninsured patients will receive emergency care in a humanitarian obligation, and when they receive that care—often via hospital emergency rooms—the costs are regularly uncompensated as these patients can not afford to pay. To compensate for these costs, hospitals charge private and public health insurance providers more. The costs of uninsured Americans are usually, then, borne at least in part by insured Americans and taxpayers.”

Single-payer is not socialized medicine, government controlled payment and delivery, as is so often assumed. The UK’s National Health Service (NHS) is socialized medicine, and Sanders explicitly states on his website that he doesn’t want this for America.

Single-payer is socialized insurance, the payer aspect only. This allows for private delivery of healthcare with public financing. It is moving from hundreds of wasteful insurance companies down to one.

The plus in a single-payer system is that because costs of services and drugs are priced down, total costs of care come down, making the taxes needed to run such a system less than the premiums we are paying now without the outrageous out of pocket costs.

Outlets like Forbes and the Wall Street Journal like to talk about how much a national healthcare program like the one Sander’s is proposing would cost, saying scary things like it will cost about $15 trillion over the next decade, bankrupting the country!

The truth is that our current system is bankrupting the country. At almost $4 trillion spent per year currently, and projected to increase to over $5 trillion by 2024, $15 trillion over a decade would be a huge savings.

I would love to hear Sanders relate crumbling infrastructures across the country to the high costs of healthcare. He must communicate more about how these costs are affecting the places we live and learn in. Just like when businesses have to make cut backs, schools and communities must make compromises when balancing the rising costs of healthcare.

Take what happened in China, Maine, population 4,300: In 2013 the annual healthcare premiums for 11 town employees cost roughly $200,000 or $18,180 per employee, according to the Lown Institute. Those costs took a bite out of funding for community programs like public safety, road repairs, police salaries, fire equipment, and the library.

Stories like these are happening all over the country, the hardships more apparent in small towns. And when communities are squeezed tax burdens increase, usually in the form of property taxes and such.

The rising costs of care shift onto taxpayers in ways unrecognized, and many people, like fixed income homeowners can’t bear the burden much longer.

Single-payer is supportive of a free market, while the complexity of our current insurance administration presents us with an illusion of choice and quality. Most people who get their insurance through work have no choice in the health plan they get. Most of us are further limited by our incomes and “provider networks.”

In a single-payer system, health insurance would not be tied to a job, and everyone would have access to the same comprehensive coverage no matter their income.

An insurance company shouldn’t be telling a real healthcare professional how long someone’s treatment should last and what it should consist of. Some doctors are so fed up with the micromanagement and bureaucracy imposed by insurers they’re retiring early, selling out to hospitals (which allows hospitals to price gouge further), going into direct care service, or moving abroad to places with far more efficient healthcare systems like Canada and Australia.

While doctors don’t make as much money in other countries as they do in the U.S., they’re overhead is much lower because they don’t have to hire as much staff to deal with so many insurance companies, the billing systems are far less complex, and they don’t have massive amounts of debt to pay off.

The single-payer movement is about easing tax burdens, not increasing them. It pains me to see shortsightedness and greed getting in the way of this goal.