Medicare For All
is Completely Impossible, a Crazy Idea.
Unless You Do These Things …


Medicare For All — or any other way of covering everybody in the U.S. — is impossible. Unless we could do it for less, way less, than healthcare costs us today.

But that we can do. That’s the good news.

People assume that covering everyone will cost vastly more. Billionaire Michael Bloomberg said the other day that it would bankrupt America for a long time. Like Venezuela, he said. You want that?

No, they do more than assume it will cost vastly more. People insist. They get really mad about it. There are lots of ways to get called names online, this is one. One person actually told me recently that even talking about the possibility that we can do healthcare for much less is immoral; they call it lying, that it’s some part of a bait-and-switch chicanery to even talk about the possibility.

It’s apparently easy to go nuts on a subject like this.

The Red Pill moment

But imagine what if for a moment with me. Imagine covering everyone, taking care of everyone—and it costing less than what we pay today. Less for the government, less for employers, less for you. Way less. Half or less.

How could that be possible? This is really kind of a red pill moment. Because once I lay this out for you, you really can’t un-see it. You won’t be able to go back to the usual way we see this debate.

Some of this will be familiar to regular readers, but hold with me for a moment while I lay it out for the people in the back there, the ones who just came in.

Four facts that will re-arrange your brain

I’ll start with four basic facts that are not controversial, that pretty much everyone who studies the U.S. healthcare system would agree are true, that will re-arrange your brain.

First: The whole thing costs us about $3.9 trillion per year. That’s what the government pays, employers pay, you pay, everything.

That’s a lot of money. It’s twice as much per person as any other rich country pays, even though Americans actually go to the doctor less, go to the hospital less and stay there for shorter times.

That’s about five times what we spend on the most powerful military in the world. Think about that for a moment.

Second: A big chunk of that is wasted on doing things that are really not necessary: more scans than necessary, duplicated tests, colonoscopies and mammograms as first-line screening tools, replacing heart valves on people who are dying from other causes, new knees and hips in frail elderly bed-bound patients, the list goes on. It’s rampant. There’s a whole website about it called Choosing Wisely, by doctors about their own fields, that would help you see whether you really need what is being recommended.

How much money is wasted? Doctors asked about waste in their own specialty will typically say it’s maybe 20%. Most studies say something closer to 35% for the whole system. Some of the most comprehensive studies say more than 50%. So that’s somewhere between one and two trillion dollars flushed away on stuff we don’t need to do.

Let’s stop for a moment to focus on this: With that kind of money, we could certainly not only pay for healthcare for everybody in the U.S., we could while we’re at it, pay for everybody in the entire rest of the world, except for the top 5 other healthcare spenders, with what we waste in the U.S. Amazing, isn’t it?

Third: the great majority of this nearly $4 trillion is spent on categories of disease that are:

  • chronic (like diabetes)
  • behavioral problems (like opioids and other addictions, and like self-harming)
  • environmental problems (like lung cancer from second-hand smoke, or young people living in an atmosphere of gang violence).

What these all have in common is that they are preventable to some extent, and have been shown to be manageable in ways that keep them from becoming acute, from requiring hospitalization and surgery.

We actually know how to do that. From pilot projects and particular parts of our system, and from other countries, we have a pretty good idea how we could lower the incidence of these disease states, help people from ever getting these diseases, and lower the intensity, so that people don’t die or suddenly need very expensive emergency care, surgery, and hospitalization.

The second thing chronic, behavioral, and environmental disease have in common is that this prevention and management is almost always way cheaper than hospitalizations and surgeries.

The third thing is that we don’t do this prevention and management. Across our system, we pretty much just don’t do the things that we know we could do to keep the cost low and greatly help people at the same time.

How much does our current approach to these problems cost us? Different experts define the problems a little differently and come up with different numbers, some say it’s more like 70%, others 85% or 88%, but all agree—it’s a lot. It’s a great majority of the nearly $4 trillion. If we could reduce that cost by half, even 25 percent, by smart management, we are talking hundreds of billions to a $1 trillion dollars or more per year saved. Costs would come down.

Wait, we’re not done yet.

Fourth: That’s all based on the prices we pay for healthcare in this country right now, not just on drugs, on everything—surgery, births, you name it. Prices are double, triple, five times prices in other wealthy countries. And prices in the US are wildly inconsistent. The price paid for a given procedure or test may be two, five, even 10 times the price paid in the next county, in the next block, even in the next bed, depending on who is paying.

So, obviously, these prices are not supported by anything. They are just made up. They have no relation to market price, or to the cost of doing the test or procedure. None. And no relation to quality. Sometimes the best places are the most expensive, most often they’re not. Mayo Clinic, Cleveland Clinic? Not the most expensive at all.

Economists studying the increasing costs of healthcare in recent years largely conclude that they are not going up because people are using healthcare more—they’re not. Or that we are covering more people—that’s doesn’t make that large a difference. No, the number one driver of higher cost is just higher prices. So we are not only paying for waste, stuff that doesn’t need to be done, we are overpaying for everything. Way overpaying.

If you think this is crazy, join the club.

“We can’t afford it!”

So you see where I am going here? The loudest argument against doing Medicare-for-all or any kind of universal system is: “We can’t afford it. The system is already breaking our backs, how could we possibly pay for more people?”

But what if the tremendous costs of the U.S. healthcare system are not because it’s the greatest system in the world? What if the costs are mostly bogus? All because of waste, price-gouging, taking care of chronic disease as inefficiently as possible, and artificial scarcity, to name a few factors.

What if smart system redesign could result in a system that is not only better but costs half as much or even less? Then of course we can afford to take care of everyone.

Fix the system

A smart system redesign would mean looking at the current system and asking, “What is allowing it, compelling it even, to be so expensive?” Then re-jiggering the system.

The system we have just pays for “treatments.” Find a disease, and fix it. It’s “fee for service,” that is, a fee for each individual service. You pay for each test, each procedure, each visit. You may think you are paying for a birthed baby, a fixed heart valve, a healed wound. But usually you are not, you are paying for each item. So of course the system will find as many ways as possible to do more tests, more visits, more procedures. At the same time and for the same reason the system does little or none of the many other things that could be done to make us healthier, prevent disease, and manage it when it does show up, minimizing the expensive surgeries, procedures, and high-end drugs.

The system we have has almost no transparency. We have almost none of the fundamental information that anyone needs to make smart choices—not we consumers, not the big buyers like employers, pension plans, or unions. You can’t shop, because you can’t find out what’s good or not, and you can’t find out how much it costs, especially how much it will cost you.

Much of the business is built on opaque, secret contractsbetween health systems and insurers. How secret? This will blow your mind: Doctors often have no idea what they will get paid for a procedure until the check arrives. The numbers in the contract they signed are secret even from them. Big buyers and health plans are forbidden to find out what other buyers pay for the same service.

Our system is built on monopolistic practices, like healthcare systems requiring the insurer to contract with the whole system, and not just the one part they need. There is a huge array of common practices, many of which to me look like little more than legalized corruption, that allow everybody involved in this game to jack up the costs and take a bigger and bigger cut.

An $8 billion profit example

Here’s one little example: That $3.9 trillion for healthcare this year? About 1% of that goes to just one item: dialysis, where your kidneys fail and they put you on a machine several times a week to pump you clean. It’s a $40 billion industry dominated by a few large firms. Do you or anyone in your family have chronic kidney disease? What they won’t tell you (most of the time) is that there are often successful ways to keep kidney disease from progressing to a need for dialysis, there are other types of dialysis that are cheaper, there is a whole different world of possible treatments. But people get funneled toward dialysis, and toward programs that are funded by insurance, rather than by Medicaid. Why? Because Medicaid pays $260 for each treatment, while private insurance is forced to pay 10 to 20 times as much. That is why those companies spent over $100 million in the fall of 2018 to defeat a ballot proposition in California that would have ended those practices. In the kidney disease biz, the only big pot of gold is in the dialysis business, and that pot is huge: 20 percent profit on that $40 billion.

Remember when a lot of insurers pulled out of Obamacare because they got blindsided by an unexpected number of “high cost patients”? These are the “high cost patients” they were talking about: end-stage renal disease patients on dialysis, with these firms raking in the 10 to 20 times higher private fees for them.

This is just one example, a little $8 billion profit example. But it is emblematic. Study the industry the way I have for decades, and you’ll see example after example until you come to believe that these are not aberrations. These are the way the industry is built. All across the industry, every sector tweaks the system every way they can to get themselves more money and power and reach, for-profit or not. There are obvious tweaks like jacked-up drug prices, and many not so obvious ones, like dialysis.

Flip the system

So what if we flip these? What if we were to outlaw the monopolistic practices, the opaque contracts, the surprise bills, the hidden charges? This can be done, and has been done in other industries. Seriously, can you think of another industry where they can come after you, after the whole deal is done, and say, “Oh, by the way, that house remodel? That engine rebuild? That landscaping for the back yard? Here’s another bill, for another $25,000. You have to pay it. You have to pay it out of your own pocket.” There is no reason that healthcare should be able to do that ever.

Outlaw these weird, secretive industry practices, and costs will come down.

Pay for “bundles” instead of fee-for-service, like one published price for a baby birthing, a new knee, an aortic valve replacement. Pay bundled prices, contracted up front, for everything that can be handled that way, and costs will come down.

Publish the prices, and mandate that, as for airlines and other common carriers, they are the same for everyone, every payer, every buyer. Costs will come down.

Publish quality rankings constantly, such as hospital-caused infections and other markers of best practices.

Buyers (like employers, unions, and pension plans) can establish “reference prices.” Like this: Say you need a knee replaced. The buyer (your employer, for instance) gathers the evidence about the processes and costs, then lays out a deal for you: “Look, here are all the places that can do this with high quality ratings. We have determined that there are a choice of good places that charge $30,000 or less. Go to any of those places and we pay everything—no co-pay for anything. Rehab, drugs, everything’s included. If you want, you can choose the place that charges $43,000, but that extra $13,000 will be your co-pay.” Which will you choose?

Do these kinds things, and healthcare providers are forced to compete on price and quality, and costs will come down. The government, and buyers—and you and I—can start being fierce customers, the way we are for anything else, and costs will come down.

I’m not making this up, it’s already happening in some parts of healthcare, and for those parts, those costs have come down. Applied everywhere possible across healthcare, such tactics will drop costs enormously.

Why do you even have to sign up?

Some of the plans Congress is talking about, like Medicare For America, start with, “Why do people have to hunt down insurance, sign up for it, figure out how to pay for it, miss one payment, they’re bumped. How about everyone is automatically enrolled?” Under such plans, everyone is automatically covered, unless they have other coverage. Your employer can buy you private insurance like they do now, or—their choice and yours—put you on the public plan while they pay eight percent of payroll, which is far less than they pay now. On the public plan, poor people pay nothing, and there’s a sliding scale up to paying full premiums, but at more or less today’s Medicare rates, which are way lower than private insurance.

One big advantage? If everyone is signed up, and every healthcare provider has to take the public insurance, the provider can’t play off the different kinds of insurance, or the insured against the uninsured—and you the customer can choose based on cost and quality without worrying that some doctor or Emergency Department will turn out to “out of network.” You’re covered. Wow! A rational system! What would that be like? If they can’t play off one group against another—the industry term for this is “cost shifting”—costs will come down.

Lots of ways to puncture the system.

Buyers such as employers or unions can build onsite clinicsright in the warehouse or office building, free to all employees, no co-pay, your choice whether to use this clinic or a doctor elsewhere—but this clinic has no co-pay. It’s free to you. Or the employer can contract with direct pay primary care teams—at $25, $35, $50 per employee per month for comprehensive primary care. There are now thousands of such teams across the country. Expensive? No, way cheaper than paying fee-for-service for everything. Pay directly for primary care and the primary care costs will go up while for everything else (such as emergency visits, hospitalizations, unnecessary tests, and surgeries) costs will come down.

Public programs can contract with organizations to treat all the people with diabetes in a particular area, for instance, with contracts that actually make more money if they do it better, help people more, keep them from having to go to the hospital or the Emergency Department. In rural Iowa, one program reduced diabetes admissions by half, just by hiring more people, local people, to actually talk to the patients and help them get control of their condition. With strategies like this, costs come down.

In some states, Medicaid contractors help people with much more than medical assistance. In Oregon, one is connecting pregnant teens and young mothers with housing, food, and income assistance. In Colorado, a contractor is making sure that people on Medicaid sent home form the hospital get Meals on Wheels, because they will need help to recover. A PACE non-profit in Western New York helps the frail elderly with everything at once, from healthcare to nutrition to social contact to housing to transportation. They are beginning to do this in some Medicaid programs across the country, and where they do, it works, and it’s cheaper, because these programs recognize what are called the “social determinants of health.” In other words, it’s stupid to pay for people’s medical costs and do nothing to help them keep those costs down. Where these tactics are used, costs come down.

Soft-hearted? Or smart management?

So is this just soft-hearted talk, playing loose with tax money? No, it’s smart management.

I’ll give you two micro examples, a couple of stories that really happened, but because of privacy laws, I can’t tell you who or where. There’s a pediatrician in a Medicaid HMO. That means the organization the doc works for is not paid fee for service but per person per year. He gets a phone call from one of his families. There was a big rainstorm, the roof leaked, and part of the ceiling fell in. Now, the three kids in this family already have severe asthma. The pediatrician knows that if they go back in that house before it is fully fixed up, they’ll be in the Emergency Department, they’ll be in the hospital. Solution? The HMO sends a crew out to fix the roof, repaint the walls and clean or replace the furniture and carpets. Kind? Being good humans? Yes, certainly, really nice of them. Also? Way cheaper for the HMO than paying for treating the three kids in the hospital, way cheaper.

Or: A hospital I know of had a woman who kept coming back to the Emergency Department in kidney failure, because she kept missing her dialysis appointments, she had trouble with the staff, and didn’t speak English so well. Her care was not only very expensive, it was very bad for her health. Solution? Send a translator to pick her up and take her to the appointments. Gold-plated treatment? Yes, and again way cheaper for any organization picking up the tab for her treatment.

There are lots of ways to drop costs, lots of ways to puncture the system.

What about drugs?

Pharmaceutical companies might have to justify price rises, like the doubling of insulin costs in just the last four years for no reason, selling the same products based on a long out of patent drug. They might have to open their books for audit. It might be that “because our shareholders like it” is not enough of a reason to gouge people for life-saving drugs anymore.

Drug companies blame high prices for new drugs on their huge development costs. Give me one sound reason that we should just take their word for it. It’s Hollywood accounting. We could do it differently. What if the government doled out development costs in massive grants, owned the patents, and then doled out licenses to produce the resulting drugs to anyone who would produce them? We would still get the innovation, and costs would come down. Pharmaceuticals are as much a part of the national infrastructure as the Interstate Highway System.

What would it look like?

“Healthcare for half as much” sounds to most people like a Greyhound bus station with stethoscopes, like flea market surgeries, and drive-through birthing centers. No, a lean, transparent system catering to fierce customers of all types would feel quite the opposite, offering more care, even what might feel like lavish care, but earlier in the illness or more conveniently.

Why will providers make healthcare so convenient and personal? Because if they are paid to be responsible for your health, paid to make and keep you healthy, it’s worth it to them to make the extra effort and investment to catch a disease process early, before it gets expensive.

The “tough love” answer

Changing the fundamental business model of most of healthcare will be difficult and painful for the industry. And this will be as politically difficult as any other serious attempts to reform the system, simply because doctors, hospitals, pharmaceutical companies, health insurers, all are formidable political players with big political war chests. But if we look to other countries and say, “Why do their systems cost so much less than ours, even while they take care of everyone? Why can’t we have what we want and need at a price we all can afford?” — this is the answer.

Don’t let anyone tell you that we can’t do this in America. We can, there are lots of ways, if we get mad enough to change the laws, win the lawsuits, back the politicians who are willing to take the tough choices to puncture the system in myriad different ways, and take it back to serve us, the owners and operators of these human bodies, and our families and our communities.

Change not just who pays for healthcare (which is really all the universal healthcare question is about) but also the way we pay for healthcare and what we’re paying for, and we can rebuild the system to be at the same time better, available to everyone, and far cheaper.

2 thoughts on “Medicare For All
is Completely Impossible, a Crazy Idea.
Unless You Do These Things …

  1. How can we make this happen? The prospect of losing a couple of billion dollars a year of gross income will motivate insurance companies, health care providers, and drug companies to fight very hard against it.

  2. Great insights. The challenge is less about figuring out what could be done than it is about gaining a consensus and commitment to actually DO what needs to be done to fix a badly broken healthcare system.

    Almost all politicians don’t really want to tackle this because their primary concern is being reelected and most of the necessary solutions are politically unpopular and unpalatable.

    Payers don’t want to reinvent their financial model, even if it will save them tons of money because they are beholden to their shareholders who don’t want to accept any short term bad news.

    The required changes seem so overwhelming to the general population that are more worried about their risk of financial catastrophe from a healthcare crisis in their family than focusing on a long-term solution that is better for everyone (or believing it could ever really happen).

    I admire Joe Flowers’ knowledge and understanding of the challenges and solutions. I’d be interested to hear his suggestions on how any of these solutions could actually get serious traction in the face of all manner of adversarial and powerful special interests.

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