Lies we're Told About Single Payer Health Care

        There is an op-ed in today’s daily rag slamming Kamala Harris’ talking points on health care, principally by using the same blatant untruth most anti-single payer talking heads use. It was written by the former Lt Governor of NY, who now lobbies for conservative issues, and one supposes, for the Health Care and Pharma providers. The argument and the falsehood, is generally (and this was) a variation on this theme:

“Medicare for all (or some relatively equivalent single payer plan) would never work because Medicare only pays about 90% of the charged amount for most procedures, and many hospitals couldn’t afford to operate on that income.” Sounds realistic, right? We all see our bills (if we have insurance) and we all see “amount billed,” “amount allowed” and “amount payed.”

        The big lie here, and it’s a lie by implication, revolves not around what is said, but by what isn’t.  It’s true that Medicare never pays the “list” price (call it retail, if it sounds easier to understand) for essentially every billed medical procedure. What the writer omits is that the exact same thing is true for private insurers as well. Understand what I’m saying: While Medicare pays less than the retail amount, so do private insurers. The crucial difference is that Medicare is consistent, while insurance companies jealously regard as confidential the sweetheart deals negotiated with providers which are, in some cases, actually better (less) than Medicare. These lower negotiated rates also vary from insurer to insurer. Added to that is the other dirty little secret, of which I have written exhaustively elsewhere, which is that drug prices are not, by law, negotiated by Medicare. Someone - Medicare, or patient co-pay, pays full price for meds. 

       Hospitals “pad” bills with outrageously inflated drug, procedural, and room charges which they never really expect to collect.

       Note the entries on the above discharge bill for: 

 service code J2930 - Methylprednisolone – this is about $5 dollars’ worth of meds billed at $165 every time administered.

Phys OBVS – every time the doctor looked in (“observed”, this isn’t procedures) the bill was $528!

The room is billed at $1847 daily. I find it amazing that the room “charge” is $700 more each day than the billed cost of the MRI!

And finally, the last entry: “discharge admin $158.65”. Wow, that must be some clerk!

       These and all costs like these are billed as an exercise in, hopefully, actually having a patient with no insurance and lots of money, since that’s the only way that amount will actually be paid. The big lie in the op-ed is that single payer is more expensive. It could be if private insurance actually paid “list price” but they simply don’t. Never have. Add to this the great reduction in real admin costs of billing only one entity with one universal fee schedule, and finally, repeal, or amend, Medicare, part D to allow Medicare to negotiate drug prices - you know, like every other insurer in America does? I did the math in another  essay some time ago and conclude that (admittedly a rough, but realistic, estimate, since actual data would require a Cray computer to analyze) that simply giving Medicare/Medicaid the same leverage with Big Pharma that all private insurers and hospitals already have would result in about a $5 billion annual reduction in Medicare /Medicaid spending on drugs alone!   

        Administrative costs, meanwhile, account for 8 percent of total national health expenditures in the U.S. For the other countries, they ranged from 1 percent to 3 percent. Health care professionals in America also reported a higher level of “administrative burden.” A survey showed that a significant portion of doctors call the time they lose to issues surrounding insurance claims and reporting clinical data a major problem.

As for the drug market, the U.S. spent $1,443 per capita on pharmaceuticals. The average pharmaceutical spending of 11 European OECD countries came to $749 per capita. One myth, popular now, is that drugs are “better” from US manufacturers, which ignores the fact than several US manufacturers make their product by contract overseas anyway.  

        We all, or at least many, if not most, of us pay for health care in various ways. So do most employers. We, as consumers, pay some of that cost in every product we buy. We also, while working, receive less in a pay envelope because of heath care insurance costs paid by us as employees. We are constantly abused by drug companies which Congress has the ability, but not the balls to rein in.

        Want a good start? Enact legislation that stipulates that in the process of getting FDA approval, the manufacturer of a new drug must show total cost of development and manufacturing, offset by NIH grants, if any. This, because about 40% of newly approved drugs in the US have been developed with some degree of, or even total, Federal funding.  Allow a reasonable, but fixed profit margin and mandate that, for the life of the patent, the price cannot be increased more than the CPI increase.

        Pharma is industry which has net profits annually which run consistently as much as five to six times the average for US corporations. So, what do these net profits do, beside pay dividends (some, like Merck, as high as 7.5% + annually)? Well, in days gone by, we simply accepted that these profits fueled research and development, which may have been true. Not so today, however since, currently and for the past decade or more, the largest expenditure of all major Big Pharma corporations is Advertising.  In 2016, Pharma spent just under $10 billion on DTC (direct to consumer advertising) and another $20 billion in marketing to healthcare professionals. Only the US and New Zealand allow DTC advertising.  Now, do we see why your physician may change your prescription, citing vague generalities?  R& D, and shareholder profits share the rest, with Lobbying around $25 million or more annually. If you care to do the math, that’s just over $46,000 for every single member of Congress!

        A change to single payer system would be difficult, not because of the logistics, since Medicare is already a single payer system, but because of entrenched interests. Essentially all “Medicare isn’t cheaper” studies are funded by conservative, and/or status quo vested interests and use current Medicare cost per patient estimates, which due to the age of the patients involved are significantly higher than the population as a whole. Even so, these folks do such shenanigans as adding the cost of the IRS collecting Medicare payments for all payees and counting them, as admin costs, while employers’ admin costs are ignored for private plans, This also ignores the fact that private plans still can, to an extent, “cherry-pick” clients.

        Assuming a level playing field, using a spectrum of ages representative of the entire population, Medicare’s admin costs would be (are) significantly less than Private plans, who are able to “dump” seniors onto Medicare. Ask yourself one final question. If Medicare is more expensive, why are so many Health Insurers making money, even with higher admin costs,  with “Medicare Advantage” plans using only the Medicare payments of seniors who, for whatever reason choose to use them? 

        The answer: Insurer negotiated, lower than “advertised,” fees for service. Same as Medicare. Add (much) lower private insurer payouts for drugs and it’s a no brainer. Put Medicare for all or a similar single payer system on equal footing and we all win.