Monday, June 12, 2017

Why We Can't Afford "Medicare for All" - Megan McCardle Thinks She Has The Answers

Image result for mri machine
One of the hyper-expensive medical "toys" driving up health care costs - the 3T MRI machine. The costs of such machines, including proton beam therapy and cancer drugs are making access to medical care more and more prohibitive.

In his extensive Barbados Advocate column (April 30, p. 14, 'Addressing the loss of health care professionals') David Jessop shed light on exactly why medical costs are soaring in all the nations of the world. As he wrote:

"Around the world, public health care systems are in crisis. From India to Australia, nations in the developing and developed world are struggling to meet the expectations of their local populations."

What reasons does he give for this crisis? He lists the following as primary culprits:

- A surge in the nature and volume of demand as populations age and birth rates continue to increase

-  The preceding occurring at the same time a desire for low taxes has made it difficult for governments to garner the necessary resources to respond to societal expectations

- Sustained loss of medical professionals causing shortages in many 3rd world nations, because they are picked off by nations such as the U.S.  - which itself is finding it can't cope with the expansion of medical services (e.g. via Medicaid in the ACA) combined with an M.D. shortage.

This combination in addition to overuse of medical resources by certain groups, has led to the condition in which much of the world is in a health care crisis.

The bottom line is this: It is futile to talk about "managing" health care costs when so little money is made available by many nations to support their current medical needs. In effect, medical care today  - from treating cancers to severe disability and chronic disease (e.g. kidney and liver disease) is bloody costly and intensive of medical resources by nature.

This leads to a Hobson's choice for many governments: either raise taxes to support their local populations' access to medical care to the level needed, or cut access as the Republicans are now doing with their "American Health Care Act" that will effectively remove access for 20 million or more via Medicaid.

Aging populations in whatever country definitely carry major impacts on its health costs. According to a paper ( Death and Taxes: Why Longer Lives Cost  Money)  produced by the UK Institute of Economic Affairs:

"Long-term healthcare and nursing home costs are strongly associated with age and cannot be driven down by healthier lifestyles.."

To be specific, the incidence of both certain cancers (e.g. prostate) and Alzheimer's disease are  directly related to age, not necessarily "unhealthy" lifestyles. The risk of Alzheimer's alone doubles every year after the age of 65, no matter who you are, what your gender or income or life style choices. Ditto with prostate cancer which is becoming more and more expensive to treat as new, more refined treatment techniques come onstream, - such as focal therapies (e.g. focal cryotherapy) and proton beam therapy,

In the case of prostate cancer, which I've been battling for five years now, I've seen at every stage the cycle of treatments and tests and how they multiply costs. Even if you'd prefer to not add to the medical loss ratio (the ratio of unhealthy subscribers to the healthy ones that support them.) it's virtually impossible once you get that PSA test result - if much higher than normal - to avoid the first prostate biopsy.  That biopsy, if it shows one or more cores at the Gleason 7 score level or higher, sends you down the path of more tests, therapies, treatments. Unless you don't give a shit, in which case your primary doc may "fire" you for being a "non-compliant patient". She wants you to continue your life under her care (including specialist referrals)  without facing the worst consequences of a cancer that can kill (29,000 deaths in the U.S. each year).

In my case, the first biopsy proved positive with three cores then affected and I had to make the decision to get either the robotic (Da Vinci) surgery or radiation. I chose the latter, for which I received high dose brachytherapy treatment at UCSF and paid my bit at about $1,200 - because by then I had Medicare.  The total price for all aspects of the treatment, including  CT scan, spinal epidural, Ir 192 needles insertion,  and follow-up came to just over $55,000.

I thought that was the end of it but the cancer remained and PSA tests showed the need for more biopsies as well as MRI scans, and even a 3D staging biopsy which finally showed the cancer at least concentrated at one location in the interior, e.g.
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Total costs by now totaled over $85,000 including all the various tests such as CT scans, MRI scans, MRI fusion biopsy, Prolaris genetic test, and so on. 

SO given this it is easy for Bloomberg writer Megan McCardle to blab in her recent column about "adverse selection" say if Medicare was ever to expand into "Medicare for all".  McCardle's point is that such a program would ensure ever higher premiums year by year since the sickest people - or those who need expensive treatments and tests -  are the most likely to make use of it. Hence one gets what the insurance bunch calls "adverse selection"  Technically, the term is defined by insurance wonks as:

Adverse selection is a concept in economics, insurance, and risk management, which describes a situation where market participation is affected by asymmetric information. When buyers and sellers have different information, it is known as a state of asymmetric information

But I argue, as does David Jessop, that this kind of economic concept has no place in health care delivery because people are not cars, homes, or fancy jewels. Look, if populations are continually growing that logically  means sick conditions and diseases must grow with them-  whether cancers, Alzheimer's, kidney disease or whatever. Even the healthiest person following a rigorous diet  can get cancer or be injured in an auto accident. Hence, the notion of "asymmetric insurance" for a risk pool managed by a health insurer is ludicrous. There can be no such thing because one will know from the get go that every manner of sickness and disability can only expand, especially for older age groups.

The subtext for McCardle's arguments is the medical loss ratio suffered by putative health insurers, including exchanges -is too great. Hence, so many now abandoning the ACA as too "expensive" to support- so why even consider 'Medicare for all'?  In this regard, if the number  of sick patients in any risk pool is 'significant' - say more than about 1 in every 20-  the private insurers' profits take a nosedive. The medical loss ratio has increased beyond acceptable levels, so the shareholders will not like it.  This is precisely why health insurers - with the exception of Medicare - have become ,more leery of accepting too many oldsters or chronically sick patients. It means major loss of profits. Thus, the imperative becomes one to deny needed care rather than to provide it, especially for pre-existing conditions.

Some on the Right are so desperate to justify cuts to Medicare - as well as Medicaid -  that they argue (as one letter writer did in a recent WSJ contribution) that  pre-existing conditions must be factored in for insurance rates because if they are not known then it is a case of "asymmetric information", i.e. the patient knows he already has some type of cancer but not the insurance company or health exchange with which s/he seeks coverage. Hence, the demand to report all pre-existing conditions before being insured, the better to fix deductible and premiums ab initio - if at all.

To which I and Jessop respond: As a health insurer you're supposed to be in the business of helping people get appropriate treatments for their illnesses, not deny them.  Are you going to deny them the care and make them severely ill, or  go bankrupt, to appease insurance wonks? Or Republican tax cut fetishists?

But McCardle has even bigger budget "fish" to fry than adverse selection might interject. She writes:

"A far bigger problem is what this might do to hospital budgets. Why? Because Medicare doesn't  necessarily pay enough to keep those hospitals running."

She is correct that Medicare controls some of its costs by shifting them to private insurers (she calls it "off loading") which is why Medicare supplemental (e.g. Plan F) insurance exists to make up the difference, As she points out:

"The hospital's fixed costs are mostly getting covered by higher reimbursements from private payers."

Allowing this isn't "necessarily cheating". Well, that's very generous of her!  But her underlying theme is that in a Medicare for all scenario all who buy in would also have to get private insurance from someplace because the single payer (government) simply wouldn't be able to handle all the costs.

There are two aspects she overlooks that could lower costs for all, and make a Medicare for all system more palatable.

First, a large part of increased Medicare costs is due to a program called "Medicare Advantage" (MA) which was created by BushCO and the Republicans with their Medicare Modernization Act of 2003. It basically confected a privatized form of Medicare ("Part C"), with the express purpose of bleeding regular (traditional) Medicare into insolvency by blowing up to $20-25 billion or more a year (based on gamed "risk scores")  and funneling much of it from the older program. Unless this (MA) program is killed (the sooner the better),  no other cuts will matter - because MA will metastasize to the point every $ is swallowed up.. For those who wish to read the details on why MA is hurling Medicare into insolvency check out the content in these links:


Second,  Medicare monies are being bled down by drug costs to the tune of $250 b over ten years, because it isn't allowed to bargain for the best prices like the VA.

Even so, fixing the above distortions Medicare will simply be brought more into a financial equilibrium i.e. to avoid insolvency. It would not really enable a dramatic expansion to "Medicare for all".  For that to occur, wait for it, taxes would have to be increased and significantly as in western European nations such as Germany, France.

As Jessop concedes the choice is one between more taxes or less health care.  So if citizens think higher  taxes (by 25 % even for "middle classes")  are the worst thing in their lives, what could happen? Well,  what if they are laid up in a hospital bed with severe disability, pneumonia  or leukemia? Is going bankrupt more to their liking?  Again, for most Americans - who are tax hating Pollyannas-  they are convinced they're never going to get to that extreme fate so they make the bet those dire medical disasters won't happen to them.  But it's a terrible bet because they can happen to any of us! (As I found out when I learned I had prostate cancer that had to be treated.)

Make no mistake that 'Medicare for all'  would be the for profit medical  industry's biggest nightmare because they'd no longer be able to reap profits by invoking medical loss ratios - preventing sick people from getting care instead of delivering it. Hence, they and their  political lackeys and extremists will be prepared to fight like junkyard dogs to prevent it, including the perverse use of propaganda.

McCardle's final cautionary argument against a single payer system is that it would lead to drastic cost cutting, i.e."hospitals would probably have to resort to draconian measures  which might result in patient lives lost".   Perhaps. But the way to avoid such drastic cost cutting is to ensure enough taxes are available to pay for the care needed by the sick segment of a populace. After all, if everyone was a picture of health and had the genes never to fall ill, health insurance would barely be needed - unless a person crossed a road recklessly.

McCardle writes at the end of her piece:

"I'd want to be  a lot surer before I started running a mass experiment for our nation's physical and fiscal health"

But then she can afford to exercise patience, being a highly paid Bloomberg scribe. Many citizens, especially in Trump country - and now facing (in 18 OH counties, after the retreat of Anthem) no more naxalone for opioid overdoses cannot.  It's a matter of priority for getting scarce medical resources and paying for them!

In this regard, the citizen needs to inform himself as much as possible about what the real arguments are for and against 'Medicare for all'. And also ask himself if he is willing to pay significantly more in taxes to be assured of better access to health care.

Perhaps the issue is best summarized by WSJ letter writer Clay Creasey (June 6, p. A16):

"It is time for intelligent conservatives to realize that the vested interests of our current health care system (insurers, drug companies and lawyers) are selling us down the river. They claim single payer is socialism. In fact, it could be the single biggest contributor to economic growth  "

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