It’s Time to get Profits Out of Healthcare
By Michael Lighty of the Sanders Institute
We have known for years the impact in lives, health and social well being from the failure in Florida to expand Medicaid. Despite conventional wisdom, Florida Blue and Aetna have made billions selling plans on the ACA Exchange, subsidized by taxpayers.
Given that Florida Governor Rick Scott led a company whose business model relied heavily on defrauding Medicare in order to profit, private companies do very well in taxpayer-funded Florida Medicaid. Well Care, whose revenues come primarily from Medicaid in Florida and a few other states, made over $100 million in the first three months of 2018, because it was providing less care, according to its own report.
Not surprisingly, the Florida uninsured rate among adults under 65 (15.5%) has significantly increased and exceeds the national average as private insurers profit at taxpayer expense by denying or delaying us care.
But that’s how the healthcare system is gamed. We pay tax subsidies to employers and individuals for health insurance so they can “afford” it. What do insurers do in return? They don’t provide universal coverage, they deny care to those covered, hassle us over claims, charge high co-pays, and don’t pay a dime until huge deductibles are met.
So Florida’s Medicaid and ACA Exchange are just stops on the gravy train for these companies, including big profits in the 2nd three months of 2018 for Aetna ($1.2 billion), Anthem ($2.4 billion), and United Healthcare ($2.9 billion), and high compensation for their executives ($20–66 million per year). Shareholders, especially in the drug companies, make out like bandits, because they are bandits. The price of insulin, without any formula changes, has climbed over 500% in just a few years because Novo Nordisk and the rest can charge whatever they want and people need it to live.
Hospital corporations did very well during the prime years of the ACA. Now — after further consolidations under new care models that emphasize high margin boutique services, concierge doctors for the wealthy, and mandates for the rest of us to get procedures done in clinics not governed by hospital safety rules — profitability is rebounding.
Since hospitals, prescription drug corporations, and insurance companies set their prices without any limit, runaway healthcare costs overwhelm us. Why does healthcare in the US cost so much? Because prices are high.
And who pays? Taxpayers and workers. The ACA limits out of pocket healthcare costs to under 10% of income or less. But that only includes in network costs, and the cost of insurance for an individual, not a family. Typically, large employers who generally provide the best benefits spend $18,800 on healthcare for each worker. But all the rising costs have been shifted to workers in the form of higher co-pays, deductibles and premiums. Taxpayers provide $342 billion per year to employers as subsidies. Meanwhile, 42% of the insured population have deferred either a doctor visit, prescription or other medical need because of cost.
The solution to these runaway costs is the power to control prices. And that requires a mind twist for some — maybe all of us — who have seen government identified first as the problem and now the enemy: Our taxes will go up, but our costs will go down.
It turns out that Medicare — a publicly financed and publicly administered healthcare system that guarantees healthcare to all Americans over 65 — spends a fraction (3–6%) on administration compared to the 12% (or more) by private insurance companies. And effectively controls costs — annual increases are consistently below overall medical inflation. Every other industrialized country spends less — on average half as much — as does the US on healthcare per person but have more equitable access, better outcomes, and stronger public health systems.
We can complete the American system of guaranteed healthcare for all by improving and expanding Medicare. People in Medicare now and in the near future should welcome healthy, younger people into an improved system that eliminates the co-pays and deductibles of Part B, and eliminates the need for expensive private drug coverage. Dental, vision and optometry will be automatically covered. All the benefits of Medicare Part C will be available, without the limits and restrictions on what doctor you can visit.
Even conservative economists acknowledge that improved Medicare for All will enable the US overall to spend less on healthcare and get more coverage. That’s why even 52% of Republicans in the latest Gallup poll support Medicare for All. Let’s build on what’s popular and works: a publicly governed, democratically accountable healthcare system that doesn’t make money but makes better health outcomes.
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Michael Lighty is a founding fellow of the Sanders Institute with a 25-yr history of working on healthcare policy that puts people before profits. He can be reached at mlighty200@gmail.com.
