What Harvard Law Students Need to Know About Changing Health Care

The U. S. health care system is in a crisis that is still under-recognized. Though we are assured from many quarters, especially by corporate stakeholders in the present market-based system, that we have the best health care in the world, this is far from true. In actual fact, our system is slowly imploding and is unsustainable in its current form, even after six years with the Affordable Care Act (ACA).

Dimensions of the Crisis

Despite the intentions of the 2010 Patient Protection and

Affordable Care Act (PPACA), access to affordable health care is still not available to many millions of Americans, as these facts on the ground attest:

• Today, there are still 29 million uninsured (down from the 50 million in 2010), but with tens of millions more underinsured. (1)
• Almost 80 percent of the uninsured have less than $1,000 in savings. (2)
• Twenty states have opted out of Medicaid expansion under the ACA, leaving 3.1 million people in a “coverage gap”—not enough income to qualify for ACA subsidies and too much to get Medicaid in their state. (3)
• Even with insurance, one in three Americans cannot afford necessary care as the ACA fails to address these underlying causes of medical debt: (1) high cost-sharing under many plans; (2) limited or no  protection from out-of-network care; (3) limits on essential health benefits; (4) and restricted drug formularies. (4)
• Access to care is still limited, and despite promises by the ACA, it is difficult for many people to keep their physician—40 percent of physician networks for plans sold on the ACA’s exchanges include less than 25 percent of physicians in their region. (5)
• There are inadequate price controls under the ACA, which has given insurers, hospitals, drug companies, and others in the medical- industrial complex new markets with minimal oversight.
• Up to one-third of all health care services provided in the U. S. are unnecessary or inappropriate, and some are actually harmful. (6)
• Many insurers have been manipulating a provision of the ACA allowing them to get higher payments for enrollees deemed sicker than average. (7)
• Medical identity theft is on the increase whereby criminals steal personal data from millions of Americans to get health care, prescriptions, and medical equipment. (8)
• About one-half of the insurance co-ops funded by the ACA have already failed, mostly due to low enrollments, adverse claims experience, net losses, and inadequate funding. (9)
• The Centers for Medicare and Medicaid Services (CMS) estimate that an expanding bureaucracy under the ACA will take up one quarter of health care spending and add almost $274 billion in new administrative costs heading into 2016. (10)
• Medical billing fraud is estimated at about 10 percent of all health care costs, or about $300 billion a year. (11)

Ralph Nader, founder of  the Center for the Study of Responsive Law in 1968, brings us this  important insight about the economic and political challenges of health care fraud:

All in all, the health care industry is replete with rackets that neither honest practitioners or regulators find worrisome enough to effectively challenge. The perverse economic incentives in this industry range from third party payments to third party procedures. Add paid-off members of Congress who starve enforcement budgets  and the enormous profits that come from that tired triad ‘waste, fraud  and abuse’ and you have a massive problem needing a massive solution. (12)

Some Lessons from the ACA

Despite having added some 16 million people to the insured rosters, either through the exchanges or expanded Medicaid, and making limited reforms of the insurance industry (e.g. prohibiting exclusions and banning of annual and lifetime limits ), the ACA falls far short of the population’s need for access to affordable care, has accelerated growth of bureaucracy and waste, and has not been shown to improve the quality of U. S. health care. Profiteering and the business “ethic” reign supreme, often trumping an ethic of service. Physicians and other health professionals, in dealing with the hassle factor of increasing bureaucracy, are experiencing increasing burnout, with many retiring early. (13)

Here are some of the lessons that we can take away from the ACA as the latest attempt at reforming health care: (14)

1. Health care reform through the ACA was framed and hijacked by corporate stakeholders, themselves largely responsible for system problems. As an example: during the run-up to the ACA’s passage, some 1,750 organizations and businesses hired 4,525 lobbyists, eight for every member of Congress, at a cost of $1.2 billion. (15)
2. You can’t contain health care costs by leaving for-profit health care industries to pursue their business “ethic” in a deregulated marketplace.
3. You can’t reform the delivery system without reforming the financing system.
4. The private health insurance industry does not offer enough value to be bailed out by government. As examples, 300 patient advocacy groups sent a letter in 2014 to the Secretary of Health and Human Services detailing many ways in which insurers continue to discriminate against the sick (16); the overhead of private Medicare Advantage plans averages 19 percent vs. 1.5 percent for traditional Medicare (17); and underinsurance has reached epidemic proportions, with more than 1 million families seeking bankruptcy protection each year, despite two-thirds of them having been insured at the onset of their illness or accident.  (18)
5. It is futile to embark on unproven or disproven incremental tweaks to our present system while ignoring health policy and experience around the world. Managed care was discredited in the 1990s, but is back in the ACA’s privatized Medicaid plans, cost-sharing by patients at the point of care leads many to forgo care. Current payment schemes to “pay for performance” have not proven to result in either cost containment or better quality of care. Almost all advanced countries around the world, including the United Kingdom, Western Europe and Scandinavian countries, Canada, New Zealand, Australia and others, consider health care as a human right, supported by one or another form of public financing, and yet pay much less for health care than we do.  
6. In order to gain the most efficiency of insurance coverage, we need the largest possible risk pool to spread the risk and avoid adverse selection. In health care, we have a 20-80 rule, which states that 20 percent of the population is responsible for 80 percent of all health care spending; the insurance industry is motivated to increase its profits by avoiding coverage of sicker people whenever possible, shifting their care to public payers.
7. The ACA is a massive bailout of private interests profiting on the backs of sick or injured Americans. Here is just one example: large insurers such as WellPoint (Anthem) and Humana expect to gain $5.5 billion through the ACA’s “risk corridor program” that covers their “losses,” even as it gives them larger subsidized markets. (19)

Alternatives for Reform

How to finance and deliver health care in this country has been a subject of great controversy for more than 100 years. As a progressive presidential candidate in 1912, Teddy Roosevelt proposed a publicly financed system of universal coverage through national health insurance, but it was shot down in that election year. Since then, health care has been a political football, and basic questions remain unanswered as a society, such as whether or not health care is a right (or privilege based on ability to pay) and what the role of government should be.

During and after this current 2016 election cycle, there are three basic alternatives to further reform our system, based in large part on the outcomes of the elections:  (1) continue the ACA, with improvements as needed (as supported by Hillary Clinton without specific “fixes”); (2) implement whatever plan the Republicans put forward, including repealing part or all of the ACA and most likely replacing it with such already discredited approaches as consumer-directed health care, tax credits, health savings accounts, selling insurance across state lines,  and state high-risk pools; and (3) single-payer national health insurance (NHI), which would provide universal coverage for comprehensive health care for our entire population, save some $592 billion a year, with financing through progressive taxes whereby 95 percent of individuals and businesses would pay less than they do now for health insurance and care.

The problems with the ACA cannot be fixed with tweaks. More fundamental reform will be needed. The private health insurance industry has had a long run, but fails the public interest. It is too inefficient compared to public financing, has already been bailed out more than it deserves, and is not sustainable because of its costs and waste. Should Republicans prevail in this election cycle, their supposed “reforms” will take us backward to a worse situation than we now have. Table 1 shows the basic differences between these alternatives. (20)

Conclusion

There will be increasing needs for legal work as the health care system further implodes and as conflict among competing interests escalate. The present system is not sustainable, and we can expect growing public discontent with its restricted access and unaffordable prices. This is a major economic, social/political, and moral issue. Hopefully Harvard Law School graduates will take the lead in helping to reform the present unfair system for the common good. In closing, these works by Joseph Stiglitz, Ph.D, Nobel laureate in economics, former chief economist at the World Bank, and author of Free Fall: America, Free Markets, and the Sinking of the World Economy, are right on target:  

[We have created] a society in which materialism dominates moral commitment, in which the rapid growth that we have achieved is not sustainable environmentally or socially, in which we do not act together as a community to address our common needs, partly because rugged individualism and market fundamentalism have eroded any sense of community and have led to rampant exploitation of unwary and unprotected individuals and to an increasing social divide. There has been an erosion of trust—and not just in our financial institutions. It is not too late to close these fissures. (21)

References:

1. Smith, JC, Medalia, C. Health insurance coverage in the United States: 2014. U. S. Census Bureau, September 2015.
2. Finegold, K, Avery, K, Ghose, B et al. Health insurance marketplace: uninsured populations eligible to enroll for 2016. Department of Health and Human Services, October 15, 2015.
3. Altman, D. Covering the remaining uninsured: not just a red-state issue. Wall Street Journal, October 14, 2015.
4. Pollitz, K, Cox, C, Lucia, K et al. Medical debt among people with health insurance. Kaiser Family Foundation, January 2014.
5. Andrews, M. Study finds almost half of health law plans offer very limited physician networks. Kaiser Health News, June 26, 2015.
6. Wenner, JB, Fisher, ES, Skinner, JS. Geography and the debate over Medicare reform. Health Affairs Web Exclusive W-103, February 13, 2002.
7. Potter, W. Health insurers working the system to pad their profits. Center for Public Integrity, August 17, 2015.
8. Armour, S. The doctor bill from identity thieves. Wall Street Journal, August 8, 2015.
9. Armour, S. Pressure builds on health co-ops. Wall Street Journal, November 5, 2015: A6.
10. Buchheit, P. Private health care as an act of terrorism. Common Dreams, July 20, 2015.
11. Himmelstein, DU, Woolhandler, S. The post-launch problem: the Affordable Care Act’s persistently high administrative costs. Health Affairs Blog, May 27, 2015.
12. Nader, R. In the public interest. Follow the hospital bills. The Progressive Populist 18 (4): 19, March 1, 2012.
13. Peckham, C. Physician burnout: it just keeps getting worse. Medscape, January 26, 2015.
14. Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015, pp. 160-180.
15. Center for Public Integrity, as cited by Moyers, B, Winship, M. The unbearable lightness of reform. Truthout, March 27, 2010.
16. Patient advocacy groups. Letter to Sylvia Burwell, Secretary of Health and Human Services, July 28, 2014.
17. Healthcare-NOW! Single-Payer Activist Guide to the Affordable Care Act. Philadelphia, PA, 2013, p. 22. Available at: www.healthcare-now.org
18. Himmelstein, DU, Thorne, D, Warren, E et al. Medical bankruptcy in the United States, 2007: results of a national study, Am J Med 122: 741-746, 2009.
19. Wayne, A. Insurers’ Obamacare losses may reach $5.5 billion in 2015. Bloomberg News Businessweek, March 4, 2014.
20. Geyman, JP. The Human Face of ObamaCare: Promises vs. Reality and What Comes Next. Friday Harbor, WA. Copernicus Healthcare, 2016, p. 203.

Stiglitz, JE. Freefall: America, Free Markets, and the Sinking of the World Economy. New York. W.W. Norton & Company, 2010: 275-276.