Four Key Things You Should Know About Health Care

Yes, it’s a complicated issue. But clarifying these fallacies will help voters understand it.

Comments: 248

  1. "The premium money that goes to the insurance company is cash that employers would otherwise deposit in employees’ accounts like the rest of their salary." But it seems very unlikely that if we were to fund all health care via taxes, then employers would increase workers' wages by the amount of health insurance premiums they are no longer paying. More likely, employers would pocket those premiums. So workers are naturally afraid that their taxes would go up but that their ages would not.

  2. Unions could negotiate for higher salaries without having to consider the cost of health insurance which is usually part of the package.

  3. @G Nevertheless, a change would seem to be transparent enough to put pressure on employers to cough up at least some of the difference, even through merit raises. Also, I think it wouldn't be a bad thing for companies to compete for getting workers through advertising that they do raise salaries that way, in the absence of having to pay premiums. Nearing utopia, compared to this whole, current mess.

  4. Thank you for this. As stated in fallacy #2, Medicare for All is affordable, but it might not be the best way to go. Fallacy #3 is really the key one, because it makes clear that it is profit-making that must go in order to arrive at the universal goal (at least for people who would belong to a civilized society) of making high-quality health care available to all residents of this nation without regard to ability to pay. The profiteering is not only insurance companies, but also Big Pharma, Big Hospitals, and even Big Doctors (although I temper this last by noting that many doctors need high incomes in order to pay off the massive debts incurred as they were trained by Big Medical Schools).

  5. @beaujames there is this small thing called loan forgiveness that could be carried out if our government decided to do it. And then, after that, perhaps we could deal with the way medical education is handled. Rather than requiring 4 years of college and 4 years of medical school and internships and residencies, perhaps we could require 2 years of college and 4 years of medical school. And we could try to ease the financial burden by providing grants for students rather than loans. But that's a reach because most Americans have developed an attitude towards helping others that is toxic. If we only help a small segment of the population by limiting the financial or other aid with extremely specific conditions the rest of the population resents it. If we extend the social safety net benefits up the income ladder to include those who may not need it, it might garner much more support from the public. Our taxes might increase but our lives might improve as well. The other part of this is ending outright government welfare for the rich in the form of tax breaks or less taxing on unearned income. That level is already set high enough that most of us are not affected. The system has to work for everyone without exception. Most of our cutoffs for eligibility are too low and that is why lower and middle income Americans are angry. 80% of us need more help than we get. Medicare for all would be a good thing if implemented properly. 9/12/2019 3:56pm submit

  6. @beaujames My primary-care doctor does not deal with the insurance companies. I pay a monthly fee which is very affordable, and don't pay for office visits. The blood tests, that are my main requirement for health care, are 80% cheaper than the next more expensive tests. I pay for all my health care out-of-pocket, no insurance involved. I am paying way less than I would pay under the insurance model Our medical system evolved into a system for making profits in all aspects of health care, rather than a system for taking care of the needs of patients. The insurance companies have NO interest in your health.

  7. Health insurance must be reflective of the new technology health care delivery system we now have . This delivery system can substantially increase patient care, quality of life and longevity. A universal health insurance program directed to cradle to grave coverage will reduce ER visits, hospital stays and expensive surgery. Preventive medicine and population management cost far less than corrective medicine. Furthermore telemedicine will enable us to serve rural areas and low income people at a lower cost than present. Before we embark on health care insurance debate, let us understand the way health care is now delivered and in the future.

  8. In my case, health insurance didn't translate to access to medical care. I had to pay so much for the insurance premiums ($800/month for an individual) that I couldn't afford health care -- which would've all come from the nice, high deductible. The system is broken.

  9. I disagree somewhat with the author's Fallacy #1. The money that employers are paying for heath insurance COULD go into the employee's pocket, not WOULD go there. As it is Health Insurance is a sort of minimum wage program, where employers are expected to pick up part of the employee's health care in addition to wage income. With a government funded health care system, I suspect many employers would plead poverty and not pass along those savings, or just ignore them.

  10. @Jim S. I agree somewhat as well. The portion of healthcare that an employer pays is a component of a total compensation package, along with wages, paid time off, profit sharing and/or 401k. The explanation the author gives is long-winded and garbled. This could have been a lot clearer and succinct. Because employers pay so much for healthcare, with rates constantly rising, the decision to hire new or more people (as well as ageism) or part-time people without benefits is directly impacted by healthcare costs. So, if you wonder why people are working longer hours this could be a factor. We've always taken the base salary and multiplied it by 1.3 or more to determine true salary,

  11. @Jim S. It's a possibility. Perhaps, then, employees who are perceptive and capable might look around for similar positions in companies that wouldn't be so greedy. In any case, pressure to distribute some of the savings, even on a merit raise basis, would be increased.

  12. @Jim S. Jim, if companies could lower pay they would already be doing it. The contribution firms make to your health care plan is cash they would pay you. The total compensation you receive (cash plus benefits) is what they think you are worth. The form compensation takes doesn't matter, it is all still a cost to the firm.

  13. Just a big thank you for this brilliant piece of thinking and writing. It clarifies so much and does it very “straight-on”. Excellent!

  14. "Insurance companies' profits drive health care costs." Emanuel and Fuchs correctly point out that this is untrue. What they neglect to mention, however, is the vast difference between insurance companies' overhead expenses and that of Medicare. "When the Congressional Budget Office broke those costs down, they put administrative costs in the nongroup market at 20 percent, small-group market at 16 percent and the large-group market at 11 percent." Medicare administrative expenses in 2016 were 1.4% Medicare for all could save a lot of overhead expense. Source:

  15. @Frank Baudino You forget that Medicare pays a lot of fraudulent charges. To eliminate that fraud, its administrative costs would have to rise. I don't know how high. Probably not as high as insurance companies that have more churn in their subscribers, but Medicare could save a lot of money if it was able to spend more fighting fraud.

  16. @Frank Baudino It's not just the insurance company overhead that's bloated. Physicians and hospitals also have a huge overhead expense due to multiple, complex contractual relationships with various payers that are extremely difficult to administer. Under a unified Medicare for all system, there should be substantial administrative savings for those providing the care.

  17. As we speak of the great costs, there are largely driven by our own myth encrusted expectations of eternal youth and vitality. After all, I as an American want and can buy the best car I can afford. And of course the best best house. So we make health seem like a merchantable item, with and endless demand. We try stay vital with a pill, and youthful with a little invisible surgery. We say we want the best health care, even if over a third of it is pure wastefulness, and and over diagnosis from fear of lawsuits. The Prosperity that we currently enjoy tends to breed waste, and unrealistic expectations. For a great heath care system, stop smoking, move about, get proper sleep, eat and drink things in moderation. Enjoy your family friend and neighbors. That is real health.

  18. @Warren Unhealthy behavioral habits are indeed critically important factors. Although, many medical problems can also result from pure accidents, as well as genetic disorders (e.g., diabetes).

  19. @akhenaten2 Good point, I Absolutely agree, and if we were able to get focused on the things you mentioned, rather than constant medical remediation of bad behavior, we could probably go a long way to cure them or alleviate conditions. Our grandchildren will look back at this time in healthcare and medicine as we looked at the late 1800 s.

  20. As to Fallacy No. 1, shouldn't it be mentioned that we all pay for "employer provided" healthcare because the employer deducts the premiums it pays, and the employee does not pay taxes on this compensation? How many billions of subsidies does this add up to? And how many of the millions of people who enjoy said subsidies are the same ones that go berserk at the notion that the government should overtly subsidize healthcare, because, you know, free stuff?

  21. @MT "the employee does not pay taxes on this compensation?"... Those self employed and not eligible for employer health insurance can deduct the cost of healthcare also. Basically, the irony is, we all pay for each other's healthcare either by the deductibility of the premiums and/or through the cost of the goods and services provided by companies or individuals.

  22. I second the point made by Jim S of Cleveland re Fallacy No. 1. Even if these employer health expenses are converted into increased salaries, exactly how will they be allocated among employees? I am confident that it will not be transparent, and that there will be arguments about who is really benefitting. And will employees lose the tax benefit of having thee health care expenses treated as pretax dollars. Just a few of the many challenges of converting from one system to a totally different one..

  23. @Ira Goldman Challenging, yes, although there is also such a thing as merit raises. And, the whole tax benefit issue would likely disappear with national health care. The trade-off? Access to affordable health care without worry about losing a job and benefits, inadequate coverage because an employer won't include that test or treatment, not physician in network to provide needed care (happened to me to the tune of out-of-pocke $1200), etc. "Converting" continues to require thinking outside the box.

  24. I think the authors are lacking real world experience as a factor in fixing the health care issue. Let’s look at some real-world examples: • I know of no one who works for a private company that doesn’t pay a premium over and above what the employer pays for the basic insurance premium. Call it a co-pay, call it a quality or level of care surcharge, the employee pays and react to that payment in choosing health care providers. • In both the insurance and the drug/appliance segments of the industry gross margins are enormous. The difference is made up in the form of advertising, marketing and sales expenses – the whole opioid problem is directly connected to drug sales quotas and bonus income. You might want to throw in product development amortization, but the big tech companies with net margins in the 20% range have just as large product development costs as do the drug/appliance makers. I recently had a major procedure. The hospital accidentally billed me $133,000. When my insurance company stepped in, the cost went into the low five figures. When the insurance company got done, I owed nothing. If you want to fix health care do the following: • Enforce Medicare rates on all procedures • Require that the lower Medicare rate be used irrespective of the patient’s insurance status • Give Medicare the power to set/negotiate drug/appliance costs. Everyone in the industry will scream and yell that this is unfair - that would be a good sign of progress!

  25. @William I think the authors are "lacking" only in the sense of not including the information you've added here. The spirit of the article seems to remain the same for both you and them.

  26. It's not just health insurance companies' profits, it's their whole bloated overhead costs. Their executives are paid 6-, 7-, and 8-figure salaries. Medicare-for-All would mean the top administrator is paid less than the salary of the Secretary of Health and Human Services: $210,700. Medicare for all would get rid of the bloat, and would enable the government to negotiate lower costs for pharmaceuticals and devices, etc. Medicare for all, now!

  27. Fallacy #1 is far from black and white. If you’re paying your employees “x” dollars per year, and covering health benefits, it’s awfully hard to cut your employee salaries simply because insurance premiums increase. Employees have, in many cases, understandably come to expect health care cost coverage in addition to salary. High quality employees are not easy to come by. It’s not simple math when you’re dealing with real people’s lives. It may seem reasonable (on paper) to cut salaries to make up for premium increases but far more difficult and complicated when you’re “face to face”. Also not the best strategy for keeping skilled and hardworking employees happy and productive. Those premium increases can, in many cases, amount to a yearly raise that no one thanks you for.

  28. @Lawrence Fiedler If people really had the yearly raise and national health care, it would negate your whole argument that is predicated solely on the current system. There can be other incentives to working in certain companies. (e.g., Well-led? Rear Admiral Grace Murray Hopper (or “Amazing Grace” as she was called). Concerning the difference between management and leadership, she said “You manage things; you lead people.”)

  29. @Lawrence Fiedler You've completely missed the point of the article. It argues that if that companies paying for premiums was is simply a pretense, like the 3 cup shell games played in Times Square. If abandoned, the hidden compensation would be demanded by employees, and appear in rising salaries. A maddening side of effect of tax law drives this pretense. Current law permits business to deduct the premiums they pay -- effectively providing them with a 20% or greater subsidy (depending on the tax rates paid by the business) to employees compared to people on the individual market. It's enrages me to know that I'm subsidizing the healthcare of employees at Google class companies. If you think I'm kidding, he's an example: - Blue Shield wants $40K+ for the premium of a policy for family of four with a high deductibles and co-pays; we call it "pretend care"). - But at one of the Valley firms, an employee typically sees little or nothing of this. The company stills pays $30K premium for the employee that would otherwise be added to salary. The result is that the taxpayer is subsidizing the already well-paid employee. A secondary side-effect of the tax deduction is that it makes the companies less price sensitive, driving up the prices for those not inside our jury rigged "system."

  30. Limiting the impact of health insurers to overall profit isn't really fair. These companies have significant operating costs which are baked into the fees paid for coverage. Nearly 300,000 people work in the health insurance industry. That's a lot of salaries. There are marketing and advertising costs as well. Proprietary technologies maintained for each employer... You get the idea.

  31. @Mark Exactly. The introduction of the much more efficient Medicare system for all will need to be accompanied by a serious program to tide over until re-employment the redundant insurance workers. Fear of this problem during a recession led the Premier of Ontario in 1991 to reneg on his most important election promise, the introduction of public "single payer" auto insurance. Yes, there are provinces in Canada where even auto insurance is publicly owned and "single payer", but NAFTA has prevented its further spread to other provinces.

  32. @Mark Busy work is very expensive, isn't it? But perhaps, they could be retrained for the growing coal mining sector.

  33. The most important takeaway here is: The GOP lies to us. The mainstream Democrats obscure the truth to a fault. Thank you gentlemen. I wish your voice is heard. I hope your clarifications will enlighten the candidates in tonight’s debate and make them see that Bernie has been telling everyone the truth!

  34. First off: Many, many thanks for this wonderful and readable summary. I'd thank as many times as the amount in dollars that our current health care system costs. Also, of course by now, whatever Trump says about something that you "wouldn't believe," he is totally right because it wouldn't be true.

  35. First off: Many, many thanks for this wonderful and readable summary. I'd thank as many times as the amount in dollars that our current health care system costs. Also, of course by now, whatever Trump says about something that you "wouldn't believe," he is totally right because it wouldn't be true.

  36. Excellent column and excellent added point @Frank Baudino. Administrative costs include the clerical work driven by a doctor's prescribing a procedure or drug to have coverage denied by the insurer with appeals and eventually coverage of the prescription or the patient's not getting the care. This is avoided in the Kaiser system where doctors are salaried and have no incentive to prescribe except the patient's welfare and thus there is no need to seek approval for payment which is covered by the prepaid premium. This does not even take into account the anguish of the patient/family struggling to obtain needed coverage from a distant insurer.

  37. @just thinking Having experienced both the Kaiser and Canadian systems, you are absolutely correct. And the administration costs of these systems are vastly less than those of the private insurers.

  38. @just thinking 40 years ago, Kaiser was, frankly, scary -- talented physicans, nurses, and other professionals didn't want to work there. Because of the insane increases in premiums for the Blues in the Bay Area on the individual market for the un subsidized, we had no choice but to move to Kaiser. An integrated systems with good communications between everyone, has transformed the organization. Perhaps the hassle of dealing with bureaucracy outside of the system, has also drawn better people into it (e.g, internists trained at the Brigham). We've found that almost everything that we've had to deal with (and its a lot) has been handled much, much better than when we were piecing together care on our own.

  39. Fallacy #3 undersells the inefficiencies of private health insurance. Profit is only part of what could be saved; most of their operating costs go to things that just wouldn't be necessary under a single national health plan, like advertising, billing, legal, and executive pay. There would also be savings on the healthcare provider side, since they would no longer need to negotiate procedures covered or reimbursements. There would also be huge efficiencies in consolidating things like research and customer service into one entity. If the US spent the same proportion of total healthcare costs on administration that Canada does, it would mean a more than 10% reduction in total spending- far more than the 0.6% the authors here attribute to profits.

  40. @Jack Actually, the point of the article is that all of that stuff is just a drop in the bucket. The real problems are cost controls, and a lack of understanding by the insured public that they are, in fact, paying through the nose. Here's an interesting fact: orthopedic surgeons are among the most conservative of physicians, decrying government intervention. Yet, the barriers to entry to their trade enforced by --- wait for it -- government.

  41. @Jack - Here is the bottom line: in 2017, Canada spent $4,753 in PPP dollars per person for health care. We spent $9,892. That amounts to a savings of $1.8 TRILLION or 51%.

  42. The idea that a fully government run health care system will be more efficient, patient friendly and even cheaper is something dreamed up in Dr. Emanuel's ivory tower. How do they plan to make doctors more efficient? Have they factored the inefficiencies that the EMR (electronic medical record) has created for doctors, nurses and office staff? Have they included the time necessary to get medical approvals for tests, procedures and expensive but often life saving biopharmaceuticals? Do they think that taking all the incentive to earn more money in medical practice will make physicians more available to patients? What about malpractice and defensive medicine? Will a single payer system include compensation for bad outcomes without subjecting doctors and hospital to expensive and very stressful litigation? What about rural hospitals or hospitals in poorly served areas? They don't have the economies of scale that large urban hospitals do. Should they be closed in the interests of efficiency? Those people will have to be taken many miles and hours away to the big city because those small hospitals have high per patient day costs. It will cost their towns an important part of their economy and put some patients health at risk (for example, trauma patients or cardiac patients). Yes the present system is wasteful but one government directed structure will only make for a new bureaucracy that is unaccountable and probably not better that the mess we have.

  43. @Forgotten Voter As the conservative that wants government out of healthcare, let me answer a one of your questions that match your principles: Question: What about rural hospitals or hospitals in poorly served areas? They don't have the economies of scale that large urban hospitals do. Should they be closed in the interests of efficiency? Conservative Answer: Yes, they should be closed. Why should the rest of us pay for their care. That's government control. Too, bad about the people in rural areas. They have the choice to move elsewhere to places that do offer economies of scale -- like cities, right?

  44. @Forgotten Voter, we do NOT have to re-invent the wheel. All the other OECD countries have some sort of universal health care; we can pick and choose from the best.

  45. @Forgotten Voter Penn State is a quasi government run institution—most Pennsylvanians believe it is a valuable and important institution.

  46. In regards to your Fallacy #2, the affordability of Medicare for All, the policy wonks are missing the reason for the public's doubts. Historically, and even more so recently, most legislation is pitched to increase the wealth of the very wealthy. The people are concerned, rightly, that they will be left to pay the costs while the employers, corporations and stockholders scuttle away with a huge windfall. My guess is that the polling that's been done on the subject just doesn't ask the right questions.

  47. Our nation's healthcare system is, perhaps, the best example of how America's system of predatory capitalism negatively impacts the lives of people. Americans pay far more for healthcare than any other nation; however, the US healthcare system ranks 27th in terms of cost/benefits. The problem in the healthcare industry is the same problem in companies like Boeing, GE, big pharma, big banking, etc. the goal of executives is not good products or services it is to maximize profits by buying laws, regulations and clout with regulators to ensure the highest profits. My guess is our nation does have the best system of predatory capitalism in the world.

  48. While it may be true that companies consider their share of healthcare premiums as being part of an employee's overall compensation, the idea that they would simply pay the employee that cost if it were not directed to his/her healthcare premium is naive. Many, maybe most, companies would simply pocket that expense for themselves, leaving employee salaries substantively the same. As to Medicare "possibly" needing to increase physician compensation under a single-payer plan, there's no "possibly" about it. They absolutely would have to. There's already a shortage of physicians in many specialties and a critical one in family practice. Forcing physicians to take the current reduced Medicare compensation at a time when universal coverage will be driving up demand will NOT improve those shortages. Not only will Medicare need to increase compensation above current levels, they'll have to increase it above private insurer levels.

  49. While it may be true that companies consider their share of healthcare premiums as being part of an employee's overall compensation, the idea that they would simply pay the employee that cost if it were not directed to his/her healthcare premium is naive. Many, maybe most, companies would simply pocket that expense for themselves, leaving employee salaries substantively the same. As to Medicare "possibly" needing to increase physician compensation under a single-payer plan, there's no "possibly" about it. They absolutely would have to. There's already a shortage of physicians in many specialties and a critical one in family practice. Forcing physicians to take the current reduced Medicare compensation at a time when universal coverage will be driving up demand will NOT improve those shortages. Not only will Medicare need to increase compensation above current levels, they'll have to increase it above private insurer levels.

  50. I question using "profit" to assess the cost to the system of the private insurance companies. If they operate like other corporations there is a lot more money sloshing around that doesn't get booked as profit. We would achieve massive economies of scale simply by processing claims in one standard system. There would be meaningful financial benefits from eliminating the costs of each individual company's management of thousands of different plans, pre-auth, review, advertising, provider communication, fake health promotion services that no one wants or needs, provider harassment, patient harassment, etc.

  51. @Jim - Here are some figures from 2012. The current figures are undoubtedly much higher, rates-really-threaten-physicians-with-bankruptcy/ The author, a private practice orthopedic surgeon, looks at orthopedists and family doctors. He finds that an orthopedist who had only Medicare patients would have a take home income of $411,000. I could live on that. A family doctor who had only Medicare patients would end up with $137,000, a lot less, but you know I could live on that, too (which is more than I ever earned) if I didn't serve Chateau Petrus on weekdays. Also other countries such as Japan cover everyone, get better health care results, and do it for about half of what we spend per person with a lower number of physicians per 1,000 people in their country. Finally, if there is a shortage of doctors, it is certainly NOT because the compensation is low. In 2018 - 2019 there were 52,777 applicants and 21,622 matriculants. That's about 2.6 applicants for every one that got in. On average applicants submitted 15 applications. People still want to be doctors. A long time ago, the AMA decided to work to limit the number of places in medical schools to keep the income of physicians way above that of other professions. They were successful.

  52. @Jim Jim, just think about it. If your employer could cut your pay tomorrow he or she would do so. It doesn't matter if the pay is hidden as a benefit. It is all a cost to the firm. There is no reason to expect total compensation would fall.

  53. Regarding Fallacy No. 3: Insurance companies’ profits drive health care costs. Insurance company profits are not the only way that insurance companies increase health care costs. Forcing health care providers to deal with multiple determiners of coverage, each with their own rules and forms probably adds more to the cost of care than company profits. Look at all the people employed just to process claims, appeal denials, etc. in a typical medical practice. Also insurance company profits are determined after paying exorbitant compensation to top management.

  54. 2. and 3., while true, are misleading. 2. Is misleading because the figures quoted for Bernie's plan include a lot of startup costs for the first 4 or 5 years. Once the system is up & running, the savings will be much greater. This can be seen by decades of data from other wealthy developed countries. For example, Canada has a system like Medicare for All. In 2017, Canada spent $4,753 in PPP dollars per person for health care. We spent $9,892. That represents a saving of over $1.8 TRILLION each & every year. Now Bernie's plan is more comprehensive than Canada's, but with $1,8 TRILLION to spend we can easily see that Bernie's plan will still save a bundle. 3. is deeply misleading because the waste in private health insurance is not in profit, but in overhead and compliance costs. The overhead in private insurance is 15% - 20%. The overhead in the government part of Medicare is 2% - 3% while the overhead in the part contracted out is 7% - 8%. The overhead in other countries is 1% - 2%. But this pales in comparison with the compliance costs to physicians and hospitals. With 1,500 different private plans with different rules & forms, this waste has been estimated to be $500 - $600 Billion each & every year. In addition there is the money wasted by patients having to fight with the private companies over coverage & payment. The Commonwealth Fund found that the were 3 times as many complaints among the privately insured as with Medicare enrollees. The amount is unknown

  55. Actually, finding a better system is not that difficult. We spend 18% of GDP on healthcare. There are nearly 40 countries getting better health outcomes and none of them pay more than 11% of GDP for healthcare. We could throw a dart and hit on a better system blindfolded. The difficult part is going to be fighting those who profit outrageously from the current inefficient system and their army of lobbyists. But fight we must because we will not be able to keep this system going much longer with the retirement of the baby boomers. The ratio of people needing care to those paying for it is going in a negative direction. Basic numbers are going to force a change but we need to make sure that change benefits everyone and not just those sitting on the boards of medical companies.

  56. Jack writes "Fallacy #3 undersells the inefficiencies of private health insurance. Profit is only part of what could be saved; most of their operating costs go to things that just wouldn't be necessary under a single national health plan, like advertising, billing, legal, and executive pay. . . . " Those overheads are probably 8 or 9 times the insurance companies' profits. And having numerous insurers means doctors and hospitals must have their own office staffs to deal with multiple insurance companies. How did an economist miss that? Right on, Jack, but there's more: for profit insurance tempts the insurer to deny coverage even at the cost of human suffering and death. And insurers have yielded to that temptation frequently. For-profit insurers call paid claims "medical expenses," an obstacle to profit. Many nurses, who see all that daily, are out supporting a single payer system. We have it in Canada, it works.

  57. @George You are absolutely correct. The authors discussion of Fallacy #3 is specious, because the real issue regarding private insurance company contribution to the total cost of medical care includes not only profits, but more importantly, the TOTAL costs of running private insurance company operations; these include not only the costs encountered by providers to comply to multiple insurers but also the tremendous, unconscionably company salaries that are paid to thousands of insurance executives and written off as costs (not profits). Certainly, with a federal Medicare for all system, costs in the private sector as well as costs in the insurance sector would be very significantly reduced. ****a Connecticut physician

  58. There's one fallacy you didn't address and that is the fallacy that this Administration gives a hoot about your healthcare. Any Administration that would tout the roll back of clean water regulations is completely uninterested whether you make it to the next election, never mind your life expectancy.

  59. @Rick Gage Right, that is why we need to vote. This Administration lost the last election by over 5 million votes in the West Coast and island states (Hawaii, Washington, Oregon, California and Nevada) and by over 2.5 million votes nationally. The current Administration will do nothing good and lots of bad for those of us on the West Coast We need a few thousand votes net improvement in a handful of states to win in the Electoral College. If we do not oust this Administration I shudder at what they will do.

  60. Oy veh, Dr. Emanuel et al, The savings in health care by MFA is not what CEOs are paid along with the unnecessary bureaucracy that accompanies it. 500 billion is usual number saved per year. How could MFA possibly cost more when hospitals have diminished billing departments, dependable monthly payments without seeking service duplications, and removing billing costs from other providers. With a risk group that includes all and a slimmed down overhead without the onus of pleasing shareholders what's not to like especially when people's lives are in the balance.

  61. Could not agree more. Our health system is expensive primarily because we have the delusion that the market model works for health care. It does not. Most of the “excess” expense is the complications resulting from the market system and the multiple “fixes” that are purchased to fix them. Pharmacy benefit managers, utilization review coordinators, expert billing systems and multiple other layers of cost are all there to help manage an unmanageable non-system.

  62. Here is something else you should know. Healthcare operates as a cartel. The cartel must maintain a steady flow of cash to support itself. Each month, insured people pay a tribute to the cartel. These are called insurance premiums. OK, so how does that make it a cartel? If a person is not covered by insurance, or out of network, they are charged typically 500% to 1000% higher fees than those who are covered. This is the punishment the cartel dishes out to force people into the system and pay the monthly tribute that keeps the system going. Now our good doctors insulate themselves from this robbery by hiring office managers who do the billing and collecting. The cartel has much to gain by behaving this way. Let's say a service provider bills a service at $5000 that would normally be $800 is under insurance. That isn't enough for the victim to hire a layer and sue. The lawyer will cost much more. The victim refuses to pay. The service provider then hires a collection agency. Let's say the agency splits the take with the provider. Now let's say the agency gets $3000 out of the victim and the provider gets $1500. That's still $700 more than they would have gotten under insurance. The way the system is designed, it greatly profits from this structure. That's why these people will hound you from the grave to collect. They will bankrupt you. They will sue and take everything you own and then some. Pay up and stay in network or else.

  63. Bless you Sir. Can you please send this comment as an unsolicited OpEd to the Times and WP? It would be a patriotic service.

  64. Another myopic discussion of American health care costs. Here is the ONE most important fact about health care in America. WE PAY MORE FOR HEALTH CARE THAN THE REST OF THE CIVILIZED WORLD. Look it up. We use 19% of GDP on health care; the rest of the world pays 14% or less. Fact number two is equally stunning: we get less. We have worse outcomes; they cover everybody, we leave millions without coverage, so they present in the ER, for triage service with the gold plated bill. 47.000 Americans suffer and die each year for lack of routine, basic health care. Got it? We pay more and we get less. And only Americans experience medical bankruptcy, where whether the patient lives or dies, the family gets poverty. I refuse to believe America has fallen so far that we cannot figure out how to do what every other nation on the planet does better and cheaper. Wake up! Put the gop down. And get 5% of GDP to play with as a free bonus.

  65. @Four Oaks Of course other nations also ration care. If we are willing to do that here we can definitely get costs down. I for one think we should stop doing heroic end of life care on taxpayer dime.

  66. @Mathew Balderdash. What do insurance companies do but ration care? What does it mean that poor uninsured don't get care; if that's not rationing, what is? Even the Russian trolls can do better than that? "No rationing?" Sheesh!

  67. One other point to add to this discussion is that employer-sponsored health insurance premiums are subsidized by the government because they are paid with the employee's pre-tax dollars and the employer gets to write off whatever portion the employer "pays" as opposed to the employee. In contrast, and very unfairly, workers of smaller companies or part-timers and gig-workers, independent contractors and the like who pay for their own insurance (or worse, have to remain uninsured due to unaffordability of premiums) get NO tax subsidy at all. All health care expense comes out of the worker's after tax dollars, unless he or she can afford to figure out how to form a one-person business and expense it from their pre-tax income that way. The whole system is messed up in favor of the wealthy, that is all there is to it. Vote for Warren and support Medicare for All! I also question the numbers the authors include regarding the insurance company profits -- insurance advertising, contracting with providers, processing claims, and paying their execs obscene salaries all have no purpose other than to leech off of the health care needs of other human beings. For profit health insurance companies are immoral, feeding at the trough and must be starved before they kill more people. Also, the issue of "non-profit" hospital greed

  68. Excellent analysis. If one reads this the obvious conclusion is that Bernie and Warren should be providing leadership in their respective states to begin a Medicare for All (M4A) program at the state level. The reason they don’t do that is because deep down they know M4A is not a viable solution to bring down health care costs.

  69. @Sebastian Cremmington - It can't be done state by state. One of the important factors that makes Medicare for All (and, indeed, all universal government run programs) so efficient is that everyone is treated the same. You cannot do that in a state program. What do you do about the money people have paid into Medicare and those actually on Medicare? On Medicaid? TriCare, Indian Healthcare?, etc. The only thing they could think of in Vermont was to leave them out. Then an even bigger problem came up. What do you do about people who work for multi-state corporations? Would these be covered by the Vermont plan or by the plan the corporation has for all of its employees? Again they were left out. If you have a national plan all these problems never even come up. IN addition we have decades of data from many different developed countries that show that a universal, government run system yields better results at much lower cost. For example. Canada has a system very similar to M4A. in 2017, Canada spent $4,753 in PPP dollars per person for health care. We spent $9,892. That amounts to a savings of #1.8 TRILLION each & every year. Here are some figures on bottom line results. I have included the UK which has real socialized medicine: Life expectancy at birth (OECD): Canada- 81.9, UK - 81.1 US - 78.8 Infant Mortality (Deaths per 1,000) (ORCD): Canada - 4.7, UK - 3.8 US - 6.0 Maternal Mortality (WHO): Canada - 7, UK - 9 US - 14.

  70. @Len Charlap You are 100% incorrect. All of the money necessary to fund a M4A program is currently being spent on health care in states with over 95% insured rates. So Bernie’s goal is to eliminate private health care. So in Vermont Bernie simply goes to the state agencies and universities and nicely asks for them to hand over the money they are currently spending on health care to Green Mountain Care (GMC). GMC proves that they can administer their health care program cheaper and better than BCBS and then more Vermont businesses will hand over their health care spending to GMC. I would suggest keeping copays and deductibles and having CSR payments in lieu of raising taxes because wealthy people don’t mind paying copays and deductibles. The process would not happen overnight and it would probably take 5 years with in year 5 GMC would offer policies on ACA Exchanges and Medicare Advantage. I have been on the ACA Exchanges so that bar is very low with respect to doing a better job then the private sector. The key is getting the residents with the best policies on board first and then expanding from that base...not trying to raise taxes and provide better health care to people with inferior health insurance. And with respect to your statistics those are the product of many variables such as lifestyle and not evidence of a superior health care system. For example people in Sicily live longer than people in Baltimore that have access to Johns Hopkins.

  71. @Sebastian Cremmington - I don't understand your plan. The money people with private insurance pay goes to private companies, not to "state agencies and universities ". And the ACA exchanges still only get people private insurance with all of its high overhead and higher compliance costs (and high deductibles). And you do not ex[alin how all the people Vermont had to leave out get handled. Yes, there are many variables and they vary from country to country. The point is that even with all this variation a universal government run system always comes out way more efficient than one based primarily on private insurance.

  72. This piece mentions, in passing, that Americans are paying more for healthcare than citizens of any other advanced country. In fact, we pay twice as much as some of those countries. This article does not pause, for even a moment to ask why. The authors do not seem the least bit interested in examining how these other countries, which all include some form of universal healthcare, are doing it for so much less.

  73. It isn't too hard to figure out how other countries reduce healthcare costs. one way they do it is by controlling the cost of drugs and medical devices. Those countries set the prices paid for drugs and they eliminate the several layers of middle men in the cost of medical devices.

  74. @Michael We provide enormous amounts of marginally useful or outright useless exorbitantly priced care. Far more than other developed countries. It’s America, everyone has to have the latest and greatest, which isn’t necessarily the best. If anyone talks about changing this system, they are accused of rationing,The political evil of modern times. The authors did mention this in the article but did not expound on it

  75. @Michael The main reason why other western countries have lower medical costs is that providers in those countries--physicians, drug companies, device makers, nurses, administrators, etc.--make far less than providers in the United States. This is also the reason why reforming the American system in a significant way has proven to be virtually impossible. Too many vested interests.

  76. I'm quite skeptical of fallacy #1. Certainly companies could stop paying health insurance and put all of that money in the employees' paychecks. But when have you ever known corporate America to return all 'extra' earnings to the employees? It doesn't matter if it is the result of tax changes or an earnings surprise, the surprise windfall doesn't all end up going to employee salaries. If fallacy #1 were true, then companies that don't offer benefits would have higher employee salaries than companies that do offer health insurance. I've never seen that to be true.

  77. I do have an issue with fallacy number three. My experience is that health insurance and cost has nothing to do with quality health care. First of all there has been a massive effort over 40 years to allow third parties to profit from health care. This may not be simply insurance companies, but HMO’s, for profit hospitals, and corporations as well. Many hospitals, HMO’s, and insurers are also seeking to consolidate and merge. Decades in the past, I as a physician, could see a patient for thirty minutes, make a reasonable salary, and order the tests required, and health care costs were less. This today is unheard of. Hospitals are consolidating, and local hospitals as well as regional hospitals are closing. These decisions are being determined by cost cutting measures to maintain profit margins. Certainly not all the profit is going to private insurance companies. However there are many other entities involved in increasing the cost and private insurers are involved directly or indirectly. Regulating the small percentage of waste due to “unnecessary” diagnostic tests or regulating “work product” to generate income to sustain health care I doubt is the answer. The health care industry, including Medicare, has been trying for decades to do this unsuccessfully. Administrative costs have ballooned partly as a result. There must be uniform governmental control of health care sooner or later as there is in Europe and Canada. There is no role for profit in health care.

  78. Here's something else to be aware of: you may find that your total out-of-pocket annual medical care cost is substantially the same when you're on Medicare as it was before. That's been the experience in this household.

  79. @BayArea101Does your out-of-pocket include the premium you paid with private insurance as opposed to Medicare. I can assure the premium I pay for Medicare (and that comes out of my pocket) is way less than what I had paid with private insurance and certainly less than what my wife pays with private under the ACA.

  80. @Robert Haufrecht In our case, yes, it does. We track every expense, and the total has turned out to be within a few hundred dollars of what it used to be. I realize that everyone's circumstance is different, and I didn't know what to expect when Medicare became our primary insurer. It did come as a surprise that the cost is substantially the same. FWIW, the annual out-of-pocket total for the two of us is in the range of $15,000. Except for a knee replacement and a hip replacement for my wife, we've used very little in the way of medical services over the years. We've had no other surgeries, our prescription drugs have all been very short-term and usually generics, we tend to have dental work performed every few years (usually crown replacements), we do see a doctor occasionally (e.g., reaction to a bee sting), and we go in for annual-type checkups every 2-3 years, etc.

  81. If insurance company profits are not the cause of high healthcare costs, the only other explanation seems to me to be high charges by doctors, hospitals, and pharma and device companies. Why didn't this article come out and say that? How can price transparency not bring down healthcare costs? That is exactly what works when we shop for ANY other products and services. Surely price transparency will put pressure on those facilities that charge way above the median price? Surely there is a lot to be gained by patients being able to shop for the provider that offers a better cost+service quality combination? As for Medicare for All -- even if politics is the cause of increased spending, surely that should be factored into the rationale for such a huge policy change? I am actually FOR Medicare for All. A few years shy of the holy grail age of 65, I wish I could BUY into Medicare. But, I maintain that an honest cost analysis should take all after/side effects into account. I wish Dr. Ezekiel (an architect of Obamacare, no less) had put forth some new ideas on what will bring down healthcare costs. Obamacare has definitely failed in that regard.

  82. @na: we know that price transparency does not work because research (science) shows that it does not work. That is, when you compare places that have price transparency to places that don't have price transparency there are no significant difference in healthcare costs.

  83. @na the answer is because people are not shopping around for their health care. First like the article says they find a doctor they like and a hospital they like and they go there. And second when you know you are paying a fraction of the bill less than 20% there is less incentive to shop for price

  84. @na prices in health care apply to an infinite variety of services and gooods which is unlike prices for cars or a can of chili or even for an hour of a lawyer's time. That is why prices do not come down with transparency in the health care arena. Secondly, in many cases we have no idea what it is we are buying. If I have heart pains and go to the hospital I have no idea whether I need a bypass or a stent or two aspirin and a good night's sleep. Transparency does not help me with that. Finally, in most areas of the country I cannot go across the street to a competitor to get a better price even with transparency.

  85. One issue that nobody seems to address is what happens to ~1 million people employed by the health insurance industry when we switch to a 'medicare for all' type of system. I'm not saying this to be cynical, or because I oppose a 'medicare for all' type system and-this is an honest question. This seems like a pretty important question to me, and one we should expect the 'medicare for all' presidential candidates to answer.

  86. @Leo: More people will need to work in government-run health insurance. Private health insurance will probably not be eliminated and in some respect may remain an essential part of the health insurance system. Some people may simply have to look for other work. It is certainly valid to ask what will happen to people in that industry, and I don't wish problems for any of them. But the health insurance industry is not supposed to be a welfare system (for those who work in it) and it makes more sense to ask why we should continue to support an industry with that level of waste. Some of those people may be able to take on more socially and economically productive work with the money we save on health insurance. The bright and hard working ones are likely to succeed.

  87. You are right, if the pool of insured people grows we will need more providers too, and the system will need more people to administer it. And yes, there is so much waste we could cut, who needs all the pages and pages of bills we don't understand anyway, then the waste to collect from all the different policies, one for prescriptions, one for one payer and another part for supplements, having to check if all branches of the insurance were billed, it could not be more complicated and wasteful.

  88. @Stan Sutton The jobs that have been lost because of automation (and to a lesser extent, outsourcing) also weren't supposed to be a welfare system, but I think it's an arguable case that those job losses are responsible for president Donald Trump. I agree with much of what you say, but I don't think it's wise to assume that huge numbers of job losses are going to be inconsequential. And again, this isn't a veiled criticism of 'medicare for all'. It's a request that the candidates pushing 'medicare for all' convince me that they have a workable plan.

  89. Why can't we have, or at lest start with, a literal Medicare for all, i.e., Medicare as we know it today provided to everyone? So Medicare would cover basic care, and folk (or their employers) would buy supplemental plans offered by private insurers? Less disruption in the transition, and more opportunity to mandate efficiencies.

  90. @ALB Maybe not-for-profit insurers only?

  91. Fallacy number 1 is what drives people to believe that the cost of ACA insurance is comparatively high. When the ACA markets first opened, the apples to apples cost comparison was very similar to what my total cost of employer provided insurance was very comparable to the marketplace cost. Now, the cost of marketplace coverage seems to be higher, but that higher cost is/was driven by Trump's policies. It need not be that way, and was done so purposely. BTW - Fallacy number 5. People expect to receive first class healthcare for a couple hundred dollars a month. Total. And they believe they are right about that low ball number.

  92. @Martin As long as the insurance industry controls the market there will be no affordable health care ever. ACA was still too expensive, Medicare is too expensive. Why do we have Medicare A,B,C,D,? People living on SS only and many women do, can't afford to pay extra for B, C, D that is several hundred $$, half their SS and more and still prescriptions add even more. That is insane. Mandatory insurance is a must, it is common sense. Spread the premiums over a lifetime like SS.

  93. Fallacy #1 (employers pay for employees healthcare) is an unconvincing argument. If the government provided free healthcare in the morning, would my employer give me a big raise? From an employer's perspective, salary, benefits and other costs are offered in order to be able to hire and keep good employees, it's all employee compensation. It's fair to say that employers don't this out of a sense of goodness, but it's note quite fair to equate them with pickpockets either.

  94. @Peter yes, your employer would give you a big raise. Of course you’d need to pay some portion (perhaps a large portion) of that increased income in taxes, to cover the cost of national health insurance.

  95. really? compare companies that has insurance with companies that dont in the same industry and you will not find that those without dont have higher take home pay.

  96. Yes. Obvious. Otherwise someone else will and hire you. That is how capitalism works.

  97. There is a interesting contradiction woven in here. In Fallacy #1, the authors state that employees actually bear the cost of their own healthcare by their employers redirect monies that would otherwise go towards higher wages. In Fallacy #4, the authors turn around and state that "health insurance insulates the patient from price." But if employers are actually redirecting wages away from employees to cover health care costs, then higher prices are directlyleading to lower wages for American workers. Even the authors agree that is the case ("Clearly workers’ wages, not corporate profits, have been paying for higher health insurance premiums") In contrast to what the authors' suggest, price transparency would at least give employers leverage to negotiate lower prices with providers for services and these savings could be returned to employees in the form of higher wages. The assumption that the only benefit would be seen by patients redirecting their own care would only occur if they bear full risk for the cost of their own care.

  98. Four things you need to know about Medicare For All (M4A): 1. M4A is cheaper than the system we have now. 2. M4A has better outcomes than the system we have now. 3. There are no premiums, deductibles, co-pays, or other out of pocket expenses. M4A will be paid for via taxes. The majority of workers will pay less overall. Medical bankruptcies (here in the exceptional USA) will become a horror of the past. 4. Everyone will be covered. You don’t have to worry about losing your coverage when you lose your job, when you change jobs, when your employer changes policies, or when you get sick.

  99. You do know that Medicare is not free, right? My mom pays nearly $600 a month fir Medicare with her supplement. It would still be north of $300 without the supplement. I am for universal health care, but I don’t think people understand the complexity. They think it’s free.

  100. @Michael Cosgrove It's a "business" When new patients flood the market, demand will soar, supply will diminish. Lower costs mean nothing if you can't get the product or your Medical Doctor is now a 23 year old physician's assistant

  101. @LJIS Yes, but--As pointed out in the article, people are already paying for their health care through deductions in wages, co-pays and large deductibles they pay out-of-pocket before their insurance coverage kicks in. Your mother pays NONE of these. The $600 per month for Medicare deducted from her SS and whatever part of that amount is paid through her supplemental insurance is, I'm certain, far less than my family pays per month for employer based coverage. This is the point that Emanuel and Fuchs are making in Fallacies 1 and 2 of their discussion. If you are employed and have insurance take a look at your pay stubs for a single month, add up what is taken out for insurance, then add in all the items I've listed above. I expect your cost far exceed your mother's.

  102. The only way to reduce health care is to regulate the insurance industry. ACA tried it, it was just a little Band-Aid. It moved Medicare funding and tax $$ to help fund insurance for people with existing conditions and set other minimum standards for policies at no costs to the industry. The Republicans repealed and repealed even that little. Bernie Sanders is right to get insurance for the middle class and lower-income people but he should let the wealthy buy their insurance on the open market with all the high premiums, deductibles and rules and regulations the industry demands. Let them enjoy the predatory free market to the fullest. Insurance for all earning $100K or less and let the wealthy take care of themselves. Could be paid with just an increase of the FICA tax. Details are negotiable.

  103. @ARL The details have already been figured out for Germany. But big Pharma, the insurance companies, the "not-for-profit" medical providers (like the one I use that pays their CEO $10M a year and advertise like crazy) have and will continue to fight it tooth and nail. The R's have done a great job gutting the ACA, and the pending Texas lawsuit Texas vs. Azar seeks to disband the whole thing, and our (alleged) President has directed the DOJ to not uphold the law that is the ACA. NO election has ever been more important than 2020.

  104. I'm totally confused by the assumption that Messrs. Emanuel and Fuchs propose regarding healthcare cost as part of salary. Employees may choose to opt into an employer's existing health insurance or opt out (if they have coverage from another source -- i.e., a spouse). Either choice regarding insurance coverage would have no bearing on salary as it would remain the same. With respect to Fallacy #1: In comparison to my non-insured co-worker, am I being cheated?

  105. The superficial treatment of pricing transparency is disappointing. Of course it alone is meaningless. At the same time history has shown the path out of the current mess. Just think of the securities or banking industries of yesteryear where the consumer had no power and a guild mentality and opaque pricing and practices and barriers to entry prevailed. Now imagine if we could eliminate all that from healthcare. I’m convinced prices would drop and quality would go up. That’s the right analysis.

  106. Far too little scrutiny is being given to reducing health care COSTS. Phrma profits are outrageous. The federal government should be involved in negotiating prices for pharmaceuticals just as they do for the Veterans Administration. Hospitals are NOTORIOUS offenders, gouging where they can. A new system could be easily devised which would benefit our citizens but the "profit rice bowls" of insurance companies and hospitals and phrma will have to be removed and they will die defending their profits.

  107. Apparently we need to reduce the capitalism effect in healthcare. Hospitals add services to enhance their reputations whether they are useful or not.

  108. @DENOTE REDMOND ALSO - if you get a service at a hospital connected center [eg imaging-trays] the cost is much more than it would be when compared to a free-standing imaging center. Same with immunizations: get it from your hospital-affiliated clinic and it may cost $200, vs a freestanding clinic it would be say $50. [my numbers are not exact, but as reference still convey the story - the hospital-affiliated clinics add the overhead associated with the entire hospital facilities 'being available']. This also explains why emergency care is so expensive - even if you don't need an x-ray your charges include a 'portion' for the hospital having the imaging center 'available should it HAVE been needed'.

  109. @DENOTE REDMOND Good point. I have noticed that ever since Obama care, hospitals and health care providers have gone on a building spree. If they were manufacturers, you would ask one question- is there demand for the product that you are building capacity for. If they build capacity without demand but somehow charge prices that reflect a shortage of capacity, then something is out of whack

  110. Hospitals should all be public. Do we have private armies? Air Force? Police Force? Healthcare should be a universal public good. Full stop.

  111. Thanks to the authors for 75% of this piece. And no thanks for the obfuscations embedded in “Fallacy 3.” Few if any of us seriously argue that insurance company *profits* are the main driver of high costs. Certainly many of us understand those profits (regardless of size) to be morally repugnant. But our excessive costs are much more the result of inflated profits of the pharmaceutical and device industries, and the grotesquely high salaries paid to most physicians who do procedures. Yes, the private insurance industry needs to go away. But not (primarily) because of its profits. It needs to go away because it’s roughly 80% unnecessary. Admin costs under a national system would be 1/5 of the $425 billion/year this industry is costing us. Of course it’s providing jobs too. What would happen to all those jobs? Many of us feel that the best answer would be to significantly increase our nation’s pool of health care professionals. In the end, we’d all be better off with more health care providers - but only as long as we can impose consistent controls on payments to drug/device manufactures and (especially) to medical specialists. Is this to say that our problems could really be solved by nationalizing health insurance, negotiating consistent caps on drug and device prices, and paying orthopedic surgeons $200k/year instead of $800k/year? Yes!

  112. There is some confusion here in the narrative. Insurance costs and benefits are different from health care costs. The best way to reduce health insurance costs is with competition. While 22 billion may not make a lot of difference to the whole marketplace, that number ignores the waste in the health insurance industry. Paying CEOs of insurance companies for performing middle management work in a monopoly environment makes no sense. The head of Medicare makes a fraction of the CEO of Independence Blue Cross in Philadelphia, but the former has a much bigger job than the latter. Insurance companies also waste money on office space, marketing and other things that add no value to the end user. They merely waste premium dollars. Add to that the cost of saying "no" in the use of low level intermediaries who block access, and you begin to understand why health insurance companies are terrible. One way to beat down these costs would be a public option to compete with the private for profit entities. This is one type of competition the authors do not discuss. The other issue is price transparency for care. It is a myth since pricing and reimbursement are widely variable and treated as major secrets by both sides of the equation. Until that changes, the posting of prices is meaningless. However, even when prices are posted, patients may choose the more expensive option. This is true for cosmetic surgery and refractive eye surgery, among others.

  113. All of these points are important, but true control of health care costs needs to solve the problem of ransoming of goods and services to the health care system by investor owned providers like pharmaceutical companies. The pricing of the cancer drug imatinib is an excellent example and the obscene price gouging is described here: Reforms of the system that don't address this are mainly "feel good" slogans that have little chance of success. Would add/amplify on their points: 2) By one estimate, 90% of Medicare recipients have supplemental insurance, which considerably complicates the "Medicare for all" miracle solution. Many other problems with this. 3) Agree that insurance profits are not the problem. As noted it is the ransoming of goods (e.g $150,000 per year cancer drugs) and services to insurance companies that is the problem. Insurance companies competing for health care premium dollars are about the only functional marketplace in medicine. The incentive is to keep premiums low by negotiating prices and creating efficiency, which is good. Bad is that the savings of for profits insurers go to investors, not back into the system. 4) Important point and obvious to most people with real medical problems. A lot of medical care is emergent and can't be shopped and most people with serious illness are frightened and are more likely to shop reputation than price.

  114. @ACA The supplemental insurance industry has two impacts on healthcare. In the first place, they cherrypick the healthy persons out of the customer base and take them as their insured. These people cost much less than the average Medicare customer. They pay out much less than the average payout for the Medicare system and take the rest as profits. Secondly, they leave the lesss healthy customers for the rest of the Medicare system. This increases the payout for the average Medicare customer NOT using supplemental insurance. Congress and the HHS managers tried to kill the supplemental Medicare insurance system for these reasons, but the insurance industry had too much clout in Congress.

  115. @ACA There's only one way to lower the cost of healthcare in America. Make sugar illegal. Make smoking illegal. Make white bread illegal. Mandate daily exercise of 45 minutes. Make booze illegal. Make drugs illegal. The Soviet Union never had these problems we have. The reason their healthcare was so cheap was if someone was fat and wanted government care, the government told him/her to go lose 50 pounds and don't come back until you've done this..for the STATE.

  116. This is an important article. It is not sufficiently appreciated that the worker (not the employer) pays for the insurance. But there is a catch here: The cost to the employer is treated as overhead & not taxed. If the employee paid the same amount, the money would be after tax dollars of the employee. In effect, the tax system supports premiums paid the employer. For insurance companies, total overhead is much too high; profit is only part of the problem. Lastly, under the current system medical care is rationed in opaque ways by many agents including insurance companies, hospitals and doctors.

  117. @William Abernathy Why do taxes matter? We run a huge deficit and the Republicans still want to cut them further. With a trillion dollar deficit assume we are all well subsidized by the government, who needs to count the ways?

  118. Any proposal that does not include increased reimbursement over Medicare rates, is a nonstarter for most physicians and hospitals. The current Medicare and Medicaid rates are inadequate to sustain viable medical practices and hospitals without huge subsidies from the federal government or significant income from private insurers. Any serious “Medicare for all”proposal, has to account for that reality, if you want healthcare providers to support them. There are very few if any private practices or hospitals who can thrive rather than just barely survive at the current Medicare reimbursement rates. We want a vibrant medical system, where healthcare providers are more concerned with improving the health of their communities rather than surviving federal paycheck to paycheck.

  119. @EPMD What if the hospitals had to start controlling their costs, like any normal well run capitalistic business. You don't have to go to far to find articles detailing how a lot of hospitals don't even know how much a knee replacement costs them, they only know how much they charge the insurance companies. As long as there is an endless spigot of money, the health care system isn't forced to worry anything about costs. Remember that the price or cost of any good or service has no direct correlation to quality, and costs have nothing to do with selling prices.

  120. @EPMD In single payer systems operated by nations outside the US, there are no physicians and administrators earning more than $300,000 per year. The maximum pay in the federal government for workers is less than $180,000 per year. Will physicians demand more?

  121. $300,000 is not enough in a system that charges 65k /yr for medical education and I would not work for the federal government for $180,000if I had education debt of 250-300k. The doctors from the countries that have national health insurance would rather be paid like American doctors. I feel our best and brightest— which thankfully most of our doctors are—deserve to be fairly compensated for their work. I’ve been in practice for 31 years, no 300k is not enough. Wall Street lackies can make more money than a PCP like myself with 2 degrees from Harvard.

  122. The premium money that goes to the insurance company is cash that employers would otherwise deposit in employees’ accounts like the rest of their salary. Do the authors really believe that if employer provided health insurance were ended, the money the employers pay the insurance companies would all [or even any] be used to raise employees' salaries.

  123. @david actually yes. The history of health insurance started as companies helped facilitate good preventative healthcare services through negotiated rates. It was a perk. If there is no health insurance or preventative services, then a company would have to spend that money in other areas such as salary or benefits to help retain their employees relative to other companies.

  124. @Prashant Sinha Right. Like when the companies get a huge tax windfall, they will increase employee's pay... about 0.0% in real terms. No company is going to give better healthcare, so there is no pressure for any company to give better health care.

  125. "There are far more savings to be had in other efforts — by cutting unnecessary patient services, for example, or by making physicians and hospitals more efficient — to deliver the same care at a lower cost." Pay attention to that sentence, America. When Big Government can't pay for this 'Get Everything! Pay Nothing!' healthcare plan and begins 'cutting unnecessary patient services', you better pray you and your loved ones aren't sick.

  126. People say that prayer now because they can’t afford to pay for privatized healthcare delivery. And that includes patients with insurance. Their treatment and drugs get denied because it cuts into insurer profits. If socialized systems delivered inferior care, they would fare worse than the USA in key metrics like life expectancy. Instead they fate far better.

  127. The article did not cover admin costs. The admin costs for private care are likely far higher than the corresponding costs for Medicare. Surely, the executive pay is far higher. Do we know the admin costs of the two groups for comparison? If profits are 5% of total healthcare costs, what is the corresponding number for admin costs? Now for the statement describing the likely ability of Medicare for all to hold payments to present levels. Is that determined by a business factor or by a political factor? Why will physicians and hospitals be able to dictate higher payscales under Medicare for all? In a single payer system, what leverage do these entities have to affect pay rates? In a take it or leave it world, do we expect the healthcare providers to go on strike?

  128. I'm curious about the cost of insurance management in the overall cost equation. Every medical office or group has legions of staff members devoted to managing myriad, often Byzantine, insurance plans. That's why many doctors like Medicare, despite the lower reimbursement. Not only is it relatively straightforward, but the government pays promptly, without endless phone calls to insurance company gatekeepers.

  129. @Elizabeth A. Not only will physician offices need fewer billing & insurance clerks, there’s another cost savings mot mentioned. When everyone has coverage, facilities won’t have to raise their rates to cover the cost of uncompensated care.

  130. @Elizabeth A My father retired from the medical profession just about the time Medicare got going. "Gee, Erich," his colleagues said," Too bad you have to retire just when the pickings are getting good." We were middle class in those days. Today, MDs are upper class in terms of income. Lots of savings can be made using technology improving medical care-- a robot reading X-rays , e.g. No fatigue factor. A well crafted computer program to take patient's histories paced to the patient's own ability to respond -- no hurry up... And then updated. Yeah, many will make less $$ then before. Welcome back to the middle class.

  131. The explanation of “fallacy no. 1” is itself an audacious lie. The idea of employer paid health insurance originated in the high tax post WW II era as a way for companies to slip extra compensation to employees free of taxation. Of course, back then, the idea that a company would pay out more in health insurance premiums than in salary would have been inconceivable. But in the case of low earning workers, it is absolutely true. My wife runs a union dental clinic, and for the lowest paid, the clerks and dental assistants, if they have family medical coverage, their salary is just about the cost of the family medical premium. And with the premiums increasing by 8% for 2020, it will be a greater cost than salary. The idea that without those premiums, companies would simply give that much more in salary to employees is either laughably naive, or a deeply cynical deliberate lie. As for Zeke’s example of the pickpocket, they’re going to buy you a drink, even if they know that you have to drive home.

  132. @Pauln It isn't a fallacy, the decision to hire an employee is based on the total cost of the employee (don't forget 401 K match and SS contribution). Whether the employer would give the employee the money if we go to Medicare for All doesn't really matter. If the employer is a manufacturer, and they save enough money in employee costs to be more competitive with the Chinese and hire more people, it is a winning situation. Ultimately one of the side effects of our wonderful health care system is that it makes American manufacturing even more non-competitive in the world.

  133. @Hugh G While employer SS contribution has, until recently, been mandatory (uber and other “disruptive innovators” are working very hard to change that), the 401K match is in no way required. My wife has a 401K, and no match. And in my years as a chef, it was a fight to get paid on the books, and forget about fringe benefits. This year, my wife’s clinic pays $26,000 in premiums for the less expensive family medical premium on offer. That will increase by 8% for the coming year. Now if you were to tell companies that the could keep 20% of what they pay in premiums, would that make them more competitive, while putting the rest toward Medicare for all premiums? I think it would. Now since I’ve managed the affairs of three octogenarians, I know that Medicare pays 80% of usual and customary. Where I differ from candidates espousing medicare for all is the wrong idea that it covers everything and would outlaw private insurance. United Health Care has made a spectacular business selling medigap policies to AARP members. I think they should be able to continue doing that.

  134. I have enjoyed Victor Fuchs writing since the 1970s, when he was an inspiration to me in my career choice. So thank you for this. piece, which stands up to his usual standards of clarity. That said, it would benefit from one or more follow-on pieces. So it's complicated (Who knew? Not our POTUS, as he admits). I'd love to see some pieces where you discuss what would be more likely to work.

  135. Two years ago we were vacationing in France when a family member needed kidney stone treatment. We thought about returning to California for insurance-covered treatment (our travel insurance wouldn't cover it: pre-existing). In France: $3200 for everything- told to us ahead of time, including 2 nights in the hospital. In the US: they couldn't tell us, but rough estimates said our *co-payment* would be at least $3500. We stayed. And the hospital food was much better.

  136. The proponents of eliminating employer-paid health insurance argue that corporations would pay the money saved to employees in salary. Why should we believe that? Why shouldn't we believe that corporations will simply use that money to increase profits? Isn't that what corporations have done with reduced corporate taxes? I admit that I have good employer-paid health insurance and I don't want to give it up. But the main reason I don't want to give it up is that it is _good_ insurance, and I have access to the _best_ care.

  137. As usual Ezekiel Emmanuel misses the mark. I do agree with his first point, I take care of patients who are uninsured who believe that those with jobs that offer health insurance get it for “free”, I gently inform them that my insurance is paid for by me in my paycheck. Medicare for all would reduce middle manager costs considerably as we know that those costs are currently much lower that those of private insurance. What he doesn’t comment on is that doctors and hospitals are currently rewarded financially for doing unnecessary care. ER doctors order a lot of unnecessary tests, because they can , and due to fear of being sued. As a family physician I saved the system probably millions of dollars in a 25 year career by spending the time with patients to assess the problem in more detail, knowing the patient better. This meant spending more time. This happens in the hospital too. But there is no “reward” for NOT ordering expensive unnecessary tests. Not even a pat on the back.

  138. @CTMD Jeff Bezos and Bill Gates hire what we refer to as a “health insurance company” to administer their health care programs for their employees. Are you implying that those companies aren’t keeping an eye on costs? I very seriously doubt Bezos and Gates would continue to employ companies that they don’t believe add value to their health care spending for their employees.

  139. @Sebastian Cremmington You are absolutely correct. I have said for years that if every primary care office performed a comprehensive psychosocial assessment on every patient prior to initiating care, we would save billions. We would not be sending every headache patient for an MRI, or every patient with chest pain for an EKG. We would be TALKING to patients, and finding out about other myriad contributors to their health problems. But performing procedures pays.

  140. @Howard Kessler The fact is, those tests should not cost that much. An EKG is done by a nurse/technician in 10 minutes and takes a doctor 30 seconds to read, blood tests are automated (labs can settle on ten cents on the dollar billed), sonograms are much improved for inexpensive screening, while digital advances mean you no longer smell expensive photographic film when in the X-Ray lab. In our family, a missed aneurysm resulted in a severe stroke. Radiology centers are popping up on every corner like McDonalds or Seven Elevens thus, must be lucrative. Considering it is difficult to pay for the hardware before it becomes obsolete many centers should run 24/7 at a reduced cost to those willing to go at night. Efficiency and convenience must be weighed as part of the cost rather than cuts in diagnostic procedures.

  141. I must be missing something. If the insurance industry's pure profit is a paltry $22 billion/year, where does the rest of the money go? In Canada, overhead is around 5% of health care expenditures. OK, somebody has to process the claims, disburse the payments, and so on. In the US, 'overhead' ranges somewhere around 20-25% of health care spending, making it at least $700 billion or more. Of course, it is possible that Canada's civil servants are just that much more efficient than US insurance company employees. Cynics however might wonder if a lot of that US 'overhead' goes for things other than processing the claims, disbursing payments, and so on.

  142. @Linda take a look at some health insurers' facilities.

  143. The authors assert that insurance company profits are only 5% of revenues. This may be true. But it is also true that insurance company payouts (to medical claims) are at most 80% of revenue - so 20% of revenue goes to overhead (some combination of profits and "costs"). (And, before the rules mandated by the ACA, the percentage was often more like 30%.) By comparison, Medicare overhead is about 2%. If private insurance was as efficient as Medicare the savings would be at least 13%, not 5%.

  144. Two more fallacies: One - the free market is the most efficient way to provide healthcare. There is no “supply and demand” system working for healthcare. Patients can’t shop for the best price for a heart by-pass. Patients can’t wait for a sale on diabetes treatments, or kidney dialysis. The free market for healthcare is obscene. Two - doctors, hospitals and medical providers want us to be healthy. Healthcare providers in the US are driven by revenue and profit. If patients are healthy, providers don’t make money. Doctors, hospitals and medical providers want to sell patients lots of services and products, the more the better. Our system is not designed for health, it’s designed for selling treatment.

  145. @John Ranta Heartily agree with number One. While it would be lovely if we all could just be "healthy" (which means different things to different people) throughout our lives, all of us will require disease/injury care at some point in our lives, whether in utero surgery for spina bifida or for dementia after age 90. Doctors and nurses go into medicine in the first place with the idealistic motivations and aspirations which most sustain throughout their careers, despite the realities of dealing with non-physician hospital administrators and insurance companies. They defer getting even a decent income over their years in training exactly because of their idealism compels them to get to the place they can relieve the suffering of their fellow human beings. As a physician I have often said that if I really wanted to make the big bucks I would have gotten an MBA or law degree and have a career on Wall Street or finance, neither of which would have satisfied my admittedly altruistic personal urge to help my fellow human beings live the best life that they can.

  146. @John Ranta If you depend on a doctor to tell you how to lead a healthy lifestyle then you are shirking your personal responsibility. As I am typing this I have a blood pressure monitor and a scale within several feet of me.

  147. @sleepdoc Would that your colleagues were as altruistic as you. On average, doctors’ salaries in the US are twice what they are in Canada and Europe. Studies show that US doctors reject salary-based compensation plans because they make far more money providing fee-for-service. The average stock broker’s salary in the US is less than half the average doctor’s salary. Many of your colleagues become doctors primarily for the money, not to serve their patients.

  148. It is also true that health insurance costs are added to the costs of all companies providing health insurance in the US. If health insurance amounts to 8% of the total costs for that company, that company has to include those costs in it's consideration for final price of their products. Nations which provide health isnurance through the government do not have the same situation. Korea, Japan, and European auto companies have an 8% advantage in the price of their products. They can compete better than US car makers. This eventually shows up as decreased sales for US companies, decreased profits for US companies, decreased GDP in the US, and fewer US jobs. Converting to a Medicare for all system in the US would overcome this disadvantage.

  149. Doubts about Medicare for all are quite reasonable--and may be reasons to oppose it, depending on any attempted implementation. The notion of simply doing away with private insurers is nonsense--they are already too embedded in the coverage system and have been for some time. There can be a lot buried in profit and loss statements from large companies. The details do not boil to a couple of lines. We are the most expensive system around, but comparisons to other industrialized countries who grew out of a different set of circumstances and sense of obligation are a bit problematic. We remain a country that has a lousy record with social contracts. As far a drivers of health care costs, any number have been listed by other experts, but one is given short shrift here: the cost of our hospitals: ("That Beloved Hospital? It’s Driving Up Health Care Costs," Sept 2019 by Dr. Elisabeth Rosenthal). Simplifying problems into short lists may make for good copy, but may also make things sound more straightforward than they really are. I agree with the concluding statements here. Bumper sticker solutions should be banned.

  150. The authors build their theory on a significant faulty assumption. Specifically they assume any savings by an employer will be passed on in wages. Highly unlikely.

  151. Honestly I was eager to read this. But where are the suggested solutions? One statistic that I found alarming was that since 1999, health insurance premiums have increased by 147 percent. WHY? I am never able to get a simple explanation.

  152. I am a physician. Hear are the four key things you should know about healthcare: Fallacy No. 1: The healthcare system in the U.S. is designed to maximize health and wellness, not profits. Fallacy No. 2: The healthcare system in the U.S. is led by individuals that truly care about you as a person; not how much money you can bring to the bottom line. Fallacy No. 3: Healthcare leaders and politicians that make decisions impacting the lives of millions of poor and vulnerable patients and families have had their lives impacted financially by medical debt. Fallacy No 4: We should have a better system that truly meets the needs of the middle class and the most vulnerable soon.

  153. @Insider I am not a physician. Due to a long term, chronic health condition, I'm a regular customer of the U.S. health care system. Based on my many experiences, I can agree that your first 3 fallacies are indeed just that - fallacies. Your number 4 is the only non-fallacy in your post and the need you cite in it is growing with every passing day.

  154. One of the savings i put forward is the savings from preventive medicine. Once copays aare gone and the fear of costs diminish there will be more preventive medicine being practiced which will increase the wellness factor. These savings will not appear immediately but over time the affect will grow as people get healthier. Catching problems before they reach catastrophic levels. Being able to improve health outcomes from birth will show savings.

  155. I had open heart surgery a year ago. My wife is getting treatment for a back that was broken in a car accident 20 years ago. My children and grandchildren have been treated for many different kinds of medical difficulties. So were both sets of our parents. Everybody is happy with their health care. And nobody went broke getting it. Why fool with that system? Any candidate who does isn't getting my vote.

  156. @Travelers Could be wrong but my guess would be that, since you have grandchildren you are on Medicare. Or, if you are a veteran, VA healthcare. The great majority of those in these systems are "happy with their health care." Why "fool with that system." So the other millions of our fellow human beings who can't be "happy with their health care" because they don't get any can get it as it is a human right, not a commodity.

  157. Re price transparency: while it might be easier to shop for a cheaper MRI, I would be wondering if the person reading it was as qualified as the guy (or gal) at another facility. My guess is that many patients, while they might not need to pick the most expensive, would view looking for the cheapest test, doc, or surgery as playing roulette with their health. As a nurse, then a pastor, I worked with lots of folks having health concerns and crises. So many people have little knowledge of their own bodies and little to none about illness, medical procedures, and medicines. They are intimidated and frightened. Nothing is routine; all is worrisome. In that state and in a situation of medical need, they look to people they trust (often a doctor) to tell them what to do and where to have it done. Even saving themselves some money might not make them go for the cheaper MRI. That is not the way to cut healthcare costs, but it is a way to add to patient stress at the worst time.

  158. The authors’ fallacy #3 is misleading, at best, if not a fallacy in itself. What matters in the discussion is insurance company COSTS, not profits. A physician told me that in the US there is one medical biller for every 2 physicians, whereas in Canada there is one medical biller for every 7 physicians. Americans pay the costs for all that billing personnel in the US. I’ve experienced both systems up close. I saw Bernie Sanders referred to recently as having been shocked that no one pays a medical bill in Canada. His experience mirrored mine (spanning 10 years). In Canada the patient has no paperwork to deal with. None. Yes, you read that right. That is one reason the Canadian system is cheaper. Without insurance companies, the billing is much, much simpler, as is the entire patient experience. Ask any Canadian and they will back up what I am saying.

  159. There will be no improvement in health care costs until we address the issue of Cost Shifting. Go to any large hospital ESR and look around at the number of people there who cannot pay for their care. With a minimum of $1,000 for an ER visit, and some patients costing over $100,000. That cost will not be paid for by the patients so hospitals will simply increase their fees and that increase will be shifted to insurance companies who will then shift it to policy holders. Until providers are compensated for each treatment we will continue to have cost shifting that will be higher than cost of living increases. To avoid this cost shifting you need to have universal funding for universal health care. Then you can lower the costs of health care. Look at successful countries like Australia to understand how to achieve the systems we need.

  160. @Ken The population of Australia is 26 million, less than 12% of ours. Further it is more homogenous. Our underclass is much larger and poorer. Other western countries do not have the black and hispanic populations we do. Our illegal immigrant population is nearly 60% of the entire population of Australia.

  161. @Allan H. - A larger population, such as the US has, means MORE patients to spread the costs across. You've also never been to Australia. It's not as homogeneous as you seem to think it is. But it's funny how those who oppose anything other than the market-based mess we have now somehow manage to think that population size has anything to do with it. The fact is that it's more expensive to cover smaller populations than larger ones.

  162. It would be so helpful if one of these experts could demonstrate where and how health insurance companies add value to patient health care.

  163. What we need is a component by component comparative analysis. Do we use/get more services and products? From what I've read, apparently not. But we are paying more for everything. How is it that we pay more? Consider RX drugs? How do prices compare across different sectors, e.g., the VA, which negotiates prices; Medicare drug benefit offerings, where the market place presumably works to lower prices; general health insurer drug benefit programs, and the unregulated market -- and the systems and drug prices in other countries. What is the variance in costs in getting drugs from producer facility to dispenser, and what effects the costs of dispensers? What overall lowers and what allows higher drug prices? Consider a MRI scan: Does the MRI equipment cost more in the U.S. to buy? to operate? to maintain? for the space and electric power it requires? Does variance in the amount of use effect charges -- fewer uses meaning higher charges are required to obtain necessary revenue to cover costs? What is the variance in costs as a function of the organizational setting for the MRI equipment, e.g., hospital, a consortium of docs. And let's look at more policies. For example, malpractice reform. It reduces costs for docs, hospitals and others -- puts more money in their wallets, but it doesn't reduce costs -- testing continues unabated.

  164. @JimPB "Medicare drug benefit offerings, where the market place presumably works to lower prices; general health insurer drug benefit programs, and the unregulated market -- and the systems and drug prices in other countries." Uh, there is no marketplace to work when it comes to Medicare drug benefits since the law that put Medicare part D into place expressly forbade the government from negotiating with Pharma on price (which is unlike the VA which can). Pharma is free to set prices they think they can get and the ability for Medicare to negotiate would undoubtedly bring them down massively (which is why Pharma successfully Bush II not to let Medicare do so).

  165. @sleepdoc Do you truly believe that if you put up a lot of posts about drug prices and pharma profits, people will be less likely to notice that you make at least double of your peers most elsewhere in the world?

  166. @cobbler I wish, besides which they don't have to deal with numerous insurers and their numerous plans to get paid and then get paid about half of the charges. As a solo practitioner who does not do any (better paid) procedures, I sometimes struggle to keep the lights on.

  167. You let insurance companies off the hook by saying their profits are not responsible for the increase in health care costs. But what about their administrative overhead?

  168. Excellent article. In particular, I like the discussion of the false notion that insurer profits are the major reason for high costs. There are so many reasons, and my thought is that past attempts at "reform" have required additional personnel being added to administration rather than actual health care. All of the persons involved in administering health care have a vested interest in maintaining their jobs. It's like the tax system--it depends upon the opposite of simplicity. So it's easy to propose a "simple" solution, but the solution is immediately met with resistance based on job-preservation. You won't get far arguing cost-reduction to a person whose livelihood is threatened by cost-reduction.

  169. As usual an incisive analysis by Dr. Emanuel. Though mentioned in passing, the profits enjoyed by Big Pharma are a major driver of health care costs. In all other industrialized countries, drug prices are regulated by the government and are much, much lower than is the US. Big Pharma argues that it needs the high prices to support research and development, which is indeed costly given the FDA process for getting a drug approved. This is the fifth fallacy that people believe but the fact is that Big Pharma spends far more on marketing it's products, including their egregious TV ads, than it does on R & D. The only way Bush II got Medicare part D through Congress was that it forbade Medicare from negotiating prices with drug companies. A major downside of this was the 'donut hole' which makes diabetics on insulin have to decide between getting their medication and eating/paying rent or mortgage/ or utility bills for large parts of the year.

  170. @sleepdoc marketing is the way companies recover costs. Are they supposed to spend all that R&D and then keep quiet about the results? You also omit the fact that pharma availability and costs abroad are lower because the large proportion of such drugs emanate from US R&D. So anger about the fact that people making life saving products might profit from it blinds you to the facts.

  171. @Allan H., the facts include that people can't afford the drugs they need and that drug manufacturers can charge whatever they think they can get away with because Medicare can't negotiate the price. So why don't we just fund the development of drugs directly so that the companies don't need to recoup their costs and stop them from gougung taxpayers just because they can?

  172. @Allan H. - First of all, most initial research on new drugs originates in universities, paid for by American taxpayers. Pharmaceutical companies only step in when there's promising initial research. Second, much of the research coming out of pharmaceutical companies is on "me too" drugs, where a molecule or two are changed so it can be marketed as a "new" drug. And finally, many countries with single payer systems have robust R&D when we later benefit from. My husband had lifesaving brain surgery using an implantable device, pioneered first in Belgium, then France, then Canada before very belatedly making its way to the US.

  173. Unfortunately this piece reveals as much about the shortcomings in the understanding of putative academic "experts" about healthcare as it does about popular fallacies on the subject. When employers write the checks for healthcare they also have far more bargaining power, due to the number of covered lives at stake, than individuals could ever have. So costs to the worker might actually rise, all other things being equal. Further, no one can predict what proportion of the funds not expended on employee health would go to salaries and it would certainly vary due to supply/demand issues for different types of worker. The worst losers would likely be less educated lower skilled employees. In addition, while "Medicare for all" might spend less money overall, hospitals are not breaking even on Medicare services and therefore it is hardly a solution to the problem Finally, the excessive costs and limited efficacy of U.S. healthcare is rooted in issues that go unmentioned: a) high drug costs in the U.S. are subsidizing drug prices in the rest of the world; b) prevention of disease, which is far cheaper than disease treatment and associated with less morbidity and mortality is at a low level in the U.S. for even the most preventable major healthcare threats, such as high blood pressure and obesity. U.S. healthcare costs and effectiveness will improve ONLY if prevention becomes massively more effective and comprehensive, which it most certainly can.

  174. @NRoad, not sure I follow your thought about individual bargaining power. If we're talking Medicare for all then the bargaining power becomes the size of the entire nation. If we had a single system supported by taxes then the incentive for preventive measures should increase, though perhaps that would depend on how the legislation is written. Other countries negotiate drug process for their citizens, the US has chosen not to give the government that kind of authority. For now.

  175. As a small employer for years we paid a set amount toward each employees insurance trying to hook into the group policy our state society offered. Employees had the option of enriching their benefits by paying more. It did not impact their wages so I am not sure I agree that employees are paying their employer sponsored health insurance

  176. @Steve Reznick, doesn't that just mean that if you didn't have to spend money on health insurance you would have chosen to keep the extra profits rather than raise wages? Maybe you would have expanded and hired more people. If other companies in your industry decided to boost wages though, you might have found yourself doing the same, if there was talent you wanted to retain. Though as someone else commented, plenty of larger companies would probably just buy more of their own stock rather than pass profits onto their employees.

  177. @Leonard - I don't imagine we could actually force companies to return that money to their paychecks, but I think public outcry and public shaming of the greedy companies could go a long way toward achieving that goal for many employees.

  178. I agree with all four of the authors suppositions. However - 1) No where does it mention that healthcare costs for the same procedure, pharmaceutical or medical item vary tremendously. One thing transparency and single payer could offer is the beginning of the conversation around why this is so. 2) Single payer offers up the opportunity to use negotiation power to ask entire parts of the system to rationalize prices vs what is paid globally. 3) Single payer could more easily shift away from a fee for service model to a few for value outcome. One might argue that this might reallocate health care away from older Americans and proportion it out to younger ones. So be it. But the real point missed is this. Today healthcare is rationed by wealth. Single payer offers the opportunity to ration it by need.

  179. @Marston Gould Why rationing of the healthcare by wealth (to a very limited extend, compared to how much it is rationed by wealth in the developing countries with "free" government medicine and flourishing private systems) is worse than rationing it based on connections and bribes - which will be inevitable if you really want to see THE DOCTOR rather than a doctor?

  180. @cobbler - Medicare is single payer. Someone on Medicare can see any doctor and use any hospital they choose. They can see a specialist without a referral from a GP. Why do you assume medicine is rationed by wealth in other countries when it's so much more clearly rationed by wealth in the US, when your healthcare depends on the insurance you can afford, or on whether you can afford insurance at all.

  181. Few (if any) cost considerations factor in the time involved when dealing with the complexities of patient care and its associated costs. Anyone who has had a seriously ill family member can speak to the hours spent dealing with payers and providers when they advocate for appropriate care. Additionally, from a free market perspective, few address the reality of the many bound to an employer or career that depends on the access to a group insurance benefit. The number of business start-ups by recently freed employees now on Medicare speak of these shackles.

  182. While I mostly agree with the four fallacies, this otherwise excellent piece is yet another article on healthcare saying what’s wrong. It ends with a teaser saying there are solutions but they aren’t sized for bumper stickers. That’s fine. Do the work and at least allude to sensible solutions and where the readers can learn more. What is sorely missing is a vision for what a sensible solution looks like. Something that would work in America. Don’t just point to the variety of cheaper with better outcome solutions available elsewhere with smaller populations. Cite a nuanced solution and its main features and where we can find the details. That would be great.

  183. We might add #5, pharma prices aren't the big driver of health costs. Pharma is maybe 15% of total health care costs. If our costs are 100% too high, it can't be because pharma is 15% instead of, say 9%. There could be changes in areas like transparency that affect the marketplace in ways that are difficult to predict in advance, by resetting some of the basic rules of the game. But it's hard to know. Amazon is pretty darn price transparent and prices tend to level or fall.

  184. Of *course* insurer profits and shareholder dividends drive much of the cost problem. But so does the enormous administrative waste necessitated by each hospital or medical office billing (and pursuing for payment) hundreds of insurance companies. Your proposed solutions for cost savings are unrealistic. Cutting unnecessary patient services to save money? Don't tell that to this RN. People don't have nearly what they need *now* in order to recover and heal. We have an enormously expensive system in which people get tossed out of the hospital with few, often no, supports other than their family members or friends (if they are lucky enough to have them nearby).

  185. Several years ago a Republican friend in his 60's told me that he never had health insurance because he was self employed and health insurance was a free perc of working for others. When I, as an employer, told him that it was not free but was being paid for by the employees who otherwise would have gotten the premiums as salary he was flabbergasted. The idea had never crossed his mind. Several years later, when he unfortunately was stricken with colon cancer, this anti government Republican was overjoyed to have been on Medicare.

  186. Any Rand pilloried people on Medicare and Soc security until she got cancer and realized treatment would bankrupt her then she signed up for both.

  187. I learned a good deal from this, including being "shown the light" on 2 of the 4 bullet points. However, it certainly seems unfair to talk about wage growth (which HAS been worse than unimpressive for quite some time) when the authors emphasize that employers "picking up" some/all of health insurance is effectively part of most people's TRUE compensation. I have to guess that with this component growing way faster than wages, say, it pulls up compensation growth no small amount. (Does the 7% they cite balloon to 15%? 20%?) Because many of the entrenched players re health care feel about price transparency the way fast food sellers feel about displaying calorie counts prominently and obfuscate or worse, dismissing price transparency as unlikely to move the needle is dubious. I'm sure I'm not alone in making numerous (other) choices based on # of stars or dollar signs. Even with severe "network constraints" for most of us, in a place like NYC, one might very well pick a dermatologist, say, with cost in mind if out-of-pocket was in the mix. Clearly, a system where some see a specialist for $10 period almost encourages "going to to the guy or gal on Park Avenue." Last, the authors' 2 "prescriptions" - (1) cutting unnecessary patient services; and (2) making physicians and hospitals more efficient seem ill advised. (1) will often mean SKIP the test, let's schedule surgery; and (2) = price controls for those 2. (4 patients an hour already goes beyond "efficient" to slapdash!)

  188. An excellent analysis but the authors mislead on one key point. It is true that employees indirectly pay for their insurance premiums and that these costs have eaten into wage increases. But it is highly unlikely that employers will use most of the money now going for employee insurance premiums to pay workers higher wages. It is more likely that employers will use their sudden windfall to repurchase stock and make top management even richer. Unless Medicare for All legislation is carefully drafted, it could be one the largest corporate giveaways in history.

  189. Health Insurance premiums are tax deductible for the employers which pay them. Further, there is no FICA or Medicare tax levied on the expense. Further, the continuity or lack of portability of health care coverage is a sort of handcuffs on the employees.

  190. Precisely

  191. @Suburban Cowboy - My employer was well known for it's excellent benefits. Employees called those benefits "golden handcuffs."

  192. I am a 55 year old retiree. My former employer pays 100% of my family medical plan that costs about $25,000 a year and has done so for over 15 years. Any slight reduction is wages that I took were well covered by the cost of my healthcare for the last 15 years.

  193. @Paul, but how many Americans get anything like what you're describing? And was it really "slight"? This article is basically claiming the entire amount that your employer paid in was simply taken from you. So you benefited from the bargaining power of your employer, but maybe not much more than that?

  194. @Paul, but how many Americans get anything like what you're describing?

  195. Your employer pays for nothing, it comes out of your paycheck.

  196. We need a health care system that is not tied to employment.

  197. Fallacy that true disclosed transfer pricing would not be helpful is wrong. Authors do make point that some medical decisions are made under duress, ie life or death or pain and not subject to market forces. But in large medical facility even the doctors dont know the true transfer prices among insurance, gov and provider. It is not even considered. Rather "sales" volume is considered; ie what can be billed successfully and that is why "coders" are very much in demand. Results divided by price equals value and that should be part of decision process for all. In competitive provider markets alternative providers can also use true price transparency within that region to make an argument for macro effectiveness as well as the micro economies of patient. Finally if true transfer pricing were adopted it would do no harm and would allow the patient to participate as good citizens to call out error or deception. Transparency would also lead to other incentives for providers and patients and insurance companies that will only be effective with said transparency Me thinks one objects too much and worse authors imply everybody is too stupid to figure it out except the anointed. Rather health care is classic example of complex system run a muck with way too many non value arrangements for political or personal gain. Rapid technological advances with hidden marketplace and desperate patients is exactly what we have. Let start by fixing the one that we want to address.

  198. This article is factually incorrect about insurers. They don’t shield the public from healthcare costs, they are actually a multiplier of costs. One example: they’ve agreed to arbitrary four-fold increases in certain brand name drug prices. Literally. No government run system would ever engage in that level of fiscal recklessness. Actually this article doesn’t make much mention of drug prices period. The USA is unique amongst OECD nations in not capping prices and price rises, and foolishly allowing Pharma to market them directly to the public. Both lapses contribute hugely to the extortionate cost of drugs.

  199. @Xoxarle All drugs together are 12% of the nation's healthcare bill. Force their prices down by half to throw some red meat to political supporters and all the savings will be consumed by growth of other parts of the system in a year or so - at a cost of shutting down most of new drug development. The fact that the plan imposed on you makes out of pocket drug costs high doesn't mean that they are major part of the cost problem - it means that more expensive parts of the healthcare enterprise, primarily hospitals, managed to distract public opinion well enough.

  200. I think if you look at American society you see serious ill health both mental and physical. You have a brutal market system that destroys people and the environment and demands endless distraction and self delusion like TV Disneyland drugs vacations guns Starbucks etc. The fault is not in our stars - our health care industry, which is after all noble - but in ourselves. Alas.

  201. Allowing 11-30 MILLION foreign citizens to live in OUR country illegally is ridiculous. These people are not Americans! How sad that Americans are being brainwashed into giving their country away.

  202. How much inefficiency is there in how payments are processed for covered treatment? I can deposit a check from a distant rural bank with a single branch and it will clear without any additional effort on my part, albeit a few days later than one drawn on a huge bank. That’s because the banking industry has set up a prescribed clearing process that works. Yet medical insurance requires every provider to employ or subscribe to a medical billing service and the process is fraught with mistakes, denials followed by appeals and numerous follow up phone calls.

  203. How's about boiling it down to When your conclusion is based on the wrong diagnosis/analysis, you will never come up with a good cure/solution! Healthcare (in general!) is NOT, never has been, never will be a "free market"! Period. The proof is in the PRICES! Insisting it being otherwise, is a fallacy, the US (dems & repubs) have been falling for for over 50 years now... It's time to acknowledge the facts on the ground: What you are basically dealing with on the supply side of healthcare are de-facto monopolies. And the best way to balance their "market/price power" is with a public monopoly on the demand side: Single Payer health insurance!

  204. Quality piece. Thank you.

  205. Another thing that can occur with a well-run Medicare for All program is that the emphasis on care is to keep people from getting chronic illness in the first place. What this means, to me at least, is that in an effort to reduce long term costs, research and studies will show the root of a lot of illness, which is nutrition, environment and economic status. If the legislative branch is serious about addressing these root causes in the interest of making healthcare cheaper overall, then a lot of positive effects can result. For example, without a profit motive being the driving force behind the direction and methodology of healthcare, effective permanent treatments and dare I say cures could be pursued. Already, the synthetic biology revolution is beginning to bear fruit, such as a 'living drug' that can cure leukemia in a very high percentage of patients:

  206. Thank you kindly gentlemen. The Times should publish your article every day until election day. The GOP is in the hands of Big everything including Big Healthcare Insurance. By obscuring the truth they make poor devils (the average American voter unfortunately) believe in myths like benevolent employers who pay for their health insurance! I wish you could get the Democratic candidates to use your explanations in ads. We need the truth and we need it now,

  207. Can we get the authors to show up in the debates and give a 10 minute brief before questions? It will be the best thing that happened to in the history of debates! Thank you Sirs.

  208. If it fits on a bumper sticker, it isn't going to happen in the US health system. . . See authors' last par.

  209. @Jeff G. Trump's bumper sticker would be simple: "Care for Us. Not for Them."

  210. @Jeff G. - There are plenty of people in this country who offer the same solution to our health care problems that they offer for gun violence." Thoughts and prayers.

  211. This is already too complicated for most Americans who don’t even realize that Obamacare and the ACA are the same thing.

  212. 4 Things You Should Actually Know About "Health Care" 1) It's not health care, it's disease care. 2) It's only about treating symptoms not causes. 3) It's controlled and operated by powerful corporate entities that want you to remain sick from cradle to the grave. 4) Most diseases are caused by the food we eat, see point 3. 5) Free bonus point. Anyone who disagrees with the above 4 points is hounded, put out of business, and barred by the powers that be, see point 3.

  213. . dr;tL & mentally taxing. But Wednesday I went thru one of the most bizarre, toxic healthcare mazes that could be conjured, so now I think the Fifth Key is "Yes, it CAN get worse ! .

  214. The most important takeaway from this: The mainstream news media has been feeding us lies throughout this discussion. The question is, why? Another fallacy to add to the list is one this idea that Medicare for All, ie, guaranteeing health insurance for everyone means taking health insurance away from millions. That is so deceptive, it should be laughable, yet the MSM repeatedly presents it that way.

  215. I stopped reading when I saw that the authors were quoting a study by the Mercatus Center. For those who don't know, the Mercatus Center was founded, funded, and is controlled by the Koch brothers, and is situated on the campus of George Mason University, though a public university, it's the university that has taken more millions from the Koch brothers than any university in the country. Clearly, these authors either don't know or don't care that they're quoting a far-right organization dedicated to stopping national healthcare. Indeed, according to the book "Dark Money," Republicans were interested in supporting the ACA until the Koch brothers ordered them not to. Mercatus Center indeed!

  216. @Sean You should have kept reading. The point was that even a study from a right-wing group found savings under Medicare for All.

  217. @Jessica The savings claim was parsed by the NYT from a narrow interpretation of the Sanders proposal done by the author of the Mercatus paper and, subsequently, fact checked by the Washington Post in response to it. In both reference links provided, I see no support for, or any real suggestion of, savings by Mercatus.

  218. Wow, it IS complicated. How on earth do European countries and Canada (for the most part) manage to provide relatively stress-free essential care to all who need it? /s Good luck to all decent Americans who would like to move jobs, move house, go to the doctor, experience a medical crisis, not worry about exorbitant co-pays or pre-existing conditions ... and NOT fear that they will be wiped out financially.

  219. @john What is really baffling is the argument that going to single payer or some other universal system would cost so much more money, when every other developed country has been been demonstrating the proof of concept, in some cases, for decades.

  220. @MT I, too, have always wondered they're able to do yet the wealthiest country in the history of the world is unable to provide it. I guess it's like the arguments against gun control that all the gun violence is due to mental illness so the people in our country are far crazier than those in other developed countries.

  221. @john Despite all the flaws in the existing systems of Europe and Canada (and loads of other countries), a proposal by any politician to take away healthcare-for-all would likely mean a swift end to their career. Americans should come over to the "dark" side and see what the (non-)fuss is about.

  222. "Health insurance insulates the patient from price." That's incorrect. Health insurance is not insulating patients from the price. We pay premiums, co-pays, out of network costs, and deductibles. We wind up paying, unless we fight it somehow, for every uncovered "procedure" or medication given to us as patients. We pay whether we have insurance or not. One thing our legislators ought to understand about medical care is that it's become quite difficult for most of us to be sure what is covered, not covered, what's part of the deductible and what's not. Call to dispute a claim and the information depends upon who we speak with, or the time of day, or the alignment of the planets at that moment. We've been told to value having a relationship with our physicians. Even now, as the insurance companies push us into narrow networks, drop providers in the middle of the plan year, change their formularies, etc., we're still told that we need to have a trusting relationship with our provider. Which one: the doctor or the insurance company? For decades this country has been refusing to understand that it can learn from other countries about how to set up a health care system rather than a wealth care system. There are examples all around us but the foes of a better health care system prefer to lie to us rather than admit that the game is rigged. How many more patients and families must go bankrupt before things change? 9/12/2019 3:45pm first submit

  223. @hen3ry Thanks for your comment. As usual, it's at once impassioned, insightful and eloquent. On a personal note, my wife is a Canadian citizen, and it is absolutely maddening for me as an American to know--not think, but KNOW--from direct experience how much better a health care system we could have if we but wanted to. But our corporate overlords in the wealth care industry and their bought and paid for representative in the US government--both parties--have determined that that shall never, ever be.

  224. @hen3ry I'll borrow the "wealth care system" phrase, if I may. Excellent.

  225. @hen3ry And yet when price information is available it seems to make little difference. Perhaps you can suggest why.

  226. I am all for "Medicare for all" as long as I can be promised that me and my family will receive EXACTLY the same care as my senator and his family.

  227. @Rob - That can never happened under ANY system because your Senator is probably a millionaire and can afford to pay for better care out of pocket.

  228. @Len Charlap Then by definition, the system is not "Medicare for all", it is a version of the same system that we currently have if people are allowed to pay for better care.

  229. @Rob In Canada, you would.

  230. I am a US citizen and live in Australia. Here we have medicare for all but private insurance is available if you wish to purchase it. If someone/anyone needs critical medical care it is paid for by the state. If you need knee surgery, you might have to wait in line. But not if you have purchased private health care. So if you are poor, you are covered, if you are rich you are covered, just better. This isn't rocket science. What is so difficult about having a similar system on the US?

  231. @P Unfortunately we can predict what the result would be: a two- (or three-) tier system in which most of us end up with mediocre care at best, with excellent care reserved for those who can pay. That’s what many of us find morally repugnant - and why we advocate for a system that makes sure everyone is in - nobody’s left out. If everyone in Michigan drank from the same water system, our catastrophe in Flint would never have occurred.

  232. @P, . Mainly whats difficult is that system is "Socialized medicine !" "It goes against America's CORE VALUES ! " ----------------- And one of them is euphemized often now as "Entrepreneurialism ! " --- that's Fake-Speak for greed. And American society is awestruck by successful entrepreneurs --- Bill Gates filled that role at onetime despite his company, Microsoft, having to pay SO many $ millions in fines & restitution for its unethical, unlawful biz practices on three or four continents. ------------------- Currently there's an astounding fraud in pharmaceuticals & testing. Henry Kissinger was one of the high-profile victims, and the main perp, the company CEO, a model-like blonde in her 30's has been charged criminally. .

  233. @P It is socialism, so will destroy the USA, like it has destroyed Norway, Switzerland and Australia. Every Conservative knows this.

  234. If any article needs a follow up article, it is this one. Why are medical costs so high? What can be done to reduce them? What kind of programs would actually bring costs down while also improving outcomes? What kinds of programs are proven to work in other countries? Inquiring minds want to know! Please write part 2!!

  235. You lost me at the 3rd point. The profit margin may be small, but it's still worth fighting for if it's your profit margin. Our healthcare system has a vastly larger private bureaucracy than single payer systems because the insurance companies have to fight for that 5% from hospitals (who are also fighting for their profit), but mostly from those of us without the means to fight back. My personal experience is to have a surgery in February '15 where the price was agreed to upfront and then watch as the insurance company and hospital battled back and forth over what the final price would be. I was cc'd by both on their monthly exchanges into the next year. As a witness to wasteful private bureaucracy, I can't help but believe that a single payer (not profit driven) system will be more efficient.

  236. @tc - The authors make it sound as if the ONLY cost to having insurance companies involved in our health care is the profits they make. In fact, there are enormous costs associated with having doctors' offices, clinics, hospitals and pharmacies have to process thousands of claim forms through hundreds of insurance companies, all of which have different levels of coverage, different paperwork, etc., and often having to battle with the insurance company to get a claim covered. In single payer, everyone has identical coverage and all claims are processed through a single claim form. In single payer countries, the doctor's receptionist can double as the billing clerk by simply bundling the bills and turning them in at the end of the week. In the US, a medium-sized doctors' office may have 3 or 4 billing clerks.

  237. But you won't save money. But you can't cut costs. You know how I know all these BUTS are bogus?? Other countries have done it! Other countries ARE doing it.... for everyone far less cost than we do. Stop believing it can't be done . DO SOMETHING!!

  238. People, Please read Bruce Rozenblit’s comment below. It is so good and true. Editors, Please pick it so it circulates more. It would be great if you ask him to write an OpEd for this page. Thank you.

  239. A well written opinion piece that underscores what it vitally does not address: "health care" costs will continue to spiral out of control unless demand is reduced. Period. For that to happen, people en masse need a real incentive to take responsibility for and control their health. This is the elephant in the room that neither employer-based health insurance nor Medicare for All plans do anything substantive about.

  240. @JCX Wrong: there is no "demand" for health care, only a necessity. People don't go to the doctor for amusement and certainly don't want more health care than they need. If we take care of children and expectant mothers properly and ensure people with chronic diseases can access care, "demand" will settle to the point of what is needed. In all my years practicing medicine, I have rarely encountered a "hypochondriac" or a Munchausen Syndrome patient.

  241. @JAH You are just confirming the point about how so many Americans,quite inaccurately, still continue to attempt to equate healthcare with any other product or service they might want or need. I am quite healthy, yet, I know that should |I require the services of my doctor or hospital, I will not have to empty my bank account or declare bankruptcy because I can't pay the medical bills. Since more and more Americans are dropping out every year, and as things get progressively worse in the system, I would expect, before too long, stress would become the number one cause of illness and death in America. Don't you ever get tired of living your life that America? It is insane and it doesn't have to be that way.

  242. The authors, in discussing profits, fail to mention the compensation aspects of executives for those companies. Which would come down under a nationalized health system. When people talk about profits, they aren't talking about just the official balance sheet of these corporations but all the wealth going to a few rich individuals that comes out of this system. For instance the wealth amassed by the Sackler family was not based off of Purdues profits alone. But on a wide variety of payments meant to enrich a few. The books are cooked when it comes to business, and the accounting is beyond creative. The laws that should protect us have also been captured by these crooks so that no fairness or justice is possible under the law. This sort of renumeration is also ideally one of the things that distinguish a for-profit from a not-for-profit enterprise. Though the failure in the US to abide by that principle is also apparent to most, especially in health related fields. To call it a myth is a willful misunderstanding of what people are actually talking about. It is a reduction of a real problem to a tight definition that is not what people are using... Well nobody but the authors.

  243. Kenneth Arrow, the economist, explained why in 1963 why a retail market for the consumption of medical care is delusional. For example, most people have an inelastic demand for life, willing to spend down their savings for more time, knowing that if they should die the won't personally be on the hook for unpaid expenses. If Republicans were serious about their ideas, their first step would be repealing EMTALA, the law that mandates ERs to serve everyone who comes to their doors, including the uninsured. Sure, that would mean scenes resembling Day of the Dead outside, but it would be easier to convince young people to buy insurance and give unauthorized more pause about travelling to the US for refuge and work. The problem is that most of us have an inelastic demand for life. The only way to bend that curve is to convince more people to spend less is that there really is an afterlife that only offers entry to those with zero balances left on their medical bills when they die.

  244. It's simple. Democrats want Medicare for All, Republicans want Medicare for NONE. This article is good at explaining that taxes would go up for some, but total cost for you will go DOWN, as the government (which is YOU in a Democracy) will barter down your health care costs. Your checkbook total doesn't care that the check is written to U.S. Treasury or United Healthcare, as long as the total of the bill is less, providing you with savings to send your kid to college, plan for retirement, buy a house which is a good investment, allowing you to make money on your money, just like richer people do. Additionally, everyone needs to give a little. Doctors need to charge less, Hospitals need to charge less, Insurance companies need to be phased out over 10 years. Pharmaceutical companies need to charge less. Patients need to live responsible lives - no smoking, drinking to excess, exercise, lose weight, take your medications (guess what, you'll be able to get them with Medicare for All). If this sounds too complex, although I laid it out in simple terms, just look at Canada, France, Germany's and all other advanced countries' health care systems. They all have national health care financing systems and spend about half of what Americans do per capita on health care. Other countries live longer, have as good, if not better surgical outcomes, and enjoy life.