Health Insurance is not Healthcare: Everybody in, nobody out!

 I have long advocated universal health insurance, recently in the form of Improved and Expanded Medicare for All. What “Expanded” means is obvious – EVERYONE would be in it. As the late Quentin Young, MD, was famous for saying “Everybody In, Nobody Out!”. That should be simple to understand. The “Improved” part means “not having the limitations of current traditional Medicare”. This means also covering dental, vision, hearing, and long-term care. And, most important, to eliminate the 20% of the amount that Medicare approves that patients are responsible for paying for hospitalization (Medicare pays 80% of approved hospital charges), or at least capping the dollar amount (not %) that people have to pay out of pocket. More detail is presented in the Physicians’ Proposal by Physicians for a National Health Program (PNHP), and is essentially what is proposed in the Medicare for All act, HR 3421, sponsored by Rep. Pramila Jayapal (D-WA) in the House, and the companion Senate Bill, S. 1655, sponsored by Sen. Bernard Sanders (I-VT).

I would like to address several important issues about why EVERYBODY IN, NOBODY OUT, expanded coverage for essentially all medical care, and the different between having health insurance and having health care. First a quick review of some of the important places where health coverage was expanded, just for background.

When there was a limited amount that doctors could do for people, folks accessed medical care with cash (or chickens). When hospitalization and surgery became effective for many conditions, insurance like Blue Cross/Blue Shield were established, mainly by surgeons. These were for a long time non-profit. After WW2, because the federal government implemented wage and price controls, even though there was a labor shortage companies could not compete by paying higher wages so benefits, like health insurance, became attractive. This was embraced by organized labor, which could exhibit such insurance as a member benefit. In 1965, Medicare was implemented to cover aged and disabled people, a huge advance. Medicaid, a program for low-income people who could not afford health insurance, was also a huge advance, but as a federal/state partnership, who and what it covers varies a lot from state to state. The ACA passed in 2010 (Obamacare) further expanded coverage by making health insurance affordable for many more Americans. This is the really short course.

 

As can be seen in the graphic (from Statista®) the number of uninsured people in the US has, as a result of the programs above, dropped dramatically. There are, however, 3 big problems that continue to exist. First, 25 million is a lot of people without insurance. Second, having health insurance, in the current chaotic system, is not an all-or-nothing thing. Many “insured” people have poor quality insurance, with high deductibles, high copays, caps on coverage, and high rates of denials by their insurance for treatments recommended by their physicians. Even people with “better” (and often more expensive, and likely paid in part by their employers) health insurance find themselves confronting these same trends with costs often making getting care unaffordable. The key lesson here is “health insurance is not healthcare”; if the care you need is unavailable to you because it is unaffordable despite having some form of insurance your health is not improved. This is what I will mostly talk about below.

Third is what changes will happen with the new Trump administration. We cannot know for sure what it will succeed in doing or even try to do, but it won’t be good. He and his advisors want to get rid of the ACA. They want to further privatize Medicare by moving more people into Medicare Advantage plans, which are private insurance plans paid for with public money that can and do often deny you care. (see Such a deal! Insurance companies keep your money and deny you care! How can I get in on that?, Oct 28, 2024.) If you want to get more information, check out the Project 2025 proposals for health care and health insurance.

So, let’s get back to the second, that having health insurance is not the same as having health care. This should also be obvious, but apparently it is not to a lot of people, including politicians, pundits, and health economists. For most things we buy, we trade off quality and price, usually assuming that higher price will lead to higher quality. With health insurance, it is sort of that way, but unfortunately the price is so high that many people buy the lowest cost (and lowest quality) because that is all that they can afford. It is why so many people have high-deductible plans that, when they need to use them, are not actually useful for obtaining health care because the deductibles and co-pays are so high. It is why the lowest cost ACA plans are the most popular and deliver the least. And it is one of the main reasons why so many seniors have opted for Medicare Advantage (MA) plans rather than traditional Medicare (TM). The entry cost is lower, they cover some things TM does not (like glasses and hearing aids and dental) and it does not require purchase of a Medicare Supplement (Medigap) plan to cover the 20% of approved hospital charges that TM doesn’t pay. But when folks get sick, they may discover that the MA plan does not cover the hospitals or doctors they want and that, because they are private insurance plans and not, in fact, Medicare, they can and do deny coverage for lots of things. Oh, well. You want a lot of detail on how bad it is? Look at the Commonwealth Fund’s Biennial Survey, “The State of Health Insurance Coverage in the US”.

Why do we demand such premiums, deductibles, and co-pays? A lot of health economists have used the term “skin in the game”, implying that if people have to pay some of their own money they won’t “over-use” health care, which drives up the cost. This analogy to gambling is flawed, and wrong. There is no evidence that “over-use” is a major driver of health care costs, either in the US or, more importantly, in other countries where the direct costs to patients are non-existent or very limited with low caps on the maximum that people can spend out of pocket. It is a theoretical belief not supported by the data. And politicians, pundits, health economists, and newspeople are employed, usually with relatively high incomes, and what seems to them anecdotally to be “not so much” (a few thousand dollars?) is so high for many Americans that they forgo health care altogether.

The cost of US health care is indeed extremely high, but it is not because people over-use services. Physicians often over-use (over-order) services because they can see the benefit but not the cost, because they may make money from procedures and even more from their use if they also own, say, the imaging center, and because they fear lawsuits if they do not. But most of the excess cost of US health care compared to other countries (many of which actually use more health care per person than we do, in terms of things like hospital beds per population) is the excessive administrative cost and profit on the part of health insurers and large care providers like hospital systems.

What can we do? Well, we can eliminate for-profit insurance companies, or regulate the heck out of them so that, as in countries like Switzerland, they have to provide the same set of benefits at the same price, cannot make a profit, and have to compete on – get this – customer service! We can have one single-payer plan, Medicare for All, improved to cover everything and expanded to cover everyone. In the meantime, we can at least cap the out of pocket maximum people have to pay to, say $1000. How could we fund it? Let’s start with the $590B in overpayments to Medicare Advantage plans!

A year ago, Levitt and Altman wrote about the complexity of the US healthcare system (Complexity in the US Health Care System Is the Enemy of Access and Affordability, JAMA Health Forum), and included this:

 “Yet, any push for health care simplification inevitably clashes with commercial interests. The health insurance system is structured to simultaneously maximize profits, control costs, and serve consumers, which are competing goals that add to the challenge of simplifying it.” 

OK. Can any decent person even consider that the value of “maximizing profits” should have any weight compared to “serve consumers”? It might be the defining question as to whether one is a decent person!

Finally, though, we need a system to cover everyone, well, so that they can really get healthcare.

EVERYBODY IN, NOBODY OUT!