ER backups and poor-quality but expensive insurance: The American Way!

The January 22 edition of the Arizona Star (Tucson) reprinted a piece from the Arizona Republic (Phoenix) titled “'I've never seen it this busy': Here's why Arizona emergency departments are jammed”. The article is paywalled, but you don’t really need to read it since that headline basically is the story: all over the state, including its two biggest cities, waits for non-emergencies (and sometimes emergencies) in ERs is many hours to, sometimes, days! The article discusses some reasons, including the increase this winter in respiratory diseases like flu, RSV, and, yes COVID (despite everyone pretending it has gone away; see NY Times “California and Oregon Ease Covid Isolation Rules, Breaking With C.D.C.”). In fact, there has been a lot of respiratory disease this winter, and as reported by “Your Local Epidemiologist”, Katelyn Jetelina, and while it seems to be declining, there could well be more peaks.

The colder weather makes the most vulnerable, those without housing, even more vulnerable. Also contributing to the ER backup in Arizona is the increase in the number of “winter visitors” (also known as “snowbirds”) who are coming back “after” the pandemic, who are often older and do not have a regular source of care here. And, yes, also that too many of us who live here year round do not have a regular source of care because, as in most places, there are not enough primary care clinicians (see “Primary Care, Private Equity, and Profit: How to ensure poor quality care for the American people”, Sept 28, 2023 and “We need more primary care to serve our people: Why do the medical schools lie?”, Dec 12, 2023). So people go to the emergency room, or to an urgent care center where they are told to go to the emergency room “if it gets worse” or, when it is serious enough, right away.

But there is something else going on here. That is the breakdown of the American health care system, particularly the insurance system and the ways people are covered (or not) for health care costs. It is breaking down at all levels: there are not enough doctors, especially in primary care (see the blog posts cited above), insurance companies and employers are covering less and less of the cost of health care and requiring those who have insurance to pay more and more, and private equity (see the referenced blog above) has taken over many practices and is squeezing them for maximum profit without regard to what it does to the quality of the “product”, which is our health care. Private equity in the healthcare sector follows the same playbook it follows everywhere: squeeze profit out, diminish services, and if it bankrupts the company too bad; they already have theirs. And when it is insurance companies that take over the practices (such as United Health Care owning Optum) the result is about the same. No one is minding the people-serving part of the store.

Yes, there are plenty of uninsured people, including the homeless, and those who are “too rich” (hah!) to get Medicaid, which in most states requires an income far below (often way less than half) the poverty level (which is about $31,000 for a family of 4), and anyway is also, in most states, pretty much limited to women with small children and virtually never covers single adults. But there are also the under-insured, those with terrible insurance coverage because it is all they can afford, as employers cut back on their contributions and insurance companies raise their rates and the financial burden on the insured including through copays, deductibles, and denied care (kind of like both raising the price and shrinking the size of a candy bar, except with much more serious outcomes). In addition, the expenditures by employers on health insurance (even when it is inadequate) is money that is not spent on wages, thereby increasing income inequality, as documented recently by Hager, Emanuel, and Mozaffarian in JAMA Open Network. And, since health insurance premiums are tax deductible for employers (although not for employees!) they prefer it to paying higher wages. What is the result of having insurance that doesn’t pay for what you hoped and expected it would when you or a family member is seriously ill? You go into debt. So the proportion of medical debt held by insured people as opposed to “self-pay” (uninsured, virtually all poor) people, has risen from 11.1% to 57.6% in 4 short years, from 2018 to 2022. Quintupled. The system, to the extent that it can be called a system at all, is broken.

But why? How? While there are still undoubtedly those, including politicians, pundits, and health administrators (all of them WELL-insured, you can be sure!) who blame it on some kind of “overuse” by patients (the medical word for “people”), there are actually 2 real causes:

1. Abuse, corruption, and illegal behavior by insurance companies in pursuit of ever-more profit, and
2. The failure of government entities to prevent them from doing so, or to prosecute them when they do.

Really? Really. Not only are insurance companies inadequately regulated, and able to effectively abstain from paying for care by repeatedly denying it and creating other obstacles, they frequently simply break the law, as documented in a study by ProPublica and reported by the Nonprofit Quarterly:

‘The findings point not just to bad behavior on the part of health insurance companies but also to a failure of the state regulatory apparatuses that oversee health insurance coverage to enforce laws already on the books: … If explicit laws on the books, spelling out mandatory coverage requirements, aren’t enough to prevent insurers from denying coverage, how are ordinary people to push back?

The answer, ProPublica’s Cheryl Clark found, is that those fighting for their own coverage are forced to navigate a “mind-boggling labyrinth” of bureaucracies set up by insurers and often barely regulated.”

It’s pretty bad, and it’s getting worse. Poor and uninsured people suffer the most, but employed and insured people are right behind them. Their medical debt increases in part because they think they have insurance and actually seek care, rather than avoiding it, as uninsured people often do. Which is, of course, terrible – how can there possibly be any justification at all for a “system” that encourages people to not seek care when they are sick, that provides too few primary care doctors or other clinicians to care for them, that makes them wait hours or days in ERs to be seen, and then saddles them with unpayable – but of course credit-destroying -- medical debt when they do get care?

Who are the worse criminals? The insurance companies and private equity firms who directly cause these problems by pursuing only maximum profit? Or the politicians who allow it to happen, who at best tinker around the edges, trying to limit (only occasionally with any success) the worst abuses? Should we run our fire departments like that? Police? The answer is in part tight regulation, prosecution of abuses and illegal activities including putting senior executives in prison, and really, finally, creating a universal coverage system in which each person has good coverage, can get good care, and be treated as a human being.

Like the executives, politicians and pundits expect for themselves.

Primary Care, Private Equity, and Profit: How to ensure poor quality care for the American people

 I -- and many others -- have written (frequently and recently) about the abuses of for-profit companies, and especially private equity companies, and “non-profits” that act like for-profits in health care (Private equity, private profit, Medicare and your health: They are incompatible, May 11, 2023; Privatizing Medicare through "Medicare Advantage" and REACH: The Wrong Way to Go!, Jan 20, 2023; "Private Equity": Profiteers in nursing homes, Medicare Advantage, DCEs, and all of healthcare, Sept 16, 2022). But despite our efforts, it doesn’t get any better. Indeed it gets worse.

Drs. David Himmelstein, Steffie Woolhandler, Adam Gaffney, Don McCanne, and John Geyman, have been leaders in the campaign for a national health insurance plan (e.g., Medicare for All), published an article 18 months ago in ‘The Nation’ (March 31, 2022) titled ‘Medicare for All is Not Enough’. They go through the ways in which the ownership of our health system has changed, particularly over the last decade, to focus on profit for the private owners rather than “health care”. That is to say, while a single-payer Medicare for All program would be a great thing and would limit the negative impact that for-profit insurance companies wreak on our collective health – which is considerable – as long as for-profit companies continue to own, and to increase their share of, our actual health delivery systems (hospitals, nursing homes, pharmacies, and physician practices) there will be terrible consequences, with those single-payer dollars flooding into investors’ pockets rather than patient care.

Insurance companies like United Health and giant pharmacy firms like CVS own large portions of our practice and health delivery sector. And the role of private equity companies and investors, with their “buy ‘em and burn ‘em” approach to acquisition and profit, in taking over our delivery system is at least as terrifying. As the authors state:

At least UnitedHealth and CVS plan to stay in business for the foreseeable future, and may be constrained by the worry that substandard care will damage their reputation. Private equity companies face no such constraints. They promise investors quick profits, and often sell off the businesses they’ve bought within five years, often after stripping their assets and loading them with debts that hobble future operations.

On top of who will own our care provision, there also is the issue of who will provide the care. Most developed countries, with more rational health delivery systems, rely on primary care physicians and other clinicians far more than the US does. In those other countries primary care is at least 30-40% of the physician workforce, while here it is closer to 20% and dropping, an issue I have written about often (see, for example, What is the problem with Primary Care? The US health system!, March 22, 2022).  Primary care clinicians – family physicians, pediatricians, and general internists, and the NPs and PAs who work with them – can provide not only cost-effective care but care that is comprehensive, continuous, and reassuring to people and families because they know the person who is providing it and have a relationship with them. And the cost-effectiveness is not (only) about the fact that they earn less money (see below) but because they are in a position, as a result of taking care of the “whole person” and having a long term relationship, to more wisely utilize resources when necessary. Nonetheless, there is a definite shortage of primary care clinicians, as anyone who has tried to find one recently, because they moved, or their physicians retired or had their practice bought out by a large company like Optum (a subsidiary of United Health Care, which has become UHC’s major profit center as documented by former insurance executive Wendell Potter in his “Health Care Un-covered” substack) or, sometimes in response, went into a “concierge” or “boutique” practice, can testify. Elisabeth Rosenthal, editor of Kaiser Health News, documents this in a recent piece in the Washington Post, “The Shrinking Number of Primary Care Physicians is Reaching a Tipping Point”. She notes that “fewer medical students are choosing a field that once attracted some of the best and brightest because of its diagnostic challenges and the emotional gratification of deep relationships with patients.” And she makes the important point that

One explanation for the disappearing primary-care doctor is financial. The payment structure in the U.S. health system has long rewarded surgeries and procedures while shortchanging the diagnostic, prescriptive and preventive work that is the province of primary care.

Don’t forget that one. Rosenthal discusses the terrible experience of colleague Bob Morrow, MD, who, under financial pressure, finally had to sell his decades-old practice, and then, watching how the new owner ran it (suffice it to say, not in the best interests of the patients), leave medicine. Morrow is not a depressed person, but reading about what has happened to him and thousand of other primary care doctors is enough to make you depressed.

In a data-driven “Report Card” on primary care in the US, the Milbank Memorial Fund ranks it poorly on all front, although not on the quality of the physicians:

This first national primary care scorecard finds a chronic lack of adequate support for the implementation of high-quality primary care in the United States across all measures, although performance varies across states. The scorecard finds:

1.      Financing: The United States is systemically underinvesting in primary care.

2.      Workforce: The primary care physician workforce is shrinking and gaps in access to care appear to be growing.

3.      Access: The percentage of adults reporting they do not have a usual source of care is increasing.

4.      Training: Too few physicians are being trained in community settings, where most primary care takes place.

5.      Research: There is almost no federal funding available for primary care research.

The  report card, created for Milbank by the Robert Graham Center (the policy arm of the American Academy of Family Physicians, AAFP), not only identifies these deficits, but also the importance of solving them for the health of the American people. 100,000,000 people without a primary care doctor, only able to see a physician (if they can see any physician) who has a narrowly focused, disease-based practice is a real problem. We need those specialists for when we are diagnosed with a particular condition that requires their expertise, but they are often not knowledgeable about conditions outside it. Moreover, the primary care clinician does not only care for many conditions; much more important is that they care for the person who has those conditions.

The report also endorses the conclusions from the National Academy of Science, Engineering, and Medicine (NASEM) from 2021, recommending that the US:

1. Pay for primary care teams to care for people, not doctors to deliver services.
2. Ensure that high-quality primary care is available to every individual and family in every community.
3. Train primary care teams where people live and work.
4. Design information technology that serves the patient, family, and interprofessional care team.
5. Ensure that high-quality primary care is implemented in the United States.

Finally, for the moment, an effort is actually being made in Congress to try to increase the number of primary care clinicians.  In an uncommon bipartisan effort, the bill is cosponsored by Bernie Sanders (I, VT), chair of the Senate HELP Committee and Roger Marshall, MD, an OB/GYN and conservative Republican from Kansas, as reported by Jake Johnson in Common Dreams, Sept 14, 2023. It’s a good thing to have bipartisan support, but it is, sadly, unlikely to have a major effect on increasing the primary care physician supply. Funding in the bill – about $6 billion -- goes mainly to Community Health Centers (CHCs), especially Federally-Qualified Health Centers (FQHCs). These centers can be, and usually are, good. They provide care to lower-income people and communities where access to other clinicians is difficult. Republicans like them because they are not actually “government” programs, but responsible only to their boards of directors. But, while they often rely heavily on primary care, and expanding them will increase the number of jobs for primary care clinicians, it does nothing to increase the supply of those clinicians, to convince medical students to enter family medicine, pediatrics, and general internal medicine instead of much higher-paying subspecialties.

I mention money, the Milbank report mentions money. It is a lot about money. It is increasingly difficult to convince students to enter fields where their income is likely to be a fraction of that of subspecialists (even if much better than that of most Americans), especially in the context of huge educational debt (frequently over $250K), and the lack of respect given by the medical profession and often the society at large to primary care. And, not at all to be minimized, the takeover of so many practices by for-profit corporations and private equity, with situations like Dr. Morrow’s becoming the norm rather than the exception. Some subspecialties make 2-3 or more times that of primary care doctors, which makes it increasingly difficult for students to decide to enter primary care. And while some of these subspecialties have grueling work hours (e.g., general surgery) others have much more circumscribed work hours, often shift work and little call.

There IS certainly something the federal government could do. The Center for Medicare and Medicaid Services (CMS) sets the relative reimbursement for physician services (office visits, procedures, etc.) and virtually all private insurance companies reimburse based on multiples of the Medicare rate (traditionally more, but now often less). So all CMS has to do is to revise its fee schedule, increasing the relative value of primary care visits relative to procedures. Of course, there will be great opposition from other specialists; indeed the “RUC”, a non-government committee that advises CMS on this ratio is completely dominated by subspecialists (Changes in the RUC: None.. How come we let a bunch of self-interested doctors decide what they get paid?, July 21, 2013). CMS is not required to follow the recommendations of the RUC although it usually does; CMS could ignore or adjust what the RUC recommends, or reconstitute the membership of the RUC to have more primary care doctors. Primary care physicians do not need to make as much as the highest-paid subspecialists (indeed neither do those subspecialists!) but the difference needs to be decreased. Studies have indicated that if primary care doctors earned 70% of what subspecialists do, income would no longer be a significant factor in specialty choice.

Addressing this income gap is critical for increasing the number of primary care clinicians. Then there is a lot else to do, like getting for-profit corporations and private equity out of healthcare altogether.

 

For a “humorous” depiction of the takeover of primary care by for-profit companies like Optum, check out this short piece by the brilliant Dr. Glaucomflecken: https://twitter.com/i/status/1706339952857149895

Private equity, private profit, Medicare and your health: They are incompatible

When recently scheduling a procedure with a physician, he just shook his head and told me how lucky I was to have retired, and how difficult the practice of medicine is now. Before the outpatient procedure, he had wanted me to get a consultation from a physician in another specialty, but it turned out that that group no longer saw outpatients but only did hospital consultations because they no longer had the capacity. From his perspective, the problem is lack of people, especially doctors and nurses.

 But there are other big reasons, which I have discussed in previous blog posts. There are different aspects to them, but they essentially boil down to the transformation of American healthcare into another profit-driven industry. My doctor, and the doctors he wanted to consult, and the nurses and other staff with whom they work, are all interested in providing high-quality and effective care to people. The corporations for which they work (or are forced to work with, such as hospitals) are interested in making money.

This transformation, like most, is incomplete, but it seems to have passed an inflection point from which, if something major is not done, there is no turning back. The changes have been in process for a long time, documented in books such as the Health Policy Advisory Center (HealthPAC)’s 1971 “The American Health Empire” (Barbara Ehrenreich and others), and Paul Starr’s “The Social Transformation of American Medicine” published in 1982. They document the change from a cottage industry of independent doctors to one dominated by large institutional players. In the 1980s, Physicians for a National Health Program (PHNP) was created with the goal of, if not reversing this trend, at least harnessing the system to serve all of our people through the creation of a centrally-financed single-payer health insurance system. While every other wealthy (and many non-wealthy) countries in the world have such coverage, the US is the outlier. PNHP has advocated for decades for a coverage system more like that of Canada, where provincially-run financing plans cover everyone under a set of rules set by the federal government.

At that time, and today, a huge part of the problem was, and is health insurance companies. They are the obvious predators, drawing profit from ‘managing’, which often means restricting, your access to health care. Insurance in general makes money when it takes in more than it pays out, and as customers we “win” when we lose. That is, we collect when we have a car accident, or our house catches fire, or we die. We bet against ourselves, and hope we will not need the insurance. But health care is different, because we want to receive it. To be paid by insurance may have made sense in the early days, when it covered the hopefully-unneeded hospitalization or surgery (“major medical”, it was called) and we paid doctors out of our pockets or in chickens. But it makes no sense for routine and necessary health care.

The other big abuser back then was pharmaceutical companies, which made even more than insurance companies, marking up prices to whatever the market would bear, no matter how many people were left out and could not afford them. Sadly, the news is not that the character, behavior or profit taking by insurance or pharmaceutical companies has improved; now they are both even worse! What is sad, and terrible, is that the actual health care providers have become more predatory, and more often owned and controlled by companies whose primary business is making money, and only incidentally providing health care. I have written about this sort of abuse by hospitals and corporate-controlled physician groups, and it has just scratched the surface.

Recently, the Kaiser Family Foundation Health News reported on ‘Sick Profit: Investigating Private Equity’s Stealthy Takeover of Health Care Across Cities and Specialties’, exposing once again the way in which for-profit companies, and increasingly private equity, have bought up healthcare practices and limited access or worse in the name of making money. The article leads with the story of a 2-year old child in Yuma, AZ who died of complications of anesthesia while receiving extensive dental work that, his parents say in a lawsuit, was unnecessary (it almost certain was). They charge that the dentists were pressured by the private equity firm that owns the practice to do the maximum number of procedures on children with Medicaid to maximize revenue and profit. But that is just the lede; the article documents the increasing frequency of practices owned by for-profit companies abusing and sometimes killing people, either by over or under treatment. Which one depends on which will make the most money, not on whether folks need medical care or not.

Killing children in pursuit of profit is something most of us would frown upon, but while all practices owned by private equity or other profit-making entities may not behave so badly, it would be a mistake to call those that do “bad actors” and excuse the others. It is the entire concept that YOUR health should be a source of profit, and be attractive to the venture capitalists investing in these practices because they can make so much money. The money, whether paid by you directly, or indirectly through your insurance premiums, or by the government through your taxes, should be going toward your healthcare, not their private jets.

This practice complements the impending takeover of Medicare by for-profit Medicare “Advantage"”plans, and private-equity controlled ACO/REACH plans, just recently reported on in the New York Times, “Corporate Giants Buy Up Primary Care Practices at Rapid Pace”. The article begins by noting the shortage of primary care doctors, and that it is getting worse (also something I have written about often) because they get little respect and less money (than other specialists). It would be nice to think that this evidence of the impact of family doctors and other primary care clinicians on patients was a sign of respect, but it is just a sign of greed, especially through the programs that privatize your Medicare. This represents a huge potential profit center for these companies. “That’s the big pot of money everyone is aiming at.” Yup. It’s $400 billion!

This is why most of us who are paying attention agree that we now need to go much farther than simply national universal health insurance. While that is important and good, it could end up being another vehicle for profit-taking; remember the Yuma dentists were ripping off Medicaid, a government funded program. Thus, only a truly non-profit (unlike the ostensibly “not-for-profit” hospital sector than emulates for-profit competitors to maximize revenue) is acceptable. Steffi Woolhandler and David Himmelstein, founders of PNHP, call for such a national health service in a recent interview in Jacobin, and it makes sense.

The justification cited by these companies for their rapacity is that they increase efficiency. This is of course, BS. Efficiency in generation of more money for them, perhaps, by cutting back the number of doctors, nurses, and other staff, overworking those who remain, and making them all, along with their patients, miserable. That is not efficiency in production of healthcare, and is certainly not efficacy.

Doctors and nurses are being “sped up” as if they were on an assembly line, and are burning out and leaving in droves. The people who are the “products” are getting 7 minute visits, don’t have time to even talk about their problems not to mention get adequately treated. It is bad for everyone but those few earning the profit.

The Times article says “The companies say these new arrangements will bring better, more coordinated care for patients, but some experts warn the consolidation will lead to higher prices and systems driven by the quest for profits, not patients’ welfare.” Yup. That’s what they say. Not to put too fine a point on it, it is a self-serving lie.

We need one system, well-funded, to handle all of our needs, generously paid for without a cent going to private profit.

"Private Equity": Profiteers in nursing homes, Medicare Advantage, DCEs, and all of healthcare

What happens “When private equity takes over a nursing home” is the subject of a recent New Yorker article. What happens is not pretty, at least not if you are concerned about the care of the people housed in it. Presumably it is good for the private equity investors, if all they care about is making money (probably). Compared to the days when the particular home examined in the article was run by the Catholic order of Little Sisters of the Poor, it is more crowded, more poorly staffed, dirtier, and the people living there are sicker, get less care, and are more likely to die. Good thing it is making money for the investors!

Private equity, a bland-sounding term for ‘rapacious profit-seeking capitalist investors’, is taking over a lot of things these days, in healthcare and in other areas formerly run by non-profits or government, as well as traditional businesses. Sometimes this is occasioned by circumstances largely outside “the market” or government policy, which is true (to a degree) in this case -- fewer women are becoming nuns, and the “10 sisters to a home” ratio that they aimed for became impossible to keep up. Sometimes it is “the market”, without outside interference (hard to come up with these examples). Sometimes it is a result of government policy, driven by people (largely but not only Republicans) who believe anything run by the government is bad and should be run privately, and probably anything run by a non-profit would be run better by a profit-seeking company. They are starry-eyed idealists who actually believe this despite all the evidence to the contrary. Much or most of the time it is a combination of the last two, that is market forces created by government policies that give tremendous advantage to profit-seekers, including direct subsidies of public funds and freedom from the restrictions placed on non-profits and government agencies themselves. The most common form of the latter in government, of course, is to starve the budgets, underfunding public agencies so that the public gets legitimately upset by the lack of service, and “private equity” rides in like a “white knight” to save the day.

Of course, it almost never works. That is, if “works” means “performs the ostensible functions of the company or agency better”. That they almost never do, and they also almost never save money, and almost always end up costing more – paid either the taxpayer or ratepayer or public that purchases their product. If by “works”, however, we mean “makes money for the investors”, it frequently does. This scenario plays out across many industries and formerly public functions, but it has a particularly bad smell when the “product” that is being invested in and turned over to profiteers is people, and people’s health.

People in nursing homes are very vulnerable. That is why they are in nursing homes. Even the best ones face problems with staffing, a big issue in any industry owned by profiteers since the best way to fix this is to hire more staff and pay them better and the prescription for “success” by investors is to have fewer staff and pay them less. Such problems, however, are generally even greater for those nursing homes that care for patients on Medicaid, who include the always-poor and the even larger number of “never-were-poor-before-but-are-now-after-trying-to-pay-for-long-term-care”. While the large majority of people on Medicaid are young women and their children (Medicaid, a federal/state partnership, makes it exceedingly difficult for single adults or men to receive benefits in most states), the large majority of its spending is on the aged and disabled requiring long-term care including in nursing homes. (Medicare, the federal program for aged and disabled people, does not generally pay for nursing home care, except a few days after some hospitalizations.) The Kaiser Family Foundation notes that although only 5.5% of Medicaid recipients are in nursing homes, they account for 34% of its spending.

This lesson is a key one to keep in mind: everyone does not (and should not) use an equal share of health care, or account for an equal share of healthcare costs. Sick people cost more. Sicker people cost even more. Most people are not sick or costly in any one year. The aged, disabled, and those who have multiple chronic diseases are the sickest and among the costliest, and that is not most of us. The rest of us are not in that group until we are, either from gradually entering it as we age or suddenly falling into it from an accident or developing cancer. In general, not just nursing homes, about 3% of people account for 50% of health care costs and about 50% of the people account for 5% of costs. (see my post “Red, Blue, and Purple: The Math of Healthcare Spending”, Oct 20, 2009. It hasn’t changed much.)

Nursing homes are not the only healthcare institutions being turned over to “private equity”. Medicare, the most important health care funding advance of the last century, has been especially under attack. Traditional Medicare (TM) has two components; Part A, which pays for hospitalizations, is paid for by the Medicare Trust fund (your paycheck deductions), and Part B, which pays for outpatient care, by monthly premiums paid by recipients. Part C, now known as Medicare Advantage, is a privatized version of Medicare which, if you choose it, puts you essentially in an HMO, for good and bad. The good, the “advantage” is that it usually pays for all your hospitalization (TM only pays 80% of its approved charges, requiring most TM recipients to have a “Medicare supplement” insurance plan), and gives other services, including (sometimes) hearing and vision care, and even gym memberships! The bad is that, as in an HMO, you have a limited choice of doctors and hospitals, and except in an emergency they are usually in a limited geographic area. The worse is that these plans, mostly owned by insurance companies and increasingly by private equity, are only required to spend 80% of their premiums on actually delivering health care (and they pad even this with non-healthcare expenses, including executive salaries). The worst is that they don’t want you if you are sick (and thus will cost them money); those gym memberships cost little but hospitalizations cost a lot! They have many ways of encouraging healthy seniors to sign up (“cherry picking”) including lots of TV commercials, and even more inventive ways of discouraging sick people from staying in (“lemon dropping”). The money from this and other policies that funnel your taxpayer dollars to private companies is addressed in detail by former CIGNA executive Wendell Potter in his Substack where he documents how 72% of United Health’s income is from public funds!

The newest wrinkle, particularly good for private equity (and bad for Medicare recipients) is called Direct Contracting Entities (DCEs). These were created to address the problem investors had with Medicare Advantage identified above, that is, the ‘if you choose it’ part. Because with DCE you don’t have to! The DCE contracts with your primary care physician (or usually the company or health system that employs them; the physician often doesn’t even know about it!) and then all those physician’s patients are enrolled in the DCE even though they may not know it! This allows the private equity company to collect your Medicare $$ without your permission! And they have even addressed another ‘problem’: the DCE can keep 40% of your Medicare money as profit! What a deal! (BTW, this program will be renamed REACH in 2023, so don’t be confused. And Accountable Care Organizations, ACOs, have many of the same characteristics.)

So, look at how good this is! We get the government out of providing efficient cost-effective care by both starving the agencies for funds and encouraging (by $$) private investments. It works great! Well, for the investors. For you, probably not so much. But there is also a good chance it is working for your senators and representatives who may not only be getting campaign contributions, but even have stock in these companies.

We NEED a single-payer program that covers EVERYONE, such as an improved (covers every necessary service 100%, no 20% copay). We do NOT need scams such as Medicare Advantage and DCE/REACH that move us in the wrong direction!

Incremental change will not cure our health care system

Earlier this year I discussed (The denominator matters: we only have a quality health care system if everyone can access it!, February 16, 2020) an article from the New York Times by Elisabeth Rosenthal, the editor of the Kaiser Health News and an emergency physician, called “Where the frauds are all legal.” One of those “frauds” I focused on was “surprise” medical bills. “Even though you went to a hospital that was in your insurance network and saw a surgeon who was in your network,” I wrote, “it turns out that the ER group or the anesthesiology group contracted by the hospital, or the assistant surgeon your surgeon picked, is not in network. Boom! $10,000, $100,000 bills! No one is “satisfied” by this.”

In fact, this is not entirely correct. Yes, your insurance company is not happy about this if they have to pay the bill. Yes, you, the patient, are certainly not happy about it if the insurance company doesn’t pay the bill, or only pays a part of it, and you are stuck with the rest. Very likely, the hospital itself doesn’t like this if they themselves are indeed in your network, because it makes them look bad, and they know that you, and your insurance company, are going to hold them in large part responsible. So who likes it? Well, as you might guess, those doctors who are getting the big payments. In fact, probably even if the hospital tried to hire its own, say, anesthesiologists or emergency physicians, they’d have a hard time paying as much as those independent groups do.

But the other stakeholders who are happy with this arrangement are the owners of these physician practices, who are not always the physicians themselves but increasingly private equity funds, which have been buying out physician groups for a few years (‘Specialty physician groups attracting private equity investment’, Modern Healthcare, August 31, 2019). Expanding upon a “research letter” published in JAMA, JM Zhu from the Leonard Davis Institute of Health Economics at the University of Pennsylvania writes:

Of approximately 18,000 group medical practices, we found 355 physician practice acquisitions across a number of specialties, most commonly anesthesiology (19.4%), multi-specialty (19.4%), emergency medicine (12.1%), family practice (11.1%), and dermatology (9.9%). From 2015 to 2016, there was also an increase in the number of acquired cardiology, ophthalmology, radiology, and obstetrics/gynecology practices. Acquired practices had an average of 16.3 physicians, 4 sites, and 6.2 physicians affiliated with each site. About 44% of acquired practices were in the South. (‘Private Equity Investment in Physician Practices’, February 18, 2020).

Of course, it doesn’t take great acumen to realize that the reason that private equity investors are attracted to buy these practices is exactly the opportunity to profit handsomely from this “loophole”, by what Rosenthal calls “legal fraud”.  In essentially all areas, the whole strategy of private equity funds is exactly this sort of “gaming the system”, finding the margin where the income far exceeds the cost because of some loophole in the law.

This demonstrates several flaws in our current healthcare “system”. The most obvious is the specific problem created by “surprise” bills, one that has been even recognized (although not addressed) by Congress. For example, HR 3502, “Protecting people from surprise medical bills”, introduced in this congress by Rep. Raul Ruiz (D-CA). It could pass the House, and if both the Senate and White House flip, it could even become law. Of course, it would have considerable opposition from the very equity firms that are making money from the current situation. This is the second flaw – legislation to regulate the system often fails because those who make big money from the very problems such regulation is intended to correct have – big money. They can give contributions to legislators.

Every inequity in health care, every exploitation of the system, results in (and usually from) someone making money, and those “someones” are very interested in preventing the issue from being corrected. This holds true, as I have previously discussed, for hospitals (“health systems”), long term care companies, pharmaceutical and device companies, and insurance companies, as well as equity-owned physician groups. Kansas Congressman and GOP Senate candidate Roger Marshall, according to a recent article in the Kansas City Star by Shorman and Lowry, pushed for aid to physician-owned hospitals (ones not yet bought up by for-profit equity companies) while his wife, as a partner in real estate ventures that owned the land that they were on, profited greatly! In this case it didn’t even require contributions to politicians; the politician was in it for himself.  You can be sure that if there is a buck to be made, someone will be making it. You can just be certain that it isn’t you, the patient, particularly if you are uninsured, poorly insured, or poor. Of course, if you are, you’ve probably figured out by now that the system overall is not designed for you!

The design of the capitalist US, particularly so in this age of corporate “gangster” capitalism is to make money for the wealthiest and everyone else be damned. The only question that might still be open to discussion is whether people’s health, and health care, should be subjected to the same rules of that system as consumer goods. After all, it is your health, your life! Your family’s health and life! The same could, and should, be said for other basic necessities such as food, shelter, and education, but health has special resonance such that every survey of the American people finds overwhelming support for the idea that everyone should be able to get adequate healthcare, and agreement that profiteers such as insurance companies and pharmaceutical companies are bad guys (there is less awareness of the role of hospital systems, still less of the private-equity-owned physician groups discussed here).

The third key aspect (I keep wanting to say “flaw” until I realize there are strong advocates for these policies) that this illustrates is the fatuousness of trying to solve the problems of our health care system and its exploitation by profiteers one issue at a time. Each scam that has been exposed and addressed by regulations or legislation (more rarely) has generated another; each loophole that is supposedly “closed” contains exceptions. The problem isn’t “bad apples” (although there are many), it is the whole system and the powerful forces that wish to continue it.

While Republicans policies are often targeted at eliminating any regulation, and indeed encouraging overt corruption and exploitation, “mainstream” Democratic policies are about putting in occasional patches, and then saying “there!” until another scam pops up. The Democratic Party, like the GOP, is beholden to rich donors, and a high percentage of theirs are financiers. Their mantra, clearly articulated by Joe Biden, is that we need to keep the private (read: profit-making) sector, and not change everything. Unfortunately, if the goal is actual to make the health system more equitable and increase the nation’s health, it cannot work.  It certainly cannot contain costs; the very profit that these companies make IS the cost!

The only solution is a comprehensive change to our entire health system, one that eliminates the incentive for profit-making altogether. This will work, is a good idea, and is what we should do, starting with Medicare for All.

Private Profit and the Public's Health: Which is More Important?

Health care is pretty complicated, and insurance coverage is even harder to understand.This is the message that comes through clearly from the interviews being done by Dr. Paul Gordon and recorded on his blog, https://bikelisteningtour.wordpress.com. Dr. Gordon is taking a unique sabbatical, riding his bicycle across the country from Washington (DC) to Washington (state), interviewing regular people, mostly in cafés and such, about their take on Obamacare. 

The economic status of these people varies from poor to pretty well-off (but none really wealthy), from well insured to uninsured. Their political perspectives range from “everyone should be covered” to “benefits just make people lazy”. Three recent quotes: ‘People use Medicaid as a crutch’, ‘You can’t penalize someone for not having health insurance when it’s so expensive and the economy is doing so poorly’, ‘Here’s my take on it – everyone should have insurance’. What they share with each other, and with most of us, is a general lack of understanding of how Obamacare works (or doesn’t) and why. The flaws in Obamacare are the result of the political tradeoffs that allowed insurance companies to continue to have control and make huge profits, but this is often not clear to most people.

Here is something that is easy to understand, however: when you call “911” as you have been trained to do in an emergency, and they don’t come. Or they don’t come for a long time. Or they come with inadequate supplies. Who do you get angry with when you, or your loved one, dies? The government? They are surely in part at fault, even though they probably contracted the service out, to save money, probably because voters want to pay less tax. But there is another reason, explained in an excellent special article in the New York Times, “When you dial 911 and Wall St. answers” (June 26, 2016). The piece, by Danielle Ivory, Ben Protess, and Kitty Bennett, details how many city services, including ambulance services, are provided by companies that are owned by “private equity firms”. These are companies whose investment capital comes from wealthy individuals and particularly from pension funds, unlike banks whose money comes from depositors. They are even less regulated than banks, and thus more able to pursue their core mission, making profit:

Unlike other for-profit companies, which often have years of experience making a product or offering a service, private equity is primarily skilled in making money. And in many of these businesses, The Times found, private equity firms applied a sophisticated moneymaking playbook: a mix of cost cuts, price increases, lobbying and litigation.

Whoa. This is starting to get complicated again. Banks vs. “private equity” vs. just plain old for-profit businesses? They are really just different forms of for-profit, and provide a stepwise progression, from public services operated by government for the benefit of the people, to private companies that are contracted by government to do a service but might care about doing it well, to having those companies owned by banks who really just want to make a profit, to having them owned by private equity companies who care about nothing but making a profit. The photo accompanying the Times article is of Lynn Tilton, owner of Patriarch Partners (an ironic name, given that she is a woman), which owned the emergency services company TransCare that served many East Coast communities. TransCare went bankrupt, leaving those communities without emergency medical services. Ms. Tilton’s picture is accompanied by the quote from her reality television stint “It’s only men I strip and flip.” As a poster child, she could become the Martin Shkreli of ripping off necessary public services the way he was of ripping off consumers of life-saving drugs.

“The business of America,” Calvin Coolidge is often paraphrased as saying, “is business.” This perspective, that it is not about doing things that are best for the American people, is based in a belief that capitalism – “business” – will, through the magic of the market, eventually meet those needs. OK, maybe not those of people at the margins, people too poor to buy, so maybe we need a safety net. But most people. A similar statement appeared today in the print edition of the Kansas City Star from KC Mayor Sly James, discussing the controversy over replacing the terminals at Kansas City International Airport with one big, new terminal. Surveys consistently show that the large majority of Kansas Citians (84% in this article, “Regarding KCI’s future, city ponders a new flight path”) like the current arrangement, with short security lines and easy access in and out from one story terminals, but the airlines and big businesses do not. In the large-type quote accompanying his picture in the print edition (but, along with the photo, left out of the online edition), Mayor James said “The people of this city need to be convinced of what I believe is a basic reality, that this airport is about a lot more than ‘how fast can you get out of your car and get to your gate?’” Right. Business interests first. Take that, 84% of Kansas Citians!

Because they most obviously involve life and death, emergency medical services and firefighting (yes, firefighting too has been contracted out to companies owned by private equity firms!) get the greatest play in the Times article, but many other services (like water!) are in the same situation: controlled by companies whose goal is to make a profit rather than to provide effective service for people. This is what happens when municipalities are starved of funds because people vote to cut taxes.

Whether it is health insurance or emergency medical services or municipal water, the system becomes very complicated and hard to understand when it is trying to meet conflicting agendas. When the need for people to receive critical, health-producing service (fire and police protection, clean water, garbage collection, ambulances) is compromised by provisions built into contracts (or the law) for companies (insurance companies, banks, private equity firms) to make profit. I guess it is fine if these services can be effectively and reliably provided by for-profit companies, but when their pursuit of profit through “a mix of cost cuts, price increases, lobbying and litigation” conflict with actually providing services, there is a big problem. In the case of emergency medical services, the problem was that “…many newly insured Americans turned out to be on Medicaid, according to the Kaiser Family Foundation. Medicaid restricts some of the most aggressive billing tactics.”

A variety of other difficult to understand strategies are also employed at the macro level to place the interests of wealthy corporations above those of the people. These include the unlimited political contributions permitted by the Supreme Court’s Citizen’s United decision, incredible gerrymandering of congressional districts so that we have states where the majority of voters vote for Democrats but most districts are solidly Republican (see the New York Times Book Review “Where votes go to die”, June 26, 2016), and the provisions of the Trans-Pacific Partnership (TPP) that prevent national governments from regulating multi-national corporations.

We could solve this if there was a single, over-arching principle, always codified into law, that the interests of the people as a whole always trumps the profit potential of corporations. I vote for that.