This article first appeared in OpEd News on 8/13/22. I just noticed that I neglected to post it here. Everything in it is still relevant, so I thought it would be of interest to those who have not already read it. With so much else going on, it's easy to forget that the system of access to health care in the US is collapsing, at least if it hasn't affected you directly yet.
Those who say Congress is too corrupt to create a publicly funded system of universal health care are likely to be in for a surprise. Recent developments suggest that Americans may see Medicare for all within the next decade. However, since our system of privately funded elections inevitably leads to Congress putting profits over people, this is not likely to be a good thing.
The death spiral of insurance costs
Some advocates of a publicly funded universal health care system have predicted that its creation is inevitable because of the "death spiral" of insurance costs. This term refers to the fact that as costs of insurance rise, fewer people can afford it, leading to a new round of rising premiums and out-of-pocket costs. If this cycle were allowed to continue indefinitely, it would be only a matter of time before the medical insurance industry priced its product out of existence.
In a rational world, this simple fact would lead Congress to do what every other industrialized nation has done; create a publicly funded system of universal health care either through a government-run system such as Medicare for All, or through a tightly regulated system of non-profit insurers that offer a defined benefit package specified by the government, as in Germany. Of course, politics in the US is rational only in the sense that it follows the logic of profits over people. The desires of the donor class come first, and the corporations of the Medical-Industrial Complex have lots of money to give.
But if the insurance industry seems destined to price itself out of existence, how is Congress going to save its deep-pocketed friends?
The Affordable Care Act is a bailout for a failing insurance industry.
Obamacare increased coverage primarily through 1) subsidizing private insurance purchased through the Exchange and 2) covering most of the costs of a huge expansion of Medicaid. Because most of the money didn't come from employer profits or wages of average workers, this massive taxpayer subsidy of a private industry served to partially mask the fact that insurance costs are still exploding. Of course, as anyone with private insurance knows, it didn't eliminate medical cost inflation. It just alleviated it enough to make people who have insurance complacent enough to not protest.
Since the Affordable Care Act went into effect, many of its inadequacies have become obvious to even its most ardent supporters. As a result, progressives have built substantial support for a publicly financed system of universal health care in the last decade. Unfortunately, Wall Street has made enormous progress toward privatizing Medicare at the same time. If they succeed, we may end up with a tremendously expensive form of Medicare for All that has all the defects of private insurance. These include reduced provider choice, inflated billing, and inappropriate denials of care and payments that lead to delays in treatment that have been associated with increased morbidity and mortality.
Privatized Medicare is a blatant giveaway to the medical insurance industry
During the Trump Administration, the insurance industry-controlled Center for Medicare and Medicaid Innovation developed the Medicare Direct Contracting program. This was a plan to give exorbitant sums to corporations to pay bills from doctors and hospitals, which traditional (government-run) Medicare does now with a 2% overhead. These contractors, the majority of which are investor-owned, are given a lump sum of money to cover medical bills and allowed to keep up to 40% as profit and overhead. That's why private equity funds are salivating to get at those profits by acquiring contracts and subbing out the work. It's a straight-up wholesale transfer of tax money to the pockets of the wealthy, with the same perverse incentives as Medicare Advantage to maximize profits by denying care.
But it gets worse. The pool of money contractors are given to pay providers is inflated by a method that essentially constitutes fraud. Called up-billing, it's a trick developed by Medicare Advantage insurers to artificially elevate the acuity of their covered members. Under Medicare guidelines, this allows them to pay medical providers more for the same services. Since total payments determine the size of the pool of money from which they can extract their 40%, the more they pay out, the more they make.
According to a recent report, this scam cost US taxpayers over $12 billion in 2020 alone in excess payments to insurers offering Medicare Advantage. Since MA covers only about 40% of the Medicare population and is limited to taking 15% in overhead and profits, the amount that taxpayers would be forced to fork over to Wall Street if all Medicare beneficiaries are transferred to the direct contracting program is staggering. The plan is for this to happen by 2030. That's what makes addressing this problem so urgent.
Loss of choice under the direct contracting plan
One of the most outrageous provisions of the direct contracting scheme is that seniors and the disabled who have chosen to enroll in traditional Medicare are being forced into direct contracting entity without their informed consent. If they have seen any primary care provider in the previous two years who currently works for a direct contracting entity, they are automatically transferred.
Most never realize this because the notifications are so difficult to understand. Even if you realize that your Medicare claims will now be handled by a for-profit corporation, your only way out is to switch doctors. Since a rapidly increasing majority of doctors now work for hospitals or corporations, it is going to become increasingly difficult to do so. In addition, independent medical providers receive financial incentives to participate. This is how CMS plans to meet its goal of forcing every beneficiary into one of these plans by 2030.
Only Biden can prevent this scheme from completely privatizing Medicare
The bottom line is this: Compared to Medicare Advantage insurers, these new contractors are able to increase the amount they skim off what taxpayers give them from 15% to 40% of an inflated pool of funds for doing a job that traditional Medicare does with 2% of payments based solely on services provided. No wonder almost all major insurers currently offering Medicare Advantage have applied to become contractors. Since the goal is 100% enrollment of Medicare patients, it's clear that the rest will soon follow.
Any program so profitable for Wall Street is sure to achieve bipartisan support, especially since this is the only way for the medical insurance industry to avoid the death spiral of insurance costs. That's why Biden has embraced it with all the enthusiasm of any other politician in the pocket s of Wall Street investors. His response to a campaign led by Physicians for a National Health Program was to change the name of the program from Medicare Direct Contracting to ACO-REACH, while keeping all the essential provisions of the original version intact.
Biden will ultimately be responsible for the privatization of Medicare if we can't get him to kill ACO-REACH, because the bill that created Obamacare barred Congress from challenging programs created by the Center for Medicare and Medicaid Innovation. (While the Supreme Court could rule that the Center for Medicare and Medicaid Innovation lacks the power to create such a sweeping program without congressional approval, as it stripped the EPA of the power to regulate carbon emissions, the corporatist-dominated Court is of course unlikely to challenge a program that serves Wall Street interests).
Since this scheme has been promoted by both Republican and Democratic administrations, the only way to stop it is to put pressure on members of Congress to speak out publicly against the program. We have to kill this thing by dragging it out into the sunlight, where taxpayers can see it and become appropriately outraged. If Congress can't stop the program by direct action, they can certainly bring pressure to bear on Biden to do so.
This may be one issue where public outrage will make a difference
It may seem that trying to whip up outrage over government corruption is a quaint idea, but recent events have made this a prime time to make this a major issue. Biden, who has a long history of favoring Social Security privatization, recently received a great deal of negative attention for nominating a long-time champion of privatization to a position on the Social Security Advisory Board. Public awareness of the fact that he is promoting privatization of both programs may be more effective at stoking public anger than would either issue by itself. If you doubt it, consider the huge hit in popularity that George Bush took when he tried to privatize Social Security in 2005.
It's time to go out on the street and raise some hell. Call, write, and visit your members of Congress. Question them during at appearances during the August recess. Write to your local paper. We have to apply maximum pressure on them to lean on Biden if we want to stop this travesty and save any chance of creating a publicly funded system of universal health care that will put people over profit.
