This post is a part of our Bioethics in the News series
By Leonard M. Fleck, PhD
Let me start with a clear unequivocal commitment in response to the January Washington Post editorial regarding Medicare for All. From the perspective of what a just and caring society ought to be, “Medicare for All” should be embraced, especially when compared to the costly, fragmented, unjust, inefficient health care financing system we currently have in the United States. For openers, if we abolished private health insurance, we would immediately achieve administrative savings of about $300 billion. We would have the same administrative efficiency as Canada. We would also have a more egalitarian approach for financing and accessing needed health care. What we would NOT have is effective health care cost control. Developing that ability would be ethically, politically, and economically painful.
If we literally mean Medicare for all, recall that substantial co-payments are part of Medicare, which is why a majority of Medicare recipients purchase a private supplementary plan to cover that financial risk. That necessary additive supplement represents a significant compromise of the egalitarian ideal that Medicare is supposed to represent. That represents financial and ethical pain.
The most painful parts of Medicare for All would be three things: (1) the transition itself from employer-funded health care; (2) the scope of the benefit package; and (3) effective cost control. Currently, the federal government covers about $1.5 trillion in health care costs (mostly Medicare, Medicaid and the Veterans Affairs system) out of total health spending in the U.S. in 2017 of $3.5 trillion. Virtually all of that spending would become part of the federal budget. To fund that, the federal government would have to recapture through taxes all that employers (and employees) currently contribute to the cost of their health plan. This would be neither easy nor equitable because of the huge variation from one employer to another, both in scope of coverage and allocation of costs.
Second, what should be the scope of the benefit package? Should it be whatever Medicare covers now, which is reasonably comprehensive? However, many employers offer more comprehensive benefit packages. That would mean employees had to accept a diminished benefit package. Alternatively, the federal government could upgrade Medicare to that optimal level. That would add substantially to that $3.5 trillion in current health spending, and the taxes needed to finance that upgrade. This is political and economic pain. We could permit private insurance upgrades, as in the UK, or forbid such upgrades, as in Canada. Either way, political and ethical pain is the result.
Third, the most painful problem would be controlling health care costs, as the former Princeton economist Uwe Reinhardt has noted with his notion of Great Equations, Cost Control = Income Control or Care Control. Every dollar in health care costs represents someone’s income, and that particular someone does not want to sacrifice their own income for a vague greater good, or someone else’s care. This is the problem of health care rationing.
Political conservatives have denounced health care rationing and contended that “human life is priceless,” (to the benefit of pharmaceutical companies). Liberals have argued that we should not be “throwing granny off a cliff” (when Paul Ryan pushed for privatizing Medicare). In either case, rationing is in fact pervasive in the U.S. health care system. We mostly ration by ability to pay, sometimes in the form of employer-restricted very thin health care coverage or coverage with very high deductibles. We collectively avert our eyes from this private pain.
As I have written extensively, this is essentially invisible health care rationing (Fleck, 71-99). It is widely dispersed among hundreds of thousands of employers. An employer might refuse to cover an extraordinarily expensive (but effective) life-prolonging drug for an employee who dies prematurely because of that denial. The obituary will not list rationing as the cause of death, and the Washington Post will not cover this unjust death.
If Medicare covers everyone, however, then decisions by Medicare not to fund these extraordinarily expensive targeted cancer therapies for patients with metastatic cancer become front-page headlines in the Washington Post and the lead story on Fox News. Pharmaceutical companies become the frontline troops in attacking the bureaucrats for having hearts of stone and consciences of jelly: “Human life is priceless (and pharmaceutical profits too).” In fairness, hospitals, physicians, home health agencies, long-term care facilities and so on will all resist health care cost control. They are all doing good work. Why, they will ask rhetorically, would a just and caring society seek to constrain such good work?
Healthy taxpayers want health care costs controlled; taxpayers with metastatic cancer want access to anything and everything medicine offers that might prolong their life, no matter the cost (because they paid all those taxes) (Eddy). This is irrational (but real). One refrain (seen as politically safe) is to get rid of waste and inefficiency in the health care system. Nothing obviously irrational or unethical about that, except that one person’s waste and inefficiency is another person’s life-prolonging care.
Consider this challenge as part of Medicare for All: CAR T-cell immunotherapy for several refractory leukemias has front-end costs of $475,000, plus several hundred thousand dollars more if a patient experiences a severe form of cytokine release syndrome as a side effect. Roughly, 30% of those patients will fail to survive a year. If we have biomarkers and other medical criteria that can predict with 95% confidence which patients will be in that 30%, would a future possible version of yourself in that 30% group accept a rationing protocol that would deny yourself CAR T-cell therapy because for you it was “wasteful and inefficient”? In theory, 60,000 Americans each year would be candidates for this therapy; potential savings from that protocol would be $15 billion. Alternatively, call a friend with end-stage heart disease and ask if he would be willing to give up his $500,000 artificial heart so you can get CAR T-cell therapy.
If we aspire to be a just and caring society with limited resources (money) to meet unlimited health care needs, then we must have these painful public conversations. Moreover, these conversations must be rational and respectful. Current invisible rationing practices are nothing more than opioids for our consciences.
Leonard M. Fleck, PhD, is Acting Director and Professor in the Center for Ethics and Humanities in the Life Sciences and Professor in the Department of Philosophy at Michigan State University.
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References
- Peter Bach. 2018. “National Coverage Analysis of CAR-T Therapies — Policy, Evidence, and Payment.” New England Journal of Medicine 379: 1396-98. https://www.nejm.org/doi/full/10.1056/NEJMp1807382.
- David Eddy, “Connecting Value and Costs: Whom Do We Ask and What Do We Ask Them?” in Clinical Decision Making: From Theory to Practice. Boston: Jones and Bartlett, 77-93.
- Editorial Board, Washington Post. “You can’t have it all — even with Medicare-for-all.” (Jan. 31, 2019). https://www.washingtonpost.com/opinions/you-cant-have-it-all–even-with-medicare-for-all/2019/01/31/b0551dcc-24c4-11e9-ad53-824486280311_story.html
- Leonard M. Fleck. 2009. Just Caring: Health Care Rationing and Democratic Deliberation. New York: Oxford University Press, 71-99. https://global.oup.com/academic/product/just-caring-9780195128048?cc=us&lang=en&#.
- Austin Frakt, “The Astonishingly High Administrative Costs of the U.S. Health Care System.” New York Times (July 18, 2018). https://www.nytimes.com/2018/07/16/upshot/costs-health-care-us.html.
- Anne B. Martin et al. 2019. “National Health Care Spending in 2017: Growth Slows to Post-Great Recession Rates; Share of GDP stabilizes.” Health Affairs 38(1):96-106.
https://doi.org/10.1377/hlthaff.2018.05085. - Kenneth Rapoza, “In Attack Ad, Paul Ryan Kills Grandma in a Wheelchair.” Forbes (Aug. 12, 2012). https://www.forbes.com/sites/kenrapoza/2012/08/12/liberal-group-throws-granny-off-cliff-again/#44dd233c8286.
- Uwe Reinhardt, “Once More, Health Care Cost Control.” New York Times (Feb. 19, 2010). https://economix.blogs.nytimes.com/2010/02/19/once-more-health-care-cost-control/.
MSU Bioethics 
I was a big supporter of “Obamacare” but have reservations about “medicare for all” because the government will not necessarily be the best stewards of our health care system if left with zero competition. In other words, I think the mix of private and public funding of healthcare is likely the best model but we need to keep beefing up the public side of the equation so that all Americans have access to a basic form of insurance such as Medicaid or Medicare. Most countries that claim to have socialized medicine also have a private sector where those with financial resources can purchase a higher level of care (eg, nicer hospital bed, better food, and the latest technological innovation) – a 2 tiered system is inevitable and even in countries such as Canada, the rich can purchase the latest and greatest internationally if they desire to do so. You can call it rationing based on income, but that is how we ration almost everything in America…the American dream. I don’t see the masses leaving behind that mode of thinking anytime soon, so following further expansion of Obamacare, we will need to rely on high deductible plans in the private sector to address cost.. those patients with private insurance and financial resources will shop around and make decisions about how they want to spend their time and money (ie, concierge medicine at one extreme vs. CVS clinic at the other).
Thank you for your comments. Let me try to offer a brief reply. First, all the countries in Europe, as well as Canada, demonstrate that huge health cost savings are possible through reduced administrative expenses alone. Private insurance companies have very high administrative costs, in part, because they are competing with one another, in part because they have to offer an enormous variety of products to satisfy the expectations of various employers, and in part because they have to pay profits to stockholders and meet stockholder expectations in that regard. More importantly. governments in Europe bargain with pharmaceutical companies, and other suppliers, to get discounts of 50-70%, compared to prices in the USA. Germany, for example, is bargaining with 80 million covered lives. They do not have to buy every anti-depressant on the market. In contrast, Medicare is forbidden by law (because of lobbying by Pharma reps) from bargaining in that same way on behalf of Medicare beneficiaries (and taxpayers). Still, if you want something other than single-payer Canada, then as a recent New York Times essay pointed out, you can have Germany’s 100+ “sickness funds” as a mechanism through which universal coverage is achieved. Employers pay into those sickness funds, but those sickness funds are not “attached” to any particular employer. These funds are very heavily regulated to assure both efficiency and equity across the funds. [See Jamie Daw, “A Better Path to Universal Health Care,” New York Times (Feb. 20, 2019]
It sounds like you prefer to have available high deductible plans. The biggest problem with high deductible plans is that they are very inequitable. The working poor and lower middle class who are motivated to purchase those plans because of lower front-end premiums all too often deny themselves or their family members timely and effective needed medical care because of a $5000 front-end deductible. That is, they make very bad health decisions for themselves or members of their family. Financing mechanisms mechanisms that motivate that sort of health behavior are inherently unjust and inefficient (because they result often enough in the need for high cost hospitalization, which will then be paid by that insurance plan). Government regulated, income-determined financing can yield a fairer and more compassionate and more efficient way to pay for health care without the high deductibles that adversely affect mostly the financially less well off.
Finally, I would argue, that if we do permit a second-tier for financing health care, then the only things included in that tier should be very costly, very marginally beneficial care, such as those targeted cancer therapies for patients with metastatic cancer. Further, purchase of those plans should receive no tax subsidy, i.e., no deduction of any kind. Government should not support with its tax resources access to care that medical experts would judge to yield only marginal benefits for most patients in specific clinical circumstances. Government resources (money raised to pay for health care needs) should only be used to purchase health care that is effective, costworthy, and substantially of proven benefit. That is required by considerations of both justice and efficiency.
Your logic seems to be a little off here, or perhaps I am misunderstanding the case you are trying to present.
“Private insurance companies have very high administrative costs, in part, because they are competing with one another,”
– This flies in the face of all observed economics. As many companies compete with each other, one of the ways they can be more successful than the rest is by cutting wasteful or inefficient costs, the first of which are usually bloated administrator or HR positions that add no or negative value to the company operations and eat up a ton of the budget.
“in part because they have to offer an enormous variety of products to satisfy the expectations of various employers,”
– when there is a demand for a large variety of products that means there is more room for various companies to step and and provide the supply without being a risky move financially. All of these extra niches to fill in the market can even justify bringing on more administrative staff if they are required to seize these markets (although no successful business in the real world outside of monopolies ties up their payroll in administrative costs like you seemed to imply)
“and in part because they have to pay profits to stockholders and meet stockholder expectations in that regard.”
– Yet ANOTHER reason to minimize high administrative costs and cut wastefulness. If one company can’t satisfy the stockholders because they have a bloated costly administrative staff then they will fall to a company that can be efficient and get the job done effectively. The very nature of private companies competing on the free market keeps costs down as they will compete with each other and undercut each others offers and services until the market equilibrium demand price is met with the consumers.
If you allow only 1 organization to run healthcare, the one that has the track record of the most wasteful administrative costs ever recorded in history, and they can set whatever prices they want, there is no need to cut positions or streamline the process. Not only that, but you allow them to be so out of touch with the market that citizens are required to purchase their product regardless of price or quality unless they want to forgo insurance entirely and you argue that this will somehow cut costs?
Citing Canada as an example of administrative efficiency is laughable. The country where people are routinely documented traveling to other countries for healthcare treatment because the healthcare their taxes fund is so inefficient that the wait times are in the years to get an appointment? Sure this is compassionate for the individual who just needs some antibiotics, but for the majority of taxpayers they are paying for a product they will never receive. That isn’t sustainable and Canada’s economy is dropping rapidly that it won’t be able to sustain this inefficient system. Even if they were having prosperous fiscal times it still wouldn’t be an effective system but the buffer would be much larger.
(Back to the US) Instead, imagine abolishing federal health insurance. Now if a company doesn’t offer good coverage at a good price they go out of business and a company who does gets to fill the gap. With the potential market being the entire country there will be plenty of competition and it will be a buyer’s market until the next unforeseen issue occurs. For the very poor, other safety nets still exist and a company can capture the demographic that can only pay $5 a month through that individual’s federal aid. Furthermore low income individuals will still be safe as many hospitals and clinics are legally required to treat someone who comes in regardless of insurance and those laws will likely never be overturned because the public outcry of being “too heartless” will win over financial responsibility every time.
Look at the efficiency of private companies VS government organizations in other areas: private schools boast higher graduation rates, higher GPAs, acceptance to higher tier colleges, significantly less drug use, violence, teen pregnancies, etc. for significantly less cost than public schools. Private construction companies get in, do the job, get paid, and get out, while government construction companies get the luxury of closing down a road or building for months/years impacting the quality of life of the public for a significant time. The examples are endless (The DMV?) and you haven’t even seemed to consider that private organizations have less cost than federal ones.
Additionally, looking at other countries successful systems is not helpful. Other countries do not have our demographics. Our population has a different culture, different lifestyle, different climate, different diet, different preferences, different habits, different genetics, different childhood development, different life goals, etc. Even a single one of these things being different throws the systems completely off, and there are numerous ones that are extremely large. We can not just pick and choose what parts of systems we like similar to a cafeteria style selection, enviously looking at another healthcare system and wanting it for our citizenry is not productive as it ignores the reality of our differences.
Josh,
Let me respond to what I take to be some of your key arguments. First, Canada (and most other companies with a commitment to universal health care), do not have to compete with anyone to “sell” insurance. That is the first reason why their administrative expenses are extremely low, which means a larger proportion of health care dollars are used to deliver health care, not to pay administrative staff. Second, all these companies offer literally dozens of different plans to employers, which means someone must keep track of all those details. Note that not all of the administrative costs fall to these private insurers; much of those costs are offloaded to hospital, physician, and other health professional offices since they have to deal with the complexities of matching what they do for patients with what a particular patient plan covers (or fails to cover). All the research by Himmelstein and Woolhandler documents everything I am saying here. It would be good if you could offer comparable documentation for your more controversial assertions.
Some comments on Canada. They are outstandingly efficient. I am familiar with a lot of the details of their health care system; I suspect you are not. Canada controls, for example, the number of cardiothoracic surgeons that are trained. They also limit the diffusion of expensive new technologies, such as PET scanners or proton beam therapy. This forces physicians to identify the patients who will most likely benefit the most from access to these expensive technologies. By way of contrast, in the US we provide an enormous amount of very expensive, and only marginally beneficial health care to anyone who has the ability to pay for it. Relative to the rest of the world, we have way too many medical specialists and not enough primary care physicians. The result is that we fail too often to meet basic primary care needs (which tend to be inexpensive) and we spend wastefully on high tech marginally beneficial interventions. Note that hospitals do compete with one another for patients. They compete primarily by overinvesting in expensive medical technologies, which then “must” be used inefficiently in order to recoup their investment from insurance companies. This is another costly flaw in our system that is avoided in Canada and virtually all of Europe because they are better able to control the dissemination and use of these technologies.
Your comparison to private schools is very misleading, both as an ethical argument and as an economic argument. Private schools cater to higher income individuals who also tend to be more highly educated and can offer many other educational advantages to their children. Dedicated teachers in our public school system do an amazing job in working with children from culturally and economically deprived circumstances. Segregation by wealth has nothing to recommend it from an ethical or political perspective, given our announced commitment to assuring all our citizens fair equality of opportunity. I would not want to see access to needed, cost-effective, and medically effective health care segregated by wealth either. But that in fact is what we have a lot of today. The virtue of the health care systems in Europe and Canada is that such economic segregation in their health care system is very minimal. We should aspire for the same; we can certainly afford to aspire for the same.
Finally, I do not know what the “differences” are between our country and Canada or any European country. We all have the same range of health problems, the same genetic vulnerabilities to disease, the same range of medical technologies and medical training. We are all liberal, pluralistic, democratic societies, respecters of human rights and civil rights. The difference that is notable is that we spend 18% of our GDP on health care while these other countries are generally spending 11-12% AND they have better overall population health statistics than we do. That suggests they are doing something right and we are doing something not right in managing our health care systems.
Your thoughts echo what I have been saying to friends ever since “Obamacare” became a reality, which is that we will have to replace rationing based on income with rationing based on need. I suspect no government institution is more hated in the UK than NICE (National Institute for Health and Care Excellence), which as you probably know is the body that decides whether the gain to health and wellbeing from a particular intervention is worth the cost to the public purse. Medicare actually already does exactly this sort of assessment when deciding whether to pay for a particular procedure or intervention, (and private insurers in the U.S. have also started to consider whether a new, expensive brand-name drug offers substantial-enough benefits over the cheaper generic to be worth covering) but the greater the percentage of the population who receive “Medicare-for-all,” the more of this sort of evaluation they will need to do if the system isn’t to go bankrupt in its first few years. I think it would be really, really important for progressives to “own” this issue before the reactionaries start talking again about “death panels,” and scare the voters who already have Medicare into voting against expansion en masse.