Deep Dive Episode 133 – Medicare for All? A National Single-Payer v. Private Payer Insurance Debate
On September 22, the Federalist Society’s Villanova Student Chapter co-sponsored a debate on Medicare for All with the Villanova Law Health Law Society. In this live podcast, experts debate the pros and cons of a single-payer health insurance system, discuss the practical likelihood of such a system being implemented, and compare the United States’ approach to health insurance to those of other countries.
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
Introduction: Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.
On September 22, The Federalist Society’s Villanova Student Chapter co-sponsored a debate on Medicare for All with Villanova’s Health Law Society. The discussion featured Delphine O’Rourke from Goodwin Proctor LLP, Michael Cannon of Cato, and Ed Weisbart of the Missouri Chapter of the Physicians for a National Health Program. We hope you enjoy it.
Matthew: Thanks, everybody. Thank you so much for joining us today. The Federalist Society is an organization of over 60,000 lawyers, law students, scholars, other individuals, who believe and trust that individual citizens can make the best choices for themselves and society. The Society’s main purpose is to sponsor fair, serious, and open debate about the need to enhance individual freedom and the role of the courts in saying what the law is rather than what they wish it to be. We believe debate is the best way to ensure the legal principles that have not been subject of sufficient attention for the past several decades receive a fair hearing. And I think this debate fits perfectly into that mission.
I’d like to introduce Mr. Michael Cannon. The Washington Post calls Mr. Cannon “an influential health-care wonk” at the libertarian Cato Institute where he is Director of Health Policy Studies. Cannon’s articles have appeared in the Wall Street Journal, the New York Times, SCOTUSblog, JAMA Internal Medicine, Harvard Health Policy Review, and the Yale Journal of Health Policy, Law, and Ethics. Cannon holds a BA in American government from the University of Virginia, an MA in economics, and a JM in law and economics from George Mason University. He is a member of the board of advisors of Harvard Health Policy Review. I’d like to thank all of our speakers today, and I’ll now turn this over to Jolene Calla.
Jolene Calla: Hi. Good morning, everyone. Thank you for inviting me to participate in today’s discussion. It’s a pleasure to be back at back at Villanova. Go, Wildcats! Near and dear to my heart; I did my undergrad there and loved every minute of it, so I really appreciate coming back. I have a lot to cover in just a few minutes, so I apologize in advance for giving you a very high level and cursory overview of the topics that we’re going to talk about today because they are each very complex, and we could spend a lot of time on them.
So I hope to give you enough of a basis to kick us off for the other speakers and to have a lot of good discussion. So the timing of this debate is actually really ideal for two reasons. First is, by all accounts, healthcare has consistently been one of the very top issues for voters as they go to the polls, and we all know that this is a presidential election year. We have two candidates who have very different ideas about what healthcare should look like and how it should evolve, how to get there, so that’s important.
We also know with the recent passing of Justice Ginsburg, there’s a vacancy on the Supreme Court, and that becomes extremely important because the Court is going to hear oral arguments on the fate of the Affordable Care Act on November 10 of this year, exactly one week after the election, and they expect to have a final decision come down in the spring.
So to put that into perspective for the group, nearly a million people in Pennsylvania currently have healthcare coverage as a result of the ACA’s expansion of Medicaid and the availability of premium subsidies on the exchange. So since the Patient Protection and Affordable Care Act, which is the formal name, or the Affordable Care Act, or most commonly referred to now as Obamacare, passed in 2010, there have been several attempts to repeal and replace it by Congress, and they were unsuccessful. However, what could not be done by Congress could now be decided by the Court. So you can see that it is increasingly clear that whoever fills Justice Ginsburg’s seat is monumentally important to the future of healthcare in the United States and many other important matters.
So if the Court were to invalidate Obamacare, it would really have a sweeping impact on the system as a whole and on the lives of tens of millions of Americans. It’s not only for the 20 million people who have coverage through the exchange plans, but also for people like you and I who are probably lucky enough to have commercial plan coverage. And by that, I mean the ACA is what actually allows people to keep children on their plans until age 26.
It provides free preventative healthcare such as mammograms and cholesterol checks and birth control to people. It gives strong protections to anyone with preexisting conditions, which is a huge concern to many people. And it bars insurers from denying coverage or charging higher premiums for people based on their health histories.
So just, again, to give you a little bit of perspective of what this means, according to the Kaiser Family Foundation, nearly 54 million Americans, or 27 percent of non-elderly adults, so those between 21 and 64, have preexisting conditions that would make them uninsurable on the individual market if the ACA does not stand. So that’s a pretty sobering number.
And with that as a backdrop, let’s talk about the healthcare system in the United States. At the very basic level, there’s two kinds of systems. You have a single-payer system of healthcare where a single entity, usually a government, is responsible for collecting the funds and paying for healthcare services for its entire population. So that means that every citizen has access to a defined group of services. And of course, that varies among countries and among the different forms of this that exist. There are several developed countries around the world where there is some variation of a single-payer system that has been working, depending on who you talk to, well or less well. For example, Canada, Germany, Switzerland; those are just a few that would be comparable to the United States.
A multi-payer system, which, of course, is what we have here, by contrast, allows multiple entities such as insurance companies to collect and pay for healthcare services. And unlike most developed nations, the United States does not provide healthcare for every citizen today. That’s a big part of the debate that we are all having right now. Instead, we have more of a patchwork approach where most citizens are covered by some combination of private or commercial insurance, government programs, meaning Medicare or Medicaid, and there are people, a large number, who have no insurance coverage at all.
Again, just trying to give you a little bit of grounding. As of 2017, which we all know is long before the pandemic hit, just to give you some framework of who falls into what category, most health insurance coverage was provided by a group plan tied to an insurer. And those employer-based plans covered about 150 million people in this country. We had about 70 million on Medicaid, 50 million on Medicare, and there were 17 million that got coverage through the ACA insurance marketplace. Now, those are the people who had coverage. In 2017, we also had 28.5 million people who were uninsured, which is about 8.8 percent of the U.S. population, according to census data. So that is just an overall look at where people fell.
In a multi-payer system, we know that the different payers or insurers can and do have significantly different plans, both in terms of what services are covered or offered and what the enrollees or the plan participants are going to pay for those services. So those are two very big questions that we want to ask.
Turning now to Medicare for All, we’re going back to the single-payer system that we’ve all heard a lot about. But what does that really mean? It really depends who you’re talking with. One of the biggest challenges is that there is no single, universally accepted definition of what Medicare for All means right now. So from a real-life perspective, whenever you are talking about this, you want to be sure to ask clarifying questions so that you know exactly what is being put on the table for consideration or what you were debating about. It’s very important to do that. But for today’s purposes, let’s define it as one type of single-payer system that, if passed, would be a tax funded, single-payer health insurance program run by the government that would provide coverage to every citizen in the United States.
So how would it work? Medicare for All would essentially be an expansion of the current Medicaid program, and that is typically geared to Americans age 65 and older. And it’s broken down into various parts. There’s an A, B, C, D, and supplement part, and each part of that provides someone with a different form of coverage. So Medicare Part A and B are what are known as original Medicare. Part A generally covers your hospital insurance, your inpatient care, your home health services, your nursing facility, and your hospice plans. That would be your Part A coverage. Part B are really physician services. Those are things related to preventing, diagnosing, or treating medical conditions. So those are Part A and B.
Medicare Part C is also known as Medicare Advantage, and that covers things under A and B as well as additional services such as dental, vision, hearing, and there are even some plans that include fitness plans and also meal services. So it’s an add-on to the original Medicare.
And finally, we have Medicare Part D, which is the drug coverage. I’m sure you’ve all heard a lot about that in the news. The cost of prescription drugs is a whole other issue, but a significant part of healthcare costs and therefore a central part of the discussion when we look at how to move forward.
And then Medigap; so Medigap is supplemental insurance that really helps to cover some of the costs associated with your Medicare plans because we all know that there are things like copays and deductibles and certain fees that you have to pay to continue being covered in your plan.
So when we talk about Medicare for All, that was a very fast, general rundown of Medicare. What Medicare for All would be doing is it would provide coverage for all individuals, regardless of your age or health status. So it would not be limited to those 65 and over. It would offer original Medicare coverage, which would mean the hospital and doctor services, and it would add things such as preventative care, reproductive, maternity, and pediatric care, which are currently not included in Medicare today for obvious reasons. We don’t have a lot of people over 65 having babies or needing care for small children. And then, finally, it would be focused on prescription drug pricing and offering more choices for how to secure those prescriptions.
Medicare for All would also change the way that services are paid for. So I just mentioned that with original Medicare, you’ve got deductibles and copays and coinsurance and various fees that are necessary in order to keep you enrolled in the Medicare or government-run plan. Under Medicare for All, there would be no monthly premiums or yearly deductibles. You would basically owe nothing at the time of your service. Instead, your healthcare plan could be prepaid through taxes and contributions, or perhaps there would be a certain amount allocated per person for you to spend on care. And there’s various ways that the financing could be done.
So with that, I did a really fast run through of setting the stage for the speakers to come. And with that, I will turn it back over to the Health Law Society.
Stephanie: Thank you so much, Jolene. That was very, very helpful. We’ll turn it over to our moderator, Delphine O’Rourke. And she’s also a professor of ours this semester, so it’s great to hear her. We had her in class this morning, but it’s great to have her moderate this debate today.
Delphine O’Rourke: Thank you, Stephanie. And thank you, Jolene. And for all of our participants, I’ll put a plug in for HAP. Great materials on their website, whether it’s on single payer, multiple payer, or issues that are facing our communities in Pennsylvania. Great source of information.
So, as Stephanie mentioned, I am a partner in the global law firm of Goodwin. And I also have the privilege of teaching healthcare and the law to Villanova law students in their second and third year. I think it is just fantastic and inspiring that the Health Law Society and The Federalist Society even thought of putting on this event, and then the next generation is focused on these issues. So thank you for that. It gives us hope.
So today we have the privilege of having, really, both sides of the spectrum engage in this conversation. And just based on the traffic that’s coming in so far in the chat room, a lot of opinions, a lot of views, a lot of emotion around these topics.
So as Stephanie previously mentioned, Michael Cannon — excuse me. As Matthew previously mentioned, Michael Cannon is with the Cato Institute, and he has, among other things, been referred to as the fiercest critic of Obamacare. So there have been a lot of critics of Obamacare, so to get that accolade we’re expecting some really tough debates on one side of the spectrum, or tough debates and tough arguments. Thank you, Michael, for joining us.
And then on the other end of the spectrum — now, I’m looking, but with Zoom, we’re not necessarily all aligned as far as speakers. So Dr. Weisbart is someplace with us within our Brady Bunch squares. So maybe you could raise you hand, Michael and Dr. Weisbart, so our participants know who you are.
Dr. Weisbart was a practicing physician, a primary care physician for over 20 years with Rush Medical Center in Chicago, and then went to become Chief Medical Officer at Express Scripts, which is a Fortune 500 company — so again, a different perspective — and now is a chair of the Missouri chapter of Physicians for a National Health Program. And he speaks around the country. He’s been writing, thought leadership, on how a single payer would affect patients, citizens, and us as a country.
So you may ask, “Well, we don’t have a single-payer candidate who is going to be on the ballot in November, so why are we presenting this view?” So if you go back to the history of the healthcare debate, it’s fascinating how the same topics kept on coming back over and over again. So you go back to the mid-1800s, and the issue of single payer versus multiple payer was around then. If you look back at the origins of Medicare and Medicaid, same thing. We have been grappling with this issue for years, so this is part of the conversation, and I expect it’ll be part of the conversation, regardless of what happens with the ACA on a moving forward basis.
So we’re going to start with the single-payer model. And as we say in class, we talk about a paradigm, and we talk about a healthcare paradigm in the sense of access to healthcare, delivery of healthcare, and payment for healthcare. And we always have to analyze our issues from the lens of this three-part paradigm. So we’re going to start with cost concerns. Who pays? How are they paying? So if we could start with single payer, how would you support this best new healthcare infrastructure? How would we pay for a single-payer model? Is it through taxes? Is it cost shifting? Is it personal savings versus administrative savings? How would we pay for it?
Ed Weisbart: Well, thanks for the invitation, and thanks for the question. If I could, I’d like to explain why I support this concept of single payer. I used to actually be much more strongly in your camp here on this. I used to actually be, as you can imagine from my background, a very strong fan of the insurance industry. I spent, as you heard, many years in the C-suites. But a number of life experiences have sort of changed my point of view on that. I still believe in the American dream, but I don’t really believe in the American insurance industry.
Let me tell you about one particular experience that made me change that point of view, if I could. I was medical director for a medical group in Chicago. We had a dozen offices scattered around. One of the offices was doing great. It was high patient satisfaction, terrific quality metrics, and was profitable. So it proved to me the idea of a well run group delivering good care and getting good results.
And then we got one patient into the group who had, unknown to him — a year previously, he had acquired hemophilia. Fine. The drug cost of treating him cost a million dollars a year. And the cost of taking care of him for that, for a million dollars, would have bankrupted our group. Our group was really a believer in the model that we’re talking about, the insurance model, and we were at 95 percent capitated and making a profit. And yet, this one person would have bankrupted us.
So as the owner of the P&L for the groups, I was under a business imperative to make him not like us. I was under a business imperative to make him — I was thinking about we should have stopped answering the phone so quickly for him. We could have made him wait longer. We could have delayed his appointments. All of these things to make him scratch his head and go, “You know, this used to be a great place, but I’m not going to keep going there. I’m going to find a new doctor.”
Had I accomplished that — and we didn’t do any of those things. But had I done that, he would have gone to a different medical group, and we would have saved a million dollars a year, which is more than all the savings from doing colonoscopies and mammograms and everything. And that got me thinking, my gosh, there’s something fundamentally wrong with this insurance model because that is the core business model of insurance. It’s to collect the premiums from the healthier people and to try to avoid, actually, a person like my hemophiliac patient.
So the insurance model, of course, is based on what we know as premium collection. And I think Delphine did a nice job of spelling out that what we’re talking about instead is the funding model moves away from that, moves away from that completely, and moves into an equitable tax system.
And the reason I think that that’s appropriate — I’m not a fan of taxes any more than anyone else is, but there are certain things that are public goods that we’ve all sort of decided, hey, this is an appropriate place for taxes. We think it’s appropriate for taxes to pay for the military. That’s a common good. It’s appropriate for taxes to pay for public defense, for sewage collection, for clean water. There’s a list of things for which we have decided as a country, these are the things, the essential benefits that every American should have access to, like the military, like the fire department. And those are the things that should be publicly funded.
To then decide, well, how exactly do you publicly fund it? What should the tax model be? I’m a doctor. I’m not an economist. I know that some of you could be more granular on that. But the whole point of how you would fund it is to pull the economics away, turn it into a publicly funded piece, and then that actually releases the market for the delivery side.
Today, I am competing against other doctors for the most lucrative insurance contracts I can get. So if you have a system with many insurance companies, some will offer more, some will offer less. And the market today drives doctors to compete against doctors for the highest insurance contract reimbursements rather than for patient care. So the point is, pull that piece of it away, have it be a public good, but have me compete against other physicians to make you want to come see me, to give you the kind of service and quality care. So the shorter answer to your question, how would I fund it, is publicly.
Delphine O’Rourke: Okay. So Michael, we’re going to turn to you. And so Dr. Weisbart mentioned public goods. So we also have the right versus privilege conversation. So taking from privilege perspective, from your perspective, could you share with us why you support private payer, and also how you would fund it?
Michael Cannon: So I just wanted to thank The Federalist Society and Villanova Law School, the Villanova Health Law Society, I want to thank Delphine, I want to thank Dr. Weisbart, for making this happen and giving me this opportunity to have this discussion. And thank all of you for joining us. I want to say to all the Villanova students, I’ve got a friend named Catherine Scotto (sp) who’s just begun her freshman year a Villanova. So if you see her, I want you to be very nice to her.
To get to the substance, Delphine, of what you’re talking about, I want to make something clear. The debate over health policy is not a debate over whether people want to expand access to healthcare and improve the quality of healthcare. Everybody wants that. I want that. I’m very passionate about that. I’ve been doing that, this work, for 20 years or more. And I definitely don’t think healthcare should be a privilege, which is sort of a “Do you still beat your wife?” sort of framing of the question. But what the issue here is that people disagree about the best way to provide healthcare to the sick, and particularly to the most vulnerable people in society, low income people.
And so if you want to talk about healthcare rights, I think that — I do believe that we have healthcare rights. I think that rather than protect our healthcare rights, Medicare for All takes our healthcare rights away. On top of that, even though there’s a very appealing argument, a pitch for Medicare for All that it makes healthcare a right, it gets everyone covered, you pay for nothing out of pocket, overall costs are going to be lower, and every other country does it, a lot of that is not true.
But I want to make three points. One is that you do have healthcare rights, and Medicare for All does not protect them. It takes them away. The second is that no country, contrary to the standard pro-Medicare for All narrative, no country has ever attempted anything on the scale of Medicare for All, at least in the sense of the proposal that Bernie Sanders and his colleagues in Congress have pushed forward and offered as legislation. And third, even though there might be some benefits to Medicare for All, there’s some pretty serious tradeoffs as well that Medicare for All proponents don’t really discuss and that turn the public against this idea once they learn about it.
So on healthcare rights, the first healthcare right that you have is the right to make your own healthcare decisions. Medicare for All doesn’t preserve that right. It takes that away. The first way it takes that away is by taking away your earnings. The way we’re going to pay for Medicare for All, if we get it in this country, is with taxes, much higher taxes.
There is a study by a former Medicare trustee named Charles Blahous. He estimated that even if you believe what Medicare for All proponents say about how Medicare can get the prices down far below what private insurance companies pay for all sorts of care, even if you take that assumption as given and as — there are a lot of reasons I could discuss about why that is not going to happen. But even then, the federal government would have to double federal taxes in order to pay for Medicare for All program.
Doubling your taxes and taking away your earnings leaves you with less control over your healthcare decisions, not more control because if someone wants to take that coverage for what you want away, if someone wants to pay the doctor so much that it creates shortages, you can’t go someplace else because the government has taken your earnings from you.
And another way it takes away your healthcare rights is not just by taking away your money but by taking away your choices. The Bernie Sanders bill would prohibit private health insurance. I prefer the Obama conception of right to healthcare. If you remember when he was arguing for the Affordable Care Act, President Obama went around the country saying, “If you like your health plan, you can keep it. I you like your health plan, you can keep it.”
It turns out that wasn’t true. A lot of people lost their health plans under Obamacare. But he was saying that because he was appealing to what we all understand is a fundamental right that we have to choose our healthcare providers or our health insurance companies. President Obama even called that a right. I prefer that conception of healthcare rights.
Medicare for All would take that right away. And this is not a trifling sort of right. The Supreme Court of Canada, back in 2004, I think it was, issued a ruling that said that that country’s ban on private health insurance amounted to a human rights violation because at the same time the Medicare system in Canada was denying access to care via waiting lists, it was prohibiting people from buying insurance that would provide them quicker access to care. And so these are very important healthcare rights. Medicare for All would take them away.
I’ve got more to say about the other two points, but maybe those will come up in the questions that Delphine is asking. Now it’s your turn to unmute.
Delphine O’Rourke: Now it’s my turn to not be on mute. So the questions — I would say the chatroom is exploding with comments. So lots of opinions that we started out saying. These are hot topics and passionate topics that impact us as the most basic levels. And Stephanie and Sarah are keeping track of some of the questions so that we can circle back on them because I can’t. They’re coming in fast and furious. So thank you for that.
Health disparities, as you both touched on to a greater or lesser extent, are an issue that we are intimately aware of. And with the social issues that have come to light, or more so over the past several months, social determinants of health are really coming to the forefront. And many of us who are already in the healthcare space knew about the social determinants of health, but now it’s becoming a conversation that is more widespread.
So Dr. Weisbart, what are your thoughts on how could the single-payer program address the social determinants of health, including disability, gender, race, socioeconomic status, in a way that would be preferable over the current state or over the proposal that Michael is advocating for?
Ed Weisbart: Thanks. This is a huge issue. The current state actually is designed to create these disparities. It’s not an accident. It’s designed to do it this way. But we know, for example, that American life expectancies are three or four years shorter than they are in the rest of the world. I would argue that one of the main reasons for that is because of the disparities that we have.
So we have this fractured system where we know that the racial differences make you entitled to different kinds of insurance. The insurance mix among black Americans is profoundly different than the insurance mix for the population of white Americans. And what we see is that there are periods — there are places in our culture where that disappears. So when we turn 65, of course, we all pretty much go onto Medicare and it disappears.
But it disappears in other places. So if you have — we’ve decided as a country that if your kidneys stop functioning, if you have advanced stage renal disease and you need dialysis, we’ve decided that everybody in the country — in the 1980s we made that decision — goes onto Medicare. So blacks and whites go onto Medicare when they go onto dialysis.
Now, we know blacks live shorter lives than white Americans do, but interestingly, on dialysis, and therefore, on Medicare, age and disease adjusted, blacks live longer on dialysis than do whites. We know the same thing happens in the VA where pretty much veterans are veterans. And I’ve not heard much saying that the VA treats the races very much differently. And veterans, age and disease matched, live longer than do white Americans in the VA.
So we’ve got a wealth of data showing that when you actually normalize the insurance around the country, in these pockets where that’s happened naturally, that this racial disparity in life expectancy disappears. And we also know that something around the order of 86 percent of the reasons that blacks die younger than whites is for diseases — things that are medically treatable or preventable. So there’s a huge reason — there’s a whole body of evidence to believe that — we’re not going to end racism by dealing with Medicare for All, but we will mitigate one of the most important impacts of it.
And then if you look at rural disparities, we have rural communities that are just swaths without doctors anywhere near them, where patients often have to drive 100 miles to get to them. I talked to medical students and residents and asked them, “Well, why don’t you go practice out there?” And part of the reason is because rural communities are so less insured, generally.
So imagine this. Imaging a doctor graduating from his or her residency program deciding where to practice. They could go into a very densely physician-ed practice in the middle of an urban setting and have to compete and take five years to build a practice, or overnight — pass Medicare for All and overnight, the entire country has the same robust health insurance.
So if I were graduating from my residency program at that point, I could decide should I go practice in this urban setting that’s going to take me five years to build a practice, or overnight, if I go into a rural setting, overnight, I’ve got a business greenfield where I bet I would be swamped. So if you want to deal with the urban/rural disparities in healthcare, one of the best ways to do that is with Medicare for All. I could go keep going on, but I’ll stop there.
Delphine O’Rourke: Mike, what are your thoughts on that, including a question from the audience. Why are outcomes of health of people so much better in nations that have universal healthcare? Do you see as part of that answer — could you respond to that question as well, Michael?
Michael Cannon: Sure, absolutely. I’m not a huge fan of the Medicare program because, as I mentioned before, or meant to mention in the trade-offs part, the point that I was making is that Medicare actually reduces the quality of care and does that for everyone.
Now, there are exceptions. I think one of the best things that Medicare ever did is that it ended discrimination against blacks in southern hospitals. When the Medicare program was enacted, Congress said, “Look, if you hospitals want this money that we’re offering you, you have to desegregate.” And so I think that may be the most significant and important thing that the Medicare program did.
But if you believe that systemic racism or structural racism is a problem in the United States, in government, then you have to acknowledge that that might be a problem in the Medicare program. If the government is going to be running everyone’s healthcare, then whatever problems are present in society are going to show up in that program.
But even worse than that is that, as I mentioned before, the Medicare program actually reduces the quality of care, not just for minority groups but for everyone. And it’s not just Michael Cannon of the Cato Institute saying so. If you look at the reports that the Medicare Payment Advisory Commission puts out — and this is a group that is part of the legislative branch of the federal government. Congress chartered it in order to advise them on how to run the Medicare program.
And they said in 2004 Medicare’s payment systems — if you look at the reports, they’re replete with evidence that Medicare is reducing the quality of care with the incentives that it creates. Medicare’s payment systems are largely neutral and negative toward quality. There are few incentives for delivering high quality care. Medicare also pays more when there is a serious illness or injury occurs or recurs while patients are under assisted care. That was in 2004.
You might think, “Oh, well, there have been improvements since then because we passed the Affordable Care Act. There are some changes in that.” In 2018, the Medicare Payment Advisory Commission said that they have a long-standing concern that primary care is underpriced by Medicare compared with other services such as procedures and that the fee-for-service schedule that Medicare uses, and this is another quote, “with its orientation toward discrete services that have a definite beginning and end is not well designed to support primary care.” What’s interesting about this to me is —
Delphine O’Rourke: — Michael, you broke up on that last comment when you started with fee-for-service. Can you repeat that last point?
Michael Cannon: Sure. The way Medicare pays for primary care on a fee-for-service basis, MedPAC said, is not well structured to support quality primary care. What’s interesting about this to me is not just that Medicare made a mistake, but that Medicare has been making this mistake for 50 years. And it’s just taking the folks who run Medicare — they’re just now becoming aware of these programs.
They say on the one case, they have a long-standing concern that they’re getting the prices wrong and they’re encouraging specialist care and discouraging primary care, including in rural areas, because Medicare pays so little. And on the other hand, they’re just noticing that the way they pay for primary care does not promote quality and is holding down the quality of care.
Those are the sorts of concerns — and there are lots of other examples we could point to. Those are the sorts of trade-offs that occur with instead of having payers compete to provide patients the lowest cost access to high quality care, you have a single-payer system that tries to make these very complex determinations and decisions for an entire country and holds down the quality of care rather than create a dynamic system that consistently improves the quality of care for everyone.
Ed Weisbart: I think it’s fascinating that you would say that because the reason that I support single payer is because it provides better care to more people for less money. And we can talk about some of the nuances that you’re trying to bring up, but if you look at the big picture, I alluded to the fact that when you give — when the African Americans are in Medicare, they survive better than whites do. And just look at the whole population. We have, as I said, shorter life expectancies compared to the rest of the world.
But the Institute of Medicine did an analysis where they looked at our mortality rates by age, and they found that when we turn 65, this discrepancy in our life expectancies begins to disappear. So if you compare us to 17 peer nations, before 65, we consistently have the worst life expectancies and the highest mortality rates. But we turn 65 — it’s remarkable. Country by country, year by year, we become the best so that our most seniors actually have the best remaining life expectancy and the best remaining quality of life.
So putting people into the Medicare program or letting people join the Medicare program actually — there’s been large scale population data that that’s the best way, the best thing our country has ever done to improve the health of our nation.
Michael Cannon: So this is actually something that health economists debate quite a lot. And the retort to those claims is that it’s really hard to find evidence that establishes causation rather than correlation between improved health outcomes and the enrollment in insurance or enrollment in the Medicare program. There are also studies that show that a lot of what we spend on healthcare in the United States, including in the Medicare program, does not appear to improve life expectancy.
There is a study by one of the top health economists in the country, Amy Finkelstein. She looked at Medicare or mortality among seniors in the ten years after Medicare first became law and at a time when life expectancy was about 65 years old. And she was able to find no evidence that Medicare improved length of life for Medicare enrollees. So this is a hotly debated topic in health policy.
And another one of the reasons why — and this is part of Delphine’s question that I didn’t answer, but thank you, Ed, for brining it up again — is international comparisons of life expectancy. There are lots of things that confound those comparisons. There’s a lot of factors that influence health aside from the nation’s health system or medical system. And those can be driving a lot of the differences that we see in life expectancy across nations.
But there’s one in particular, one confounding factor that really makes those comparisons problematic, and that is this. I have as many or more criticisms of the U.S. healthcare sector than anybody. I would never advise a country to design their healthcare sector the way we have in the United States. We would agree on probably most of the pathologies; high prices, lots of low quality care, inaccessible care, and so forth.
But the one area where the United States healthcare sector shines, and I mean outperforms every other country, and by some measures, all other countries combined, it’s on medical innovation. We come up with more new cures, treatments, tests, procedures, and so forth, than any other country in the world. I think the paradigmatic example would be Sovaldi, which is like a 95 to 97 percent cure for hepatitis C.
But when we come up with those innovations, they don’t just stay here in the United States. They go all around the world, and they improve health outcomes and they lengthen lives all around the world. What’s interesting about it, especially about the comparison that say we spend more on healthcare but other countries live longer than we do is that in that comparison, the United States gets dinged, it looks worse because it put in the investment to develop Sovaldi and all these other cures, whereas the other countries look better because they adopted these innovations that came from the United States and which are improving health outcomes in those other countries.
I think unless you can also control for that factor, you can’t really say that — you can’t really get a bead on the performance of each nation’s health systems because you really do have to account for that fact that when it comes to these innovations, the United States health sector is making healthcare more universal all around the world, including in all of those countries who have longer life expectancies that the United States.
Ed Weisbart: Interesting. Sovaldi was the outgrowth of a really robust campaign on the parts of the federal government, the National Institutes of Health, when it was recognized decades ago that hepatitis C was one of the reasons that HIV patients were getting coinfected and dying. So they funded — our government, our public dollars, funded research to identify the weakest part of hepatitis C and develop a treatment for it. So the foundational pivotal research that you’re describing was publicly funded, very broadly.
And then based on that one part of that was — I think it was a group at the VA who actually did the research that found the link that Sovaldi could attack, and then that was spun off into a private model where it was transformed into a drug at enormous profits. So they reaped the benefits of — I don’t know how much, but a fortune that the U.S. government spent on the research developing of that. Then we privatized it and let them make a profit without having to bear the cost of producing that profit. So my point is that we should own the things that we’ve produced. We’re paying through the tooth for it.
Michael Cannon: I think all of that is correct to the best of my knowledge. But the question remains, which country that didn’t develop Sovaldi should the United States emulate, and how would you make that pitch to the hepatitis C patients who would die or patients of other diseases who would die without those innovations?
Ed Weisbart: So it’s true that we get a lot of innovation in the United States, of course, and that we are one of the leaders in it. But there’s two things to think about that. The first is if you prorate that for the number of people we have in the United States, the number of medical researchers and the dollars that we spend on medical research in the United States is roughly middle of the pack for countries if you normalized it for our population and our economy. So because of our size, we do produce a lot, and it’s something to be very proud of.
I forgot my other point that I was going to make. I’m sorry.
Delphine O’Rourke: Well, let’s shift, then —
Michael Cannon: — Well, one place where we can agree is I think that a lot of the innovation happens here because the drug companies and others can charge such outrageously high prices for these drugs here in the United States. But the reason they can do that — I think we might disagree on that. Part of the reason they can do that is because the government allows them to do it. And this is a flaw in the plan and the pitch for Medicare for All.
Medicare overpays all the time for all sorts of things, including prescription drugs. Every time we hear that Medicare Part D should be able to negotiate with drug companies is an admission by Medicare, supporters of Medicare, for all supporters that Medicare is overpaying for these drugs right now. That happens in drugs. It happens in procedures. Medicare overpays for things all the time. It’s not that the federal government doesn’t negotiate with drug companies. It does negotiate with drug companies, and the taxpayers lose because the drug companies have so much influence over these programs.
And if you want to get those programs — and there are other ways that even Medicaid drives not just the prices for drugs. And if you want to get those prices down, you have to get the government out of the business of purchasing these drugs because that combines a whole army of lobbyists who will lobby to increase the prices the government pays with a population of people who are totally anesthetized to the cost of these drugs, so they don’t care about the patients, I should say. They don’t care about the prices of these drugs that the government is paying, so they’re more than willing to go along with these lobbying campaigns by pharma.
Until you get these decisions out of the government’s hands, I think we’re still going to see — we’re going to continue to see these outrageously high prices. And the government even has a hand in increasing the prices that private payers pay, private insurance companies pay, through several mechanisms.
Delphine O’Rourke: Okay, we want to wrap this up so we can get to our audience questions. So one final point while our students compile — there’s so many questions, which is great, that they’re going through the comments and questions to identify those that we’ll be able to address.
We can all agree, hopefully, that we’re in the middle of a pandemic, a health pandemic that has caused the deaths of hundreds of thousands of Americans and people around the world. How will COVID impact or how would a — Ed, we’ll start with you — how would a single-payer plan respond and be a preferential model in a time of COVID? A lot of these debates, obviously, were occurring pre-COVID. Now we’ve seen the impact of a pandemic on our existing system. How would a one-payer model be a preferential option now that we know this risk?
Ed Weisbart: I think this is a hugely important question, and thank you for asking it. First off, we have to realize that national health insurance or any health insurance model doesn’t make a pandemic go away. The pandemic is around the world, obviously. But what national health insurance does do it what we — by not having that, in addition to the pandemic, we have an epidemic in the United States of medical bankruptcy.
So while a national health insurance doesn’t solve the problems in Italy or in any other country you pick, nobody in Italy is worried, as desperately sick as they are, and on top of that, they don’t have to worry that they’re going to go bankrupt. Instead, what we’re learning is that they’ve figured out that they’re in it all together. One of the most important things about Medicare for All is the idea of — financially, is shifting hospitals from the model that they’re under today into having a global budget, a global budget that’s annually negotiated.
And the reason that that’s so relevant to a pandemic is because under today’s model, hospitals are forced, business imperative, to chase after those procedures that are the most lucrative. So they’re forced to go after that. Those are typically the high end optional sort of procedures, so a lot of orthopedic and cardiovascular surgery and things, not all of which is optional. I don’t mean to be implying that. But hospitals today are building more and more of those kinds of units, and they’re dependent on that.
And so under a pandemic, what we’ve seen around the country is that hospitals are facing what some have called seismic economic shifts because the industry has taught them to chase these lucrative procedures, whereas under the Medicare for All single-payer model that we’re proposing, hospitals wouldn’t be doing that. They would be on a global, negotiated, annual budget where they would be — instead of being impelled to go after lucrative procedures, their business interests would be improving the community’s health. The healthier they can make their community, the less expensive it is to operate under any circumstance, and certainly under a pandemic. So that’s the most important way, I think.
Delphine O’Rourke: Okay. Three minutes for a response.
Michael Cannon: Okay. I mentioned before that the Medicare Payment Advisory Commission said that Medicare effectively rewards medical errors. It pays hospitals more if there is an error. It should pay them less and penalize them that way. But instead, Medicare penalizes efforts to reduce medical errors. So this bankruptcy point is really — I find this unpersuasive because the ethos of Medicare for All is essentially, “Yeah, you may die of a medical error, but at least you won’t go bankrupt doing it.”
Also, the Medicare for All bill that Bernie Sanders proposed is not capitation. He’s proposing expanding featured services, preserves those perverse incentives. And you might want to have a VHA, a veteran’s health system for all, and there would be plusses and minuses to that as well. But that’s not really what’s on the table right now. And I don’t think that’s going to happen, either.
Even if you got a Medicare for All bill and promised that down the line, we’d fix the delivery system and make care more integrated, that’s not going to happen. The first President ever to ask Congress to give Medicare the authority to change the way it pays for care so that it could integrate care, it could eliminate that incentive you mentioned to chase the highest margin procedures was the same President who signed Medicare into law. Lyndon Johnson asked Congress to give the authority to do that, to implement something like the sort of system you’re envisioning.
And for 55 years, Congress has said, “No, we’re not going to do that.” And the reason is every effort to reduce Medicare prices or improve the quality of Medicare services represents a threat to the incomes, the revenue streams of high cost and low quality providers. When you create a Medicare for All program, you’re — oh, and every one of those low quality, high cost providers has a lobbyist. When you give Medicare the power to decide what kind of healthcare we’re going to get, what prices we’re going to pay, how the providers are going to get paid, those providers then capture that power and use that power to preserve their own revenues.
And that’s why even just a few years ago MedPAC again said to Congress, “We’d really like you to give the Medicare program more authority to implement some changes.” Fifty years later, almost sixty years later, we’re still begging for this sort — advocates of this sort of delivery reform that we’re talking about are still begging Congress for the authority to do that.
And it’s just — I think Einstein said, “The definition of insanity is doing the same thing over and over again and hoping for a different result.” Markets develop the sort of system that you want. Kaiser Permanente is an integrated, prepaid delivery system. It’s like a private sector VA. But instead of allowing that model to flourish, what giving so much power to government has done has restricted that model to the point where there’s only one in the United States right now.
Delphine O’Rourke: Michael, I’m going to just turn now, because this is — we could go on for a while on this topic, so much to discuss. So from a student, we’re going to turn to our first question from a Villanova law student, which is appropriate here. Could the debaters answer how they feel is the best way to address the main issue in health economics? There are three things people in countries want: high availability; low cost, both in terms of personal costs and costs to the nation; high quality. But it is essentially impossible to get all three. So who wants to take that one first? Dr. Weisbart? Michael?
Ed Weisbart: Sure.
Delphine O’Rourke: Okay. Go ahead, please.
Ed Weisbart: I would argue that that’s actually precisely the reason. Those three things are aligned. Today, they are in competition. Today, if — in my life when I was working within the insurance industry, if I wanted to put in a program to improve quality health, when I would put in a program that would reduce admissions to coronary care units, when I wanted to put in a program to increase compliance with statin medications, they all had to have a business turnaround within 18 months to 2 years because the fragmented insurance industry knows that their turnover is 20 to 25 percent a year. People change jobs, you’ll change insurance. Even in a competitive insurance industry, people will be changing from insurance to insurance. So an insurance company today that does a campaign to actually improve public health would be perversely punished because they would be helping the price of their competition.
Medicare for All, that’s the exact opposite. It’s the core reason that I like Medicare for All is that it creates, frankly, a business case, a business imperative for improving the health of the population. That’s why people live longer when they get onto Medicare. That’s why all of these things are better, not worse.
Access, well, of course. I just talked about the greenfield where physicians would go to practice, and you would no longer have the financial barriers to getting into care. So access cost — Medicare has been phenomenally better, despite Michael’s theoretical arguments. The year over year trend for the last 10 years, Medicare has had a 21 percent increase in per enrollee cost over the last 10 years, whereas the commercial insurance industry had had a 53 percent. So Medicare may not be perfect, and I’m certainly not here to argue that it is. But Medicare had done a phenomenally better job at controlling cost, improving access, and improving quality.
Delphine O’Rourke: Okay. Michael, to you now, please, for your rebuttal.
Michael Cannon: What the questioner asked about healthcare applies everywhere. Do we want it to cost less? Do we want higher quality? Do we want broader access? We could make the same point about food, about clothing, about shelter, about all sorts of things. The question is, really, do you — where do you think the ideas that are going to make things more affordable and higher quality, make access to care more secure, where are those ideas going to come from? Are they going to come from the system that gave us the current President, the system that where they’re currently — the debate they’re having over the next appointment to the Supreme Court? The political system is not exactly a paragon of either rectitude or innovation.
But if we’re going to be comparing the private market system to the political system, we also have to be clear about what we’re comparing. Ed mentioned that in the private sector, you have to show a business’s case for an innovation within 18 months, some change in insurance because insurers cannot recapture the investment in these sorts of changes over a longer time horizon because people change jobs and they cycle in and out of insurance plans.
That is a result of giving to government — that’s not a function of markets and consumer choice. That’s a function of giving to the political system the sort of power that Medicare for All supporters want to give the political system. We don’t have an employer-based healthcare system because people chose that. We have an employer-based health insurance system because the federal government said, “Either you enroll in a health plan through your employer, let your employer control $15,000 of your compensation, or we’ll tax about a third of it away from you,” which is pretty much an individual mandate that we’ve had for 70 years.
And that is why we have an employer-based system where — and then think about the madness of this system. You have a system where the government is penalizing you unless you buy a type of insurance that disappears once you get sick and can’t work anymore, and advocates are giving the government that confronted you with that choice, say, “Well, that proves that markets don’t work.” This is not a function of markets versus government.
So if you look at the only reasonably free market thing we had in health insurance in the United States, which was the much maligned and unfairly maligned individual market where you buy insurance directly from an insurance company. What studies have shown is that that type of insurance was more secure for people with high cost conditions. You were less likely to lose that type of insurance if you had a high cost condition than if you had insurance through the type of plan that the government coerced you into, was backing with what you could call a text preference if you want, but it’s really effectively a mandate.
The market was beating government and making access to healthcare more secure. And so I just don’t think it’s valid to say that the system that we have in the United States right now shows that government is somehow superior when government has been pouring gasoline on the problem of preexisting conditions by stripping people of their health insurance after they get sick.
Ed Weisbart: Could I make one more comment on that, Delphine?
Delphine O’Rourke: Sure.
Ed Weisbart: So I think Uwe Reinhardt, whom we lost not too long ago, made a good analysis of what you’re describing. And he analyzed how you would create — what the impact of a competitive insurance market is. And he said just let people buy their insurance, and of course, they will make their own choices. They’ll probably look for the least expensive that they think meets their needs.
So he said here’s the four steps to purchasing your insurance product on the free market like you’re describing. Number one, decide what diseases you and your family are going to have in the coming year. Step number two, identify the best physicians and hospitals for those diseases. Step number three, find the insurance product that covers those diseases. And step number four, if there isn’t such an insurance product, go back to step number one and pick some new diseases.
So the idea of having this fragmented thing on the marketplace that people can shop around and buy the one that they want and then they’re fine until they get a disease that doesn’t include — for which the treatment isn’t at a hospital that’s covered by that insurance product. And we’ve already talked about that hemophiliac patient of mine. They’re under pressure to make that problem worse, whereas we know something’s going to happen to all of us. Nobody gets out of here alive. We’re all going to have something happen. Ultimately, we’re all going to need robust health insurance at some point in our life. And the best way to do that is to pool the risk and have it be a real insurance product that pools the risk for all of us.
Delphine O’Rourke: Okay, so building on —
Michael Cannon: — I have to respond.
Delphine O’Rourke: Michael, you’ll have a chance to respond —
Michael Cannon: — He invoked Uwe Reinhardt. I have to respond because Uwe Reinhardt did not support single-payer in the United States.
Delphine O’Rourke: Michael, this question from the audience addresses that, so hold on a second.
Ed Weisbart: I didn’t say he did.
Delphine O’Rourke: It says, “Mr. Cannon,” — this is from Dr. Donald Green — “as an advocate of a free market, can you describe how health insurance subscribers can know how a policy fits their needs, ensuring comprehensive care?” So similar to Ed’s point, and we’re also incorporating audience questions. So take it from there, please.
Michael Cannon: Sure. So I have slide — screen sharing is disabled, but I have a slide up on my screen right now with a quote from Uwe Reinhardt where he said, “I have not advocated that single-payer model here,” — he means in the United States — “because our government is too corrupt.” And by that, he means that the Medicare program overpays in all sorts of ways because of the influence of the pharmaceutical industry and other providers. And that is why healthcare is so expensive, even in the Medicare program, excessively expensive here.
So the question, Delphine, was how would — was it as broad as I’m remembering it? How would a market work for health insurance?
Delphine O’Rourke: No. Basically, it’s going to Ed’s question of how do you know? How do you pick and know which insurance product is going to be best for you? So how do you beat free market?
Michael Cannon: I also knew Uwe Reinhardt, and I know he was being cute when he said that you should predict in advance what kind of diseases you’re going to have over the coming year because he knows that that’s why insurance exists because you cannot predict these things. And that’s why you buy insurance.
And what should be in the package of benefits that you purchase is — no one knows what the right amount is, but if you do what the Affordable Care Act did and you require people to buy all sorts of coverage that they may not want, or they may even find morally objectionable, we’ve seen what that does to access to care. The premiums for ACA plans are through the roof. And unless the government subsidizes them, you cannot afford them. A much better approach is going to be if you let people make their own — if we respect their right to healthcare and let them make their own decisions about how to pool their healthcare resources, then we will get a much better match of health insurance to people’s needs. Health insurance will be much more affordable. We will broaden access to insurance and access to care.
And I’m not going to say that no one will ever make a decision — or no one will ever make a bad decision in insurance markets. I will never say that insurance companies will never breach their contracts and try to deny to people promised benefits. Those things do happen. But they would happen much less often in a healthcare sector where the feedback loops are much tighter so that insurance companies that gain a reputation for doing that get run out of business because they can’t sign up any new enrollees, and where the insurers very jealously guard their reputations by making sure they adhere to their commitments, and we have new innovations that force them to do so.
We have seen so little innovation in the health insurance market because of government regulation, but what we have seen has been remarkable. It lets in the results that I mentioned before about markets beating the government’s horse, employer sponsored insurance, and making access to care more secure for people with high cost conditions. And even as Congress is debating the Affordable Care Act, trying to solve this problem of preexisting conditions, markets were trying to solve that in a much less expensive way.
Insurance companies had developed products that said to the people, “Look, if you lose your employer sponsored insurance after you get sick, we will cover you. We will provide you with secure coverage so that you don’t end up in this situation that the ACA is trying to solve where the government required you to buy a type of insurance that disappeared after you got sick. And then all of a sudden, you lose your job and you have an uninsurable preexisting condition, and it’s somehow the market’s fault. Markets — insurance companies are developing an innovation that did that, but Obamacare destroyed that innovation.
Delphine O’Rourke: So on that point, since you’re the fiercest advocate of Obamacare — or fiercest critic of Obamacare — that’s bringing it full circle. Freudian slip, there. And I want to thank both of our debaters for bringing their perspectives, and being mindful of everyone’s time, and also that we have students on the call who have to go back to class and learn to be the future leaders of this country and do a better job than we’ve done.
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Director of Health Policy Studies
Goodwin Procter LLP
Missouri Chapter, Physicians for a National Health Program
Federalist Society’s Villanova Student Chapter
Villanova Health Law Society