First of all, Medicare for All is not socialism.
Socialism has been simply defined as "the nationalization of the production of goods and services." Examples of "socialized medicine" include the U.S. Veterans' Administration hospital system, where the federal government owns the hospitals and employs doctors and providers. The United Kingdom is another example of "socialized medicine."
Traditional Medicare is not "socialism," but rather, a model of "social insurance"—intended to protect individuals against economic hazards, such as unemployment, old age, serious illness, injury or disability. As social insurance, Medicare is publicly managed, with each individual paying according to his/her means, e.g., through a progressive tax structure, for universal health care coverage providing access to all necessary care. Also called Single Payer or Public National Health Insurance, proposed Medicare for All is public government-managed health insurance. It is an actuarially sound single large risk pool insurance model intended to cover the entire U.S. population. Government collects and distributes insurance funding for healthcare that is provided predominantly by independently managed hospitals and private practitioners.
Huge Profit-taking & Taxpayer Subsidies to Commercial Health Insurers
By contrast, the U.S. multipayer private health insurance model is milked as a profit-center by numerous segments of the health care economy, including Wall St. investors, media advertisers, private insurers, and the pharmaceutical industry. These recipients of tens of billions of dollars of profits annually promote the U.S. healthcare status quo. In addition to excess profit-taking, the U.S. model of fragmented, dysfunctional multi-payer private insurance invites wasteful high administrative costs. Cutting administrative/overhead costs that absorb an estimated 30 percent of each health care dollar in the U.S., as reported in numerous studies over the past several decades, would alone save $500 billion annually - enough to cover the uninsured and upgrade coverage for the under-insured.
False narratives conveyed by MFA opponents, including Donald Trump's October 3 executive health care order titled "Protecting Medicare from Socialist Destruction," serve as distraction from the privatization of profit and the socialization of risk at the heart of the avaricious private health insurance machine. The insurance industry's siphoning of health care dollars from government coffers is in fact a form of "corporate socialism."
Symbiotic Relationship: Congressional Recipients of Corporate Money Oppose Medicare for All
A search of OpenSecrets.org reveals large contributions to many Congress members from insurance, drug, hospital, and other segments of the health industrial complex that profit hugely from the private health insurance model. Consequently, it is no surprise that congressional priorities commonly place the corporate bottom line before people's health.
The many proposals for a so-called "public option"—"Medicare Buy-In," "Medicare X," "Medicare for All Who Want It"—are "Faux" Medicare plans that maintain at their center the inefficient system of multiple private, fragmented, administratively costly and actuarially unsound small-risk-pool insurance plans with narrow networks that deny full choice of doctors and hospitals. "Faux" Medicare is a gift to private insurers, permitting them to cherry-pick the healthiest, most profitable clients, while rejecting the costlier sickest, who are forced into a "public option."
Only when all—sick and healthy—comprise a single large insurance risk pool, will the insurance be actuarially sound and sustainable, permitting true universal health coverage.
A coalition of health industry groups with vested interests in the current model of profit-taking, in 2019 organized to advance Washington's goal of privatization of traditional Medicare. Forming The Partnership for America's Health Care Future, the group manufactures papers and talking points and invests their combined wealth toward opposing Medicare for All. The Partnership counts among its members the largest heatlh industry lobbies, including The American Hospital Association, the American Medical Association, (subsequently reported to have withdrawn), America's Health Insurance Plans (AHIP), and Big PhRMA.
Washington efforts to privatize Medicare gained momentum with the Medicare Modernization Act of 2003, which promoted tens of billions of dollars in taxpayer-funded subsidies for Medicare Advantage plans, an amount inflated annually ever since. The MMA also gifted the pharmaceutical industry by denying Medicare the right to negotiate bulk drug rates, guaranteeing persistent inflation of U.S. medicine costs.
Advancing the cause of privatization of Medicare, in 2019 368 Congress members signed a letter promoted by the insurance lobbyist group American Health Insurance Plans (AHIP), expressing strong endorsement for Medicare Advantage plans. Even Congress members professing to support Medicare for All, have signed the letter that advocates moving more seniors into Medicare Advantage plans, a step toward the goal of privatization of traditional Medicare.
The Congressional/lobbyist revolving door is testament to big money influence, as many in Congress pocket large contributions from health industry lobbyists, and subsequently transition into positions as highly paid lobbyists upon leaving office. After successfully pushing through the Medicare Modernization Act of 2003, Louisiana representative Billy Tauzin was rewarded as the highly paid president and CEO of PhRMA, the pharmaceutical industry lobby group.
Promotion of "Medicare Advantage for All"
Even as the term "Medicare for All" is coopted by proponents of numerous "faux" plans, it is further corrupted by proposed expansion of private "Medicare Advantage for All" insurance.
Dr. Don McCanne describes how the stage has been set by Washington corporatists to bankrupt traditional Medicare and replace it with private Medicare Advantage-for-All, the perfect vehicle for limited voucher, private defined-contribution plans. To protect profits, private insurers shrink provider networks, limiting access to doctors and hospitals. Greater cost and risk is transferred to the insured in the form of increasing premiums, copays and deductibles, and reduced benefits, moving more into the category of under-insured - unable to afford to use their insurance until they pay off their annual deductible.
Corporatists envision rolling all forms of private insurance into "Medicare Advantage for All," including employer-sponsored plans, those insured through Affordable Care Act Exchanges, and Medicaid, which already consists predominantly of private managed-care plans.
CMS (the Centers for Medicare and Medicaid Services) under the Trump administration, has led the effort to heavily market Medicare Advantage plans, while radically trimming traditional Medicare funding. CMS reportedlyhiked payments to Medicare Advantage insurers by 3.4% in 2019 alone. Thus, Medicare Advantage plans are overpaid with funding re-directed from traditional Medicare, a means to transfer wealth upward, while shifting the risk and burden of health costs to the masses. It is a prescription for decreasing economic stability of the population - the subject of Jacob S. Hacker's book, The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream. The wealthy would be relieved of their moral obligation to pay their fair share of wealth accumulated due to increased national productivity that has been realized on the backs of underpaid workers. McCanne emphasizes that "Medicare Advantage for All would perpetuate the profound administrative waste, inefficiencies, excessive cost-sharing, narrow provider networks, and other inequities of a system" that would continue to be affordable only for the wealthiest.
Excess Profit-Taking by Private Medicare Advantage Insurers
The Center for Public Integrity reports that additional billions of tax dollars are misspent every year on the Medicare Advantage payment tool called a "risk score," originally intended to pay higher rates for sicker patients and less for the healthier. Medicare Advantage payers have commonly manipulated patient risk scores, inflating CMS payments to themselves. The Government Accounting Office reported that the Centers for Medicare and Medicaid Services (CMS) made excess taxpayer payments to Medicare Advantage plans of $3.2 billion to $5.1 billion between 2010 and 2012 due to inflated risk scores. In 2019 Medicare Advantage plans were reported to overcharge CMS by nearly $30 billion over the previous three years alone.
Chronic Care Act of 2018
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At first glance seeming to aid the chronically ill, the proposedChronic Care Act of 2018 became yet another attempt by the Trump administration, with bipartisan support, to funnel more money to private Medicare Advantage plans for non-medical benefits, such as transportation and housing—benefits not afforded to traditional Medicare recipients. Some cite the bill's adding to the debt over$325 billion in just the next two years, on top of the $1.5 trillion increase in debt over 10 years attributed to the Trump administration's 2017 tax cut. The consequent unsustainable increased annual federal deficit, anticipated to exceed $1 trillion a year, will become an excuse to cut programs like Medicare, Medicaid and Social Security. So goes the repetitious Washington pattern of granting large tax cuts for the elite as excuse to then cut programs that benefit the populace.
The Empty Threat of "Losing One's Private Insurance"
Employer-provided coverage and Medicare Advantage plans are two of commercial insurers' largest profit centers. Washington mouthpieces frequently promote both, parroting insurance industry talking points. Sen Michael Bennet has fueled his presidential bid with assertions—made on Meet the Press in February—that 180 million "like their employer-provided coverage" and wouldn't want to give it up, and 20 million Americans on Medicare Advantage "love it."
Both forms of private insurance are unreliable – coverage is lost if the insured lose or change jobs, or if insurers or employers drop their plans. Every year insurers and employers shift more of the cost of care to workers in the form of increased premiums, copays and deductibles, rendering more workers under-insured, with coverage they cannot use due to high out-of-pocket costs before coverage will kick in.
The Commonwealth Fund reports increasing rates of underinsurance—fully 28 percent of U.S. adults with employer-provided coverage joined the ranks of the underinsured in 2018—up from 20 percent four years earlier. A further indicator of instability, 28 percent of those with employer-sponsored health insurance reportedly change plans every 12 months.
Commercial insurers may frequently change provider lists or discontinue plans, leaving patients vulnerable to out-of-network costs. They may also change their drug formularies abruptly, withdrawing access to a prescribed drug; or change rules, increasing out-of-pocket costs, and reducing benefits. Medicare Advantage insurers leave markets if they decide they are not profitable enough. Nor are all Medicare Advantage plans available in every area; a move may result in loss of coverage.
Political right objections to "government bureaucracy" pale in relation to obstruction by private insurance middlemen. Unlike traditional Medicare, Medicare Advantage plans often require "preauthorization" by a corporate representative deciding which doctor-prescribed treatments are "medically necessary." Denial often leaves the insured responsible to pay the entire cost.
The private insurance practice of "Denial Management" often rejects or renigs on health insurance claims, forcing multiple submissions of a single claim. Physicians' administrative costs escalate, as they require large staffs to deal with complexities of multiple insurers' differing paperwork, frequently changing drug formularies, and billing, preauthorization and credentialing requirements. In 2007 The Wall Street Journal (2-14-07) reported that 30 percent of health claims were initially denied, adding $20 billion to annual health costs.
By contrast, Medicare-for-All's pared-down paperwork and single point of billing streamlines claims and payment processes, projected to produce savings of a half-trillion dollars a year.
Among insurers to remove benefit plans at will, United Healthcare - the largest private insurer in the nation - recently terminated their contract with Houston Methodist hospitals and its outpatient facilities, affecting both employer-sponsored plans and Medicare Advantage plans for seniors. Reported the Houston Chronicle, "As many as 100,000 United Healthcare plan members could lose in-network access to all eight Houston Methodist hospitals and dozens of its out-patient facilities on Dec. 31 after the insurer announced it was dropping the major hospital system from its network." United Healthcare also stated it would drop roughly 800 Methodist-employed physicians from its network on April 1, 2020.
Media Reap Windfall Profits from Insurance/Pharma Ads
Corporate media perpetuate the false narrative around Medicare for All as "unaffordable" and "socialism," even as media accumulate huge profits for airing drug and insurance ads, reportedly reaping $5.2 billion for drug advertisements in 2016 alone. The perverse incentive of large cash gains contribute to perpetuation of an incestuous financial arrangement: Corporate media counts among its owners private equity firm investors holding stakes in highly profitable medical and pharmaceutical companies—the same companies that pay huge cash sums to advertise through those very same media outlets.
Furthermore, corporate media frequently invite commentary from a common pool of spokespersons from groups like the Brookings Institute, funded in part by private healthcare groups like Health Corporation of America (HCA) and United Healthcare. CNBC's Trading Nation and Bloomberg have lamented that Medicare for All would inflict "pain" on investors resulting from reduced profits from highly profitable medical and pharmaceutical companies.
Health as a Profit Center: "Free Market" Commodification of Health Care
The profiteering vision of U.S. health care "free market" advocates maintains that as means to "hold down costs" individuals should "shop around" for health care, like shopping for a house or a piece of furniture. Disregarded is the impossibility of shopping at the point of accute illness or injury, e.g., bargaining for care at the door of an emergency room or a surgical theater. Occasions of serious injury or illness require a system that does not exploit the ill for profit in the way that the current U.S. commercial health insurance model invites profiteering by providers, hospitals, drug companies and various middlemen. Stated by one wise observer, "Comparison shopping is unnecessary where everyone needs the same thing—affordable access to high-quality health care."
Raising industry profit-taking to yet another level have been investors in private equity and venture capital firms that have bought and managed many large physician-staffing companies. A business strategy of such investors is to avoid participation in insurance provider networks, so as to permit exhorbitantly high billing for "out-of-network" care. Even patients with comprehensive insurance may find themselves in an out-of-network hospital or emergency facility. Patients treated at an in-network hospital may later discover that they have been treated by an out-of-network anesthesiologist. By one report, these investors' business model drove out-of-network billing rates up by 33 to 90 percent in 2017. Their lobbyists have been dispatched to create a multi-million dollar campaign of TV ads opposing state and congressional bills that would ban surprise medical bills – "balance billing" and out-of-network billing.
Private insurance leaves too many susceptible to financial hardship and medical bankruptcy. Business Columnist Michael Hltzik recently wrote, "Debating whether the number of Americans forced into bankruptcy by medical debt is 500,000 or some other figure is nitpicking, and woefully beside the point." The fact is that the threat of bankruptcy is an "American scandal that can strike anyone," a risk unknown in other countries.
Contrast of Private and Public Health Insurance
Greed blinds corporatists to the inherent failure of U.S. private managed care health insurance to achieve either cost control or universal health coverage. Under the predominantly private health insurance model, health care spending is growing faster than the broader economy, 4.4% higher in 2018 than 2017—a record high of $3.65 trillion—further draining workers' paychecks. Private commercial insurance market costs have continued their upward spiral, with per-person spending increasing 4.5% in 2018, even as enrollment remained flat.
When he studied Sen. Bernie Sanders' Medicare for All bill in 2018, even conservative Mercatus Center researcher Charles Blahous projected a $2 trillion reduction in overall healthcare expenditures for the decade 2022 to 2031, compared to projections of current healthcare spending. The study concluded that under Sanders' plan overall health costs would fo down, and wages would rise. There are tremendous efficiencies possible with Medicare for All. Overhead and administrative costs are much better controlled under the government-run Medicare model, with only 2 percent overhead. Only Medicare for All offers full choice of doctors and hospitals, the ability to negotiate bulk drug and medical equipment rates, as well as annual negotiation of provider rates, while offering a sustainable large risk pool insurance, actuarially sound, that can provide all necessary health care and protection against medical bankruptcy.
Citing private industry's propensity for milking the system to cover only the low-cost healthiest, Dr. McCanne observes, "Only government can ensure that...financial and other barriers to access are removed, that all essential services are covered, and that the system is affordable for each of us through a universal financing system funded through equitable taxes."