On Healthcare, Obama, and "Disappointment"

A number of strong letters came into The Nation in response to my article on Obama, progressives, and healthcare. They will be published in a forthcoming issue, along with my rejoinder. Readers of this blog might be interested in an advanced look.   

In “A Spoonful of Sugar” [Feb. 13] his review of Paul Starr’s book on healthcare reform, Bernard Avishai says that I have been “hammering away” in support of policies insurance plans could use to control costs. Not so. I have never championed such marginal remedies, because I believe the main causes of the US system’s excessive costs are elsewhere—in its commercialized investor-owned organization and in its incentives to maximize income. For-profit private insurers generate huge unnecessary costs, as does the fee-for-service system.

I advocate replacement of private insurers by a public tax-supported single payer, and replacement of fee-for-service by prepaid universal entitlement to comprehensive care in a not-for-profit system. The elimination of billing and collecting avoids excessive overhead costs and prevents the rampant fraud afflicting the present insurance-based system. But it also requires providers to accept global payment, reimburse physicians largely with salaries and support multispecialty groups in which primary care doctors collaborate closely with specialists. Organized care like this outperforms private practice and is expanding.

Avishai and Starr dismiss the possibility of such transformation, but a rapidly growing number of physicians are choosing employment in multispecialty groups, and physicians’ support of major reform is gaining. Furthermore, employees insured at work now realize how badly the system is broken when they must contribute more to their medical costs and receive fewer benefits. They, too, may soon be ready for major change.

The Affordable Care Act took a step toward reform by expanding and improving coverage, but it still relies on private insurance and fee-for-service, and it will therefore not control rising costs. We should not give up on the further reforms so urgently needed.

Arnold S. Relman, MD professor emeritus of medicine and social medicine, Harvard Medical School; former editor, The New England Journal of Medicine

Bernard Avishai’s strident defense of the Patent Protection and Affordable Care Act would have been far more persuasive if he had analyzed the law on its merits rather than treating it as a test of President Obama’s statesmanship. The law has positive features, but its main achievement was to take a health insurance industry which was in danger of pricing itself out of the market and bail it out with $44 billion of our tax dollars—money that could have gone to pay for medical care. In the process, a $12 billion industry’s stranglehold on our healthcare system has tightened.

Something closely resembling the PPACA has been on the books in Massachusetts for six years, thanks to the efforts of a Republican governor and the nation’s leading conservative think-tank. Today nearly everyone in Massachusetts has some kind of health insurance, but a recent study published in the New England Journal of Medicine reveals that there has been no real change in the incidence of people winding up in bankruptcy court because they can’t pay their medical bills. According to the Kaiser Family Foundation, high deductible insurance policies, which were virtually unknown five years ago have become commonplace, a trend likely to intensify once PPACA’s mandatory coverage requirement kicks in in 2014.

I defy Avishai (or Paul Starr, whose book he admiringly reviews) to show up for one of those bankruptcy court hearings and tell some poor fish, who has lost his home or his life savings to pay for a premature baby or a few rounds of chemotherapy his insurance wouldn’t cover, that he should be grateful because “Obamacare was healthcare reform’s best—and last—shot.”

This country is capable of much better, and its people have a right to expect much more. But we won’t get it if we allow temporizing politicians (and their apologists) to write our ticket for us. FDR embraced the reforms of the New Deal because people took to the streets and demanded it of him. We need to do the same for Obama, instead of wasting our time and energy making excuses for him with tortured polemics.

Peter Shapiro
Oregon Single Payer Campaign

Bernard Avishai takes aim at progressive critics of Obama’s healthcare reform bill, portraying them as hopelessly naïve and out of touch with political reality. But intimate acquaintance with medical reality drove the criticism from us and our 18,000 colleagues in Physicians for a National Health Program who advocate single-payer reform. As doctors, we’re too cognizant that the reform will leave 23 million of our patients uninsured and thousands dying each year from lack of coverage; do nothing for our insured patients with coverage so skimpy that serious illness would lead to bankruptcy; strip tens of billions from safety net hospitals; and let medical costs continue to skyrocket, leaving Medicare and public workers’ coverage vulnerable to savage cuts. Whatever its political merits, the bill is a failure in medical terms.

If anything’s naïve, it’s Avishai’s faith in cost savings from generalizing the Mayo Clinic model (Mayo, which shuns uninsured and Medicaid patients—and Medicare at some of its clinics—was dropped from two big insurers’ networks because of its high costs) and from standardized and computerized billing. He seems unaware that computer firms have been promising paperwork savings for forty-six years (see the 1966 video posted at youtube.com/watch?v=t-aiKlIc6uk). Yet the savings haven’t materialized, and there’s not an iota of evidence they will.  He also seems unaware that hospital billing has been standardized and computerized for years (they all use the same ICD coding system, the UB82 billing form). As our studies in The New England Journal of Medicine have shown, single-payer reform could eliminate about $400 billion wasted annually on insurance overhead and billing paperwork; the reforms Avishai lauds will save bupkis.

Obama’s reform, closely patterned on a Heritage Foundation proposal, will deliver billions to insurance and drug firms, and paltry benefit to the American people. Yet Avishai would have progressives hold their tongues. Should we also hold our tongues about the administration’s missteps on civil liberties, education “reform” or the environment?

David U. Himmelstein,
Steffie Woolhandler, M.D., M.P.H.

Bernard Avishai’s review has so many errancies, it’s challenging to begin addressing them here. One recent vignette helps illustrate some of his oversights. An insurance company from Senator Lieberman’s state denied a follow-up scan for a patient on whom I had operated (successfully) for metastatic cancer.

This scan is the “standard of care” noted in national guidelines. The company’s medical director (a physician) eventually approved it, after I fought their insidious, nonmedical bureaucracy. But the insurer only did so after I wrote a two-page heavily footnoted letter, detailing how their “decision” was essentially malpractice.

If only 5 percent of physicians who have appropriate procedures blocked by insurers fail to appeal, those unspent funds become revenue for the insurer. Avishai asks, “Wouldn’t a public plan enjoy critical savings…if it didn’t have to pay dividends to shareholders or engage in marketing?” He then leaves this fundamental question unaddressed. He goes into a lengthy discussion of claims “processing.” He does not address the fact that dividends and profits provide zero “value-added,” for patients. No other industrialized democracy finances healthcare primarily via for-profit corporations. There is no policy reason for us to have this system (or other countries might use it also, no?).

Profit and dividends are the real reason “why healthcare in America eats up almost double what it does in other Western democracies,” to quote his misdirected phrase. He mentions “Switzerland’s mixed, complicated system, also based on private sector insurers” but fails to note that those insurers are nonprofit!

Physician activists for single-payer were arrested when they protested their exclusion from discussions with President Obama and Senator Baucus. The “not-monolithic Democratic Party” didn’t deign to even include this broadly supported position in the conversation, much less in negotiations. This goes unmentioned by Avishai, along with too much else.

William A. Wood, MD
Georgetown Delaware


Bernard Avishai replies:

I did not argue in my review against single-payer. I stated that an Ontario-like system—where the government is the single insurer, the patient pool cannot be cherry-picked, and procedures are performed by multispecialty groups and hospitals on a fixed budget—is best for controlling costs. Paul Starr believes this. So does President Obama, for that matter.  For the record, I introduced Dr. Relman to my colleagues at Harvard Business Review in the early 90s, where he subsequently published a defense of single-payer. Much of the criticism in these letters is misplaced, though the tone of some reveals my real point.

It was: that single-payer had no chance of passing—none—because (as Starr’s history shows) Americans do not live in Ontario; that all major Democratic candidates supposed it was a non-starter during the primaries and Obama knew where his votes were (and weren’t) early in the spring of 2009; that the Act he, Pelosi, and Reed got through the Congress nevertheless does tremendous good, covering 30 million people who would otherwise not be covered; that some of the claims against the Act from progressive voices—e.g., the need for a Medicare-like administration to gain savings from claims processing, or the indispensability of a “public option”—were exaggerated if not wrong; that the intemperance of these claims—specifically, that Obama sold out to insurance companies—played into Tea Party demagogy about his being a feckless captive of Eastern elites who foist their self-serving experiments on, you know, ordinary people; that if Obama is not reelected, it will be owing to the defection of “independents”—presumably such ordinary people who, like those who rallied to the Cambridge police in the Gates case, didn’t need much proof that a Harvard-trained African-American was not to be trusted; that progressives should know enough not to make the great the enemy of the good (that FDR compromised with Jim Crow, for God’s sake, to get Social Security and other good things passed).

Dr. Relman reiterates his support for single-payer insurance—also for what he takes to be its counterpart, salaried doctors, collaborative practice, and “global payment” (i.e., physician groups working from fixed budgets). Fair enough. But to appreciate Obama’s achievement, as Starr painstakingly shows, the dysfunctions of American healthcare need to be further unbundled. For my part, I praised Relman not for his insurance cure, single-payer, but for his diagnosis of the medical industry as a whole, namely, the incentives to game “fee-for-service.” Relman has indeed hammered away at the point (as recently as in The New York Review in 2010) that you can strip insurance profits out of the equation, as with Medicare, and yet the costs, fraud, etc., of fee-for-service would still spiral up.

But, obversely, if all physicians worked in collaborative groups and within global payment, and even if all insurers were private, we would still be substantially better off. Relman does not say this, but he implies it by speaking of a “transformation” through expansion of multispecialty doctor cooperatives. Starr, Atul Gawande, and others anticipate just such gains from physicians working within the Act, buttressed by increasing leverage from Medicare to induce global payment based on best practice. Curiously, Relman dismisses as “marginal” other inferences to be drawn from his diagnosis (e.g., that advances in information technology, wedded to common reporting standards, could at least lower claims-processing costs). He dismisses, that is, my admiration. So be it.

Relman and the other letter writers are shrewd to identify the for-profit insurance industry as a defender of fee-for-service. But, surely, its defenders are not just insurance companies. Relman has argued himself, also shrewdly, that “economic incentives for health care providers, particularly physicians,” is the second side of the patient-provider-insurance triangle. Starr shows that AMA opposition has been at least as important as insurance (and drug) company lobbying in taking single-payer off the Congress’s table at least since Carter. Oh, and then there is the third side, the patients, unions—a majority of voters in the last election, actually—who like their care and don’t want change.

Incidentally, Relman conflates the added costs of “billing and collecting” from multiple providers with the added costs of insurance profit. The latter adds about 4% to every private insurance policy (and a certain stability to our pension funds, but never mind). According to the CBO, complex claims-processing has historically added at least twice that amount; Himmelstein and Woolhandler suggest $400 billion and, unlike Relman, seem not to consider this problem marginal. I claimed (after Dr. Ezekiel Emmanuel) that processing costs could be substantially reduced to levels more like those of processing credit card charges; I added that, ironically, it is the for-profit insurance companies that have the greatest “commercialized” incentive to reduce processing costs, precisely to protect their 4%. Himmelstein and Woolhandler insist that, no, reporting standards are already ubiquitous and that the claims of savings from information technology have been empty for 46 years.  Uwe Reinhardt’s research would contradict their view of standards. If they think information technology has not improved since 1966, they are not, let us say, paying attention.

I don’t know what Peter Shapiro means by the insurance industry “pricing itself out of the market.” Patients do not buy health insurance the way we buy, say, vacations. Nor does the Act require providers and insurers to be for-profit; again, nothing now prevents non-profit multispecialty cooperatives from starting up and growing. I cannot deal fully here with Shapiro’s claim that, based on Massachusetts, medical bankruptcies will be as numerous under the Act as before. I read the report he refers to. The causes of personal bankruptcies are not as clear as Shapiro makes out. Nor does the claim stand the test of common sense, given the new protections against denial of coverage, for portability, and subsidies for people who cannot afford insurance (in Massachusetts, my son and his wife among them, for a while).

Dr. Wood is understandably frustrated writing letters to advocate for his patients. But even not-for-profit health insurance companies, as in Switzerland, or non-profit sick funds as in Israel, have formularies and best practice conventions which may be debatable. I can assure you that Israeli physicians also have to write letters of protest or finesse the system. It is nonsense to say that insurance “profits and dividends” make the US system so expensive. I can’t speak to why specific protesters in favor of single-payer were denied access to a Senate hearing. I can say that elaborate proposals, including the 2003 one in JAMA by Drs. , Himmelstein, Woolhandler, and Marcia Angell have been heard in Democratic Party circles for a generation.

Of course progressives should not be silent about healthcare, education, or anything else. But speaking carries the responsibility of political sense. Shall we also say that Obama’s effort to increase subsidized student loans is a give-away to the private education industry? Ontario has highly subsidized universities, too. Alas, taking to the streets (or writing a book review or letter) is a lot easier than running for office and getting legislation passed. America has a politics that requires Democrats to swim perpetually against the current. The miracle of Obamacare, and the Obama presidency, is that we’ve lived to see them. We could lose them both.