THE GREAT HEALTHCARE DEBATE
By: Dr. Victor M. Sternberg
July 16, 2019
As many of you know I have had a radio talk show on WVOX out of New Rochelle for about 4 years. The show's title was Politics and Your Healthcare. During that time I acquired a great deal of knowledge during preparation for the show that I would like to share with you today.
It would be nice if there were easy answers, but there are none. As I mention in this article, we must at least put the facts on the table so we can have an intelligent conversation instead of a food fight.
As of July 1 I began a hiatus from radio and have chosen to teach at the new dental school in Westchester County, Touro College of Dental Medicine. Hopefully I can provide the students with insights that I have garnered over my 4+ decade career. I will keep you informed.
The looming 2020 presidential election has brought out more than 20 aspirants for the Democratic nomination.
The issues have crystallized around healthcare and immigration. I would like to use this opportunity to explore the healthcare conundrum that exists within our country.
I will try to present as many facts as possible and avoid rendering an opinion since, in the words of one of our great philosophers, "we're all entitled to our own opinion, but not our own facts", so let's begin.
What is clear and non-negotiable:
To personalize it, we are now facing, in our office healthcare policy, a 17.9% increase from United Healthcare. That will increase the premium of a single individual to over $11,000 and a family over $30,000.
Medicare for all vs. our system, should be first looked at through the lens of what currently exists. 56% of Americans receive their insurance through their employers. For many of them, the employer pays nearly 100%, and for a significant number the employee contributes. 16% of Americans directly purchase insurance, as I do for myself and my employees. 17% of Americans receive Medicare, and 19% receive Medicaid.
The vast majority of people who have obtained insurance under ObamaCare/Affordable Care Act did so through an expansion of Medicaid which was able to insure more Americans by raising the income level that allowed one to obtain Medicaid insurance. A much smaller number bought individual policies through the exchanges that are part of the Affordable Care Act. Approximately 28 million people are without any healthcare insurance.
The mandate that required healthcare insurance to be purchased lest there be a penalty, has been overturned by the courts, thus allowing people to suffer no penalty for not obtaining healthcare coverage.
Despite the rancor on the right, pre-existing conditions continue to be covered under all private policies.
When we compare ourselves, in terms of longevity, with other industrial nations, we are 27th out 35. We have the 4th highest infant mortality, we have the 6th highest maternal death rate, and we are 9th in young people dying early. Yet, as I mentioned, we spend nearly twice as much as every other industrialized nation.
Our nearest neighbor is often used as a comparison in healthcare systems. In Canada, the doctors receive healthcare payments from the government, unlike England where, although they are not government employees, they are reimbursed similarly to how Medicare reimburses, directly to doctors.
Per capita spending in the US is nearly $9,000 per person, where in Canada it is approximately $4,500, and in Canada life span is 3 years longer.
In a recent study looking at colorectal cancer treatment in Vancouver and Seattle, two cities that approximate each other in the US and Canada, it was found that the response to treatment was similar in fact to the Canadian patients living somewhat longer with this very serious cancer.
Canadians, who pay significantly more money than we do in taxes, with a 15% VAT tax on everything purchased, and a higher tax rate than America, gets back 63% of their taxes in the form of low cost education and healthcare.
In 2000 the average American paid 5% of physician fees out of pocket. Today they pay 35% of those fees out of pocket due to the higher deductibles which have now exposed the cost of healthcare to individuals who did not know or care what the cost of their doctor visits or medications were because they were not paying for them directly.
Over the last 30 years physicians in hospitals have been able to raise their prices because the insurance companies paid directly and the deductibles were minor. Now, with the patients being individually responsible, the out of pocked expenses become a larger issue.
In Germany, which does have a private healthcare insurance system, but a non-profit one, the Germans pay, between the workers and the employers, nearly 50% of their salary to the government; individuals paying 40% and companies paying the difference.
In Canada, between the employer and the employee, 58% of the total salary of individuals goes to the federal government and the province. As I mentioned, they get back 63% not only in terms of healthcare, but in education. The cost of 4 years at McGill University, one of the finest universities in the world, is approximately $4,000 a year. In fact, an American going there will pay about $20,000 in tuition. Someone going to dental school in Canada will pay approximately $18,000 a year whereas in the United States, Columbia and NYU charge over $100,000 for dental school.
In Canada, all doctors are covered by one malpractice policy. A neurosurgeon in Montreal pays approximately $24,000 for malpractice insurance. The Canadian insurance company never settles and there are less than 150 suits a year. Obviously they are a less litigious society, and as a result the cost of malpractice and defensive medicine is not passed on to the doctors and hospitals, significantly lowering the cost of healthcare.
Similarly, in the United States, a neurosurgeon who I know well, had to give up his practice as he entered his seventh decade because his malpractice rate went to $350,000 per year. It was costing him nearly $2,500-$3,000 out of his pocket for every neurosurgical procedure he performed. Since much of the reimbursement was either coming from Medicare, and to less of a degree from private insurance,his income was completely controlled by the reimbursements given to him by the insurance companies or the government, making it no longer profitable to practice neurosurgery.
We practice defensive medicine due to our malpractice system; it is estimated that up to 35% of all healthcare costs are due to defensive medicine. Other countries do not have this issue. 92% of doctors say they are constantly thinking about the ramification of what they are doing and whether they can be sued. Almost half the tests they run are done so to be able to defend themselves in a lawsuit. Despite running all these expensive tests and being defensive in nature, lawsuits are still prevalent to a much greater degree in the United States. It is not unusual for insurance companies to settle these cases rather than go to trial since their exposure is less, even if the doctor cannot be faulted.
Taxation, in Scandinavian countries particularly, is at a higher rate, often approaching 50% for individuals, with a VAT tax, basically a sales tax on every item purchased from a bagel to a BMW, of 25%. My recent visit to Copenhagen made me realize, when I paid the bill for dinner, that the $25 surcharge turned a reasonable meal into an expensive one. The Danes don't complain because they are on the receiving end of an excellent education system and healthcare system, without out of pocket expenses. Again, that's the choice of that particular culture.
One of the issues not discussed by those who want to propagate Medicaid for all is the fact that currently, hospitals are only kept afloat financially by private insurance companies. The reimbursement rate for Medicare is about 60% of what private insurance pays, and Medicaid even less. If they relied on only Medicare and Medicaid payments, they could no longer stay afloat. Similarly, doctors find it difficult to treat to Medicaid patients, and many will not accept them. The growth of concierge practices where you must pay a surcharge to be a patient of that practice comes as a result of Medicare paying significantly less than private insurance. Those practices that have a large Medicare patient load, are opting out of Medicare, unless the patient pays the surcharge. Locally, in Westchester, the physician for my wife and I required a surcharge of $5,000, in addition to whatever insurance would or would not pay. A friend of mine from Manhattan with many medical problems had to pay his physician $26,000 per year in order to continue to be a patient.
This change in the face of medicine is without government involvement. If you haven't noticed, more and more practices, whether it be Northwell or Presbyterian or Langone and the like, are all becoming large corporate practices, with all the issues that corporations present. As they become more corporate, the relationship between the patient and the doctor has to go through the prism of bureaucrats rather than to the doctor's office. This does have an effect upon separating the patient from the doctor. If you haven't noticed, I have.
Hospitals that are merging as these corporations merge with more and more hospital groups, form large corporate entities that operate very much like other corporations. Interesting that you would think that the mergers would result in lower fees; they have not. They've actually realized that since there is less competition, they can raise their fees without having any repercussions.
One of the issues that's not discussed by Mr. Sanders or Mrs. Warren is that if we had Medicare for all, the reimbursement at the Medicare rate would make it impossible for hospitals to continue to function. If you raise the reimbursement rates to levels comparable to private healthcare insurance, it would only increase the cost of healthcare insurance.
Vermont, Mr. Sanders' home state, announced their intention to go to a universal healthcare system for all state residents. However, when they were about to unroll the plan, they came to the realization that they would have to have a 9% surcharge for every individual in the state of Vermont, and a 15% surcharge for all companies.
They realized that this was unaffordable by the population and the businesses and the plan was dropped.
Surprisingly, this issue is never discussed by any of the politicians who are promoting a one payer system.
If the political class was honest, and we know that an honest politician is an oxymoron, they would tell you that you will pay more in taxes, significantly more in taxes, if we go to a one payer system, where the government is the sole insurer. Looking at other societies where healthcare is paid through the taxation of the individuals, the tax rate is considerably higher, and as I mentioned, the VAT tax range is from 15%-25%.
What else not shared is that if you want to cover the 28 million Americans who are not currently covered, and you want to raise the reimbursement rates for the 19% of the population who are on Medicaid, you have to generate even more money through higher taxes. Just to reiterate, the Medicare rates paid to hospitals and doctors are not sufficient to keep the system viable.
Even before any plans to come to a one payer system, we are all too aware of the fact that Medicare and Social Security will soon be bankrupt since their trust fund is running out of money.
All of the western world is faced with the demographic time bomb that is ticking as we speak.
When Social Security was set up the average life span in this country was 65 years. Now, for women it is over 82 years. We did not plan for people to live this long. Similarly, Medicare is now caring for more and more octogenarians, nonagenarians and even centurions. In five years there will be 140,000 people in this country who are over 100 years old.
Thanks to the advances in orthopedic medicine, many of you reading this may have already had joints, whether it be hips, knees or shoulders replaced, a great benefit for your lifestyles, but at a great cost. As I have seen in my own practice, there is a huge increase in the number of individuals with joint replacement, something that did not exist when I started the practice over 40 years ago. The demographics of my own practice have changed. Currently I have more than 600 people over the age of 80 years old, and over 90 people over 90 years old. I recently placed a dental implant in a 98 year old man who wanted to still enjoy eating everything he ate before; he had lost an eye-tooth.
The obstacles to changing our healthcare system are numerous. First let me share with you an interesting fact about why we do not have the ability for Medicare to negotiate drug prices. In the year 2000, a senator from Louisiana who had received a million dollar campaign contribution from big pharma, introduced a bill that would have prevented Medicare from negotiating drug prices. Just remember, that Canada and many of the European do negotiate prices, and pay much less per individual for the drugs than we do. This bill to prevent negotiation still exists. When the senator left the senate, he got a job paying millions of dollars as a lobbyist.
Big pharma, which has the highest paid executives in the United States, would certainly resist with every legal and political means possible, to prevent any negotiations for government paid drugs. In addition, hospitals and physicians groups would equally dig in their heels because they realize what will happen to their reimbursement should we have a one payer system. Certainly insurance companies, with again highly paid executives, would also dig in their heels and lobby with every dollar they have to prevent a change in our healthcare system.
Two areas that we must look at in our healthcare system are as follows. I mentioned before that we do not have a healthcare system, we have a sick care system. Unless we deal with this reality, we will never resolve our economic challenges.
I have lost more patients in my practice to lung cancer than any other illness. Tobacco took my father and kills 400,00 people a year. This, followed by diabetes driven by obesity and poor dietary choices, are leading causes of illness and death. Alcoholism and the resultant cirrhosis and heart disease, as well as carnage on our highways, costs our healthcare system over 100 billion dollars a year. Hepatitis C, which is a preventable disease caused primarily by drug use, is treatable today at $80,00 per treatment. We have millions of people with Hep C in this country. We have HIV, with 150,000 new cases a year, that costs $50,000 to treat. Fortunately we have medication to keep people alive, but do the math. These preventable diseases have an astronomical price tag.
Medicine is primarily the profession of diagnose, medicate and operate. There is no reimbursement for preventing disease. Imagine a healthcare system that required everybody who has healthcare to have a complete physical evaluation on an annual basis in order to keep their healthcare insurance. Their smoking habits, their weight, their drug use and alcohol use would all be evaluated by a non-physician necessarily, but by a nurse practitioner or physician's assistant. These patients would be monitored and called back if they had any of these life altering habits. Currently our system has, at the highest level, those who operate, whether they be brain surgeons, heart surgeons or cardiovascular surgeons, being reimbursed at the highest levels and have the highest salaries in medicine. On the other hand, the interns and pediatricians are at the low end of the totem pole. It's understandable that we pay people who have greater education a higher reimbursement, however, every disease we prevent, every lung cancer that doesn't occur, every diabetic that doesn't go blind or lose a kidney, saves the system immeasurably more money than the alternatives.
Just like the resistance in the pharmaceutical and insurance industries, there is a strong resistance in medicine to move from a medicate-operate to a prevention oriented mentality.
A little research revealed that between 25% and 30% of all the Medicare expenditures are during the last year of an individual's life. Whereas only 7% is spent for the entire rest of the population for routine care. We have to examine the issue of at what point do we move from operate and medicate to allow caring end of life. Interestingly enough when my father was diagnosed with lung cancer, we did not tell him. A week after the diagnosis he developed complications from the biopsy. My mother elected not to bring him back to the operating room to repair the hole in his lung, for fear that for the next few months his life would be painful and end in his death. She allowed him to expire that day to avoid the pain and suffering he would incur later. I am not suggesting that everybody make that choice, but it should be discussed more openly than we do now.
Drug development in this country takes between 9 and 14 years. A large percent of these drugs do not make it to market. We have lately been fast tracking drugs, for particular conditions that are not treatable, to get them to market as soon as possible. However, we must be careful about looking at the efficacy of drugs, not just their availability. Recently, a drug for sarcoma, which costs $17,000 a month, was rapidly taken to market. It was soon found that it made no improvement in the outcome for the patients, after more than $100,000 was paid for this medication.
Changing our tort system is a way to lower the cost of development of drugs, as well as eliminate losses that will occur after the drugs are brought to market. All too often a drug which passed with flying colors its stage 3 clinical trials involving several thousand people, begins to show side effects when it is released to a million people. Then the lawyers come marching in. You have heard the ads on TV. As long there is no malfeasance in the studies, any of these untoward effects should not go through the legal process. Approximately 300 people die from taking aspirin. There is no medication or drug that, if you give to enough people, will not show negative effects.
Ultimately, taxation rates for those in the 1%, as well as for those in the middle class will have to change substantially for us to provide healthcare for all, whether it be through a hybrid system where we have private insurance and government sponsored insurance, or whether it be a one payer system, as favored by many who are currently running for president.
In the end the problem is that the discussion of the real costs are not honestly and completely presented to the American people. When Medicare was first was introduced, they expected the annual cost to be about $9 billion a year. It is now over $700 billion a year and growing.
The discussion about how to fairly allocate our system of taxation, as well as how the government disperses revenue, is necessary, but is often completely ignored.
Between the Republicans and Democrats, there are three schools. Republicans are anxious to repeal and replace ObamaCare, which they see as government interference in healthcare. To date they've been unsuccessful. The issue of pre-existing conditions has been a roadblock that has not been resolved. They were able to repeal the mandate that everyone had to have insurance or pay a penalty. The Democrats made this mandate too inexpensive for those who didn't buy insurance, in essence decreasing the penalty for going without.
The Democrats are in two camps. One is, in the case of Bernie Sanders, Elizabeth Warren and others, to have Medicare for all, which I've discussed earlier on. The second Democratic position is to retain private insurance and Medicare, but create a public option for those who want to buy into Medicare irrespective of their age. The consequences of this have never been explored financially. If all individuals could buy into Medicare, and did not have a deductible, and premiums were based upon the ability to pay, there would have to be considerable government involvement in providing a Medicare level insurance plan with financial subsidies for those at the low end of the economic spectrum. For the middle class there would probably have to be subsidies as well. The appeal of a plan without deductibles and good access to many doctors would drive many into this Medicare buy-in. How the government would get the money to pay for this has never really been discussed at length. In addition, we would not know how it would affect private insurance. Would in attract people with pre-existing conditions and large deductibles, thereby driving up the bill for the federal government. Also, what affect would it have on private insurance companies. Would they have to lower premiums again. A lot of theory but not much evidence and not much history.
Basically to summarize, we are looking at a battle royal with different moving parts. On one hand we have those who vehemently oppose any socialization of medicine on philosophical grounds. Joining this group are those who have the most to lose which would be drug companies, many physicians, hospitals and insurance companies. They will oppose it tooth and nail for obvious reasons.
The groups favoring an expansion of Medicare for all, wanting a system similar to Canada, have their appeal to those who feel that healthcare should be a right rather than a privilege. They have failed to put a price tag on it or indicate how it would impact all the institutions of healthcare, whether it be hospitals, doctors, insurance companies and the federal budget.
The elephant in the room, however, is the demographics of an aging population, an explosion in medications that can prolong life and deal with heretofore untreatable conditions, these medications having a unsustainable cost.
As I mentioned earlier, the inability and unwillingness to deal with preventable illnesses by requiring a change in behavior among our population, has not been part of the discourse. Individual responsibility vs. government responsibility remain an unspoken but vital conversation.
Currently we have a budget deficit of nearly $22 trillion, the interest alone on that being hundreds of billions of dollars and growing. That deficit will soon consume more and more of our resources, yet no earnest conversation is going on with either party on how to reduce this deficit.
Liabilities for pension plans, growing healthcare time bomb, and an unwillingness to rein in spending will lead us to an existential financial crisis whether we like it or not.
A speech George Washington gave upon leaving office was never more relevant than it is today. He warned us that political parties would be a death knell of our democracy, for the parties would put their own interests ahead of those of the people. It is amazing how nothing has changed in over 200 years.
There are no simple answers to very complicated problems. Thank G-d we are all living longer than we ever did, and living more rigorous lives than our grandparents. However, that doesn't mean many of us are not living with serious maladies, many of which can be prevented by lifestyle changes.
I welcome a dialog from all of you and would urge you to ask those politicians you support the difficult questions that I have raised. There is no perfect answer.
Although our constitution written by our founding fathers was brilliant in its conception and execution, we still have amended it many times and probably still have to do so going forward.
Minds are like parachutes, they only work when they're open. Hopefully we can all have an open mind to this most challenging issue.
As usual, I welcome your opinions.
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