The United States is the only developed country that does not have a state supported healthcare system. Advocates on the political right argue that “the market will take care of itself if only the government and its rules and regulations will get out of the way?” It takes only a minimum of observation and research to recognize that that statement is manifestly untrue. The capitalist marketplace exists for profit. The U.S. has a “system” of sorts for providing healthcare that operates as a “pay for service” entity with an unsuccessful return of value to the customers and payers. We the People can no longer afford to squander such massive amounts of money for an all too often failing system, and it is time posthumous to change over to a national one-party payer system, a true system.
Consider, for purposes of the argument of this blogpost only waste, overcharging, and fraud. U.S. healthcare cost the country a staggering $3.0 trillion in 2014—17.5% of the GDP—and that cost rises every year, at a rate significantly higher than the rise in population or inflation. We spend triple what the Netherlands spends, and our results are less than a third what that small country spends per capita. According to the McKinney Global Institute, the U.S. spent $650 billion more than did the other developed countries in 2006, and there is no evidence that the population of America is any sicker than any of those countries. That study found $91 billion (14% of the total) was waste related to the inefficient, redundant, profit driven health care administration practices—the “marketplace”. The Dartmouth Institute for Health Policy and Clinical Practice found that approximately 30% of all Medicare expenditures could be eliminated—nearly $700 billion in savings—by stopping spending on certain wasteful and redundant services without causing worsening in healthcare outcomes. The RAND Corporation did an analysis in 2011 and found that considering five areas of waste, there was $476-$992 billion consumed by the “system” which provided no benefit to the consumers for that cost. This was not including fraud.
Overcharging is rampant and systemic. Consider only a couple of examples. The U.S. prevalence of hepatitis C, a potentially fatal disease, is at least three million people, and probably many more in the population as yet undiagnosed. The U.S. Food and Drug Administration recently approved two new drugs for treatment of the disease which are far less toxic and safer than earlier drugs which are still on the market. There is an obvious demand for those improved drugs, and the cost is staggering. The treatments will cost private insurers, the government, and consumers $136 billion over the next five years! That exceeds the cost of the previous drugs by $65 billion. A Medscape editorial in 2015 posited the possibility that the huge number of people needing treatment, and the massive cost of those two drugs could overwhelm the finances of the entire U.S. healthcare “system”. At $27 billion a year—10% of the cost of all national prescriptions–for as long as can be foreseen, bankruptcy of the “system” is a real possibility. Innovation should be rewarded, but is it conscionable that Sofosbuvir should cost $1000 and the combination of Sofosbuvir and Ledipasvir $1125 a day for twelve weeks? The manufacturing costs are $200 for the whole twelve weeks.
In January 2012, the U.S. Food and Drug Administration approved Kalydeco, the first drug to treat the underlying cause of cystic fibrosis. The manufacturer, Vertex Pharmaceuticals, priced Kalydeco at $294,000 a year, which made it one of the world’s most expensive medicines. Doctors and patients enthusiastically welcomed the drug because it offers life-saving health benefits and there is no other treatment. Insurers and governments readily paid the cost.
That same year, Zaltrap was approved by the FDA for treatment of colorectal cancer. The drug was discovered by Regeneron and but sold by the French drug maker Sanofi. In this case, the drug worked no better in clinical trials than Roche’s cancer drug Avastin, which itself adds only 1.4 months to life expectancy for patients with advanced colorectal cancer. Nevertheless, Sanofi priced Zaltrap at $11,000 a month, or twice Avastin’s price.
The grim choice for providers, consumers, insurers, and the government is bankruptcy or rationing and triage: the rich will live, and the poor will either suffer or die. And the “poor” in this statement includes the middle-class. Some estimates put the markup of brand name drugs at 600,000% when compared to the cost of active ingredients. Pfizer is a $119 billion company.
Generic drugs—those which substitute for the extremely costly drugs under patent—are estimated to save $1.2 trillion a year for consumers, but recently, the costs of those drugs has shown a steep increase. According to a report by Elsevier, out of a research sample of 4421 drug groups, 222 drug groups increased in price by 100% or more. Seventeen drug groups had price increases of more than 1000%. Those were not highly exotic or rare drugs. One of them was tetracycline.
Waste and overcharging may be unconscionable, but they are at least legal under our present highly flawed for-profit “system”. Real criminal fraud costs Americans tens of billions dollars a year, according to the FBI. With Medicare expenditures totaling $565 billion a year, this amounts to between $17 and $57 billion as the cost of Medicare fraud alone. The CMS estimates that it distributed $65 billion in fraudulent overpayments during fiscal year 2011. Medicaid spends $415 billion a year and the CMS estimates that 10% of that cost is for fraud. Across the entire health “system” the cost may be as high as $272 billion, according to the FBI.
Fraud comes in a myriad of forms:
- Billing for services never rendered, often associated with identity theft.
- Billing for more expensive services or procedures than those actually provided—“upcoding”, a form of intentional inflation.
- Performance of medically unnecessary procedures and services to generate insurance payments. These include improperly designated cosmetic surgical procedures (e.g. cosmetic nose procedures billed as operations for deviated septum).
- Misrepresentation of non-covered treatments as being medically necessary.
- Outright falsification of patients’ diagnoses to justify unnecessary tests or procedures.
- Billing each step as if it were a separate procedure—“unbundling”.
- Billing patients more than the allowable co-payment for services that are pre-paid in a managed care contract.
- Kickbacks.
- Waiving patient copayments or deductibles then over-billing the insurance carrier or benefit plan.
Among the most egregious of all frauds are those that actually injure patients, all for profit. A recent example is among the worst. This year, a Detroit court found Dr. Farid Fata guilty of fraud and sentenced him to 45 years in prison for 23 counts of health care fraud, two counts of money laundering, and one count of conspiracy to pay and receive kickbacks. His crime was to prescribe and to insist that otherwise healthy patients receive chemotherapy they did not need and should not have had with all of the suffering attended to those toxic drugs, usually intended for the treatment of cancer. There were 553 victims. The fraudulent insurance billing came to a massive $35 billion over six years.
This is the marketplace so highly advocated by political and business supporters of the current unmanageable “system”. It is time—and well past time—to make drastic changes to save the health and the healthcare provision for the American public. The marketplace model has failed. Unfettered capitalism in healthcare has failed. Healthcare should be regarded as a right under a system akin to a government utility and given over to a single-payer managed system—yes, a national healthcare system (absence of quotation marks is intentional here). It should be run with all the force and resources of the United States government with full, mandatory, cooperation of the states and local governments. An adequate monitoring, investigative, policing, and punishment system for perpetrators will be crucial to the success of such a system. You may argue that government is inherently wasteful, but you cannot presume that such a system will be worse than what we now have, which is advancing towards ruination of our country for the enrichment of a few sociopathic individuals, companies, and providers.