How Big Medicine can ruin Medicare for All

How Big Medicine can ruin Medicare for All

By Phillip Longman for The Guardian. Photo from Make It Our UPMC.

NOTE: One of our criticisms of the Sanders’ Medicare for All Act is that it doesn’t get rid of investor-owned health facilities. Longman explains the problem with leaving profit in our healthcare system.

The pursuit of a ‘single-payer’ healthcare system in the United States will degenerate into corporate welfare unless America takes on healthcare monopolies.

In 2013, Senator Bernie Sanders, a self-described “democratic socialist,” couldn’t find a single co-sponsor for his healthcare plan, which would replace private insurance with Medicare-like coverage for all Americans regardless of age or income.

But have they? Actually, no.

Real socialized medicine might work brilliantly, as it has in some other countries. In the United Kingdom, the socialist government of Labour’s Clement Attlee nationalized the healthcare sector after the second world war, and today the British government still owns and operates most hospitals and directly employs most healthcare professionals.

The UK’s National Health Service has it problems, but it produces much more health per dollar than America’s – largely because it doesn’t overpay specialists or waste money on therapies and technologies of dubious clinical value. Though they smoke and drink more, Britons live longer than Americans while paying 40% less per capita for healthcare.

But what advocates of “single payer” healthcare in this country are talking about, often without seeming to realize it, is something altogether different. What they are calling for, instead, is vastly expanding eligibility for the existing Medicare program, or for a new program much like it.

So, what does Medicare do? It doesn’t produce healthcare. Rather, it pays bills submitted by private healthcare providers.

What would happen if such a system replaced private healthcare insurance in the United States by becoming the “single payer” of all healthcare bills? If adopted here a generation ago, it could have led to substantial healthcare savings.

After Canada adopted such a system in the early 1970s, each of its provincial governments became the sole purchaser of healthcare within its own borders. These governments then used their concentrated purchasing power to negotiate fee schedules with doctors and fixed budgets with hospitals and medical suppliers that left Canadians with a far thriftier, more efficient system than the United States even as they gained access to more doctors’ visits per capita, better health, and longer lives.

The same might well have happened in the United States if we had adopted a single-payer then. But we didn’t. Instead, we created something more akin to a “single-provider” system by allowing vast numbers of hospital mergers and other corporate combinations that have left most healthcare markets in the United States highly monopolized. And what happens when a single payer meets a single provider? It’s not pretty.

Healthcare delivery in the United States a generation ago was still in many ways a cottage industry, but not any more. Not only have 60 drug companies combined into 10, but hospitals, outpatient facilities, physician practices, labs, and other healthcare providers have been merging into giant, integrated, corporate healthcare platforms that increasingly dominate the supply side of medicine in most of the country.

According to a study headed by Harvard economist David M Cutler, between 2003 and 2013 the share of hospitals controlled by large holding companies increased from 7% to 60%. A full 40% of all hospital stays now occur in healthcare markets where a single entity controls all hospitals.

If you want a hint of what a single-payer healthcare system would look like today if grafted on to our currently highly monopolized system, think about how well our “single-payer” Pentagon procurement system does when it comes to bargaining with sole-source defense contractors.

In theory, the government could just set the price it’s willing to pay for the next generation of fighter jets or aircraft carriers and refuse to budge. But in practice, a highly consolidated military-industrial complex has enough economic and political muscle to ensure not only that it is paid well, but also that Congress appropriates money for weapons systems the Pentagon doesn’t even want.

The dynamic would be much the same if a single-payer system started negotiating with the monopolies that control America’s healthcare delivery systems.

Think about how members of Congress representing, say, western Pennsylvania would be likely to respond if Medicare-for-all dared to reject the terms demanded by the University of Pittsburgh Medical Center, which is not only the region’s largest employer but controls nearly 60% of the inpatient medical-surgical market in the greater Pittsburgh area.

Who would blink first if the government threatened to exclude UPMC from its healthcare plan, which under a “Medicare for All” system, would be the only one available? Without access to the UPMC system, the region would face an instant healthcare crisis.

The choice before us is thus stark. Single payer will fail unless we make sure that the market power of hospitals and other providers is sufficiently dispersed that it remains politically possible to regulate them.

  • Phillip Longman a lecturer at Johns Hopkins University, and the policy director at the Open Markets Institute. He is also a senior editor at the Washington Monthly, where a longer version of the article appears

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