It is critical, now more than ever, that Long Islanders have access to affordable, quality health insurance. As a former healthcare executive who worked in hospitals and human service agencies for over four decades, Ann plans to utilize her wealth of knowledge and experience to serve our community.
Despite spending more on healthcare than any other international member of the Organization for Economic Cooperation and Development (OECD), the United States has the lowest life expectancy for residents and the highest rate of chronic disease. As recent as 2018, the United States health expenditures constituted approximately 18% of the nation’s Gross Domestic Product (GDP).
While the first domestic calls for accessible and affordable healthcare began in the 1900s, the ongoing COVID-19 pandemic has demonstrated clearly the deficits in our current healthcare system. People are unable to access the medical services that they so desperately need, our healthcare providers lack the equipment they need to treat patients, and millions of healthcare workers have been left unemployed and furloughed due to economic losses caused by the coronavirus - with 1.4 million healthcare workers being let go in April alone.
Here at home on Long Island, we see these very same problems. In a 2019 study concerning physician availability on Long Island, it was found that there was only one doctor for every 1,360 persons in Suffolk and 700 persons in Nassau. Looking to the future, we must consider ways to expand and build resilience within our healthcare system so that those in our community who need help can get it.
Why is healthcare so much more expensive in the United States than in other nations?
Looking back several decades, we can see that the United States healthcare spending was historically comparable to other large nations. What has caused this rapid domestic growth in expenditures and divergence from global norms? Do Americans use more healthcare services than their international counterparts? Various studies suggest otherwise. These studies tell us that U.S. residents typically use approximately the same amount of healthcare services as people in other wealthy nations, but that the major difference is the cost that we pay for these services and the expensive circumstances surrounding the delivery of healthcare.
Overall, researchers have discovered that the U.S. healthcare sector grew at about a 4% annual rate while the overall economy grew at a 2.4% rate. Why? Have Americans become sicker over the years? No. It turns out that the U.S. actually got healthier. Hospitalizations decreased, doctor visits increased, and the use of prescription drugs got higher. These reports indicate that the approximate 63% increase in domestic healthcare spending was due to increased services being provided with in-patient treatments and the other services being costlier. Simply stated, more is being done during hospital stays and doctor visits, but the cost of such treatment is also going up.
There is a bright side to this financial increase - America’s healthcare system is highly dynamic and innovative, leading the world in new diagnostic procedures and treatments for numerous ailments.
The High Cost of Prescription Drugs:
The United States has the highest prices for pharmaceuticals of any nation in the world, with prices expected to rise over the next ten years and American’s already paying 17% of the total healthcare industry costs internationally. This situation principally affects patients, as many struggle to afford the high prices. The tragic result of this struggle leads to patients rationing their prescriptions, not taking the full prescribed medication dose, and preferring to cut pills in half.
The reasons are multifold:
1. Drug companies producing drugs lay claim to the fact that if they develop a drug, they have an exclusive right to sell the drug. For example, for small molecule drug developments, companies are granted five years of exclusivity in regard to sales and 12 years for biologic drugs. Despite the fact that much of the cost to develop new drugs are handled by the National Institute of Health using taxpayer dollars, pharmaceutical industry leaders legitimize their claims for exclusivity and high prices on their research and development costs used during the research phase. In general, companies spend as little as 10% on research and development, with more money being spent on marketing and ads. The reality is that prices for prescription drugs are based on what the market can bear, and big pharmaceutical companies exploit this.
2. Pharmaceutical companies have found numerous ways to limit and stall the production of generic drugs so as to cause a delay in the development of generic counterparts that would enter the market. This is done by creating departmental divisions within their own company that focuses on solely producing generic drugs and by even altering the medicine or its dosage to throw off “competitors.”
3. Managers who run prescription drug insurance programs benefit from higher-priced drugs due to the fact that they can negotiate rebates, with only a small portion being passed on to the patient and thus reaping huge profits.
4. The United States does not set pricing standards for domestic drug companies, resulting in inconsistencies and aggressive market pricing. The Federal Drug Administration (FDA) clears the pharmaceuticals and sets standards of safety but does not issue any guidelines for drug pricing and sales.
5. Pharmaceutical political lobbyists in the U.S. are very powerful and have deep connections with politicians and domestic leaders. This allows the industry to maintain control over a lot of legislation and policies relating to pharmaceutical drugs.
6. The United States pays more for drugs than any other country. For example, the drug HUMIRA is an injectable used for rheumatoid arthritis and psoriasis. The prescription cost for this drug in Switzerland is $822, in England it is $1,362 and in the U.S. it is $2,669. Over the last twenty years, the price of insulin drugs have been raised 700%!
7. The Veterans Health Administration, on a small scale, is able to negotiate prices through the Department of Veterans Affairs for its patients, but it does not have as many drugs available compared to Medicare. Medicare, similar to the FDA, should have the ability to negotiate price ranges for drugs similar to the V.A.
Medical Malpractice Costs:
One often-overlooked factor that contributes to the uptick in U.S. healthcare expenditures is medical malpractice cases. Medical malpractice is supposed to compensate patients for injuries incurred through physician negligence, but the costs associated with this issue (including malpractice insurance, litigation, and the cost of pharmaceuticals) are tremendously high. Problems inherent in the system are that certain specialties – surgery, obstetrics, gynecology, etc. – are cost-prohibitive for physicians and contribute greatly to higher specialist fees. Over a ten-year period, only 6% of physicians had paid on insurance claims.
Claims are expensive and slow – it takes around four years on average to resolve a claim. Of all medical liability spending, 54% of it goes to litigation and other transaction costs rather than for actual patient compensation. From a physician’s perspective, the threat of legal risk leads to engaging in defensive medicine, which contributes to 15%-30% of healthcare services being unnecessary, but utilized to “cover all areas.” This practice costs the healthcare system $210 billion each year, as well as the lives of 30,000 people from overtreatment and unnecessary testing. In an analysis by PricewaterhouseCoopers (PwC), the firm reported the cost of insurance and defensive medicine to be 1% of total healthcare costs equating to $55 billion annually.
Although it represents a small fraction of total health care spending, in absolute dollars, the amount is not trivial.
In New York, particularly, per capita medical malpractice costs are exceptionally high - some of the highest in the country. New York consistently accounts for nearly 20% of all medical malpractice costs of the United States. In New York, premiums for OB-GYN/GYN services reached $214,999 in 2017, and in California, premiums were only $49,804. Something must be done to address aggressive insurance practices and mismanagement of medical malpractice procedures that harm both doctors and patients alike.
1. Attaining universal coverage – health care coverage that is affordable to all.
2. Provide additional incentives to increase the number of not-for-profit insurance options on the NYS health insurance exchange. This organization would cover operating and treatment costs, but would not generate profits and would also be tax-exempt. The premium prices and deductibles for users of this service would be lower , making it desirable to those seeking affordable healthcare options. To make healthcare providers accept this coverage, incentives should be established. By increasing competition on insurance exchanges, the not-for-profit option would pressure private insurers to reduce rates and increase benefits to maintain enrollments.
3. Raising the Medicaid threshold line above the present limit for individuals and families. This will permit many who are uninsured to be included within the program and thus receive much needed medical coverage. Full coverage for those financially eligible for Medicaid patients will cost $2.799 billion.
a. Ways to fund this increase in insured patients can be offset by the following:
i. Increase excise tax on health hazards (smoking, alcohol, etc.).
ii. Create a pollutant taxation system to reduce the use of health-harming pollutants.
iii. Implement, either on a State or Federal level, a billionaire and ultra-millionaire tax.
4. Encourage high competition among private insurance companies in order to reduce pricing, while also considerably regulating their profit margins.
5. Controlling and capping the cost of pharmaceutical drugs, which would, in turn, lower premiums.
6. Limiting malpractice claims and insurance premiums in order to lower costs for doctors and hospitals, so that more funds get allocated to patient care.
7. Incentives for physicians to work in Primary Care by creating and raising primary care reimbursements.
8. Institute and encourage a medical school loan forgiveness program for Primary Care physicians who commit to practicing in New York State for a defined period of time.
9. Enabling elderly patients to stay at home and receive care rather than having no options other than long term nursing home facilities. I would advocate for a national and/or state-administered long-term care program in which payments can be taken out of salaries for working people and then used to support and fund these services. This plan should be more cost-effective than other private, long-term options.
10. Establishing small contained family-style care facilities equipped with resources necessary to furnish higher quality care.
1. Establish a watchdog committee to identify and prohibit incidents of price gouging and to demand pharmaceutical companies show the real cause of price hikes.
2. Demand greater transparency behind drug prices and the role drug insurers play in receiving dollars back from pharmaceutical companies.
3. Oversee prices of insurance drug plans.
4. Pass a law that would enable New York to import drugs from other countries at lower prices.
5. Identify drugs that create cost challenges and set upper payment limits for them.
6. Pool prescription purchase power by increasing industry competition.
7. Cap out of pocket expenses for patients to a designated amount on certain drugs. Since Medicaid is jointly administered by the state, this public health insurance program can build in cost controls, i.e., mandated rebates from manufacturers in exchange for Medicaid coverage.
8. Encourage transparency from pharmacists to fully inform patient cost savings options. For example, paying cash for the drug is cheaper in some instances than using insurance, which is a predatory practice known as “claw backing,”
9. Prohibit manufacturers from offering product vouchers if generic drugs at a lower cost are available, except under exceptional circumstances.
10. Establishing a drug preferred unit list based on the cost and clinical efficiency of the drugs.
11. Inform patients of price increases above a specified threshold a minimum of ten days before the increases go into effect.
12. Prohibit manufacturers and wholesale distributors from engaging in price gouging for drugs that are classified as “an essential generic drug.” Increases not justified by production costs or ones that do not have other options for the patient should be prohibited.
13. Require that Medicaid notify the Attorney General when there is more than a 50% increase in the cost of a drug suddenly.
14. Requiring manufacturers to refund consumers the increase in drug costs and to sell it at only 50% of the said increase.
Medicare- a 54-year old program for Americans aged 65 and older as well as for others with disabilities and disease. There is traditional Medicare and Health Maintenance Organization (HMO) Medicare. Most Medicare patients also purchase supplemental or “Medigap” plans, which cover those expenses not covered by their Medicare plan.
Medicare for All- a phrase used to describe a government insurance plan which covers all Americans, not just for those 65 and older.
a. This plan would cover more services and have fewer deductibles than the current Medicare program. This plan would likely abolish all private insurance.
b. Another plan emphasizes the expansion of the current Medicare plan for everyone. Canada has a national health care plan similar to Medicare for All coverage.
Single-Payer – a government system typically paid for through taxes. Everyone would get insurance through a company run by the government. This is commonly referred to as a National Health Insurance.
Socialized Medicine – this model embodies not only that the financing is provided by the government, but is also run by and employs a health care provider. The federal Department of Veterans Affairs has a form of socialized medicine – it has its own hospitals, doctors, nurses, etc.
Value-Based Care – a form of reimbursement that ties payments for health care delivery to the quality of care provided and rewards providers for efficiency and effectiveness. Value-based reimbursements are calculated by using numerous measures of quality and determining the overall health of populations. It is driven by data because providers must report to payers on specific metrics and demonstrate improvement. Under these models, providers are incentivized to use evidence-based medicine to engage patients, upgrade health technology, and use data analytics in order to get paid. This process alone will necessitate more administrative staff and hours outside of direct patient care, which favors large health cate practices instead of solo practitioners.
The real question is, “Do we measure the right thing?” It seems that value-based service has become metric-based medicine. We cannot forget the most important factor – better healthcare outcomes, which, if we measure dollars and cents, will result in fewer patient visits, fewer hospitalizations, and better lives for our patient populations. Value Based Care (VBC) is a concept which I feel still requires further study as to the long- and short-term consequences to healthcare providers and patients.
While Value Based models, as opposed to fee-for service, present opportunities, many challenges and issues must still be addressed.
VBC requires much more exploration. Shifting the focus from volume to value holds promise. However, value should not be defined mainly by cost reductions. Improved patient care is a laudable concept. Value based reimbursement is more complicated.
The initiation of a model of outcome measurement based on extensive disease registry and the standardization of treatment based on the data learned from these registries will result in the best success rates for the patient.
Public Option- a government plan that can be self-selected by people who opted for their choice. This would permit middle-income working-aged adults to choose a public insurance plan, like Medicare or Medicaid, instead of a private insurance plan. People or employers could choose Medicare, Medicaid, or an option alongside those offered in the Obama exchanges. Others would set up a new public plan run and subsidized by the government.
Bundled Payment – a payment for all services related to a medical condition.
Canada: Government financed healthcare. Many Canadians have supplemental private insurance through their jobs, spending approximately 10% in healthcare.
Britain: Socialized medicine. It is financed and provided by the National Health Service. It provides broad coverage – all public, but there is a private system that approximately 10% of the people purchase. Access is a problem, sometimes waiting for several months for surgery—low cost-based barrier.
Singapore: Basic care in government-run hospital wards. It is cheap and sometimes free. If patients can afford, private rooms are available. Workers contribute 37% of their wages to mandated savings accounts that can be spent on healthcare, housing, education, insurance, etc. The government has bulk buy control, which controls costs. It spends 4.9% of the GDP as opposed to 17.2% for the U.S.
France: Mandatory purchasable health insurance sold by nonprofit funds which are financed through taxes. Voluntary supplements cover the rest. Regulations exist for hospital beds, equipment, and the number of medical students. The Ministry sets prices for procedures and drugs. It gives tremendous access to almost all services – very good outcomes. Costly but much less than the U.S.
Switzerland: Has arguably the highest outcomes in the world. Universal healthcare requiring all to pay into it. 30% of the population get subsidies to offset costs. Insurers are nonprofit. Premiums are on a sliding scale pegged to income. For-profit plans are also available. Fee for service, and patients can select their doctors unless they have a managed care plan. Similar to the American Affordable Care Act.
Germany: 86% get coverage primarily through a national public system with the opportunity to purchase voluntary private healthcare insurance. Premiums paid for by employers, employees, and subsidies available for predetermined economic reasons. No subsidies for private insurance, but the government regulates premiums. Fee-for-service limits of annual income. Premiums can be increased due to age, not condition.