Health Care: Right or Commodity?
The Affordable Care Act and the
Marketization of Health Care
Adam Gaffney, MD
Physicians for a National Health Program
NY-Metro Forum: October 14, 2014
Primary Arguments
• A right to health care
– Not simply a question of “universal access to health
insurance.”
– Financial barriers to access and health care inequality
not consistent with a “right” to health care.
• The ACA does not create a right to health care
– Uninsurance persists
– Underinsurance or “malinsurance” persists
– Health care inequality persists
• Health care “rights” vs. “commodity” dialectic
matters
Two Different Conceptions:
Right or Consumer Commodity
• Health care “right/commodity” dialectic stretches
back into history.
– Writing ~ 17C, Chinese ethicist Chu Hui-ming wrote:
“In antiquity it was said: There are no two kinds of
drugs for the lofty and the common; the poor and the
rich receive the same medicine.”
– Kung Hsin, Confucian physician: For an “enlightened
physician,” a “patient’s wealth or poverty is of no
concern … they prescribe drugs according to a formula
which is valid for everyone.”
Unschuld, Paul U. Medical Ethics in Imperial China. Berkeley: University of California
Press, 1979, page 63 and 69.
Health Care as a Right
• The “Right to Health”
– FDR: 1944 SOTU Address: “The right to adequate
medical care.”
– Universal Declaration of Human Rights: Included many
social/economic rights including right to medical care
– WHO Constitution: “…the enjoyment of the highest
attainable standard of health is one of the
fundamental rights of every human being…”
• Postwar Period
– National Health Service in Britain
– Movements towards universal health care in many
nations
http://museum.hackney.gov.uk/object9232
Truman’s NHI
• Truman: NHI “will mean that proper medical
care will be economically accessible to every
one covered by it, in the country as well as in
the city, as a right and not as a medical dole.”1
• “I consider it socialism. It is
to my mind the most
socialistic measure that this
Congress has ever had
before it” 2
–Senator Robert Taft
1 Quoted in Beatrix Hoffman. Health Care for Some, 59.
2 Quoted in Monte Poen, Truman Versus the Medical Lobby, 88.
“The major issue has
been decided. Do
individuals have a right
to medical care by virtue
of their being a citizen of
the United States, a
human being? I think
that answer has been
given”1
-Wilbur Cohen.
Images from http://www.ssa.gov/history/lbjsm.html
1 Wilbur Cohen, Toward new human rights, 1977.
New York Times, August 9, 1971; quoted in Hoffman, 163.
Health Care as a Right …
• The Kennedy-Griffiths 1970 Health Security Bill
S.4323
– A single national health insurance w/o means testing
(no significant role for private insurers)
– No cost sharing: Elimination of all co-payments
• 1971: Nixon’s Response to the Kennedy-Griffiths
Bill
– Means testing: Expanded Medicaid-like program for
the poor (up to 122% of poverty)
– Employer mandate
– Maintained private insurance
– Cost-sharing: Deductibles, Copayments
Paul Starr, Remedy and Reaction, 53-54
Beatrix Hoffman, Health Care for Some, 164
The Neoliberal Health Care Turn
1) Health care is ultimately a commodity or
consumer good
2) Individuals differ in the amount of health
care goods they desire (in relation to other
goods).
3) There is no “universal” standard of health
care for all.
4) “Free” care the problem: Patient’s should use
their “own money” to avoid moral hazard
5) “For-profit” medicine key
• asdf
“Medical care is neither a right nor a privilege: it is a
service that is provided by doctors and others to
people who wish to purchase it … whether to buy a
doctor’s service rather than some other
commodity or service belongs to the consumer as
a logical consequence of the right to his own life.”
The Rise of Corporate Medicine
• Corporatization of the HMO
– Consolidation/Mergers
– For-profit HMOs: 18% in 1981 > 60% by 19861
2
1 Gray, Bradford H. 2006, page 315.
2 http://www.modernhealthcare.com/article/20120303/MAGAZINE/303039958
National Hospice and Palliative Care
Organization. "Nhpco's Facts and
Figures." (2013).
“Consumer-Driven Health Care”
• 1970s: Health care “consumerism” –
empowering patients; having say in treatment
decisions; opposing medical paternalism;
community involvement in healthcare.1
– 1971 Editorial in Archives of Internal Medicine:
examples include free clinics, the community takeover
of Lincoln Hospital2
• 2000s: “Consumer-Directed Health Care” care
plans = HDHPs + HAS
– 2003 Medicare Modernization Act creates the current
CDHP
1 Tomes 2006, “Patients or Health-Care Consumers?”
2 Bogdonoff 1971. “Consumerism in medicine.” Arch Intern Med 128(3):469-71.
Neoliberal Ideology:
Health Care as a Commodity
• Friedrich Hayek
– 1960: “The conception that there is an objectively
determinable standard of medical services which can and
ought to be provided for all … has no relation to reality.”
• Milton Friedman
– 1991: “End both Medicare and Medicaid and replace them
with a requirement that every U.S. family unit have a
major medical insurance policy with a high deductible …”1
– 2001: “The patient, the recipient of the medical care, has
little or no incentive to be concerned about the cost –
since it’s somebody else’s money.”2
1 Hayek , The Constitution of Liberty. New York: Routledge, 2011.
1 Milton Friedman, “Gammon's Law Points to Health-Care Solution, Wall Street
Journal, November 12, 1991: 1.
2 ---, “How to Cure Health Care,” The Public Interest Winter, 2001
The Affordable Care Act
• Expands access while assuming many of the tenets of
health care neoliberalism
• Nixon plan elements
– A [limited] employer mandate
– Expanded means-tested program for the poor (Medicaid, up to
138% FPL)
• Individual mandate
– A requirement of the health insurance industry
• Accommodates
– Skin in the game: trend towards higher cost-sharing:
copayments, deductibles, co-insurance
– Corporatization of medicine
• Does the ACA create a right to Health Care?
– “Two kinds of medicine for the rich and poor?” or
– Class-based medicine
I. Employer-Based Insurance
-Study of employer-based health insurance
-62% increase in premiums
-Rising cost sharing
26.7%
Worker
contribution
28.6%
Worker
Contribution
Cost Sharing: Definitions
• Copayments
• Fixed amount for a health care service
• Deductible
• Amount paid for health care services before health insurance
contributes
• Coinsurance
• Percent of cost of health care service paid by the insured after
the deductible is met
– Out-of-pocket maximum
• After premium, most the insured is liable for
• In-network/covered services
KFF/HRET Survey of Employer-Health
Insurance
-From 2006 to 2014, the percentage of covered workers
with a general annual deductible increased from 55% to
80%.
-Percentage of workers in a Consumer-Directed Health
Plan (High-Deductible Health Plan + HSA)
2006: 4%
2014: 20%
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2014
Covered Workers with a General Annual Health Plan Deductible for
Single Coverage
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2006
2007
2008
2009
2010
2011
2012
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2014
2013
2014
Separate from the
general annual deductible….
• Separate cost sharing for hospital admission
–
–
–
–
–
Separate annual deductible: 3% [average $490]
Copayment: 15% [average $280]
Coinsurance: 62% [average 19% of bill]
Both copayment and coinsurance: 10%
Charge per day: 5% [average $297]
• Separate cost sharing for outpatient surgery
– Copayments: 16% [Average copayment: $157]
– Coinsurance: 64% [Average: 19% of bill]
– Both Copayment and Coinsurance: 7%
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2014
Copayments
• Physicians Visits
– Copay
• Percent of plans: 89% Primary Care, 72% Specialists
• Average Copay: $24/$36
• Average Coinsurance: 18%/19%
• Drugs
– Three, four, and five tiers of copayments AND coinsurance.
– Very high for so-called “specialty” drugs
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2014
https://www.bcbsnc.com/content/services/formulary/rxdef.htm
http://www.bcbsm.com/index/health-insurance-help/faqs/plantypes/pharmacy/what-are-specialty-drugs.html
“With the new pricing system,
insurers abandoned the
traditional arrangement that has
patients pay a fixed amount, like
$10, $20 or $30 for a
prescription, no matter what the
drug’s actual cost. Instead, they
are charging patients a
percentage of the cost of certain
high-priced drugs, usually 20 to
33 percent, which can amount to
thousands of dollars a month”
-Generics reported to rise in price > 600 – 1000%
By Caroline Mayer
July 1, 2013
“Even with Stage IV lung cancer, there are moments when 32-year-old Chip
Kennett feels blessed. Over the course of two weeks in April, those moments were
many, as 325 friends and family members contributed $56,800 over the Internet to
help defray his out-of-pocket medical costs … The Kennetts acknowledge they are
lucky to have good health insurance ….
Even so, the Kennetts have paid thousands
of dollars in out-of-pocket expenses,
including the insurance plan’s co-pay
requirements and its $5,000 annual
deductible ($7,000 for out-of-network
doctors) for both 2012 and 2013. They also
face large bills for their share of
medication costs, including $485 a month
for a blood-thinning injection … and $480
a month for a bone-strengthening
injection.”
• More companies offering HDHPs as only
option (GE, JP Morgan, Honeywell)
• ~50% increase in number of employers that
plan to offer HDHP as the only plan option in
2015 (10% in 2010; 22% in 2014; ? 32% in
2015)
-Analysis of ED visits and hospitalizations over two
years among enrollees inured in high deductible
plans in Massachusetts
-Resulted in 25-30% reduction in “high-severity ED
visits”(defined as a diagnosis with 75%+ likelihood
of requiring emergency department care) over both
years, with a reduction in hospitalization by 23% in
year 1 but a rise in year 2.
II. The Obamacare Exchanges:
Individual Health Insurance
• Actuarial Value: 60% for the “Bronze Plans”,
70% in the “Silver Plans,” 80% in the “Gold
Plans,” 90% in Platinum.
– Copays
– Deductibles
– Coinsurance
NY State of Health – Standard Bronze
Plan (Family)
• $6,000 deductible
• Out-of-pocket maximum: $12,700 for a family with incomebased adjustments …
• 50% coinsurance after deductible for:
–
–
–
–
–
–
–
–
“Ambulance services”
Emergency department (unless admitted)
Urgent Care Center
“Advanced imaging”
“Diagnostic tests”
Dialysis
Hospice care
Inpatient care for end of life care (preauthorization required)
Source: NY State of Health Standard Products; courtesy of Len Rodberg
Different medicine for the
“common and the lofty”?
http://www.whatmattersbywellmark.com/premiums.php
Out-of-Pocket, Out-of-Money?
KFF 2012
CWF, 2014
Out-of-pocket limits:
A Changing Target
BOTTOM LINE:
For a family of 4
making with income
of $60,000, out-ofpocket liability
doubled, from
~$6,000 to ~$12,000.
http://www.salon.com/2014/04/11/a_pro_single_pay
er_doctors_concerns_about_obamacare/
Out-of-Pocket Maximums:
A Changing Target
• How/Why? ACA specifies that if the original
limits would increase the actuarial value of
the plans above what is required by law (i.e.
would result in insurance companies paying
for > 70% of your health care bill for a silver
plan), government would increase out-ofpocket maximum.
• asdf
-Favored by insurance industry, some Democrats
-”Copper Plans” would have actuarial value of ~50%
-Presumably OOP limits would have to be increased
-Next up?
III. “Private Option” Medicaid
• 2010: Supreme Court makes the ACA’s
expansion of Medicaid optional for states.
• States now have leverage to obtain “waivers”
to experiment with Medicaid expansion – in a
conservative direction.
• Arkansas, Iowa: Obtained waivers to expand
Medicaid through the “Private Option”
(voucher to buy plan on the exchange).
Pennsylvania has followed.
The “Private Option”
• Arkansas: Medicaid legislation required
establishment of “independence accounts
that operate similar to a Health Savings
Account” and that would allow participants to
“purchase cost-effective high-deductible
health insurance” that would “promote
independence and self-sufficiency.”
"We believe in consumerism," according to the director
of the Arkansas Department of Human Services. By
making the poor act more like consumers, "we think
they'll use care more appropriately and get a sense of
how insurance works."
Waiver: Gives enrollees the
“private health insurance
experience” and “promotes
consumerism” & “preserve[s]
dignity.” Also “the infusion of
market principles works to
educate members and prepare
them to participate in the private
market.”
Does It Have to Be This Way?
Out-of-Pocket Health Care Spending per Capita, 2007
Adjusted for Differences in Cost of Living
Dollars
890
800
720
580
600
573
542
528
485
470
351
400
343
246
213
200
0
US
NOR
CAN
AUS*
* 2006
Source: OECD Health Data 2009 (June 2009).
ITA
SWE
OECD
Median
GER
NZ
UK
Courtesy Len Rodberg
FR
NETH
Cost Sharing = Cost Saving?
Source: Patryk Perkowski and Leonard Rodberg, unpublished data 2014. Courtesy of Leonard Rodberg.
http://www.nytimes.com/2014/09/27/upshot/the-benefits-of-economic-expansions-areincreasingly-going-to-the-richest-americans.html?abt=0002&abg=0
A right to health: No two types of
medicine for the lofty and the needy ...
• Cost sharing in an era of rising inequality inevitably
contributes to class-based medicine regardless of the intent
of the provider.
• A right to health care is much more than “universal access”
to insurance. It requires:
– Equality of access
– No financial barriers to care
• True universalism does not square with for-profit system:
no need for product design with “everyone in and nobody
out.”
• The fight for single-payer
– About more than universal access, administrative savings
– About health care equality
– Part of a larger campaign against rising inequality