Far more attention has been devoted to the ways in which
industry consolidation has driven up health costs than to proposals on how to
remedy the situation. But the introduction of Medicare for All and Medicare for
More bills—however dim their short-term prospects are—has changed the terms of
the debate. It is time to think about how we can eliminate the market power of health
systems without causing harmful dislocations in health care and the economy.
Before we get to that, here are the main facts about
consolidation: As a handful of health insurers have become dominant in many
markets, health systems have done likewise in order to maintain or improve
their negotiating positions. That has proved to be an effective strategy in
many cases. Even dominant health plans cannot do without the largest hospital
systems in their areas, especially when they employ many of the local
According to a Kaufman Hall report, 90 hospital and health system deals were publicly announced in 2018. This was a decline from the 115 deals unveiled in 2017, but the average size in the revenue of sellers hit a high of $409 million.
The biggest provider mergers are staggering in scale. In February 2019, for example, Catholic Health Initiatives and Dignity Health formed a new organization called CommonSpirit Health, which has 142 hospitals, 150,000 employees and nearly $30 billion in revenues. The union of Chicago-based Advocate Health Care and Wisconsin’s Aurora Health Care in April 2018 created a giant with 27 hospitals and $11 billion in revenues. A month later, Atrium Health (formerly Carolinas Healthcare System) joined with Wake Forest Baptist Health to form a system with 49 hospitals and combined revenues of $7.5 billion.
Within the ever-widening array of Democratic contenders for the Presidency, the “Medicare-for-all” debate continues to simmer. It was only six weeks ago that Kamala Harris’s vocal support drew fire from not one, but two billionaire political rivals. Michael Bloomberg, looking for support in New Hampshire declared, “I think we could never afford that. We are talking about trillions of dollars… [that] would bankrupt us for a long time.” Fellow billionaire candidate Howard Schultz added, “That’s not correct. That’s not American.”
Remarkably, neither man made the connection between large-scale health reform’s potential savings (pegged to save 15% of our $4 trillion annual spend according to health economists) and the thoughtful application of these newly captured resources to all U.S. citizens without discrimination. Bloomberg’s own 2017 Health System Efficiency Ratings listed the U.S. 50th out of 55, trailed only by Jordan, Columbia, Azerbaijan, Brazil, Russia. Yet he seemed unable to connect addressing waste with future affordability.
Schultz was similarly short sighted. While acknowledging that the
manmade opioid epidemic, mental health crises, and income inequality are
“systemic problems” and at levels “the likes of which we have not had in a long
time”, he failed to connect the cause (a remarkable dysfunctional and
inequitable health care system) with these effects.
As I outline in “Code Blue: Inside the Medical Industrial Complex” (Grove Atlantic/ June 4, 2019), today’s greatest risk to continued progress and movement toward universal coverage and rational health planning is sloppy nomenclature. To avoid talking past each other, we need to define the terms of this debate while agreeing on common end points.
The demise of the ACA individual mandate, along with Trump’s and Republicans’ efforts to repeal Obamacare in 2017, will trigger in election year 2018 a new phase of the long-running, bitter battle over the fate of ACA, the insurance marketplaces, and the direction of health reform in general.
Surprisingly, the Democrats appear to have the upper hand for the moment. Republican efforts to repeal the ACA in 2017 were deeply unpopular—only about 20 percent of the U.S. population supported them. Independents and moderate Republicans, in Congress and among voters, were notably opposed. And in the Senate, moderates killed the various ACA repeal bills (albeit by narrow margins).
The Republican tax bill is also unpopular.
Recent special election results in Virginia and Alabama—put Republicans off-balance and on-notice as well. In particular, the Alabama result bends the vote math in the Senate against any repeat ACA repeal efforts in 2018, and very likely beyond.
But, perhaps most surprising, the resurgence of interest in “coverage for all,” universal coverage, and “health care as a right” that started with Bernie Sander’s campaign in 2016 has continued to gain traction, even among some conservatives.
Remember back in 2012 when then Vice-President Joe Biden told us, “Bin Laden is dead, General Motors is alive”? The good old days. Also around the time Senators John McCain and Lisa Murkowski promised to repeal Obamacare. Along with a bunch of other Republicans seeking reelection to Congress.
Fast forward to 2017. The new catchphrase is “GOP is dead, Obamacare is alive.” At least their credibility is dead. Buried in the rubble of broken campaign promises. Not only Obamacare repeal, but also tax cuts, immigration enforcement, balanced budgets, reduced spending, and so on.
Repeal and replace, as a promise was simple enough on the campaign trail. We heard this promise in 2010, when voters gave the House to Republicans. We heard it again in 2012, when voters gave them the Senate. Despite controlling Congress, Obamacare remained alive and well. Candidate Donald Trump, along with most Republican members of Congress, promised repeal and replace last year.
Eight months into the Trump administration, Obamacare is still kicking. Congress had three bites of the apple this year and each time came up with a worm instead. This week was their third attempt to fix Obamacare. Not the promised repeal, instead only financial window dressing to keep Obamacare alive in some shape or form.
A seasoned colleague recently told me that some PowerPoint presentations have no power and make no point.
But sometimes, a picture really is worth a thousand words. Or maybe — in the case of any meaningful discussion of health reform, thanks to its density and complexity — it might be worth 10,000 words. Hence our handy little exhibit.
This picture captures the 10,000 words it would require to explain with technical precision where President Obama’s Affordable Care Act fits relative to all health reform plans. It places “ObamaCare” along an ideologically scaled continuum of all serious reform options developed, debated and discarded or ignored since the 1980s.
They are all here: from the single-payer, centrally controlled models popular with those who detest corporations and the influence of money in medicine — two actual, not imagined “government takeovers of health care” — to two free market, laissez-faire models favored by those who detest regulation and the heavy hand of government in medicine.
Not surprisingly, yesterday’s debut Supreme Court argument over the so-called “individual mandate” requiring everyone to buy health insurance revolved around epistemological niceties such as the meaning of a “tax,” and the question of whether the issue is ripe for review.
Behind this judicial foreplay is the brute political fact that if the Court decides the individual mandate is an unconstitutional extension of federal authority, the entire law starts unraveling.
But with a bit of political jujitsu, the president could turn any such defeat into a victory for a single-payer healthcare system — Medicare for all.
The dilemma at the heart of the new law is that it continues to depend on private health insurers, who have to make a profit or at least pay all their costs including marketing and advertising.