The Incision

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Activists in Washington, D.C. demonstrating for health care reforms in 2021.

The Incision

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My testimony to the Senate Budget Committee on Medicare for All

By Abdul El-Sayed

Friends, last week I found myself on Capitol Hill in W ashington, D .C. to testify before the Senate Budget Committee on Medicare for All. I wanted to share my written testimony with you, laying out the case for Medicare for All — and how it would solve not just a limited set of our challenges, but all of them. You can watch the testimony at budget. senate.gov.

My name is r. Abdul El ayed, I trained as a physician and epidemiologist. I served the ity o etroit as ealth irector between and , where I was responsible or the basic health and wel are o nearly , etroiters. I also led the rebuilding o the etroit ealth epartment a ter it had been privati ed during municipal ban ruptcy and financial ta eover by the tate o ichigan under the same system o emergency management that led to the lint ater risis. oday, I teach at the niversity o ichigan s ord chool o ublic olicy, as well as American niversity s chool o ublic A airs. I find mysel shouldering the aw ward responsibility o e plaining the hapha ard dys unction o American healthcare to some o the brightest young policy minds in the country. I watch my students aces crin le when I e plain how deductibles wor comparing them to having to pay . or each movie you watch on Net i even though you already pay or your monthly subscription. ast year, my boo on the very subject o this hearing, along with r. icah ohnson, Medicare for All: A Citizen’s G uide was published by O ord niversity ress. I have given a copy to each o your o ces.

I want to start with the two most obvious problems in American healthcare e ail to provide everyone health insurance coverage. he cost o healthcare in America is spiraling upward.

Coverage

e li e to thin o ourselves as customers o healthcare. ut we are not. o understand why, let s review how being a customer actually wor s. Imagine you were to go to a armer s mar et in search o some heirloom tomatoes. here are multiple varieties

all at di erent prices. et s say you find a stall with some tomatoes you li e. ou as the seller or the price. I that price is too high, you move on. ut i it s air, you purchase them. ou tender payment and you are now the proud owner o heirloom tomatoes. hat is a normal customer e perience. ut that s not how we e perience healthcare. Imagine I was to complain o chest pain during this hearing. I d be e hibiting signs o a potentially deadly heart attac . I should hope that you would call . hen the ambulance comes, I would have no choice as to where I was going no choice o who would sell me healthcare. Indeed, I would need to be ta en to the nearest hospital. ime is wasting. hen I arrive, I have no choice in the care I get or rom whom I get it I m le t at the mercy o the physicians assigned to provide me care. ut there are several directions my care could go depending on the physician, the services provided at the hospital, and what they deem my pathology to be. No one ever shares a price list or the care I will receive.

A terwards, a bill is sent to my health insurer. y insurer is based in ichigan, while I would have had my heart attac in ashington, . ., so I would have received out o networ care. It is unclear e actly how much o the cost o my care they will pay. ut it is ay, and my amily and I have been healthy this year. e have yet to pay down our deductible the paywall in ront o the health insurance my amily pays a premium or every month. o, some o the cost would get pushed bac to me. Either way, my insurance pays or my healthcare, and sends me a bill or whatever it will not cover.

Now compare this e perience to the traditional customer e perience I laid out at the armer s mar et. I do not get to shop around between providers. I do not get to choose what product I want owing to the in ormation asymmetry the di erence in nowledge between my provider and me. I am le t to the provider to both tell me what I need and sell it to me. I am never as ed what price I am willing to pay. It s assumed I ll pay whatever it costs considering I only have one heart that is priceless to me, a per ect e ample o what economists call inelastic demand my demand or care does not change based on price. And finally, once I receive my care, I do not pay. Instead, a third party insurer pays on my behal and passes whatever it will not bac on to me.

Rather than being the initiator and completer o a financial transaction, I am the reason a financial transaction between my insurer and provider has ta en place. As yoursel , in the traditional customer analogy are we the customers ... or the tomatoes

Our profit driven healthcare system renders our bodies into products, over which providing healthcare justifies financial transactions between major corporations. ealthcare is not a traditional mar et product because it violates so many o the re uirements o the mar et. e are not the ones who pay or our healthcare. e o ten receive healthcare in circumstances that preclude us rom negotiating. e rely on our providers to both tell us what we need and to sell it to us.

It s no wonder why mar et based healthcare so obviously ails. I I were a customer, I would be ree to wal away i the price is too e pensive. hat act would orce any seller to lower their prices i they wanted the sale. hat s the power o negotiation in a true mar et the act that you do not have to buy. ut in our system, no one can wal away. As a patient, I don t have time. As an insurer, the care has already been provided. o instead o eeping prices down, health insurance companies have reali ed that they can just pass more o their costs bac onto us. remiums what we pay every month or the privilege o being insured have risen aster than wages and in ation over the past decade. he median amily premium is now , nearly , o that is coming out o amily, not employer, poc ets. onsidering that the median amily earned about , in , they spent . percent o their earnings on premiums. ut that s not where the healthcare cost burden ends. eductibles usually sit around , or private amily plans. hat ma es the annual cost o private health insurance nearly , per year, or . percent o the median amily budget be ore ta es.

Out o poc et costs in the orms o deductibles and co pays are not just financially costly, but they re also physically costly. aving to pay a deductible delays necessary healthcare. One study ound that high deductibles delayed treatment or breast cancer by nearly nine months. orse still, deductibles have more than doubled over the past decade.

All o this contributes to the irony that the operative part o the word insurance is sure. And the structure o our or profit system leaves Americans increasingly unsure about their health insurance access. he nature o insurance coverage, itsel , has changed. It s no wonder that nearly percent o adults struggle to a ord their care, and percent report rationing care because they cannot a ord it.

And that s or people who are winning in our or profit healthcare system. hese are the privately insured Americans who are routinely told that they have the greatest healthcare in the world. hat about those who are losing in our profit driven system hat includes, o course, the uninsured o whom there remain million according to the census. hat includes percent o America s children.

It also includes about million Americans enrolled in edicaid, our ederally unded, state operated health insurance program or low income Americans. hile edicaid is a critical program, a li eline or millions o Americans who cannot a ord private health insurance, the program is only just that a li eline. edicaid reimbursements, on average, are substantially lower than private insurance reimbursements. And because healthcare providers are not re uired to accept edicaid, beneficiaries are, in e ect, second class healthcare citi ens. It is impossible to escape the act that reimbursing the same healthcare services at a lower rate re ects an implicit lac o value o the body or which the healthcare is being provided. One study ound that just a increase in edicaid reimbursements led to a . percent increase in the probability that a edicaid beneficiary had seen a physician in the past two wee s. ecause Americans o color are substantially more li ely to be insured on edicaid than their white counterparts, our tiered healthcare system is just another means by which our healthcare system assents to undamental health ine uities. Empirically, our system literally values lac bodies less than it does white ones.

Costs

e spend a whopping , per capita on healthcare more, by ar, than any other country on Earth. Our neighbors just north spend less than hal as much , . And the costs are rising aster than comparable countries, too. hy do healthcare costs eep rising ecause corporations ma e money when they do. ealthcare providers ma e more when they bill more. ospitals mergers and ac uisitions continue to surge. And as hospitals buy one another up in mergers and ac uisitions, they eliminate their competition. One study ound that hospital consolidation was associated with increased healthcare prices, o ten as high as percent. ou might e pect health insurance companies have an incentive to negotiate healthcare costs downward on behal o consumers, acting as a chec on rising healthcare costs. ut instead o negotiating these prices downward, insurers have leveraged cost sharing mechanisms to pass rising costs bac onto American amilies. here are also the unintended conse uences o the rule which re uired health insurance companies to spend at least percent o their annual collected premiums on healthcare or return anything in e cess bac to beneficiaries in the orm o a premium rebate. hile it was intended to eep premiums low, it also removed the incentive health insurers had to negotiate down provider billing. All o this illustrates the undamental ailure o assuming that negotiations over healthcare costs between profit driven insurers and healthcare providers on behal o the American public would do anything but ma imi e the profits o both sets o corporations at the e pense o the public.

The pandemic shows us how America’s healthcare failures extend well beyond this

Now that I have discussed the most obvious problems with American healthcare, I want to e pand the aperture. hough we o ten rame our healthcare discussion simply around coverage and cost, this raming specifically e cludes some o the most important issues acing health and healthcare in America. o help us understand these, I want to ta e us bac just two albethey e traordinarily long years, to early . None o us will orget the horror o the first days o the pandemic that spring. e were acing a new virus with very little in ormation about how it spread, how deadly it might be, and who was at highest ris . e had no vaccine nor any e ective treatments. e were watching hospital wards fill up their sta struggling without the ventilators or beds they needed to treat patients. rontline nurses, doctors, and hospital wor ers were doing all this without the basic personal protective e uipment they needed to protect themselves and their patients rom what was then called the novel coronavirus. Indeed, this added to the already chronically poor wor ing conditions or many healthcare wor ers including unsustainable and unsa e sta ng ratios, mandatory overtime, and vicious union busting. oday, nurses are being orced to travel or more lucrative locum opportunities where they wor alongside permanent colleagues who ma e ar less or the same wor all this cementing a permanent sta ng crisis in America s hospitals. esperate to atten the curve, mayors and governors around the country were orced to close schools and issue