This Health Care Law Bars Competition And Drives Up Prices, Even as a Pandemic Rages

“COVID-19 has forced doctors to postpone many types of surgeries, but some things can’t wait. Ophthalmologist Jay Singleton saw one man at risk of permanent blindness on a recent Friday evening in New Bern, North Carolina.

“He had a rare type of glaucoma caused by a large cataract, and the only thing to do was to remove it so the pressure would go down inside the eye,” Singleton says. “We knew it was a very real situation because he already had lost one of his eyes to the same thing.”

Singleton had all the skills and equipment necessary for the job at his state-of-the-art vision center. Unfortunately, the government won’t let him use his space for the vast majority of the surgeries he performs.

North Carolina and many other states impose a regulatory tool called a “certificate of need” (CON), which forces health care providers to prove an unmet need in the market before operating a facility, scaling up, or purchasing major medical equipment. In practice, CON laws block new competition, funneling traffic to big hospital systems—the last thing that should happen during a global pandemic.”

“”You have to pick a side,” Singleton says. “If you treat it like a business, you must allow other people to enter the market and compete with you like every other business. If you treat it like a public partnership, then you can’t enrich yourself on the backs of Medicare patients. You can’t have it both ways.””

“15 states—including California, Colorado, and most recently New Hampshire—have eliminated their CON programs.
None of these states has experienced any negative effects. Indeed, Matthew Mitchell, a researcher at George Mason University’s Mercatus Center, says states that got rid of their CON laws have more hospitals and surgery centers per capita, along with more hospital beds, dialysis clinics, and hospice care facilities.

“Forty years of peer-reviewed academic research suggests that CON laws have not only failed to achieve their goals but have in many cases led to the opposite of what those who enacted the laws intended,” he says.”

“Many states, including Connecticut, Georgia, and South Carolina, suspended their CON laws after the pandemic came to America. Other states, such as Rhode Island, rolled back CON laws at hospitals and nursing facilities but not outpatient surgery centers or hospices.

Instead of just being a temporary reprieve, these emergency actions should be expanded and made permanent.”

Middle Class Welfare: The Pros and Cons of Employer Sponsored Health Insurance: Sources

What’s Wrong with Employer Sponsored Health Insurance Ed Dolan. 11 6 2018. Niskanen Center. The Real Reason the U.S. Has Employer-Sponsored Health Insurance Aaron E. Carroll. 9 5 2017. New York Times. Column: The health insurance tax exemption makes care more affordable,

The Real Reason the U.S. Has Employer-Sponsored Health Insurance

“The single largest tax expenditure in the United States is for employer-based health insurance. It’s even more than the mortgage interest deduction. In 2017, this exclusion cost the federal government about $260 billion in lost income and payroll taxes. This is significantly more than the cost of the Affordable Care Act each year.”

“Let’s take a hypothetical married pediatrician with a couple of children living in Indiana who makes $125,000 (which is below average). Let’s also assume his family insurance plan costs $15,000 (which is below average as well).

The tax break the family would get for insurance is worth over $6,200. That’s far more than a similar-earning family would get in terms of a subsidy on the exchanges. The tax break alone could fund about two people on Medicaid. Moreover, the more one makes, the more one saves at the expense of more spending by the government. The less one makes, the less of a benefit one receives.

The system also induces people to spend more money on health insurance than other things, most likely increasing overall health care spending. This includes less employer spending on wages, and as health insurance premiums have increased sharply in the last 15 years or so, wages have been rather flat. Many economists believe that employer-sponsored health insurance is hurting Americans’ paychecks.

There are other countries with private insurance systems, but none that rely so heavily on employer-sponsored insurance. There are almost no economists I can think of who wouldn’t favor decoupling insurance from employment.”

What’s Wrong with Employer Sponsored Health Insurance

“The high proportion of people who get their health insurance through their jobs is one of the most distinctive features of the U.S. health care system. According to the Census Bureau, 56 percent of the population had employer-sponsored health insurance (ESHI) as of 2017. ESHI accounts for 83 percent of all of those with private insurance of any kind. People whose health insurance is tied to their jobs far outnumber the 38 percent of the population served by government insurance of all kinds.”

“most people on ESHI appear to be satisfied with the coverage they get. A survey by America’s Health Insurance Plans (AHIP), an insurance industry group, found that 71 percent of respondents were satisfied with their ESHI plans, compared with just 19 percent who were not satisfied. An independent survey by Gallup came up with similar results, finding 69 percent of people on employer-sponsored plans to be satisfied. A study by the Employee Benefit Research Institute found that 50 percent of workers were extremely or very satisfied with their own ESHI plans, with another 39 percent somewhat satisfied.”

“Despite its popularity, though, serious health economists tell us that ESHI is “broke,” after all. No comprehensive reform can succeed unless it is phased out. This commentary examines three of ESHI’s biggest problems: job lock, which reduces labor mobility for ESHI beneficiaries; the fundamental inequity of the way the benefits of ESHI largely accrue to the highest -paid workers; and the increased fragmentation of health care finance inherent in a system administered by thousands of separate employers.”

“The term job lock refers to the tendency of employer-sponsored health insurance to discourage people from changing jobs; from starting a business of their own; or from reducing their hours to care for family members or move gradually toward retirement. Job lock undermines labor market mobility, makes it harder to match workers to the most suitable jobs, and cuts labor productivity.”

“Eichenwald suffers from a severe form of epilepsy for which medication alone costs $50,000 a year. His op-ed vividly details 40 years of struggles to secure and keep health insurance: small employers who refused to hire him because he would send the company premium through the roof; frightening gaps in coverage when he had to appeal to his parents to cover costly ER visits; a humiliating incident in which he had to beg for an entry-level job far below his qualifications just to maintain coverage.

Eichenwald’s experience is by no means exceptional. In the AHIP survey cited above, 46 percent of respondents listed health benefits as an important factor in deciding to work for their current employer. That included 9 percent who said health coverage was the decisive factor in taking the job. An even greater number, 56 percent, reported that health insurance had an impact on their decision to stay in their current job.

There is a large academic literature on the extent of job lock, well summarized in a 2015 literature survey by Dean Baker, published by the AARP Public Policy Institute. Baker notes that there is wide agreement that people with ESHI are less likely to change jobs, become self-employed, retire early, or reduce hours of work. At the same time, there are many other factors that influence labor mobility. Still, Baker concludes that even when those complicating factors are accounted for, the preponderance of evidence shows that job lock is a reality.”

“Suppose you are a head of household earning $60,000 a year, putting you in a 25 percent federal tax bracket. In that case, having your employer pay $14,000 of your insurance premium, rather than getting that much extra in cash and paying the premium yourself, saves you $3,500 in taxes. If you are a top executive in a 40 percent tax bracket, the tax deductibility of the insurance is worth $5,600.

However, according to the Tax Policy Center, some 44 percent of Americans will pay no income tax at all in 2018. Sixty percent of the nonpayers work. Even if they get ESHI, it gives them no tax benefit at all. They would be no worse off if health benefits were not deductible and if employers added the cost of their insurance to their cash pay instead.

A second factor adding to the inequity of ESHI is that low-wage workers, by and large, are not even offered the option of health benefits. The following chart, provided by the Social Security Administration, shows that only about a third of workers in the lowest fifth of the wage distribution are offered health benefits and that fewer than 20 percent accept those offers. In contrast, more than 80 percent of those in the top fifth of the wage distribution are offered health benefits and accept them.”

“Robert Kaestner and Darren Lubotsky, economists at the University of Illinois, Chicago, provide an estimate of the overall inequality of ESHI based on the combined effects of differences in tax rates and differences in offer and acceptance rates. As shown in the next chart, taken from their study, workers in the bottom fifth of the family income distribution get annual benefits of less than $500 from ESHI, while those in the top fifth get benefits averaging $4,500. What is more, the value of health benefits to well-paid workers grew substantially over the period shown in the chart, while the value for the lowest paid workers decreased slightly.”

“Fragmentation is a problem for small employers, who have little bargaining power in purchasing group policies from insurers, but also for larger employers. Many larger employers try to save on health benefit costs by self-insuring. According to Collective Health, a company that advises employers on their ESHI programs, 79 percent of companies with 200 or more employees self-insured as of 2017, up from 60 percent in 1999.

The problem is, companies that self-insure don’t always do a good job of it.”

“When it comes down to hard bargaining, health care providers, including big insurers, hospitals, and drug companies, are less fragmented than employers. Furthermore, health care is what they know best. For employers, whose main expertise lies in manufacturing, customer service, finance or other areas, health care is only a sideline. Given the structure of the system, providers will always come out ahead, driving up costs for workers and their families, who are the ultimate health care consumers.”

“people who have tried to trace its origins, like Indiana University’s Aaron Carroll, portray ESHI as an accident of history. Job-linked health benefits first became widespread during World War II when American firms faced both a labor shortage and a wage freeze. Desperate to attract employees, the story goes, they started giving out benefits like health insurance instead of cash raises. The IRS boosted the popularity of ESHI by declaring such benefits to be nontaxable. When President Truman’s attempts to establish a national health care system failed after the war, ESHI became a central element of a complex health care system whose many disparate parts have never fit together well.

We can do better than that.”

How Doctors Broke Health Care

“Nearly 18 percent of America’s economy is devoted to spending on health care, far more than the share in any comparable country. And although the U.S. medical system provides some of the best health care in the world, it does so only for those who can afford it. Moreover, fragmented service delivery undercuts overall quality. A decade after passage of the Affordable Care Act (ACA), health care spending is still eating up government and household budgets, nearly 28 million Americans remain uninsured, and costs continue bounding upward.”

“Too many of today’s policy “solutions” build upon the faulty insurance company model that currently organizes U.S. health care—a model that was concocted by the American Medical Association (AMA) in the 1930s as a way to protect the professional status and earning power of its members. It resulted in care that is expensive, bureaucratic, and frustrating for both patients and caregivers.”

What Mike Pence’s public health record says about his ability to lead on coronavirus

“In 2011, a Congress member from Indiana helped pass federal legislation to strip funding from Planned Parenthood.

Two years later, the last Planned Parenthood affiliate in Scott County, Indiana, closed its doors because of budget cuts. It was also the last HIV testing center in the county. By 2015, an HIV outbreak was brewing in the state. At the peak of the outbreak, 20 new cases were being diagnosed per week, with a total of nearly 200 cases eventually reported, according to HuffPost.

But that Congress member, who became Indiana’s governor, didn’t want to authorize a needle-exchange program to stop the spread of the virus.

“I don’t believe effective anti-drug policy involves handing out drug paraphernalia,” he said.

That Indiana governor was, of course, Mike Pence. Now he’s the vice president, and on Wednesday, President Trump put him in charge of fighting coronavirus in the US.”

“In general, the administration has sought to restrict funding to Planned Parenthood and other groups, reproductive health advocates say, without regard to the public health implications. The administration’s policies have already made it harder for low-income Americans to get screening for conditions like breast and cervical cancer. And some fear that, especially with Pence in charge, the administration could put politics over science when it comes to coronavirus response too.”

“Finally, over two months after the HIV outbreak was reported, Pence said he would pray on the issue, according to the New York Times. Two days later, he issued an executive order for syringes to be distributed in Scott County.

The distribution helped stop the epidemic, according to the Times. But Pence didn’t actually allocate new money for the program, or for fighting the epidemic generally, forcing state officials to cut other health programs, Meyerson said: “overall, his governorship showed that he did not commit to an adequately funded public health infrastructure.””

“Last year, the administration issued a rule barring Planned Parenthood and other groups that perform or refer for abortions from getting federal funding through Title X, a program aimed at providing family planning services to low-income Americans. As a result, nearly 1,000 health centers around the country have lost funding, making it harder for many Americans to get necessary services like cancer screening or HIV tests.”

“Also in 2017, six members of the Presidential Advisory Council on HIV and AIDS resigned in protest, with one writing in Newsweek that “the Trump administration has no strategy to address the ongoing H.I.V./AIDS epidemic, seeks zero input from experts to formulate H.I.V. policy, and — most concerning — pushes legislation that will harm people living with H.I.V. and halt or reverse important gains made in the fight against this disease.”

Then, in 2019, the Trump administration cut funding for fetal-tissue research, despite long-standing arguments by scientific and medical experts that such research is crucial for developing vaccines and treatments for diseases. Research into AIDS and other conditions has already suffered as a result, Carter said.”