health care

America’s Health-Care System Has Never Looked Sicker — or Harder to Cure

Sick, sad country. Photo: Justin Lane/EPA-EFE/Shutterstock

The coronavirus crisis looks like it was designed in a lab — to lay bare the insanity of the American health-care system.

Employer-provided insurance has always been a bizarre and retrograde practice that’s earned our people a reputation for barbarism among foreign anthropologists. But a pandemic-induced recession should render the perversity of tying medical coverage to a specific (and shrinking) category of job apparent to even the most backward and chauvinistic among us. By month’s end, between 25 and 43 million Americans will lose their job-based health coverage, according to a new report from the Urban Institute. Already, 14 percent of U.S. adults say they would avoid seeking health care for COVID-19 symptoms due to affordability concerns. A policy that was once merely unjust for the unlucky is now unsafe even for the cosseted few.

Allowing America’s specialist physicians, hospital executives, and pharmaceutical companies to charge rates several times higher than their peers in foreign countries — until the health-care sector commandeers 18 percent of national GDP — has always been an anchor around our economy’s neck. But when a pandemic forces almost every hospital in the country to cancel all of their overpriced elective procedures at once, that anchor starts sending the economy hurtling toward the ocean floor: A contraction in the health-care sector accounted for nearly half of the 4.8 percent decline in GDP that America suffered last quarter.

Financing hospitals on a fee-for-service model — such that lifeline institutions in poor, rural regions struggle to remain open, while those in affluent, urban areas indulge in needless renovations and extravagant executive compensation — has always been a cruel joke. As a pandemic chokes off hospital revenues while ramping up need, it’s become gallows humor.

Seeking to curb medical inflation — without curtailing elite health-care professionals’ outsize incomes — by gutting hospitals’ surge capacity and discouraging the disempowered from visiting the doctor through high-deductible plans was always injurious. In a pandemic, it’s homicidal.

And so on.

The ideologically inclined are famous for seeing every crisis as a validation of what they’ve always believed. But it isn’t just progressives who see COVID-19 as a strong argument for radically reforming the U.S. health-care system: Morning Consult’s tracking poll finds that Medicare for All gained 11 points in net support between February and March, leaving 55 percent of voters in favor of nationalizing the health insurance industry.

So progressives could be forgiven for thinking that the sickness of America’s health-care system has finally become grave enough for its political class to approve invasive treatment. But that thought looks mistaken.

Proponents of universal health care in the U.S. have long labored under an oppressive irony: The very things that make our medical system substantively indefensible also make it damn near politically untouchable. That the health-care sector lays claim to nearly one-fifth of the U.S. economy is absurd. And yet, the more bloated the industry becomes, the more voters owe their livelihoods to the maintenance of that bloat — and the more resources the industry has to finance ad blitzes and lobbying campaigns defending its exorbitant share of growth. Employer-provided insurance condemns much of the American working class to medical insecurity. But for that reason, workers who have access to relatively robust employer-provided coverage tend to guard it jealously (however lackluster their benefits may be by international standards).

Thus far, the COVID-19 crisis has done less to erode these obstacles to reform than to exacerbate them.

As Americans lose their jobs en masse, Congress hasn’t recognized the folly of employer-provided coverage — but rather discovered the putative necessity of showering that model in (even more) subsidies. This is less paradoxical than it appears on first glance. Working people exercise very little political influence unless they form institutions that collectivize the costs of effective civic engagement (a.k.a. trade unions). Thus, the most politically empowered U.S. workers are also those best served (or least disserved) by the employer-based model: Unionized workers who’ve secured better-than-median health benefits from their bosses are politically organized; underemployed gig workers who can’t afford to see a doctor (typically) are not.

To be sure, socialized health insurance is still in the interest of unionized workers, and plenty of unions support the single-payer movement. But in a moment of acute crisis — when unions are faced with the task of maintaining their furloughed members’ coverage in the midst of a pandemic — they have good reason to think that casting their lot with those who wish to prop up the existing system is their best bet. Donald Trump and Mitch McConnell aren’t going to restore sidelined hotel workers’ health coverage by passing Medicare for All. But they might be willing to do so by bailing out employer-provided insurance plans. As Politico reports:

Big businesses and powerful Democrats are aligning around a proposal to bail out employer health plans in the wake of staggering losses to the insurance industry, as some worry that a surge in uninsured Americans could give new life to a stalled push for “Medicare for All.”


… While the health industry and Democrats still want to bolster Obamacare, an unusual bloc is pressuring Congress to fully subsidize workplace premiums for the uninsured. Corporations would benefit because the employer-based system supplies a big tax break for benefits they can use as a recruiting tool. Unions would keep the generous coverage they have negotiated with corporations. And hospitals and doctors could maintain the big payouts from private insurance, which are far higher than the Medicare and Medicaid rates paid by government … Democratic leaders in Congress know Republicans have little appetite for broadly expanding government coverage, and Biden has endorsed temporarily subsidizing workplace plans. Republicans, despite railing against insurer “bailouts” in Obamacare for years, are friendlier to employer-based insurance and may be more receptive to a deal that could prevent millions of people joining the Medicaid rolls.

… Unite Here, representing mostly service workers, said Congress must subsidize workplace plans. The union’s international president, D. Taylor, estimates 95 percent of its members are unemployed during the crisis.

“The health care crisis of a lifetime requires full emergency health care coverage for those millions of hardworking Americans who, through no fault of their own, have become unemployed,” Taylor said.

As a matter of advancing the general welfare, providing the newly unemployed with a temporary extension of their employer-provided coverage is madness. Since employer-provided plans pay elevated rates, Uncle Sam could enroll the jobless in open-ended Medicaid (or Tricare Select) coverage for a fraction of the cost. Beyond its relative fiscal inefficiency, subsidizing employer plans is also more regressive than expanding public insurance, since the most vulnerable unemployed Americans never had employer-provided coverage to lose.

Simply put, the employer-provided model deserves to die. Given how difficult it is to kill by political fiat, having Congress sit on its hands as a pandemic eviscerates the rentier interests and mass base sustaining employer-based coverage may be the most plausible path to reform we’ve got.

But that’s easier said than done. After all, from the perspective of many well-organized and broadly sympathetic constituencies, seeking to prop up the existing system through makeshift fixes is perfectly rational — and only getting more so.

As the pandemic-induced recession squeezes providers, those who cater to Medicaid recipients — and thus operate on the razor-thin margins that that program’s low payment rates demand — are among the first to close their doors, thereby diminishing the value of Medicaid coverage to ordinary Americans. This dynamic would play out in the absence of further federal intervention. But the Trump administration is actively working to undermine providers who serve the poor. As the Los Angeles Times reports:

Hospitals, clinics and physicians’ offices across the country have seen a steep drop-off in business during the coronavirus outbreak as medical centers limit nonessential procedures and patients stay away, fearful of getting ill.

That prompted Congress to earmark $100 billion in emergency assistance for medical providers in the most recent aid package. But it left the distribution of this funding to the Department of Health and Human Services.

The department initially allocated money based on providers’ Medicare revenues, a calculation that favored hospitals and physicians that care for large numbers of elderly patients.

Last week, Azar announced yet another formula, which would allot additional aid largely based on medical providers’ total revenues. This tipped the scales even more toward hospitals, physicians and other providers that care for patients with commercial health insurance, which typically pays them much higher rates than either Medicare or Medicaid, the two main government health plans.

When Unite Here works to preserve its members’ access to employer-provided coverage networks — rather than pushing for their enrollment in a low-cost, public plan that’s bleeding providers by the day — they are acting in their members’ best interests, at least in the near term.

Similarly, when financially embattled hospitals and doctors that serve a mix of publicly insured and employer-covered patients ask Congress to subsidize the latter — so as to prevent those patients from becoming the former — they are acting in the interest of their own survival. Which is to say: If total funding is distributed inequitably between providers, even those who are not extracting outsize rents from the status-quo order will have an interest in propping up employer-provided coverage (and its high payment rates) just to make ends meet. And this interest will become even stronger in a moment of acute economic crisis.

Take this reality — add in the damage COVID-19 is doing to state budgets — and it isn’t hard to see why Colorado is abandoning its push for a public-health-insurance option, even as the substantive case for one grows stronger by the day:

Democrats in the Colorado legislature on Monday said they are setting aside their contentious effort this year to pass a bill creating a public health insurance option.

The prime backers of the legislation, House Bill 1349, say the coronavirus crisis has made it impossible to ensure that all of the relevant stakeholders — hospitals, doctors and insurance companies — can be involved in the lawmaking process.

… State lawmakers are also facing significant budget cuts because of economic impacts of coronavirus that likely would have made passing the public option legislation nearly impossible. House Speaker KC Becker, a Boulder Democrat, alluded to that factor last week.

Colorado hospitals had fought to block the public option, which would have given the state the power to force down payment rates. Last week, Colorado Hospital Association CEO Chris Tholen framed opposing reform as a duty Coloradans owed to the heroes of the coronavirus crisis, saying the pandemic had “demonstrated how crucial it is to support our health care infrastructure — including protecting our front-line workers and facilities that are essential to pandemic response.”

There is no inherent reason why the United States cannot provide all of its citizens with basic medical care while keeping its rural hospitals and doctors in the black. We are a historically wealthy society with more fiscal capacity than any other nation on the planet. By enrolling all Americans in high-quality public coverage, publicly subsidizing medical training, making it easier for foreign-trained physicians to practice in the U.S., establishing global budgets for the nation’s hospitals, and implementing other proven reforms, we could build a health system that provided universal care at a lower per-capita cost.

But abstract, Rawlsian rationality does not govern Congress. Well-organized, well-funded interest groups and ideological movements do. And the political economy of U.S. health care leaves proponents of maintaining the status quo with far more divisions than single-payer advocates command (no matter how much passive support their ideas might boast among Americans in surveys). The coronavirus may yet make the reactionary coalition’s advantage a bit less lopsided as the health-care industry bleeds money and the employer-provided system loses public support. But for now, there are few signs that COVID-19 is curing what ails our health-care politics.

U.S. Health Care Has Never Been Sicker — or Harder to Cure