Viewpoint: What About the Poor?
"Lowering costs and improving quality is actually now happening without mandates and laws, and in spite of bureaucratic obstacles."
When discussing the topic of health care in the United States, “What about the poor?” is often the first question asked, and it is a loaded one. People are emotional about it; they care deeply about it. Some have experienced bankruptcy and other hardships from medical costs. Others just have an opinion that nobody should be left out. Many people have intelligently written about this issue from a variety of different perspectives. Other people have heatedly argued and disagreed on social media, often adding more heat than light. I am going to try to add something that is useful to an understanding of this important and complex issue.
Let’s start with the fact that we already have large safety nets for health care in the United States, mainly public (Medicare, Medicaid, ACA and CHIP), but also private safety nets and charities. We also have publicly funded medical care for active duty military and for veterans. 2020 and 2021 are clearly unusual years, due to COVID-19, so 2019 is a good year to use for some numbers. Per CMS (Center for Medicare and Medicaid Services), Medicare and Medicaid spending constituted 37% of total spending on health care in the U.S. in 2019 (Medicare: 21% and Medicaid 16%). Private health insurance spending was 31%, and out-of-pocket spending was 11% (these add up to a total of 79%, because there is other health care spending that does not fall under personal health care).1
This means Medicare and Medicaid paid for almost HALF of personal health care in the United States. In addition, there are taxpayer-funded subsidies for private insurance premiums (PPACA, aka Obamacare). Also per CMS, Medicare and Medicaid spending added up to over 1.4 trillion dollars in 2019, when the entire federal revenue that year was 3.5 trillion dollars (and federal outlays were 4.4 trillion dollars, with a deficit of 900 billion dollars). Total national health care expenditures reached 3.8 trillion dollars in 2019, or more than the entire federal tax revenue! And, this was before COVID-19. Not only do we have very large public safety nets, but the costs for them and for health care in general are staggering. This doesn’t even address the issue that Medicare and Medicaid often do not even entirely cover the actual costs of medical care.
Let’s also acknowledge that not everyone on Medicare, or even Medicaid, is poor, although most people on Medicaid are poor, at least relatively. People who advocate for “single payer” or “universal health care” say these safety nets are incomplete and imperfect, and they are correct. Health insurance and medical care can be extremely expensive, and they are correct about that, too. They say these safety nets should be extended to everyone, but that is where the problems and disagreements start. For one, Medicare is due to become insolvent in 2026, and the federal budget is running enormous deficits (especially with COVID-19), and those are just two important problems out of many. For another, there is often an assumption that a solution can be designed and implemented from the top down, and that it will actually work as designed.
Legislators and others have designed many plans to extend the safety nets and improve health insurance, but even if we could figure out how the government could pay for it, not everybody wants that, and this is not a small issue. It can be argued that often the results of plans that have already been implemented not only don’t fix all the problems, but also create other problems. Again, there are major problems with the details, and much has been written on this subject.
Many people wish the United States had a health care program like Canada, or the U.K, or France, or Singapore, etc. They can wish for it, but each country has come down a long and very different path than any other country, and the United States has a unique situation. Realistically, as much as anyone fervently wishes, health care in this country is not going to magically be transformed into the system of any other country, although we can learn from their experiences.
Next, let’s acknowledge that health care and health insurance in the United States is far from perfect. We often hear arguments from some quarters that our health care is the best in the world, and in some ways it is great, and in other ways, far from it. I won’t go into details, because I think we all know this; it’s a mixed bag. Rankings of health care in the United States compared to other countries are notoriously flawed and politicized, and to me, of limited help.
People use them to support their arguments one way or the other, but what we need is concrete improvement in the problem areas. One of the biggest problem areas is cost, and it has proven to be a refractory problem. It turns out we have more of a cost problem than a failure to take care of the poor. We may also have a fear problem, in that we fear solving the cost problem may harm the poor. However, I think solving the cost problem the right way will help the poor in a number of ways.
Now that we have all that out of the way, I would like to talk about some solutions that are not “top down,”, that don’t require everyone to agree and don’t add to the strain on the federal and state budgets. My husband and I have a good friend, Dr. Keith Smith of The Surgery Center of Oklahoma, who likes to answer this question about the poor with another question in turn. He says, “What are your intentions toward the poor?” This is important, because too many people are demanding that someone else do something or be made to do something. What can people do, that is not also making other people do things? I know that in my own medical practice, I have made my own contributions to the care of the poor, as many have. But, that is not enough. I would add, what can you do to solve the cost problem (and maintain or improve quality)?
Now I am getting to a bigger solution, and it is imperfect and very incomplete, too. As something of a perfectionist myself, one of my favorite sayings is “Perfection is the enemy of the good.” I am very much in favor of excellence, but the requirement that a solution not only improve a particular problem but fix ALL problems is a huge obstacle to improving anything. Perhaps it is even the biggest obstacle. The solution I am talking about is for those who provide medical services to figure out ways to cut out everything that does not add to care of the patient (there are so many things loaded in there that it is practically unbelievable), and then charge a reasonable price. This is called disintermediation. It sounds easy, but there are many large obstacles to doing this. I can assure people that lowering costs and improving quality cannot happen by mandate or law, and trust me, it has been tried, and will be tried again, but will not work.
But, lowering costs and improving quality is actually now happening without mandates and laws, and in spite of bureaucratic obstacles. It generally is only possible outside of the “system” (government-paid, and insurance-paid care). There are many people who are finding ways to make this happen. The “system” is so broken people are now beginning to work outside it to provide great care. It is beyond the scope of this essay to detail examples, but we expect to do that in the future. One of the very best solutions to “what about the poor” is to charge fees that are affordable to most people, and especially to the people who are NOT covered by the safety net programs. We can shrink the size of the group of people who are considered poor when it comes to paying for medical care.
There is much more I can say on this subject, but I think this is a good start. My most important message is if you are someone who wants everyone to be “covered,” and everything to be free (paid for by taxpayers), I ask you to recognize that we already have (imperfect) large safety nets for the poor, with large participation by doctors and hospitals. Whether people like them or not, they are not going away. However, the entire third party payer system (government payers and insurance) is at its breaking point, and we need to allow and support solutions that are “outside the system” to lower costs and improve care. More to come.
Healthcare Viewpoints is a monthly series featuring original columns from Montana healthcare leaders focused on addressing the challenges presented by our broken healthcare system. The opinions of guest authors do not necessarily represent the policy positions of the Frontier Institute.