Tag Archives: dan munro

‘Single-Payer’: the Wrong Debate

Once again, our healthcare reform is mired in muck.

That means we’re knee-deep and grinding away at our circular healthcare debate, but it’s really a big distraction.

It’s the wrong debate.

We keep debating the math of coverage and cost as if they’re independent of system design — and they aren’t. As Senate Majority Leader Mitch McConnell is finding out, there’s no solution to the Rubik’s Cube he’s playing with, because it’s the same one we’ve been fiddling with for decades: tiered coverage to support tiered pricing. The only way to lower the cost is to end coverage (“how” and “for whom” are just the dials). The good news is that “single-payer” healthcare isn’t necessary to solve our healthcare cost crisis. The bad news is that single pricing is, and that will require systemic change.

Lost in our debates (often intentionally) is a critical design component called universal health coverage. Here, the landscape is littered with artifacts and variations of the term, but they’re often used in a way to disguise, confuse or obfuscate the core principle of universal coverage. There are many good definitions, but this one from the World Health Organization captures the general intent well:

“Universal health coverage is defined as ensuring that all people have access to needed promotive, preventive, curative and rehabilitative health services, of sufficient quality to be effective, while also ensuring that people do not suffer financial hardship when paying for these services. Universal health coverage has therefore become a major goal for health reform in many countries and a priority objective of WHO.”

Terms like “universal healthcare,” “Medicare for All,” and “single-payer” are typically substituted for universal coverage as if they all mean the same thing and everyone understands the reference. They don’t, and the big distinctions are critical for any debate. Payment and coverage are definitely connected, but that connection can (and should) be simple and transparent, not complex and opaque. Universal coverage is that simplicity and transparency.

What we have is tiered coverage designed to support tiered pricing. It’s not just complex for everyone, it’s totally opaque. Medicare, Medicaid, VA, Indian Health Services, employer-sponsored insurance, Obamacare and the uninsured are all different tiers of coverage — all with different pricing. That works well to maximize revenue and profits, but the enormous sacrifice to this design is safety, quality and equality. A big myth surrounding the debate is that our system is just broken. It’s not. It’s working exactly as designed, and we need a different system design based on the core principle of universal coverage.

See also: Healthcare Needs a Data Checkup  

Obviously, how universal coverage is paid for (either single- or multi-payer, delivered through government or privately owned industries) is a critical debate, but who qualifies for coverage (and under what terms) shouldn’t be. There are only three big arguments against universal coverage — clinical, fiscal and moral — and they all fail. The clinical evidence alone isn’t dazzling, but it is compelling. As MedPage Today noted last week:

“There are a lot more studies covered in Woolhandler and Himmelstein’s paper, but they all suggest roughly the same thing–that insurance has a modest, but real, effect on all-cause mortality. Something to the tune of a 20% relative reduction in death compared to being uninsured.”

That’s just the clinical evidence, but healthcare is really expensive, so health coverage is inseparable from payment — which, of course, is the fiscal or economic argument. As a country, we’ve been arguing, fussing and fighting over the economics of healthcare for decades — and we’re likely to continue for years to come — but the following chart is the only proof we need that we’re not just on the wrong clinical trajectory, we’re on the wrong fiscal one, as well.

Creative Commons License by author Max Roser

Our system design is the death spiral — not Obamacare. Of course, policy wonks and politicians love to confuse the debate with a heavy focus on the y-axis of life expectancy. The general argument here is that the data around life expectancy is too variable around the world, so it’s all wrong. By extension, the argument goes, the whole chart must be wrong, but I’ve seen no dispute with the x-axis because the math is bone simple. Take our (estimated) National Health Expenditure for 2017 ($3.539 trillion, from CMS) and divide that by our current population (325,355,000, from the Census Bureau). The result is a whopping $10,877 per capita spending just on healthcare this year (the chart only goes to $9,000 in 2014).

The argument that universal coverage is just too expensive for Team USA also fails with this chart because all of those other countries have some variant of it. Our debate swirls endlessly around economic options of tiered group (and now individual) coverage, but it’s all the science of actuarial math. The largest single group is always an entire country, and that’s also where the actuarial math is fully leveraged. As we can see from the chart, our decades-long battle with actuarial math has been epic, but the battle using tiered coverage (or some variant) is un-winnable.

All of which brings us to the final argument: the moral one. Germany was among the first to recognize the moral imperative of universal coverage with its Health Insurance Bill of 1883. We’ve argued this imperative as well–perhaps none so eloquently or succinctly as Dr. Martin Luther King, Jr. in 1966:

“Of all the forms of inequality, injustice in health is the most shocking and the most inhuman because it often results in physical death.”

He’s right, and we know it.

The clinical, fiscal and moral arguments against universal coverage all fail, so what’s left? All we really need now is the logic behind our obvious and longstanding political intransigence against it. Why don’t we just implement universal coverage?

Here’s the simplest and best answer I’ve seen from the legal mind of Harvard Law Professor Lawrence Lessig:

“You know, when Bernie (Sanders) was talking about single-payer healthcare people rolled their eyes. Not because it was a bad idea, but because there’s no chance to get single-payer healthcare in a world where money dominates the influence of how politicians think about these issues.”

He’s right, too, and we know it.

Much of our “healthcare debate” isn’t really a debate at all. It’s a huge distraction from our fatally flawed system: the status quo. We’re just grinding away at the math hoping for an undiscovered calculation to solve our Rubik’s Cube. Politicians and heavily entrenched incumbents love to debate the variants of tiered coverage (and opaque pricing) because it continues to support the enormous revenue and profits for the healthcare industry. At almost $11,000 per capita per year, our healthcare system is a gigantic monument to the priorities of “shareholder value,” inequality and injustice (at scale).

No one group is to blame for our healthcare cost crisis because each segment of the industry is complicit, and they each have a fiduciary obligation to their shareholders. Payers, providers, pharma, suppliers, educators, software vendors and medical device manufacturers are all harvesting enormous profits from our $3.4 trillion “medical industrial complex.” Naturally, they also lobby heavily for legislation to support those profits, and they have the war chests to do that effectively.

See also: A Way to Reduce Healthcare Costs  

Again, a payment mechanism for universal coverage is the only real debate, because there are many options and enormous ancillary benefits as well. Two of the biggest are single pricing (versus the opaque, tiered pricing of our current system) and the elimination of annual enrollment. I’ve never seen a clinical or economic argument supporting annual enrollment in health insurance because there aren’t any. That’s just not how healthcare works. It’s just another artifact (like employer-sponsored insurance) in a system that’s been optimized for billable episodes of care — not health — all marching to the drumbeat of an annual tax calendar.

Single-payer is certainly one payment option, but it’s not the only one, and it’s easy to argue that it’s not a good cultural fit for Team USA. That’s OK, because we don’t need single payer to get to single pricing. As one of the wealthiest countries on the planet, we can easily afford any healthcare system we choose — except one. The one we have.

The future of Obamacare or Trumpcare isn’t the real debate, because it’s not as much a clinical or financial debate as it is a civil rights one. That will take time, but the result is inevitable. Universal health coverage isn’t a matter of if, only when, and not just because it’s the right thing to do but because it’s in our collective economic and clinical interest to end tiered pricing as the way to maximize revenue instead of optimizing for health. Obamacare was a step closer to universal coverage, but as Obama (and others) have suggested, progress isn’t always linear.

My book Casino Healthcare is now available. You can also follow me on twitter @danmunro.

U.S. Healthcare Actually Isn’t Broken

The header image was part of an article by Bloomberg that was written more than two years ago (May 2014). The data itself goes back nine years. Mylan’s price gouging was front and center recently, this week, but the gouging issue has been percolating for years. It has erupted before, and it will erupt again. Everyone’s squawking, and legislators are “looking into it,” but it won’t be solved this year — or even this election cycle. Here’s why:

Mylan’s pricing controversy with EpiPen is the same controversy that plagues much of U.S. healthcare. As a country — and as individuals — we don’t like it when there’s a BIG, obvious imbalance between the cost of healthcare and the need for it at scale, especially for kids. Our indignation is righteous.

The EpiPen delivers about $1 of a drug (epinephrine) easily and quickly to avoid a life-threatening condition (anaphylactic shock). The company that manufactures the EpiPen (Mylan) has raised the price dramatically through the years, especially relative to the cost of either the drug or the delivery mechanism. We can’t really claim ignorance here; EpiPen is one of the drugs from that Bloomberg chart in the header. As hard as it may be to believe, the reason for all the increases isn’t complex or complicated at all, it’s simple. Mylan raise prices because it can — and the EpiPen is a BIG moneymaker for the company.

But the EpiPen controversy isn’t unique to Mylan. It’s the exact same controversy in that Bloomberg chart and the one sparked by Martin Shkreli last year (with the drug Daraprim). Shkreli was my pick for the No. 1 quote in my Top Ten Healthcare Quotes for 2015:

I probably would have raised the price higher … is probably what I would have done. I think healthcare prices are inelastic. I could have raised it [Daraprim] higher and made more profit for our shareholders, which is my primary duty — and again — no one wants to say it, no one’s proud of it — but you know this is a capitalist society, capitalist system and capitalist rules, and my investors expect me to maximize profits.

Not surprisingly — Shkreli was publicly supportive of Mylan’s pricing increases. However, Ralph Nader referred to Mylan as “greed on steroids.”

See also: EpiPen Pricing: It’s the System, Stupid  

Valeant Pharmaceuticals is another company like Mylan and Turing, and they, too, have generated similar controversies through the years with their price increases.

The pattern is well-documented and easy to see.

But there’s a really hard truth to these hemorrhoidal flare-ups of price gouging. We resent it, but not enough to understand it, and that’s a big problem. There’s also a collective problem in trying to make real, substantive changes.

Real change is difficult — and it requires a deeper understanding. We need to go beyond the headlines and understand how drug pricing fits into our whole healthcare system design. All too often, we simply throw up our hands and falsely conclude that our healthcare “system” is broken. The hard truth that we must face head-on is that it really isn’t.

We think it’s “broken” because we don’t understand the evolutionary design of our healthcare system. There’s an urgent immediacy to our culture that makes history too long, too boring, too difficult — but it always bites us. As the author Michael Crichton said:

If you don’t know history, then you don’t know anything. You are a leaf that doesn’t know it is part of a tree.

In fact, there’s another quote — by another author — that I like to use to highlight our specific challenge with that deeper understanding of our healthcare system.

On the release of his book Flash Boys, author Michael Lewis was interviewed by Steve Kroft on “60 Minutes,” and a quote from that interview was both the inspiration and influence for my book Casino Healthcare:

If it wasn’t complicated, it wouldn’t be allowed to happen. The complexity disguises what’s happening. If it’s so complicated that you can’t understand it — then you can’t question it.

What Lewis was referencing was high-speed trading on Wall Street, but the quote could just as easily be applied to all of U.S. healthcare. In fact, it’s tailor-made. Our healthcare system has become so complicated that we can’t understand it. But that complexity is also by design as a way to avoid the hard questions.

See also: Our Real Problem With Drug Pricing  

We desperately want someone — or something — to just fix healthcare. We thought Obamacare might do so — and some truly believed it could — but Obamacare is really just a single step out of our healthcare wilderness, the same wilderness we’ve been wandering around in for decades. At different times we’re angry, lost, confused, frustrated and hurt — and it winds up being more of a ghoulish nightmare than a wilderness.

But the hard truth in this wilderness is that in our Casino Healthcare (including big-side stories like EpiPen), all the players are complicit. Payers, providers, pharma, politicians and suppliers are all aligned to a primary objective: their objective. These objectives are unique to them individually, but they’re the same collectively. It’s the for-profit business of revenue, stock price, shareholders, risk capital and campaign contributions. Safety, quality and equality in our system are secondary objectives, even though there are many that push hard for the full attention they deserve (myself included).

Mylan is simply doing what for-profit companies are legally required and expected to do : work in the best interests of their board, their investors, their stockholders — and, yes — themselves. Like her or not, the CEO of Mylan is doing exactly what she is paid (very well) to do. If she were fired tomorrow, any replacement would simply dial back the pricing to avoid the heat and slowly ratchet it back up when our anger and frustration moved on. It always moves on.

We don’t like to hear it, but we’re complicit, too, just in a different way. We’re complicit in our ignorance because we don’t dig deeper, we don’t understand the whole design, and the media flare-ups do die down. Valeant, Turing and now Mylan are like accidents on the freeway. We slow down, we’re stunned and aghast at the horror — and then we move on.

See also: How Quote Data Can Optimize Pricing  

So, no, the EpiPen story isn’t rare or all that different. It’s not just a delivery mechanism for epinephrine, it’s an important lens into the whole healthcare debate. It just happens to be the latest in a long line of stories that will continue to repeat until we make systemic changes to the way U.S. healthcare is designed. We can make those changes. We should make those changes, but the first step for all of us is to understand that the system we have — now running at $3.4 trillion per year, more than $10,000 per capita — isn’t broken at all. It was designed this way, and we just need a whole new design. Not a partial one, not just around the edges, but at the core — one that’s not optimized for revenue and profits but one that’s optimized for patient safety, quality and, yes, real equality first.

Big Disruption That Just Hit Healthcare

The event drew little fanfare and scant attention last week, but it still rocked the healthcare world.

The headline I wrote for Forbes was an attempt to capture the full effect, but headlines are tough that way. On the one hand, you have to grab a reader quickly. On the other, headlines have to be accurate and truthful. In this day and age — where everyone has a keyboard and a WordPress (or LinkedIn) account — it can be hard to separate the wheat from the chaff and too easy to discount headlines that scream “disruption.” I elected to run with the popular technique of using a question as the headline:

Could This Pricing Tool for Consumers Disrupt Healthcare?

The fact is — this particular pricing tool is very disruptive — and not for the reasons that are readily apparent. The first reaction by many was, so what? There are tons of consumer pricing tools already on the market. I highlighted three that are “consumer facing.”

  1. Health Care Blue Book
  2. Fair Health
  3. ClearHealthCosts

These are all great examples in their own right, of course (and there are many others), but they are all attempts to circumvent the mechanism that keeps true “in-network” provider pricing from becoming transparent. They’re mostly designed with the fervent prayer that consumers will influence pricing by shopping with their feet.

But that’s not the full effect of the new pricing tool — by a long shot. One of the key pricing targets is the providers that Blue Cross Blue Shield of North Carolina (BCBSNC) negotiates with. In the course of one short week (since launch), one provider has already called BCBSNC to ask that its prices be lowered.

In. One. Week.

Full credit goes to BCBSNC for its bold vision. This cannot have been easy. For decades, in-network pricing (hotly negotiated between payers like BCBSNC and their various networks of providers) has been a closely guarded secret. Prices were considered proprietary — and serious legal effort was expended to ensure their secrecy — often including non-disclosure agreements, with serious penalties for breach.

That changed this month, and I posit it will have a profound impact on the healthcare system as a whole. Why? Because it’s a Blue Cross Blue Shield organization (one of 37 around the country), and because the footprint for the Association of Blues is enormous. Not just in North Carolina (lives covered by BCBSNC equal about 40% of the population in North Carolina): The association either administers or provides health coverage for about 1/3 of the entire U.S. population (roughly 105 million Americans).

It will be hard for other Blue Cross Blue Shield plans to ignore this precedent-setting move by BCBSNC.

Will this be the impetus that forces payers to disclose in-network contract pricing more broadly? That’s a big unknown, of course, but the pressure is enormous and growing. BCBSNC was the first, but I doubt it will be the last.

I ended the article on Forbes this way: “Some said this could never happen. Others said it never would. The fact is — it just did. I’m betting other payers (every color stripe) will follow.”

At the very least, the pressure of true, in-network contract pricing transparency is clearly evident… and mounting. The whole healthcare industry needs as much disruption as everyone can create. The surprise here was the source. Way to go, Big Blue!

Are U.S. Doctors Overpaid? Yes, but. . .

Funny: If you ask a doctor if she’s overpaid, you’ll get a long-winded answer largely around an emphatic “no.”

The real answer is a much more nuanced “yes” — and is summarized every year in this one chart:


The why of this chart isn’t some big mystery. I’ve written about it very directly here: Med Student Gives Sober Assessment of Future With $500K in Student Debt.

Healthcare training takes an incredible amount of time and money, so those who survive as freshly minted docs have a huge debt — roughly equivalent to a nice home mortgage. Oh, and unlike all other types of financial debt, student debt is not dischargeable through bankruptcy, so it’s lifelong until satisfied.

None of this is a mystery to U.S. med students. They are exceedingly bright (by necessity) and start planning their career trajectories fairly early. A key component to that planning is the amount of debt they’ll have when they graduate — and the number of remaining years they’ll have as high wage earners. The math leads directly to the above graph.

If you have a choice at graduation of being a family practitioner or internist (with long, grueling hours, inside exam rooms all day) for $15,000 a month — or the cushy job of being a radiologist (reading images remotely for eight hours a day) for $30,000 a month — where’s the choice? It’s not a choice. It’s a no-brainer (for most), which is why we have a severe shortage at all the specialties on the right side of the graph.

That’s the U.S. (and why our system is dysfunctional from the start). The system we have is optimized around revenue and profits, not safety and quality.

France, by contrast, has a different view and (not surprisingly) better health outcomes and cost. France’s view is that medical training is an “infrastructure” cost, and the best way to accommodate that is to have med students graduate with $0 debt. Now, in fairness, doctors in France don’t have the opportunity at a lavish wage of $400,000 to $500,000 a year (or more), but the French also don’t have a shortage of primary care docs. We do — and it’s also a contributing factor to why our system is now a global embarrassment and perpetual national crisis – as represented by this one chart:


There Is No ‘Free’ Healthcare in U.S.

There is no such thing as “free” healthcare in the U.S. There are people who access healthcare at low (sometimes even no) cost, but the people delivering the service aren’t providing it for free, or, if they are, it’s an ad-hoc charitable donation.

There is one exception that I know of, but the clinics typically only run over weekends (when providers can donate their time and skill). The exception is called Remote Area Medical and is staffed with clinical volunteers, so there is no charge to patients — and no payment to providers. It’s as close to “free” as I think we’ll ever get. Here are some images of what a weekend RAM clinic looks like:

Patients receive free dental care at a c


RAM has been featured on “60 Minutes” and other news-magazine shows. It’s run by Stan Brock, who founded it. It derived its name — Remote Area — from the idea that it would deliver healthcare to remote regions of the globe. In fact, it started with medical “expeditions” to Latin America in 1992. Today, 60% of RAM clinics are held in rural or urban America. I encourage everyone to watch the 13 minute 60 Minutes episode – from 2012. (60 Minutes – RAM Medical Missions in the U.S. – A Lifeline.)

RAM aside, the argument that EMTALA (Emergency Medical Treatment and Labor Act of 1986) is “free” care delivered through the emergency room is flat-out false. The costs accrued through every emergency department (for every patient, service and supply) is simply rolled into the books under a category called “uncompensated care.”

Uncompensated care is among the three categories of healthcare that for a hospital amount to negative margin. The other two are Medicare and Medicaid. The only remaining opportunity for “positive” margin (and keeping the doors open) is through commercial insurance. That chart (courtesy of L.E.K. Consulting) looks like this: