THE U.S. HEALTH CARE SYSTEM IS MORE THAN BROKEN, IT’S TOTALLY CORRUPTED

This is the first in a series of posts on how the U.S. health care system has been totally corrupted by private, for-profit companies. The system has very high costs and poor outcomes. Profits rather than patients have become the perverse and pervasive priority because there is a fundamental conflict between caring for patients and delivering value to investors.

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The U.S. health care system is more than broken; it’s truly dysfunctional. It’s been totally corrupted by private, for-profit companies. If you ever want to prove that private, for-profit businesses aren’t necessarily effective and efficient, the U.S. health care system should be exhibit 1.

The U.S. health care system has the highest costs by far of any comparable country, but also has by far the worst outcomes. [1]

The U.S. spent 17.8% of its Gross Domestic Product (GDP, the value of all goods and services the economy produces) on health care. This is almost twice as much of as the average of the other 38 comparable countries in the Organisation for Economic Co-operation and Development (OECD), which range from Germany at 12.8% to South Korea at 8.8%.
The U.S. spends $11,912 per person on health care versus $7,382 in Germany (the next highest) and, in the three lowest countries, $4,666 in Japan, $4,393 in New Zealand, and $3,914 in South Korea.
U.S. life expectancy is 77.0 years, the lowest of the OECD countries, which range from the United Kingdom at 80.4 to Japan at 84.7. Furthermore, for Black Americans life expectancy is only 74.8 years and 71.8 years for American Indians and Alaska Natives.
The U.S. rate of preventable or treatable deaths per 100,000 people is 336, far higher than the other OECD countries, which range from Germany at 195 to Switzerland at 130.
The U.S. rate of infant deaths per 1,000 live births is 5.4, far higher than the other OECD countries, which range from Canada at 4.5 to Norway at 1.6.
The U.S. rate of maternal deaths per 100,000 live births is 23.8, far higher than the other OECD countries, which range from New Zealand at 13.6 to the Netherlands at 1.2. These are deaths due to complications of pregnancy and childbirth.
The U.S. rate of death from physical assault per 100,000 people is 74, far higher than the other OECD countries, which range from New Zealand at 1.3 to Japan at 0.2.
The U.S. supply of physicians per 1,000 people is 2.6, lower than the OECD countries’ average of 3.7, which range from Germany at 4.5 to Korea at 2.5.

The U.S. health care system has been privatized and financialized so that profits rather than patients have become the perverse and pervasive priority. Mergers and acquisitions have created behemoth health care corporations that have an insatiable drive to increase profits. Through local monopolies and vertical integration (where one company owns and profits from everything from primary care doctors and nurses to end-of-life hospice care), they maximize profits rather than patient outcomes. Pharmaceutical companies manipulate patents and buy off generic drug makers to maximize profits. Private equity firms profit by buying health care providers and monopolizing niche markets, slashing costs, and manipulating real estate and other assets.

The portion of U.S. health care dollars that go to administrative overhead, waste, and fraud has grown to 30%, while the portion going to pay doctors and nurses has fallen. For example, the CEOs of the top seven health insurers got an average of $48 million last year. Experts estimate that one-tenth (10%) of what the federal government spends on health care is fraud.

Meanwhile, the supposedly efficient private sector health care system has shortages of doctors and nurses; shortages of frequently used drugs (e.g., antibiotics and common cancer treatments) and of commonly used and essential intravenous solutions; and medical deserts where emergency and acute services can’t be found, typically due to the closing of small, often rural hospitals and other service providers for the sake of profit maximization. [2]

In the 1980s, due to deregulation and supposed innovation, the U.S. health care system began a dramatic shift from a small business and not-for-profit model to a large corporate, for-profit model. The cost of health care in the U.S. began to skyrocket. And outcomes did not improve. (See above for some data on costs and outcomes.)

The government pays for a growing portion of health care in the U.S.; it’s about half today, having grown from less than a third in the 1990s. Much of this care has been privatized. Over 80% of Medicaid’s low-income families and individuals are enrolled in some type of privatized care. Over half of Medicare’s seniors are in privatized plans known by the misnomer Medicare Advantage plans. Medicare Advantage plans are such large and reliable generators of profits that every insurer, many private equity capitalists, and even retailers like Amazon, Walgreens, and Dollar General are anxious to tap into the it. The health care industry and Congresspeople whose campaigns it has funded are also working hard to privatize the Veterans Affairs health care system.

One example of a huge health care corporation built through mergers and acquisitions is HCA Healthcare, which has $60 billion in annual revenue. It owns roughly 180 hospitals and 2,300 ambulatory care sites, including surgery centers, freestanding ERs, urgent care centers, and physician clinics, in 20 states and the United Kingdom. It is effectively a monopoly in some areas.

HCA has engaged in fraud, billing Medicare and Medicaid for unnecessary and wasteful services and supplies, including repeat lab tests and redundant scans. Critics describe it as the epitome of the profits over patients mindset. More than two dozen doctors from 16 HCA hospitals have corroborated its use of a “vulnerability index” algorithm to identify patients most likely to die. HCA then pushes staff to persuade the patients’ caregivers to abandon less profitable life support and move the patient to more profitable hospice care. Since acquiring a hospice provider two years ago, HCA’s hospital to hospice discharge rate has jumped to twice the national average. Insurance reimbursement practices mean that profits can be maximized by moving these patients to hospice and freeing up hospital beds for other patients who use more billable services. Moreover, this gets a death off the hospital’s records, improving its mortality statistics, which are part of HCA’s calculation of executives’ bonuses.

For-profit health care dangerously incentivizes denials of care and actions not in patients’ best interests because there is a fundamental conflict between caring for patients and delivering profits for investors. Vertical integration of health care services (where one company owns and profits from everything from primary care doctors and nurses to end-of-life hospice care) exacerbates conflicts of interest between maximizing profits and patient well-being.

[1] The Commonwealth Fund, 1/31/23, “U.S. health care from a global perspective, 2022: Accelerating spending, worsening outcomes,” Issue Brief (https://www.commonwealthfund.org/publications/issue-briefs/2023/jan/us-health-care-global-perspective-2022)

[2] Tkacik, M., & Dayen, D., 7/31/23, “A sick system,” The American Prospect (https://prospect.org/health/2023-07-31-sick-system-business-health-care/)

THANK GOODNESS JOE BIDEN IS PRESIDENT!

President Biden is providing outstanding leadership in a series of very challenging situations. President Biden’s speech to the nation on 10/19 will impress and move you. The mainstream media focus on drama, conflict, and negativity. Calm, steady, effective leadership doesn’t get the coverage it deserves. Below are three examples of non-mainstream media that have done a much better job of telling the story of Biden’s leadership than the mainstream media. Stop and think for a minute what would be happening if Donald Trump were President.

In turbulent situations, it’s invaluable to have an experienced, thoughtful, steady, and rational leader. President Biden is providing outstanding leadership in a series of very challenging situations:

The Covid pandemic and its aftermath, including serious damage to the economy;
Putin’s attack on Ukraine;
The dysfunction of the Republicans in the U.S. House of Representatives and, in particular, their threat to default on the U.S. debt; and
Hamas’s attack on Israel and all the volatility it could unleash in the Middle East.

I don’t think any other President in my lifetime has faced such a set of serious challenges. Stop and think for a minute what would be happening if Donald Trump had been re-elected in 2020.

The mainstream media is now driven by on-line clicks, and therefore focuses on drama, conflict, and negativity. Calm, steady, effective leadership doesn’t generate as many clicks, so it doesn’t get the coverage it deserves.

Non-mainstream media have done a much better job of telling the story of President Biden’s leadership. For example, Robert Reich (who served as President Clinton’s Secretary of Labor and in a number of other federal government jobs before that), in his blog on 10/19/23, titled The last adult in the room, describes President Biden as “shrewd, careful, and calibrated” in the face of major challenges, despite the child-like behavior of many other supposed leaders. Reich highlights Biden’s significant actions and successes on the home and global stages from the Middle East to dealing with Congress to delivering benefits for the American workforce.

Robert Hubbell, in his blog on 10/20/23, titled We cannot give up on peace, reviews President Biden’s speech to the nation on the evening of 10/19. I encourage you to listen to Biden’s 15-minute speech. You will be impressed and moved by it. (It begins 2 hours and 5 minutes into the YouTube recording of the news broadcast.) Hubbell calls it a truly great speech in which Biden forcefully and convincingly addresses the complicated situations in the Middle East, Ukraine, and here in America. He links all of them back to the need to defend democracy from the threats of dictators, terrorists, and hate. Biden is thoughtful, compassionate, and comprehensive; he does not shrink from taking on difficult topics including racism, Islamophobia, and antisemitism.

In the speech, Biden underscores the importance of the United States of America and its leadership on the global stage. He calls America the “essential” and “indispensable nation,” noting that America “is a beacon to the world” … “the idea of America, the promise of America.” He states that we must “reject all forms of hate. It’s what great nations do.”

Heather Cox Richardson, in her blog, Letters from an American on 10/18/23, reviews Biden’s visit to Israel and the speeches he gave there, where he adroitly walked the tight rope of condemning terrorism, supporting Israel, stating that the vast majority of Palestinians are not Hamas terrorists, and negotiating humanitarian aid to the Palestinians in Gaza. He called unequivocally for the protection of civilians on all sides and adherence to the rules of war. He stated that democracies must live by the rule of law, not the rules of terrorism. Richardson takes note of “Biden’s steady hand, experience, and courage” in visiting Israel and taking on the tricky issues the Hamas-Israel conflict presents.

We are lucky, and should be thankful, that President Biden is bringing such capable leadership to our country and the world at this very challenging time both globally and domestically.

SENATOR WARREN’S EFFORTS TO REDUCE FEDERAL OFFICIALS’ CONFLICTS OF INTEREST

Senator Warren (D-MA) has worked relentlessly to expose and reduce federal officials’ conflicts of interest, thereby reducing corporate influence on government decision making. Here are three examples of her work involving the oversight of Medicare, the Internal Revenue Service (IRS), and the Defense Department.

Senator Warren (Democrat of Massachusetts) has worked relentlessly to expose and reduce the conflicts of interest of federal officials. She regularly advocates for stronger ethical standards for federal employees and for closing or at least slowing the revolving door between public and private employment where conflicts of interest arise. One of her goals is to prevent or at least reduce corporate influence over government decision making. Here are three examples of her work on this issue.

First example: President Biden has nominated Demetrios Kouzoukas for a spot on the Board of Trustees for the Medicare and Social Security Programs. His specific role would be as a Public Trustee, charged with overseeing the finances of Medicare and Social Security to ensure they are able to provide promised benefits to seniors in perpetuity.

Senator Warren raised concerns at Kouzoukas’s confirmation hearing about a potential conflict of interest due to his membership on the Board of Directors of Clover Health, a for-profit health insurance company. Clover Health receives a substantial portion of its revenue from Medicare Advantage plans, which provide privatized Medicare services to seniors. Kouzoukas receives over $100,000 a year from Clover Health for his position on its Board. He also owns 25,000 shares of Clover Health stock. [1]

As you may know (and as I have written about previously here, here, and here), there are multiple problems with Medicare Advantage plans’ privatization of Medicare. These plans cream the crop so they only serve healthier seniors. Nonetheless, they have successfully lobbied to get paid more per patient than Medicare spends on other patients. They often deny coverage for needed services and have high overhead for advertising, administration, and executive pay. Most damningly, every major provider of Medicare Advantage plans has fraudulently over-billed Medicare. Many health care experts worry that the current growth of Medicare Advantage plans will, ultimately, bankrupt Medicare.

The Board of Trustees that Kouzoukas has been nominated for will, among other things, oversee the efforts of Medicare to stop fraud by Medicare Advantage providers, which is estimated to be $75 billion a year. That role presents a direct conflict of interest for Kouzoukas given his position on Clover Health’s Board, from which he has refused to resign. [2] (Note: This footnoted press release from Senator Warren lists nine examples since July 2021 of her successful efforts to get federal appointees to commit to higher than required ethical standards that reduce conflicts of interest.)

Second example: In February 2022, Senator Warren requested that the Department of the Treasury Inspector General for Tax Administration (TIGTA) investigate potential conflicts of interest resulting from the revolving door of personnel between the Internal Revenue Service (IRS) and the big accounting, tax, and audit companies. The New York Times had reported that tax lawyers from these companies were taking senior jobs at the IRS, writing policies that frequently were favorable to their former employers, and then often returning to their former employers where they received promotions and pay raises. [3]

TIGTA’s recent report revealed that 496 federal employees had received income from those big accounting, tax, and audit companies before taking government jobs. An undisclosed number went back to those firms after working for the government. At least eighteen IRS employees had worked on official tax administration rulings for clients represented by the company they had worked for either before or after their IRS job. For 232 IRS employees, TIGTA could not determine if they had conflicts of interest with previous private sector work because their previous employers would not cooperate with the investigation. Furthermore, an undetermined number of IRS executives did not properly disclose, as is required, private sector job searches while they were working for the IRS.

The IRS has agreed to implement two recommendations from the TIGTA report: 1) improving training for employees on ethics and impartiality, and 2) collecting better data to identify potential conflicts of interest. Senator Warren is pushing the IRS and its officials to do more. She has communicated with Marjorie Rollinson, who has been nominated to be the IRS’s top internal lawyer, and has asked her to hold herself to a higher ethical standard than is currently required by law. Rollinson has committed to do so by extending the two-year requirement to four years for recusing herself from matters concerning previous clients and employers. In addition, for four years after she leaves the IRS, she has promised not to lobby the IRS or to seek any employment or compensation from companies she interacted with while at the IRS.

High ethical standards at the IRS are particularly important right now because the IRS is receiving additional funding and implementing several important policies contained in the 2022 Inflation Reduction Act. These include the Corporate Minimum Tax (that Warren has championed) and new tax credits. In addition, the IRS is implementing a new, free, income tax filing system that would allow most Americans to easily file their income tax returns (and avoid paying for tax preparers or software to do so). Having these policies implemented by staff that don’t have conflicts of interest is critical to their success and effectiveness.

Third example: Senator Warren is investigating conflicts of interest involving the Defense Department’s Office of Strategic Capital (OSC). The OSC was created in 2022 by Defense Secretary Austin to identify and finance technologies critical to US national security. It provides loans, financing guarantees, and other financial supports to companies involved with such technologies.

Warren has expressed concern that at least two advisers at OSC have senior positions at private consulting and venture capital firms that might present conflicts of interest. Both advisers were hired as “special government employees,” which exempts them from many of the ethics standards that apply to regular federal employees. For example, they are not barred from lobbying federal agencies or receiving outside income. However, their access to non-public information might benefit them in making investment decisions or assisting clients in getting defense contracts, for example.

Warren has proposed a bill in Congress, the Anti-Corruption and Public Integrity Act, that would subject “special government employees” to the same ethical standards as other federal employees and would require them to recuse themselves from any matters that would provide a financial benefit to them or to an employer or client of theirs from the preceding four years. [4]

[1] Johnson, J., 9/29/23, “Warren grills Biden Medicare Trustee pick over ‘shocking’ ties to Medicare Advantage firm,” Common Dreams (https://www.commondreams.org/news/warren-grills-biden-medicare-trustee-pick-over-shocking-ties-to-medicare-advantage-firm)

[2] Warren, E., 9/28/23, “At hearing, Senator Warren slams Medicare and Social Security Public Trustee nominee over ‘shocking and deeply unethical’ financial conflicts of interest,” Press release (https://www.warren.senate.gov/newsroom/press-releases/at-hearing-senator-warren-slams-medicare-and-social-security-public-trustee-nominee-over-shocking-and-deeply-unethical-financial-conflicts-of-interest)

[3] Facundo, J., 9/28/23, “Warren and Jayapal raise revolving-door concerns at the IRS,” The American Prospect (https://prospect.org/power/2023-09-28-warren-jayapal-revolving-door-concerns-irs/)

[4] Conley, J., 7/10/23, “Warren demands answers from Pentagon on ‘cozy’ relationship with Wall Street,” Common Dreams (https://www.commondreams.org/news/warren-pentagon-office)