#formularies

I know I am just one voice of many, but for what it's worth, I'd like to type out my views on the 2020 candidates and the current state of the healthcare debate with regards to Medicare for All, a public option, etc. It is a nuanced view, one that I have put a lot of thought into. In this first post, I'll be discussing some of the healthcare plans that are on the table. I plan to write a part 2 soon, which will be about my views on the 2020 Democratic candidates.

As a spoiler alert, my opinions on this topic are not the farthest-left-possible point of view. I expect to be criticized for this if this post gains any traction. So before you call me a neoliberal shill, please know that I am a person with a chronic illness who believes fiercely in the right to healthcare as a human right regardless of ability to pay. I do not personally have any stake in any particular proposal except insofar as I need a functioning healthcare system in order to survive. I am myself vulnerable to being harmed by the pitfalls of our current system; I'm genuinely not out here to defend the status quo. But I am also vulnerable to being harmed if a new system is not implemented carefully. My priority is the protection of the vulnerable, alongside expanding healthcare access to every single person in this country.

My closest-held positions in healthcare are:

We need universal healthcare - every single person in this country must have healthcare coverage.

The most vulnerable patients must be protected - I will not embrace a plan that seeks to cut costs by refusing patients access to certain expensive treatments. I will not throw the most vulnerable patients under the bus in exchange for whatever perks the new plan might offer.

We need to be thoughtful about how we go about making changes to the healthcare system - I am not of the mindset that the system is so broken that we have nothing to lose by burning it to the ground and starting from scratch. Ask any person whose life depends on continuous access to healthcare - if the transition is mishandled in such a way that people's access to care is interrupted, people will die, and that is unacceptable to me.

Note that number or nature of payers is not on my list, as I am somewhat more agnostic on that issue. While I understand and recognize some of the advantages that a pure single-payer system might have above other options, I am not of the position that single-payer or abolishing private payers is the only way to achieve an equitable healthcare system.

Let me expand on each item now.

We need universal healthcare.

Many people do not seem to see the distinction between universal healthcare and single-payer, or understand that single-payer is not the only way to achieve univeral healthcare. Universal healthcare simply means a system in which everyone has healthcare coverage. It does not imply that the system does not contain private payers, or that there is only one payer. I am ride-or-die on universality in our healthcare system but I am open to many paths to achieving it.

The most vulnerable patients must be protected.

Some examples of ways in which even a very progressive healthcare universal healthcare proposal might not adequately protect vulnerable patients are:

Allowing the use of formularies. A formulary is a list of treatments that are covered by the plan. Most if not all insurance plans - under private and public payers alike - in today's system include a formulary. If you need something that is not on the list, you and you doctor have to do a bunch of paperwork basically begging the insurer to cover it; if they refuse you are SOL.

Excluding coverage for long-term services and supports (i.e. care in the home or in a nursing home for people who cannot live independently).

Medicare for America is the only bill that I know for sure bans formularies and covers LTSS. I believe Bernie's Medicare for All bill now covers LTSS (after activists lobbied them to include them; it didn't originally). Bernie's Medicare for All bill involves a formulary.1

One could argue that because plans in the current system usually include formularies, and often don't cover LTSS, that moving forward with a Medicare for All bill that also has these issues would not be a regression. I don't agree. If the entire nation is put on one public plan, but that plan has a formulary, what is a patient who needs a treatment that is not on the formulary going to do? At least under the current system, if their current plan excludes a treatment they need, they have the possibility of finding and switching to another plan that will cover it. In the single-payer scenario, they'd have to literally leave the country to get access to their treatment.

We need to be thoughtful about how we go about making changes to the healthcare system.

There is a certain crowd whose argument is "people are dying NOW; this is urgent; we need to make sweeping changes as fast as we can." I see and respect that argument. I am with you in my disgust and despair over the fact that people are dying under our current system.

I do not agree that the system can't get any worse. Are these folks so quick to forget the days before the Affordable Care Act? Like it or not, there is the potential for severe harm and death if the transition is mishandled. While I agree the issue is urgent and should be addressed quickly, I just don't believe that we can afford to rush this.

I also personally think that the "burn it all down" crowd in general tend to oversimplify the issue. They often assume that if we adopt Medicare for All, it will "just work." Some assume that single-payer implies that every treatment will be covered (it doesn't; rationing can and does occur under public payers. This happens in the US now, under Medicare & Medicaid, and it happens in other countries who have government-run single-payer systems). They also don't tend to acknowledge some of the facts that complicate a transition to a more equitable healthcare system. Let's discuss some of those:

We have a physician shortage in the US.

One step in becoming a doctor is completing a residency; Medicare pays for the majority of residencies currently, but the number of slots they pay for was capped by the Balanced Budget Act of 1997 as a cost-saving measure.2 Medicare for America is, to my knowledge, the only bill that addresses the physician shortage by removing this cap. Worse, reversing this shortage will take time. Even if we remove the cap today, we won't see the benefits for a decade or so while a new generation of doctors complete their training. So any bill hoping to expand coverage to everybody - which we absolutely need to do - needs to at least be cognizant that there will be a period of time in which our supply of physicians may not be wholly sufficient to meet the demand of 28 million people newly gaining insurance.3 Some consequences of this could include an increase in wait times to see a doctor, which is dangerous to patients experiencing urgent health problems. We need to have a plan for this. We can't handwave it away. Of course, our current method of rationing, which just completely excludes people who can't afford health coverage from accessing care, isn't acceptable either.

The break-even rate for most hospitals is at about 110% of Medicare rates, on average.

This means that most hospitals today actually lose money on Medicare patients, and those of us not on Medicare subsidize them by paying more than our share. To the best of my knowledge, Bernie's Medicare for All bill basically ignores this fact and proposes paying hospitals at Medicare rates.1 Some hospitals would probably be able to find ways to become leaner and survive under this payment plan, but many others would likely go under. Medicare for America and Elizabeth Warren's health plan both propose paying out at 110% of Medicare rates.1,4

It's worth noting that we should look critically at why exactly hospitals in the US have such a high break-even point! I know it is generally true that we pay much more per capita on healthcare in the US than any other country,5 but the reasons for this aren't straight-forward and cannot be explained by greed alone. The hospitals are not simply pocketing the extra money; their profit margins alone are not high enough to explain the discrepancy. Our doctors and nurses have higher salaries than they do in other countries,6 but before we propose slashing their pay, we need to consider that this could worsen our already troublesome physician shortage. I do think there is potential to get leaner here without sacrificing on the quality of our care (I recommend the book An American Sickness by Elisabeth Rosenthal for digging deeply into this topic), but the adjustment will be turbulent and take time. In my opinion, it is not realistic or reasonable to just start paying hospitals at a vastly lower rate and expect them to be able to figure out how to quickly adjust and emerge unscathed.

Let's talk about drug development.

This is an especially complex issue, in my opinion, because companies that develop drugs are paid by patients and healthcare systems all around the world. Remember how I said before that hospitals in the US lose money on Medicare patients, and recoup those losses by charging privately insured patients more, resulting in privately insured patients subsidizing the healthcare costs of Medicare patients? The same thing is happening on a global scale with drug prices internationally. People in other countries are paying much lower prices than we are for drugs, in many cases well below the break-even point for drug development companies, and we in the US are paying so damn much that we are essentially subsidizing drug development for the rest of the world.7 To this end, we can't simply say "let's start paying a lot less for drugs like the rest of the world does" and expect that decision to come with no consequences.

I'm loathe to defend PhRMA; the industry is greedy, it holds our lives for hostage, and it is not okay. But, research & development is genuinely expensive. When setting the price of a drug, we have to consider not just the materials and manufacturing process - other considerations include the expense that the drug company incurred researching that drug, running clinical trials, and getting it approved for use by the FDA, which is a process that typically takes over a decade. Furthermore, they have to recoup the costs they incurred on all the other drugs they tried to develop but which didn't make it all the way through the pipeline and into the market; only 1 out of every 5000 compounds researched in the laboratory results in a drug that makes it to market.8 We simply cannot drastically slash drug prices and expect drug companies to be able to sustain R&D at their current rates.

That said, I refuse to buy into the conservative talking point that we must choose between completely unrestricted prices that bar some patients from accessing drugs at all and "stifling innovation" with price controls. One suggestion that I think has a lot of potential is to switch from our current system of awarding intellectual property rights to companies that develop new drugs - essentially giving them a monopoly on the medication for several years, leaving them free to charge whatever they damn please for it - to a system in which companies that develop innovative new drugs are simply awarded a cash prize, but anyone can sell the new drug right away, allowing competition to reduce prices on that drug immediately.9 I don’t believe any of the major healthcare bills out there today would implement this system, though.

So let's look at the ways in which various bills have proposed controlling drug prices. As I already mentioned, Bernie's Medicare for All bill includes a formulary to keep prices down. The way a formulary helps control prices is it gives payers the ability to just say "no, we won't buy this drug at this price" to a drug company, forcing the drug company to either forgo that payer’s business or come back with a better offer. A formulary boasts considerably more clout in a single-payer system, because if the only payer in the US won't pay for the drug, then the drug company essentially doesn't get to sell their drug in the US (except perhaps to the super-rich who could pay with cash).

I've already discussed why I don't consider a formulary an acceptable price control measure: it's too harmful to patients. If the government payer and the drug company can't reach an understanding on a price point at which to sell a medication, it just...won't be available to anybody to use in the US. So if you're dependent on Humira today to maintain your health, and we pass Medicare for All, and Humira doesn’t make it onto the formulary, you just...don't get your Humira. And that's not acceptable to me.

Medicare for America takes a better approach here in my opinion. In the case of a stand-off between the government payer and the drug company, instead of punishing the drug company by just saying "no, I'm not buying," under Medicare for America, the government would punish the drug company by taking away their exclusivity rights on the drug. This does a couple of things - first it provides a powerful incentive to the drug company to strike a deal with the government on the price, because they want to maintain their IP. Secondly, in the case that the stand-off persists, it allows other drug companies to sell the drug, thus introducing competition and most likely lowering the price.

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So I’ve discussed a lot of concerns here and how some of the plans would address (or not address) them. A lot of single-payer purists try to drown out these concerns by saying "who cares about PhRMA's/hospitals’/physicians’ bottom line; people are dying; single-payer NOW NOW NOW" which, again, I understand and respect their sense of urgency on this issue, but these are real questions that need to get answered; passing a bill that does not have answers to these sorts of questions will likely plunge our healthcare system into an unacceptable level of chaos; people will be harmed.

You've probably gathered by now that the bill I like best is Medicare for America. Medicare for America would achieve universal healthcare, but not under a single-payer system, at least not immediately. It proposes that we quickly set up a public option - a government-run healthcare plan that anyone can buy into. This public option would come to replace Medicare, Medicaid, and the ACA's individual marketplace plans, with people who are currently on any of these plans, or uninsured, being automatically enrolled in the new public plan. The plan would offer comprehensive coverage, and it would be completely free for anyone making less than 200% of the federal poverty level; people making over 600% of FPL would be charged no more 9.69% of their income; people with incomes between those two extremes would be charged smaller percentages of their income.10 I like this payment scheme because scaling according to income ensures that the plan remains affordable to all; it’s conceptually similar to funding a single-payer system via a progressive tax that scales according to income.

I think the main reason that Medicare for America has gotten a bad reputation from single-payer purists as being a "half-measure" is because it preserves the role of private insurance for the time being. It would allow people who get private insurance through their employer to continue doing so. Such private plans would be required to meet strict quality regulations. People who don't like the plans offered by their employer would be free to buy the public option, which is great news for people who don’t like how insurance is tied to employment under the current system. And employers would also have the option to stop offering private insurance and to instead send their employees into the public option; in that situation, the employer would subsidize the premium for their employees.

I would like to push back on the characterization of Medicare for America as a half-measure. It would in fact almost certainly lead to us adopting a single-payer system in the long term. Newborns would be automatically enrolled in the public option, meaning that the share of the market still using private plans would shrink over time until there was no market at all. Some people call this a "slow-glide" approach to single-payer. I really like the idea of slow-glide, because it allows the transition to happen gradually over time, eliminating the potential chaos that might ensue from trying to the shift two-thirds of the population who are currently on private plans3 onto a public plan over a very short transition period (4 years under Bernie's bill; only 2 years under the House’s version of Medicare for All1).

I do like the idea of single-payer because of the way it allows us to trim fat such as administrative costs and profit margins from the healthcare system. Healthcare is expensive on its face; we really don't need parasitic profit-seeking insurance companies adding to the costs. I like that Medicare for America gets us there eventually. I don't think there is any need to be in a huge hurry to get there immediately. Universality is the part that's urgent - and Medicare for America gets us to universality just as readily as Medicare for All does.

Most of my other wonky reasons for preferring Medicare for America over Medicare for All are described earlier in this post.

My second favorite health plan is Elizabeth Warren’s flavor of Medicare for All, in short because there is evidence that she has thought deeply about transition, it pays out at 110% of Medicare rates as mentioned earlier, and her payment plan is clearly laid out and excludes some unpopular options such as a middle class tax increase. The text of Bernie’s bill does not lay out how it’s paid for, but he has informally proposed some ideas, one of which includes a tax on anyone making $29,000 or more. Warren’s plan also uses a methodology for dealing with drug prices that’s similar to Medicare for America’s approach rather than a formulary.4

It is very disappointing to me that certain contingents of the left feel the need to disparage anyone who isn't for "pure" Medicare for All regardless of their reasons. Even Ady Barkan, who is perhaps the healthcare and disability rights community's greatest champion, has been receiving incredible quantities of hate recently for questioning the feasibility of passing Medicare for All and for endorsing Elizabeth Warren over Bernie Sanders. I hope that if you have read my entire post, you will see that my concerns about Medicare for All stem from my deep passion for protecting the most vulnerable disabled and medically complex patients in our country.

This has been long. Thanks for reading.

Citations

According to managed care organisations (MCOs) in the US, costs of covering biologic treatments of autoimmune diseases are anticipated to increase by double-digit rates for the next two years. MCOs expect the cost trend for rheumatoid arthritis (RA) to average 19%, which has been cited as a major concern.

For payers, autoimmune diseases represent the most costly class of specialty drugs and as a result, controls that encourage prescribers to adhere to treatment protocols and prescribe MCOs’ preferred agents have been implemented, and it is anticipated that further restrictions will take place in the next two years.