Income Inequality is Everyone’s Problem – Including Physicians

A group of medical students (myself included!) rally to support Single Payer – one of the most important campaigns health professionals can participate in to combat income inequality.

The publication of Thomas Piketty’s book Capital in the Twenty First Century has really shook the economics community, and along with Robert Reich’s documentary Inequality For All has thrust the debate about income inequality into the spotlight. I haven’t yet read it, but it’s hard to ignore all of the publicity it’s been getting from highly influential people. Bill Moyer’s interview with Paul Krugman as he discusses the book and its importance is well worth a watch. As I understand it, the thesis of the book can be summed up in the Intro (available to preview for free on Amazon!),

When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based. There are nevertheless ways democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests, while preserving economic openness and avoiding protectionist and nationalist reactions.

 

I don’t think this book could have come at a more important time. With the following egregious facts coming to light (CEOs now making 354 times the amount of the average worker), nicely summed up by John Case’s article for People’s World:

The wealth of the 1 percent, and even more the .1 percent, is increasing at 2-3 times the overall growth rate of the economy (GDP). The median income worker, on the other hand, received virtually no gains from increased productivity. And workers who fall below median income have seen their share of national wealth and income dramatically cut.

It seems that Americans are more open to realizing that the super-rich didn’t necessarily do anything of value to earn that money, and that it is harmful for everyone for wealth (and increasingly, political power) to be concentrated in the hands of fewer and fewer.

As a member of the Millennial generation, I grew up being told I could be anything I wanted to be. Inherent in that statement is the idea of upward mobility. The idea that working hard is a surefire way to success in America. Yet, increasingly, this is a myth, and reviews of this book indicate this is something that Piketty addresses. In a review by Christopher Matthews for CNNMoney, he writes,

[Joseph] Stiglitz was equally taken by the work, arguing that Americans would not be bothered by increased inequality if it were based on merit within a society that enables class mobility. But the U.S. is near the bottom when it comes to social mobility [emphasis added].

 

Now we see a student debt crisis and the related social and economic effects of this on our generation, yet we are blamed for being lazy and entitled when we can’t find meaningful work that allows us to support ourselves as well as generate new ideas and technology.

Why should physicians care?

• Medical students are a privileged few who have managed with a hearty dose of luck and generous social support to forge the beginnings of meaningful careers, but we face financial and occupational insecurity never before faced by the profession.  According to the AMA,

AAMC data show that median private medical school tuition and fees increased by 50 percent (in real dollars) in the 20 years between 1984 and 2004. Median public medical school tuition and fees increased by 133 percent over the same time period. 

 

• Accelerating consolidation of hospitals and insurance corporations, leading to huge behemoths of systems with unprecedented power and exploding costs. The ACA has been a driver of this trend, and this is a HUGE topic that’s worthy of much closer examination that I only superficially address here. Yet there is no doubt this relates to concentrations of influence.

• Concurrently, physicians are changing from an employing to an employed class. This is also related to many other factors, such as the fact that employed physicians typically have more predictable work hours, a guaranteed salary, and maybe a better work-life balance. But, because they are employees, they have a boss that they are accountable to, who may or may not possess an MD and understand the challenges of the profession. Will this mean that doctors’ voices will be less influential in healthcare in the future? In a 2014 Medscape survey asking what doctors dislike about being employees, 45% of employed doctors reported limited influence in decision-making, and 30% reported “being ‘bossed around’ by management. If this doesn’t sound like the classic worker-boss struggle… Yet as a “profession” instead of a “trade,” doctors generally do not participate in typical collective bargaining efforts like strikes (and many, including myself, have ethical concerns with doctors striking).

To me, the direction this is pointing is that physicians no longer have the power and influence they once did, and they will likely continue to experience declines. I don’t think this is entirely a horrible thing in itself; like all groups, physician self-interest has not always aligned with what’s best for the public (ie., the AMA was one of the biggest opponents of Medicare for all back in the day, and its official position does not support single payer still.)

This change in status will force physicians to pay attention to the concerns of the working class – because physicians now belong to it. 

Our organizing strategies will have to reflect this emerging reality. The good news is that tons of groundwork of labor movements has already been laid. Once physicians join the voices of other allied health professionals and working people, all of our voices will be much stronger. This means physicians must publicly support the struggles of much lower-income workers in living wage campaigns (as these health professional students did, this physician did, and this group of physicians did), attempts at better working conditions, and yes, single payer healthcare.

• Finally, and probably most importantly, physicians should care about income inequality because it drastically affects the health of our patients. Check out these graphs charting life expectancy by income.

If true democracy is the key to solving the problem of income inequality, physicians can play an integral role. Now, more than ever, we’re in this together.

Expanding Medicaid is important; keeping an eye on Managed Care corporations is more so

It’s no secret that the ACA is experiencing growing pains at best and is in crisis at worst. Plagued by website concerns and the fact that many states are not committed to the Medicaid expansion, actually manifesting the increased coverage that is so central to the bill is proving to be much more difficult. Robert Reich recently remarked on his Facebook page regarding the problems with ACA implementation, “…if the problems continue, it won’t be only Democrats in trouble but the entire idea that government can do something complex and well. Yet, ironically, it won’t be the government that determines whether or not the system works as promised; it will be an array of private for-profit contractors and insurers.”

Again we see private industry creating problems but our government taking the blame in the public’s eye.

SCOTUS’ decision to allow states to choose whether to expand Medicaid created a new “donut hole” that’s particularly worrisome – people who do not qualify for Medicaid as it currently stands, but who make less than 138% of the poverty line (and thus do not qualify for the federal subsidies to purchase insurance through the exchange) have absolutely no options for health insurance! Because they were supposed to be covered under the new expanded Medicaid, no other provisions for their coverage were made.

It is extremely important that Medicaid expansion happen in every state, but we need to keep a close eye on how it’s done.

In some previous posts I’ve talked about states’ ideas for implementing Medicaid expansion and how Virginia, like many other states, seems to be leaning in the direction of increasing managed care. This basically amounts to awarding contracts to private insurance companies to handle the administration of Medicaid, with the idea that private companies will know how to better decrease costs as well as increase efficiency. Generally (but not always) this means that private companies are paid a fixed rate per enrollee, which is usually a percentage (usually around 95%) of what patients are costing the state, on average, under the prior fee for service system. Good data exists regarding this tactic in Medicare. Contracting to private companies via Medicare Advantage increases costs because programs have consistently found ways to cherry-pick for the healthiest seniors, thus minimizing risks, and have higher administrative costs than traditional Medicare.  It is estimated that Medicare private plans have resulted in overpayments of over a quarter-trillion dollars from 1985 – 2012!

However, the impact of Medicaid Managed Care on cost, access, and quality of care is more difficult to assess on a national level because Medicaid is a state program and significant variability exists between states. The patient population of Medicaid is also significantly different than Medicare. Yet there is some emerging evidence that the impact is negative, especially when for-profit companies handle care:

1) A recent study by McCue and Bailit directly compared publicly-traded with non-publicly traded Medicaid Managed Care plans and found “publicly traded plans that focused primarily on Medicaid enrollees paid out the lowest percentage of their Medicaid premium revenues in medical expenses and reported the highest percentage in administrative expenses across different types of health plans. The publicly traded plans also received lower scores for quality-of care measures related to preventive care, treatment of chronic conditions, members’ access to care, and customer service.”

2) The state of Connecticut recently ended their contracts with multiple managed care organizations (MCOs) after an independent investigation, citing concerns about insufficient transparency regarding allocation of funds and burgeoning administrative costs.

I spoke with a few physicians who provide care to a large population of patients with Medicaid about differences they’ve noticed with the Managed Care companies vs fee for service. These companies seem to increase administrative burden on physicians by ensuring “quality measures” are met. A few examples – reminders to place patients on ACE inhibitors (when many of the patients are already on these medications, but just not registered by the company), or “Members who turned 15 months old during measurement year and had at least 6 well child visits since birth.” While important aspects to consider, it’s easy to see how satisfying them may not necessarily lead to better outcomes (but give the appearance of such to policymakers). It’s even easier to see how these may balloon into huge administrative bloat for already busy doctors.

Still, many states are expected to increase their involvement with private insurance companies in expanding Medicaid.  Why? The myth persists that private companies, because they are subject to the invisible hand, will streamline administrative costs and improve quality or risk failure. All available evidence points to the contrary, because healthcare does not function like other markets. 

 

Medicaid Managed Care proponents say that coordinating care of people with chronic diseases/conditions is necessary to help them navigate the confusing system and keep them out of the hospital living longer, healthier lives. How could any multi-payer system possibly do that better, and with less administrative burden, than a single payer one? That would allow for the optimum, most efficient coordination of care, as well as quality evaluation.

Let’s work to keep an eye on further privatization of Medicaid. An example of an organization doing just this is Community Catalyst, a consumer advocacy group that conducts research and writes publications about healthcare reform, including Medicaid Managed Care. 

When these market-based experiments fail, we need advocates to step in swiftly with evidence-based explanations in order to prevent the needless suffering of patients and further waste of taxpayer money.