The Ongoing U.S. Health Care Crisis: A Data Update

Abstract

While efforts to repeal the Affordable Care Act were narrowly defeated, grave problems in health care persist. Twenty-eight million remain uninsured, a number that is likely to increase. Millions more who have coverage cannot afford care because of high cost-sharing requirements. Meanwhile, the corporate takeover of medical care in the United States is at a gallop. This article provides a brief précis of recent data on U.S. health policy.

Keywords

health policy health economics inequalities in health health care corporations

Uninsured and Underinsured

The Census Bureau reports that 28.1 million people were uninsured in the United States in 2016, a slight decrease from 29.0 million in 2015. Overall, 8.8% of the population was uninsured, including 6.3% of non-Hispanic whites, 10.5% of blacks, 16.0% of Latinos, 7.6% of Asians, and nearly 20% of Native Americans. An additional 18 million non-elderly adults had a gap in coverage at some point during the year.¹

Preliminary data from a different federal survey, the National Health Interview Survey, indicates that the number of uninsured was virtually unchanged in early 2017 (28.1 million) compared to 2016 (28.6 million). However, a Gallup survey from the third quarter of 2017 found that the uninsurance rate increased to 12.3% in 2017, up from 10.9% in 2016, representing an increase of 3.5 million people.²

Lower-income enrollees in high-deductible health plans get much less preventive care than higher-income enrollees but are hospitalized much more frequently. Among those making less than $24,000, only 19% used any preventive care over the course of a year, vs 38% of those making more than $70,000. The hospitalization rates were 82% higher for the poorest compared to the wealthiest income group.³

In 2016, 33% of non-elderly adults reported a problem paying a medical bill, including 12% who received a collection agency call regarding a medical debt and 22% who were paying off medical debts over time. These figures were slightly improved since before the passage of the Affordable Care Act in 2010 but were actually worse than in 2005. Measures of access to care showed a similar pattern of substantial improvement in recent years but little change as compared to the situation in 2003. In 2016, 16% reported skipping a recommended test or treatment, while 12% failed to get a recommended specialist visit.⁴

In early 2017, 4.3% of Americans reported failing to get needed medical care due to cost within the past year. That figure was down from 6.9% in 2009 and 2010, but identical to the 1999 rate.⁵

Medical bills remain the most common reason for debt collection phone calls. Among people who had received any collection call, 59% had been called regarding a medical debt vs 37% who received calls about a telecommunications bill and 28% who were called about a utility bill. Unlike other types of collection calls, wealthier people were just as likely to report a medical collection call as were those with lower incomes.⁶

Recent restrictions in Texas mean that many women in that state are much farther from an abortion provider than in previous years. On average, women had to travel 51 miles farther to reach the nearest abortion provider in 2014 than in 2012.⁷

In 2015, the age-adjusted death rate rose for the first time since 1999, to 728/100,000 from 725/100,000 in 2014. Significant increases were recorded for black males, white males, white females, and infants of all races and ethnicities.⁸

The rising death rate has had one positive side effect – for corporations. In the past 2 years, 12 big companies have reduced their estimates of how much they’re likely to owe retirees by a total of $9.6 billion. For instance, between 2015 and 2016, Lockheed Martin cut its estimate of retirement obligations by $1.6 billion.⁹

Insurers often impose steep copayments for emergency department (ED) visits to discourage “frivolous” use of the ED. But a recent nationwide study found that only 3.3% of ED visits were “avoidable,” i.e., they didn’t require an inpatient admission, diagnostic or screening services, procedures, or medications. And even many of the “avoidable” visits were for substance abuse, mental health, or dental conditions that generally require care. Instead of punishing ED use, we should upgrade access to more appropriate venues for care of non-emergent conditions.¹⁰

Racism and Immigration

U.S. medical schools haven’t come close to reaching the goal set by the American Association of Medical Colleges in the 1970s that blacks should constitute the same share of medical students as their share of the overall population. At present, 4.8% of doctors, 3.0% of dentists, and 5.7% of advanced practice nurses (APNs) are African Americans, who constitute 11.6% of the entire U.S. workforce. In contrast, African Americans account for a disproportionately large share of low-paid health care workers, including 32% of aides and 23% of licensed practical nurses (LPNs). Hispanics, who constitute 16.1% of the workforce, are also markedly underrepresented among doctors (6.3%), dentists (6.1%), APNs (4.5%), as well as among registered nurses (RNs) (5.7%) and LPNs (9.4%).¹¹

The crackdown on undocumented immigrants may well have severe health consequences. In the wake of the largest raid ever by Immigration and Customs Enforcement (ICE) at a meatpacking plant in Iowa in 2008, the incidence of low birth weight increased by 14% among the infants of U.S.-born Latina women in Iowa and by 36% among the infants of foreign-born Latinas. A previous study found a similar deterioration in birth weight in California among the infants born to women with Arabic names after 9/11, particularly when the infant also had an Arabic name (which is presumed to be an indicator that the family was less acculturated).¹²

Prior to the recent hurricanes, 46% of Puerto Rico’s 3.5 million residents were covered by Medicaid or CHIP. But the island’s Medicaid program has long been hobbled by a cap on federal funding that limits the federal share to 18% of expenditures. That’s far below the 83% federal share that would apply under the formula for states’ programs, which indexes the federal contribution to each state’s per-person income. The ACA provided a short-term infusion of additional funds for the island’s Medicaid program, but with that funding set to expire, 900,000 Puerto Ricans are in danger of being cut from coverage.¹³

Immigrants and foreign medical graduates (FMGs) play a large role in many facets of U.S. health care. FMGs account for 21.5% of all U.S. doctors and 18.3% of academic physicians, and they lead 18.5% all clinical trials.¹⁴

Socioeconomic Inequality

Medicaid expansion under the ACA decreased the use of high-interest payday loans in California by about 11%, indicating that it gave a financial boost to low-income workers.¹⁵ A narrow slice of wealthy Americans have enjoyed almost all of the income gains since 1980. The average income of the poorest 50% of the population grew only 1% between 1980 and 2014, while income grew by 205% for the top 1% and by 636% for the wealthiest 0.001%. In contrast, between 1946 and 1980 the bottom 50% saw income growth of 102% vs 47% for the top 1%. Additionally, in recent decades poorer Americans have borne more of the tax burden while richer Americans have borne less. In 1951, the average tax rate for the poorest half of the population was 16.1% vs 43.4% for the wealthiest 1%. The comparable figures for 2010 were 23.6% and 31.3%.¹⁶

Pharma

Drug firms have long sought to justify their high prices by citing high estimates of R&D costs from industry-funded researchers. A new, independent analysis rebuts those claims. The researchers assessed the finances of firms that had gained FDA approval for only a single drug. For each firm, they tallied total research and development costs (including any R&D expenditures for drugs that had not gained FDA approval) and drug sales. Total spending for R&D averaged just $720 million, while sales revenues averaged $6.699 billion.¹⁷

Most top-selling and heavily promoted drugs offer little advantage compared to older (and usually cheaper) medications. Only 8% of the 50 most-promoted drugs offered a major or moderate therapeutic gain, while 22% of the 50 top-selling medications offered a major or moderate gain. The study was based on sales and promotional spending in Canada, but the lists would be similar for the United States.¹⁸

The FDA increasingly approves new drugs based on lower standards of evidence and requires post-approval studies to further assess safety and efficacy. But drug companies aren’t carrying out many of the required studies. According to a recent study, 5 to 6 years after approval, only 54% of the mandated studies had been completed; 20% had not even been started.¹⁹

Pharmaceutical company CEOs have reaped massive rewards since the passage of the ACA in 2010. Eight drug companies each paid their CEOs at least $186 million between 2010 and 2016. Former Gilead CEO John Martin was the top earner, pulling in $822,794,934. Gilead made billions in profits after purchasing the hepatitis C drug sofosbuvir (sold under the brand names Harvoni and Sovaldi).²⁰

Drug companies took home the majority of health industry profits in 2016, $67.7 billion, but insurers ($15.1 billion in profits), medical equipment and supply firms ($10.4 billion), pharmacies, labs, and benefit managers ($10.2 billion), medical product distributors and wholesalers ($5.9 billion), and for-profit providers ($2.0 billion) also had a good year. At present, for-profit firms’ share of revenues is 11% among general hospitals, 37% among specialty hospitals, 75% among home care agencies, 80% among nursing homes, 89% among surgicenters and urgent care centers, 93% among dialysis providers, and 100% among free-standing lab and imaging facilities. Sixty-five percent of hospices are under for-profit ownership.²¹

In 2015, 449,864 U.S. physicians (50.8% of all male doctors and 42.6% of female doctors) received $2.4 billion in industry payments, most of that amount from drug and device makers. Surgeons received an average of $6,879 each vs $2,227 for primary care doctors.²²

Corporate Medicine

In our market-driven health care system, investment in new medical facilities and equipment is often shaped by what’s likely to be profitable rather than what’s needed. A recent study found that new freestanding emergency departments (aka “urgicenters”) were preferentially located in areas with higher income and higher rates of private insurance (70% vs 57%). The presence or absence of a nearby hospital emergency department apparently had no influence on the siting of new urgicenters.²³

Another recent study of the siting of new invasive cardiology programs nationwide between 1996 and 2014 reached similar conclusions. New programs were most likely to open where a nearby competing hospital also opened a new program. For-profit hospitals, or nonprofits in markets dominated by for-profits, were more likely to open new programs.²⁴

Giant corporate systems are buying up hospitals and physicians’ practices at an unprecedented rate, leading to monopoly control of health care providers in many regions. Between 2010 and 2016, the share of primary care physicians working in hospital- or health system–owned practices grew 57%. By 2016, 90% of Metropolitan Statistical Areas were highly concentrated (according to the definition used by the Federal Trade Commission) for hospitals, 65% for specialist physicians, and 39% for primary care practices. And providers that dominate a region use their clout to drive up prices. For instance, insurers paid big provider groups 8% and 19% more for specialist and primary care office visits, respectively, than they paid small practices.²⁵

Government has become the major funding source for private insurers. In 2016, the “Big Five” insurers (Aetna, Anthem, Humana, Cigna, and UnitedHealthcare) got 59% of their total revenues ($213 billion) from government, up from 44% ($92.5 billion) in 2010. And those figures don’t even include government payments for public employees’ coverage, which accounts for nearly one quarter of all employer-paid coverage.²⁶

Ever wonder why management cares so much about diagnostic coding? Medicare pays Medicare Advantage (MA) plans $4,990 annually for a patient whose only coded diagnosis is uncomplicated diabetes. In contrast, MA plans receive $17,580 for a patient with type II diabetes with stage IV chronic kidney disease + morbid obesity + major depression + coronary artery disease with angina. Coding intensity may well be the only difference between those patients.²⁷

Pain doctors who operated “pill mills” contributed to the opioid epidemic. Now some pain clinics are cashing in on that epidemic by performing (and billing for) vast numbers of urine drug tests. Comprehensive Pain Specialists (CPS), a doctor-owned network of clinics in the Southeast, billed Medicare at least $11 million for such tests in 2014. One of CPS’s founders billed Medicare $1.8 million for drug tests in 2015, while one nurse practitioner at a company clinic in Tennessee “single-handedly generated $1.1 million in Medicare billings for urine tests that year.” Some of the increase in testing is attributable to drugs that are rarely abused. For instance, in 2014 Medicare was billed for 644,495 tests for amitriptyline, up from 6,173 in 2009.²⁸

Competition between insurers is becoming a thing of the past. In 2016, a single insurer had at least half of the market in 43% of the 389 metropolitan areas analyzed in a study by the AMA. In 89% of metro areas, one insurer had captured at least 30% of the market.²⁹

Medicare

Politicians eager to cut Medicare often claim that the Medicare Trust Fund is on the brink of bankruptcy. But the most recent Medicare trustees’ report projects that the Trust Fund will remain fully funded until at least 2030, 1 year later than their previous estimate.³⁰

Medicare’s readmission penalty program may have increased the mortality rate of congestive heart failure (CHF) patients. A new study analyzing 115,245 CHF discharges between 2008 and 2014 found that while the 30-day readmission rate fell by 1.6% during the period, 30-day (1.4%) and 1-year (2.0%) mortality rose significantly.³¹

Medicare’s Disproportionate Share Hospital (DSH) payments are supposed to compensate hospitals that care for many uninsured patients. But the formula used to calculate the payments actually penalizes hospitals when they provide more uninsured care. While (on average) Medicare kicks in an additional $320 for each added day of care for a Medicaid patient (making those patients profitable for many hospitals), it subtracts $20 in Medicare payments for each day of care for the uninsured.³²

Medicare’s diagnosis-related group (DRG) payment system was the first bundled payment scheme. Its fixed payments gave hospitals incentives to get patients out quickly. But that hasn’t meant that patients get home any sooner. Between 2004 and 2011, the decrease in hospital length of stay (from 6.3 to 5.7 days) has been more than counterbalanced by an increase in stays at post-acute facilities (from 4.8 to 6.0 days). So the “home-to-home” time actually increased from 11.1 to 11.7 days.³³

Medicare Advantage (MA) plans economize by providing less of all kinds of care – needed as well as unneeded. Compared to traditional Medicare enrollees, MA enrollees got 24.4% fewer diagnostic tests, 38% fewer flu shots, 14.9% fewer colon cancer screening tests and had 15.8% fewer non-emergent visits and 16.6% fewer emergent visits to emergency departments.³⁴

Medicare Advantage plans aren’t allowed to overtly exclude costly, unprofitable patients. But they often push high-cost patients to dis-enroll by charging high copayments for drugs and services that are mostly needed by high-cost patients. For instance, the MA plans have raised copayments particularly fast for ambulance services, home health care, partial hospitalization, and inpatient services. The resulting shift of high-cost MA patients to the traditional Medicare program saved the privately operated MA plans $5.2 billion in 2007–2009.³⁵

Pay-for-Performance and ACOs: More Evidence of Failure

Two recent studies have found that Medicare’s pay-for-performance programs that have amped up hospital paperwork have done little or nothing to improve quality. One concluded that the Value-Based Purchasing program “was not associated with improvements in measures of clinical process or patient experience and was not associated with significant reductions in two of three mortality measures.” The other “found no evidence that the program has had a beneficial effect.”³⁶

The new Medicare physician payment program mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is likely to penalize physicians who care for sicker and poorer patients. According to a recent study, only 3.1% of practices that care for mostly low-risk, non-poor patients will incur penalties based on quality and cost measures under MACRA vs 9.8% of practices with sicker patients and 18.0% of those with poorer patients. Similarly, practices with fewer sick and poor patients are much more likely to receive bonuses. Another study reached similar conclusions, prompting its authors to comment: “We’ve gone headlong into pay-for-performance despite study after study showing that it doesn’t improve quality or lower overall spending.”³⁷

Claims that Medicare’s Accountable Care Organization (ACO) initiatives have delivered savings for Medicare ignore the “quality bonuses” that Medicare has paid to ACOs. The Centers for Medicare and Medicaid Services (CMS) proclaims that in 2013–2015 ACOs cut Medicare’s costs by $954 million. But that figure excludes the $1.3 billion in quality bonuses paid to ACOs. So overall, the program increased costs by $346 million. The recently released 2016 figures tell the same story: Claimed savings of $652 million were more than offset by $691 million in bonuses.³⁸

Public concern in the 1980s that HMOs paid doctors to deny care led CMS to require Medicare Advantage plans to disclose their payment incentives for physicians. But CMS has waived that requirement for ACOs. Only 9% of ACOs responded to repeated queries from researchers at a consumer advocacy group and academic medical centers about their physician payment policies. Among the few that responded, more than one-third penalized doctors based on their patients’ utilization of care.³⁹

International

In 2011, the median survival of cystic fibrosis patients in Canada was 11.7 years longer than in the United States (48.5 vs 26.8 years). In comparisons adjusted for genetic and clinical factors known to affect survival, uninsured patients in the United States had by far the highest death rate, 77% above Canadian patients, but even Americans with private coverage had 15% higher mortality than their Canadian counterparts.⁴⁰

Expensive last-ditch, end-of-life care doesn’t explain the U.S.’s high health care costs. Care in the last 12 months of life accounts for a much smaller share of health spending in the United States (8.5%) than in Denmark (11.0%), Germany (11.0%), Holland (10.0%), or Taiwan (11.2%). Moreover, the share of Medicare spending devoted to persons at the end of life has fallen from 18.6% in 2000 to 13.5% in 2014.⁴¹

Doctors in nations with multi-payer systems (including those with universal coverage) more frequently report that time spent on insurance claims and data reporting is a “major problem” than doctors practicing in single-payer systems. In a 2015 international survey, only 20% to 21% of doctors in the United Kingdom, Canada, and Australia complained about the time spent on insurance claims, 2 to 3 times as many voiced that complaint in Holland (60%), the United States (54%), Germany (52%), and Switzerland (50%). Similarly, few Australian (8%) or Canadian (10%) doctors complained about the burden of data reporting, compared to 51% in Holland, 33% in the United States and Switzerland, and 23% in Germany.⁴²

U.S. seniors have far more difficulty affording care than their counterparts in 10 other wealthy nations. A Commonwealth Fund survey of seniors found that 23% of those in the United States have “problems getting care because of costs” vs 3% in Sweden, 4% in the United Kingdom and Norway, 9% in Canada, 10% in Germany, and 11% in Switzerland. The United States and Switzerland were outliers on out-of-pocket expenses: 22% of U.S. seniors and 31% of those in Switzerland reported that they spent $2,000 or more for medical care in the past year. In the other 9 countries, fewer than 10% spent that much. The findings highlight the need to upgrade Medicare coverage.⁴³

Electronic Medical Records

Plagiarism has become the norm in electronic medical records (EMRs). More than half (51%) of the text in residents’ EMR notes at a prominent academic medical center was copied from another note, 37% was imported from other parts of the EMR (e.g., lab values), and only 12% was newly typed in. The proportions were similar in hospitalists’ notes.⁴⁴

Polls

Fifty-six percent of U.S. doctors now favor single-payer reform, up from 42% in 2008, according to surveys by Merritt Hawkins.⁴⁵ In July 2017, 62% of all adults agreed that it is “the responsibility of the federal government to make sure that all Americans have health care coverage,” up from 52% in March 2017.⁴⁶ Support for a government-run health system is rising, and fewer Americans favor a private insurance-based system than at any point on record. In a recent Gallup survey, 47% preferred a government-run system (67% of Democrats and 22% of Republicans), up from 35% in 2014, while 48% favored a private insurance system, down from 61%. A shift in Republicans’ views accounts for most of the recent increase in support for a government-run system.⁴⁷

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

David U. Himmelstein, MD, is a distinguished professor of Public Health at the City University of New York’s Hunter College, a lecturer in medicine at Harvard Medical School, and a staff physician at Montefiore Medical Center in the Bronx. He graduated from Columbia University’s College of Physicians and Surgeons and completed a medical residency at Highland Hospital in Oakland, California, and a fellowship in general internal medicine at Harvard. He practiced primary care internal medicine and served as the chief of social and community medicine at Cambridge Hospital/Harvard Medical School. He cofounded Physicians for a National Health Program, whose 20,000 membersadvocate for nonprofit, single-payer national health insurance.

Steffie Woolhandler, MD, MPH, is a distinguished professor at the City University of New York’s Hunter College, a primary care doctor in the South Bronx, and a lecturer in medicine at Harvard Medical School, where she was formerly a professor of medicine. A native of Louisiana, she graduated from Louisiana State University Medical School in New Orleans and completed an internal medicine residency at Cambridge Hospital and a research fellowship ingeneral internal medicine at Harvard. She cofounded Physicians for a National Health Program.

Mark Almberg served as communications director at Physicians for a National Health Program (PNHP) for 8 years until his retirement in April 2017. He continues to follow health care news and policy issues. He received his bachelor’s degree from the University of Illinois at Urbana-Champaign. Prior to joining PNHP’s staff, he worked in a variety of positions including as a journalist and editor. He resides in Chicago.

Clare Fauke is a communications specialist at Physicians for a National Health Program (PNHP). She earned her bachelor’s degree from the University of Missouri. Prior to joining PNHP’s staff, she led communications campaigns for labor unions and school funding initiatives and taught courses in labor studies at the University of Illinois. She resides with her family in Chicago.

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