More About Our Dysfunctional Healthcare System
Many say our American health care system is broken. Diane and I begin writing about the early signs 34 years ago, and self published our book Modern Medicine: What You’re Dying to Know. Of course, back then things weren’t as broken as they are today. In our book we wrote about the difference between healthcare systems and actual healthcare—the relationship between a patient and the physician which is at the heart of real healthcare. On the other hand, healthcare systems include all the other services like payers and payer systems, such as the Centers for Medicare and Medicaid Services (CMS), Big Pharma, Pharmacy Benefits Managers (PBMs) and the increasing burden of government regulation. The Department of Defense (DOD) ushers in mandates, lockdowns, extreme censorship, and even thought control (physicians lost their licenses for expressing concerns about the COVID vaccinations).
The slide of the U.S. healthcare system into the dysfunctional entity it is today has come mostly from the outside and from those inside who did not object to the weaponization of healthcare by the payers. And that includes the federal government. I went into my medical career to provide care, not to think of thousands of ways to withhold care from my patients. Because we spend so much time, effort, and money denying care, we spend more and more on healthcare systems and get less patient benefit than other developed nations. Worse, our healthcare system is now a user-hostile environment. I began medical school in 1973 and have spent about 50 years actively practicing and teaching. Instead of the problems being resolved, they’ve gotten worse. Moreover, they’ve often been made worse by ill-conceived solutions such as denial of care.
Salaries of Big Pharma CEOs:
In a previous article, I wrote about the regulatory capture by Big Pharma of government agents in pivotal positions, where government officials in positions of power and responsibility are literally purchased by Big Pharma to rule in its favor in legislative decisions. The pharmaceutical industry has a lot of money and can buy lobbyists and favors from legislators. To say that the Covid experiment made Big Pharma richer is an understatement. The compensation paid to Big Pharma CEOs says it all:
Stéphane Bancel of Moderna is the highest paid executive in the healthcare sector made a total compensation of $300.7 million in 2023.
Douglas Ingram of Sarepta therapeutics made $124,938,694.
The CEO of Lilly David Ricks made $67.6 million in 2023.
Pablo Garita of Royalty Pharma made $84.8 million in 2023
Martine Rothblatt, CEO of United Therapeutics made $85.4 million in 2023.
Peter Gassner, CEO of VEEVA Systems, made 245.4 million in 2023
Altogether, the CEOs of 300 pharmaceutical companies were paid a staggering $3.5 billion collectively.
PBMs:
These organization were originally created by our legislators to protect the public and insurance companies from price gouging by the pharmaceutical industry. The PBMs were usually part of the insurance industry’s machinery but today are a prime example of the leverage that money can buy. They now are seen as exploiting inequities in the market and making money in the process. The most glaring single example of the perversion of the PBM is CVS (abbreviation originally stood for Consumer Value Stores), a large and powerful pharmaceutical company which has been around for about 60 years. CVS purchased Aetna for $75 billion. It’s difficult to express in one or two paragraphs how fundamentally wrong the Department of Justice (DOJ) was in allowing this purchase. A perfect example of "Carrying Water for Big Pharma." Unfortunately, this is not the only example of the kind of company purchases allowed by the DOJ. Optum is the PBM for United Healthcare. Optum uses AI and nurses to reject 31 percent of claims for patient care , the highest rejection rate in the industry.
In the first place, the DOJ had to approve the CVS purchase of Aetna. The DOJ should not have allowed the purchase of one monopoly by another. The DOJ was seduced by CVS's characterization of the purchase of Aetna as “innovative.” Such a public relations term is hardly an excuse to break Federal law. The American Medical Association (AMA) considered the merger detrimental to patients and wrote an extensive response (this link automatically downloads the document) to the at-that-time proposed purchase of Aetna by CVS. The AMA specifically addressed the notion that this was an "innovative" approach—something it was not. Once the purchase of Aetna by CVS was completed, the AMA continued to criticize the purchase.
To put it simply, now the fox is watching the henhouse, and the original intention of the federal DOJ legislation to preserve competition by preventing monopolies from developing is completely subverted. And finally, anybody with a brain should ask why Big Pharma is allowed to buy an insurance company and the PBM at a cost of $75 billion dollars. Where does the money come from? The money comes from the profit made from the consumer. So, to come up with $75 billion worth of profit means CVS is charging consumers so much that they have $75 billion lying around to buy up the competition.
Food and Drug Administration (FDA):
The FDA is another government agency supposedly designed to safeguard the public from foods and drugs which are either useless or harmful. This organization's carrying water for Big Pharma can be traced back 80 years to around 1942 when Wyeth imported Premarin from Canada. Wyeth had done some very incorrect studies indicating how wonderful Premarin was and the FDA simply gobbled up the Wyeth dogma hook, line, and sinker, until the Woman's Health Initiative (WHI) study said otherwise. And still the FDA (one of 13 entities) under the Department of Health and Human Services (HHS) has not learned its lesson. Covid vaccines from Moderna and Pfizer were unleashed on the public on the basis of Moderna’s and Pfizer’s marketing to the FDA, not vaccine safety.
Through the Covid pandemic, the FDA also carried water for Big Pharma. A large number of the FDA agents leave their federal jobs for higher-paying jobs with Big Pharma, taking along with them the knowledge and relationships they have acquired by working for the federal government.
Drug Advertising to Consumers:
We know that Robert Kennedy, Jr., wants to stop TV drug adds. Amen. This is one time when the AMA is correct. Get rid of drug adds to consumers. Drug companies appeal directly to consumers, creating a false need and a false desire in viewers. Pharmaceutical adds should be considered illegal. Drug companies would not spend millions advertising their products directly to consumers if the ads didn't increase sales and protect their products from criticism. Elizabeth Rosenthal notes that the U.S. and New Zealand are the only countries to allow drug advertising on TV and compares advertising of drugs on TV similar to the long gone TV advertising for cigarettes:
Companies prodding patients to “ask your doctor” for drugs that they may not need isn’t just about truth in advertising or breaking government and personal budgets. It is an issue of public health.
Another side to Big Pharma's advertising their products includes promoting their products to physicians. ProPublica often writes about the evils of giving sample meds to doctors. I can say that fifty years ago there was a friendly relationship between doctors and what we call “detail” people, those honest and hardworking people who would occasionally bring us a sandwich, so we could eat during our lunch break and listen to them tell us about new drugs. This was in no way bribery. It was simply a way to get our attention in a very busy day. It was also a meeting in which I could ask for more specific information about a drug and the detail person would get back to me with an answer. The best part was that we were given free samples of medications to provide to our patients who could not afford them. This was a genteel win-win. There were no losers in this equation. Detail people now must worry about giving us a sandwich. However, it is now legal for drug companies to hire doctors to speak to groups and bring lunch to all attendees.
CMS:
This is the center for Medicare and Medicaid services and is one of the 13 branches of Health and Human Services (HHS). In the future Trump presidency, Robert F Kennedy, Jr., is scheduled to be in charge of HHS and Dr. Oz is scheduled to be in charge of CMS. Although I’m comfortable with Robert Kennedy, Jr., Dr. Oz's attitude toward Medicare worries me. Rachel Maddow reported that Dr. Oz owns $600,000 of private medicare stock. From a providers/consumer perspective, Medicare, also called Traditional Medicare (TM), works well. About 30 years ago our federal legislators voted to “privatize” Medicare with Medicare Advantage (MA) plans. According to the Medicare Payment Advisory Commission (MedPAC), the annual cost over-run for MA plans is $88 billion. MedPac is an independent congressional agency chaired by Michael E. Chernew, Ph.D., from Harvard Medical School to advise the U.S. Congress on issues affecting the Medicare program.
In 2024 there were 33.8 million people enrolled in MA plans which is 55 percent of all Medicare beneficiaries. Enrollment in the MA plans has more than doubled since 2010, with growth expected to continue and 60 percent of eligible people involved in MA programs by the end of the decade. The average MA beneficiary has access to 43 MA plans, which is more than double the number of plans offered in 2018. MA plans are offered by private insurance companies who literally make a killing on them. Although each insurance agent is paid $1000 a month per MA enrollee, the price for the initial capitation has never been disclosed. As one can imagine, this is a boon to the healthcare insurance industry, but the cost greatly increases the cost of Medicare for providers and consumers alike. With the high cost of MA plans, MedPac should recommend eliminating the entire Medicare Advantage program. In my opinion, the MA system is the single greatest threat to the future survival of Medicare.
I hate these plans for many reasons. In the first place, they are treacherous. They are bait and switch on speed. I’ve had to deal with them as a provider, and I have been able to see the problems that many consumers have. In the first place, advertising these plans is excessive so that every year I get dozens of phone calls telling me of all the wonderful opportunities. They’ll say, “You can get dental, eye, hearing, counselling and sometimes even a ride to your appointments.” The problem is that the actual payment to many hospitals is so small many hospitals refuse to provide services to those insured by MA plans. If you need too much care, the MA plans withdraw their coverage. Or they do not offer their plans in areas with a large number of elderly people. So, they burden Traditional Medicare with high risk, poor people. And then, rather than reducing the money glut to the MA insurance agents, CMS reduces payment to the providers in Traditional Medicare who are already providing better care for less money. Like many health maintenance organizations (HMOs) and preferred provider organizations (PPOs), these groups skim off the consumers with money and leave those who can't afford insurance uncovered.
Leave it to CMS to come up with a completely ridiculous solution to a simple problem. Because MA plans have a budget overrun of $88 billion a year, CMS has to borrow from Traditional Medicare fund to cover the cost overruns. CMS then tries to resolve the shortage of money in the Traditional Medicare fund by decreasing physician pay. Instead, CMS should be decreasing what it pays insurance companies. One can only wonder how CMS can arrive at something so stupid. Perhaps someone in the loop is getting kickbacks we don't know about.
I can only assume that Dr. Oz has been seduced by MedPac's Dr. Chernow to consider these treacherous MS plans as somehow beneficial to consumers. A simple way to get rid of the staggering problems confronting Traditional Medicare, and Medicare Advantage plans is to discontinue the Medicare Advantage program. Defunding the MA plans would be quick, effective, and a remarkable improvement in healthcare for 60+ million Medicare consumers.
Drug Advertising to Consumers:
The FDA succumbed to the drug interest lobbies in 1995 allowing direct to consumers adds on TV. The U.S. and New Zealand are the only nations in the world which allow drug adds on TV. In the U.S., TV ad spending ballooned from $360 million in 1995 to $1.3 billion in 1998 to $5 billion in 2006.
There are consequences to “direct-to-consumer” ads. Vioxx by Merck is one example. It went on the market in 1999, was famously promoted by figure skater Dorothy Hamill in 60 second spots. Five years later Vioxx was pulled off the market because of increased risk of heart attacks and strokes. At that point, Vioxx was bringing in $2.5 billion dollars in annual sales.
Insurance Companies:
The moral to the story is that insurance companies almost always come out on top but there is one recent exception to that. Covid injections correlate with sudden death at ages 15, 25, 35, 45 and 55. Those groups are traditionally low risk groups, but that has all changed since the advent of the COVID vaccination. Aetna was probably quite desperate to be purchased by some company flush with capital.
We also know that insurance companies were heavily involved in the Affordable Care Act. Although it is a good idea to provide better access to healthcare through better access to payment, you can see who benefited because the price of insurance eventually shot up to become much more than the cost of a house payment. I witnessed many families who had had barely affordable health insurance ending up without insurance because of the increase in premiums.
Perhaps one of the greatest disservices to the public is the mark-up in insurance premiums to pay for hospital acquisitions. When a larger hospital pays $500 million for a smaller hospital system, who pays? The purchase price is lumped together with the new operating budget of the purchasing hospital, which has suddenly become much more expensive to run. The hospital then tells the insurance companies they need more money to break even. Insurance premiums are then raised to cover the cost of the hospital's purchase of another hospital. This is a win for the hospital and a huge loss for the consumers who are actually the ones paying for the newly acquired hospital.
Besides working with hospitals to gouge consumers, insurance companies enjoy too much power over life and death matters. Twenty-five percent of the healthcare dollar is used to deny care. Nobody has even tried to count the monetary, emotional, physical, and spiritual cost of denying care.
A favorite insurance trick is to deny payment for the best medications and substitute a cheaper medication that doesn’t work as well or doesn’t work at all. Sometimes there are work-arounds, but they take several hours of clinic time. Years ago, a "peer" meant another doctor. Today it can mean waiting on the phone for two hours to talk with an LPN. Now there is nothing wrong with being an LPN, but that degree is not the same as an MD degree. When a doctor or nurse kills a patient, that is considered murder. No one is tracking when prior authorization by insurance companies causes injury or death to a covered patient.
In N. Adam Brown's article Insurers Are Dictating Care and We’re Sick, Sick, Sick of It!, Brown provides some statistics on what happens to patients when prior authorization interferes with patient care:
In fact, 94 percent of providers surveyed said prior authorization still delays care. More than three-quarters (78 percent) reported that prior authorization has led to patients abandoning treatment, and 24 percent said prior authorization has led to a serious adverse event for a patient in their care.
Yet despite the statistics Brown provides about the harm done by prior authorization, Andrew Witty, United Health Groups CEO, claims:
Our role is a critical role, and we make sure that care is safe, appropriate, and is delivered when people need it….We guard against the pressures that exist for unsafe care or for unnecessary care to be delivered in a way which makes the whole system too complex and ultimately unsustainable.
Since many or most of insurance denials are created by AI and not reviewed at all, Witty isn't providing facts about what insurance companies are doing with denials of care, but rather a public relations coverup. Talking about something else besides the real problem at hand is, according to Darrell Huff, a common way to lie with statistics.
Doctors and Healthcare Systems:
It is true that some doctors abuse the system. As with most accidents, disasters occur as a result of several systems failures over time and a culture of tolerance or looking-the-other-way. So, you must ask, where were the other doctors, the nurses, the administrators, the hospital boards, the lawyers, and the state medical boards, which often act in ways which result in disasters.
Years ago one of the clinics for which I did not work had an orthopedist who was too busy, but he made a lot of money which contributed to the over-all benefit by indirectly raising everybody’s salary. The point is that everybody knew how this doctor worked and everybody benefitted for many years until one day a rival clinic member started an investigation and the doctor who was so busy was “found-out” and punished. But all those others (doctors, nurses, administrators) who knew and benefitted from his work were not punished. Therefore, the guilt which was shared by many, was focused on one. You might say, the scapegoat. The outcome, had there been effective functioning systems in place, could have been much better for everybody, including the patients. We all have a long row to hoe regarding the taking of responsibility for the functioning of the systems in which we work.
Finally, we as healthcare providers should work together to object to state and federal legislation which is hostile to patients. Most legislators really don't understand the complexity of healthcare issues.
Today, Elizabeth Rosenthal in An American Sickness tells us that getting any problems addressed in our horrendously dysfunctional healthcare system can only be accomplished by consumers holding legislators responsible for the state of affairs in healthcare today.
In the past quarter century, the American medical system has stopped focusing on health or even science. Instead, it attends more or less single-mindedly to its own profits….The current market for healthcare just doesn't deliver. It is deeply, perhaps fatally, flawed.
Introduction to An American Sickness
We wrote Modern Medicine: What You're Dying to Know to alert consumers to the need to contact their legislators and lobby for fixing the increasing dysfunction in our healthcare system. More and more people such as Elizabeth Rosenthal are beginning to understand that only legislation will take the enterprise out of healthcare and put medical decisions back in the hands of physicians.