HEALTH CARE/Joan Retsinas

When the Government Behaves Like Big Business

Ah government! That bloated bureaucratic blob! The tangle of warped decisions that siphon money from taxpayers’ pockets! The omnipresent, oh-so-easy opportunities for fraud – Uncle Sam is just too stupid. His spendthrift ways have plunged too many citizens into poverty – not to mention the shackles put upon our Main Street and Wall Street entrepreneurs. Bureaucrats draw hefty salaries, with generous benefits. If only Uncle Sam were as savvy, as frugal as those private-sector businesses. So the right-wing lament goes.

In health care, right-wing zealots point to the fraud in Medicaid and Medicare: for-profit companies wouldn’t let that happen. The zealots point to the entire notion of universal coverage, almost a right of citizenship, bandied about in the Affordable Care Act: indeed, the Act stipulates a basic level of coverage for everybody. The private sector doesn’t act in such a profligate un-American way: the private sector treats every consumer as a customer, without trying to make every customer equal. In short, you get what you can pay for. The levels of bureaucratese we mock in the public sector don’t happen in the private sector. Supposedly.

Reality belies the rhetoric. Fraud happens in the private-sector – it is just not publicly aired. As for bureaucratese, call your private-sector HMO to ask for information, to appeal a decision, to understand the intricacies of your preferred provider network. In Medicare, our totally private-sector insurer, money spent on administration pales beside that spent in public-sector plans – 3-4% versus 10+ percent. (In small plans, the percentage can rise higher). Plus private-sector businesses, in health care just as everywhere else, make a profit, or they vanish (though the Affordable Care Act put a mini-brake on profits, by requiring private sector plans to spend a threshold of premiums on care). Comparing salaries, the head of Medicare earns less than half that of his private-sector counterpart, without many of the perks.

Yet the romanticism to let Main Street (or Wall Street) run health care persists. Whatever the public sector can do, the private sector can do better, from trash collection (watch municipalities rush to privatize whatever they can) to prisons to health insurance.

So the case of Kalydeco (made by Vertex) presents an interesting twist on right-wing rhetoric. At last a public sector insurer – Medicaid – has said “no” to a treatment ostensibly because there are other treatments that cost less – but mostly because it costs so much. Private sector plans – the HMO ’R Us contingent – are skilled at saying “no.” They have denied coverage for facial surgery for children born with congenital abnormalities, for expensive diagnostic tests (before legislation, many insurers wouldn’t cover routine colonoscopies), for preventive immunizations, for bone marrow transplants. They are skilled at saying “no.” In fact, they pioneered the use of the “limited formularies” that we blithely accept.

Medicaid in Arkansas decided to act like the hard-nosed business we profess to admire. Kalydeco is a drug prescribed for cystic fibrosis. Because it targets the genes that cause the disease, it is considered more effective for some patients. (Many new drugs target genes, not just symptoms.) Treatment costs roughly $300,000 a year. Three patients in Arkansas met the medical criteria. Arkansas officials claimed that the patients should try other cheaper treatments; the patients’ physicians advocated Kalydeco. So Medicaid did what any cost-conscious private-sector insurer would do: it said “no.” In Arkansas, a “red state” where a majority of citizens don’t like government, the state Medicaid office was acting in sync with public values. Or so it thought.

The outcry has been rapid. Three patients sued, claiming that Medicaid was violating their “civil rights” under federal law. The Wall Street Journal chronicled the tale of one patient, denied coverage. (

Arkansas is the only state to deny coverage for this drug, but the business model is creeping into the public sector. Alarmed by the high price tag for Sovaldi, a hepatitis C treatment (from Gilead Sciences) that costs $84,000 a patient, the Oregon Health Plan received a waiver to deny coverage to some of its 20,000 members with hepatitis C. Prisons have balked at covering this drug.

All of us who are taxpayers – as well as patients, families of patients, and potential patients – should ponder those savvy business decisions to minimize costs by minimizing treatment.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, September 1, 2014

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