I’ve started reading Shannon Brownlee’s book Overtreated: Why Too Much Medicine is Making Us Sicker and Poorer. Bear in mind that the book is from 2007, prior to the ACA enactment and the current debates about the next direction for health insurance coverage in this country, but I found this passage – which is actually in the introduction – to be interesting with regard to the insurance industry. It’s not a direct connect, but I think it applies.
[…] talking about costs means talking about overtreatment, and bringing up overtreatment means facing the fact that reducing unnecessary, wasteful care would lead inevitably to a small health care industry. The seven hundred billion dollars we currently spend on unnecessary care doesn’t just go down the drain – it goes to paying for drugs and medical devices, which are manufactured by American workers. It helps pay the salaries of doctors, hospital administrators, nurses, orderlies, and pharmacists. It covers part of the cost of hospital beds and the constructions of new hospital wings, which are built by American construction workers. It helps support the insurance industry and the salaries of all the clerks who shuffle those mountains of paperwork. Think for a moment what it would mean to eliminate this wasteful, unnecessary care. Getting rid of seven hundred billion dollars’ worth of useless medical care is roughly the equivalent of wiping out the entire US high tech industry, including all the jobs it provided and the money it makes for shareholders.
Aside from the fact that I’m almost certain my salary will go down – a salary I have yet to start earning after four years of medical school, five years of general surgery residency, two years obtaining a MPH, three years of plastic surgery residency, and one year of hand fellowship – this is actually my next biggest concern about the Medicare for All plans that entirely eliminate private insurance. Look, I hate insurance companies just as much as every other physician and American, but what happens if we just wipe them out?
In 2017, health care spending accounted for 17.9% of the US Gross Domestic Product. Obviously, the private medical insurance industry does not account for anywhere close to that entire amount, but some of that 17.9% is certainly fueled by the insurance industry itself. There are a significant number of jobs tied to the insurance industry – as Brownlee points out, the “clerks who shuffle those mountains of paperwork” are actual people. Sure, some of them would undoubtedly be hired by the government to run a significantly expanded Medicare program, but not all of them. Overhead costs are currently significantly lower for Medicare than for private insurance companies, predicting that a Medicare that covers every American won’t need to hire all of those people. What happens to those folks after those jobs are gone? And what’s the ultimate ripple effect – because altering any part of the health care industry, nearly 1/5 of the economy, is bound to have a big effect.