COVID-19 Crisis Highlights Need for Overhaul of U.S. Healthcare System

COVID-19 Crisis Highlights Need for Overhaul of U.S. Healthcare System
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Lawyer and author Kenneth McCallion writes in the following commentary about the need to overhaul the U.S. healthcare system.

Much of the blame for the U.S.’s 225K+ COVID-19 death toll can be attributed to a colossal failure of leadership.

But we must also recognize that our country’s balkanized and disjointed healthcare system left us far less prepared for a pandemic than other countries. Even before the virus reached our shores, Americans were dying at much higher rates from preventable causes, and a bigger share of the U.S. population lacked health insurance than in any other developed country.

When COVID hit, the U.S. had fewer doctors and fewer hospital beds per capita than most other developed countries. Due in part to the extremely high cost of medical schooling in the U.S., we only have 2.6 doctors per 1,000 people—much lower than the 3.5 per 1,000 people in comparable developed countries. The U.S. has about the same number of hospital beds as Canada and U.K., but we have far more people.

Due in part to the prohibitively expensive cost of preventative primary care, the U.S. also has higher rates of hospitalizations for chronic conditions like congestive heart failure, diabetes, and asthma that should only require outpatient treatment. As a result, when the COVID-19 crisis hit, emergency rooms and ICUs quickly filled to overflowing, and doctors were working dangerously long shifts which led to “doctor burnout.”

The U.S. was also totally unprepared to conduct the level of testing needed in the current pandemic. Our healthcare system is mostly a for-profit system. U.S. pharmaceutical companies are primarily in the business of making profits for their shareholders, and there is simply not enough of a profit incentive for private companies to spend millions or billions on the development of diagnostic tests and vaccines for a virus which may or may not come, or stockpiling supplies in case of a crisis. “Emergency preparedness” are just not in the vocabulary of the U.S. healthcare system.

In recent years, the encroachment of hedge funds and private equity investment firms into the medical field has added to the vulnerability of the healthcare system. In theory, physicians control all medical decisions and agree to pay a management fee to a newly created company, which handles administrative tasks such as billing and marketing. In reality, investment firms that buy a hospital’s or medical office’s “nonclinical” assets exercise substantial influence over medical decision-making, since all decisions in a medical practice have an impact on the only thing of importance to investors: profits.

So, rather than stockpiling necessary equipment for a public health emergency, these firms followed a “just in time inventory management” with regard to medical supplies, causing the hospitals owned by private equity funds to be the first to experience shortages of personal protective equipment, ventilators, and other necessary equipment needed to treat COVID-19 patients.

Countries with universal healthcare invest far more in public health research and testing, which is why those countries – such as the Scandinavian countries, Germany, South Korea and Taiwan – are able to test far more people per capita than the U.S. Not surprisingly, these same countries with universal healthcare systems also had lower COVID-19 death rates than the U.S. This is because any universal healthcare system requires centralized planning and places a heavy emphasis on emergency planning and reserve capacity, which is always an asset in times of crisis.

Many Americans, by contrast, are uninsured or have high out-of-pocket costs, which leads them to delay seeking care for underlying health conditions that made them more susceptible to COVID-19. This, in turn, leads to unnecessarily extended hospital stays, more acute illnesses, and, in many cases, death.

In addition, the rabbit warren patchwork of public and private medical labs makes it difficult, if not impossible, for the U.S. to scale up to the level of testing needed to maintain the tens of thousands or millions of daily tests that experts are saying is required for effective monitoring of the disease. This testing capacity is especially needed as lockdown and social distancing restrictions are eased, but is generally not available to most Americans.

Another factor causing a financial crisis in the U.S. healthcare system is that, almost overnight, millions of Americans became unemployed and lost their private insurance coverage, which is tied to their jobs. At the same time, privately-owned for-profit and ostensibly not-for-profit hospitals and healthcare systems are squeezed from the other end, since public programs like Medicare and Medicaid negotiated lower rates for medical services, thus reducing profit margins for hospitals.

Even the most prestigious and well-managed U.S. hospital systems quickly ran into financial trouble when the coronavirus crisis hit this country. The Mayo Clinic in Minnesota lost millions of dollars a day when it suspended all non-emergency medical care in late March to deal with coronavirus cases. Since 60% of its revenue normally comes from privately insured patients, it experienced a sharp drop in revenue when more profitable elective surgeries were suspended, leading the Clinic to lay off much of its staff as it projected a loss of $900 million for 2020.

A major overhaul at the federal level would be necessary if the U.S. really wants to transform its broken healthcare system into one that is first-class. If a new administration steps in as of January 2021, and a reinvigorated Congress recognizes this as a top priority, the healthcare system can be at least modified in important structural respects so that we will be prepared to respond to the continuing crisis and any future healthcare emergencies.

Representative Tony Cardenas of California has already introduced HR 6616 in Congress, which would amend the Social Security Act to allow states to provide coverage under the Medicaid program for vaccines and treatment for COVID-19 for uninsured individuals without the imposition of cost-sharing requirements. This would be a small yet essential first step in improving the U.S. healthcare system and move it closer to the universal healthcare coverage systems that have become the norm in other developed countries and is long overdue here. Healthcare is now generally recognized as a fundamental right, not a privilege.

The American people deserve a system designed to provide the maximum healthcare coverage for all at the lowest possible cost, not one designed for maximizing profits.

Kenneth F. McCallion is a New York-based attorney and author of COVID-19: The Virus that Changed America and the World.

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