When the media frenzy subsides and Republicans run out of scare stories, the country will be faced with the most important question about Obamacare: Can it deliver what it promised? Thanks to the Affordable Care Act, a new business model is rapidly emerging in the medical-industrial complex that, in theory, can dramatically reduce the inflated costs of healthcare while serving everyone—rich and poor, healthy and sick. But the reformed system will also still rely on the market competition of profit-making enterprises, including insurance companies. A lot of liberal Democrats, though they voted for Obama’s bill, remain skeptical.
“In the long arc of healthcare reform, I think [the ACA] will ultimately fail, because we are trying to put business-model methods into the healthcare system,” said Washington Representative Jim McDermott. “We’re not making refrigerators. We’re dealing with human beings, who are way more complicated than refrigerators on an assembly line.” I turned to the Seattle congressman for a candid assessment because he’s the third-ranking Democrat on the House Ways and Means Committee and has been an advocate of single-payer healthcare for decades. Plus, he’s a doctor.
The business transformation under way in healthcare involves the consolidation of hospitals, doctors and insurance companies in freestanding “integrated delivery systems”—nonprofit and profit-seeking—that will have the operating scope and power to eliminate duplications and waste and hold down costs, especially the incomes of primary-care doctors. Major hospitals are buying up other hospitals and private practices, and they’re hiring younger doctors as salaried employees. An American Medical Association survey in 2012 found that a majority of doctors under 40 are employees, no longer independent practitioners.
“The medical-industrial complex is putting itself together so that the docs will be the least of our problem,” McDermott said. “They will simply be serfs working for the system.” The AMA’s market research reports that “hospitals focus on employing primary-care physicians in order to maintain a strong referral base for high-margin specialty service lines.” Big hospitals need a feeder system of salaried doctors, McDermott explained, to keep sending them patients in need of surgery or other expensive procedures.
“It’s possible hospital groups can reduce costs,” the congressman said, “but I look at the consolidations going on and ask myself, ‘Are we going to wind up with hospitals that are too big to fail? Are we going to have hospitals so powerful that we cannot not give them what they want?’ It’s going to be the government against the medical-industrial complex, which is developing very rapidly. If the Little Sisters of Providence [his fanciful example] become a conglomerate and the government says you should close some of your hospitals, they will say, Who says?”
Despite these doubts—not to mention the Republican-promoted hysterical attacks on the ACA on other grounds—McDermott is actually optimistic. He expects stronger healthcare systems roughly resembling single-payer “to spring up like dandelions” around the country—led by progressive states that really want to make it work. “That’s probably going to happen in Vermont, Washington and Oregon,” he said. “California has tried twice to have a single-payer system and was defeated by the forces of money. Jerry Brown in California, maybe Cuomo in New York, maybe Kentucky. The governor in Oregon, John Kitzhaber, and our governor in Washington, Jay Inslee, all want it to happen.”