“I see people coming back, coming back, for the same issues, and I know that they’re really not well enough to stay well outside of a hospital for an extended period of time.”
Medical professionals like June F., a registered nurse in Connecticut, often wish to keep their patients around for observation, just to be safe. But usually they have no choice but to send those patients out the door before they’re completely healthy. Beds cost money; care costs money.
If a patient is readmitted within 30 days of having been discharged from the hospital for the same health issue, the hospital won’t be reimbursed by the insurance company for subsequent care. This puts added pressure on the healthcare providers. June explains, “[Nurses] are walking this constant tightrope. We want to keep people in the hospital [for] long enough that they are well and won’t be readmitted, but we’re constantly getting this push to discharge them.” A 2016 study by Dr. Oahn Nguyen at the University of Texas Southwest Medical Center found that one in five patients have at least one “vital sign instability” at the time of their discharge.
What results is a pattern that is typical of the healthcare and health insurance industries, wherein the nature of a patient’s care is determined by a financial need, rather than a medical one. June explains, “You can tick off all the boxes so that according to the algorithm, [the patient] is well enough to go, but the doctor and the nurses and the case managers know that they really shouldn’t go. They should have one more day.”
Advocates for Medicare for All see these failures as evidence of the need for universal public health insurance. Without the private insurance companies setting regulations (such as hospital discharge requirements), June and other nurses would have the autonomy to give their patients the care they need, to the extent that they need it. One of the most common critiques of Medicare for All proposals, however, is that the elimination of private insurance will wreak havoc on the economy built around those companies. Hartford, Conn., the “Insurance Capital of the World,” serves as an example to weigh the legitimacy of this concern. What sort of future might we imagine for Connecticut if its health insurance companies close? How will the elimination of private insurance impact a city and state that supports these companies? (The answer: probably not as much as you’d think.)
Insurance in Hartford, Conn., begins in 1794, when a well-off merchant named Jeremiah Wadsworth started informally selling fire insurance. This eventually morphed into a legitimate undertaking with the establishment of publicly owned insurance firms: The Hartford Insurance Co. in 1810, and The Aetna Insurance Co. in 1811. But Hartford didn’t earn its reputation as the Insurance Capital for another few decades. When New York City’s financial district burned down in 1835, almost all of New York’s insurance companies were unable to follow through with payment promises, and many of them went out of business. Hartford-based insurance companies, however, paid out their losses, thereby demonstrating their professional reliability. Parts of Lower Manhattan burned down again 10 years later, in 1845—and again, Hartford insurers kept their promises. The city soon became a hub for the insurance industry, and by the mid-1980s, there were three dozen insurance companies in Hartford.
But the city’s reputation as the Insurance Capital has been diminishing for several decades. Today, there are only a handful of insurance companies left. Many have moved their headquarters out of state, relocating to cities with bigger draws and lower taxes.
It’s important to note that health insurance is only one part of an intricate, much larger industry, and that most of it—life insurance, home insurance, auto insurance, etc.—would be untouched by Medicare for All. Health insurance comprises 16 percent of the Connecticut insurance industry, employing approximately 9,500 people in Connecticut, and distributing an annual payroll of $1.1 billion.
Beneath a lot of the rhetoric surrounding Medicare for All is the question of what will happen to the industry? But the threat of insurance companies withdrawing from Hartford and its economy is nothing new. In June 2017, Aetna announced that it would be moving its headquarters from Hartford to New York City. For the previous 164 years of the company’s existence, it had held strong ties to Hartford: Morgan Gardner Bulkeley, a son of Aetna’s founder, served four terms as the city’s mayor and subsequently was elected governor of Connecticut—all while presiding over Aetna. The company’s plan to leave the city was scrapped, however, in January 2018, when CVS bought Aetna and decided to keep the health insurer in Hartford. “We… view Hartford as the future location of our center of excellence for the insurance business,” wrote CVS spokesman David Palombi via email. This announcement followed months of lobbying efforts by Connecticut officials.
It might seem tempting to compare what would have happened to Hartford had Aetna left, with what might happen to Hartford should Medicare for All take effect. “Whenever a company shuts down, there’s a big deal,” says Ted Doolittle, a healthcare advocate for the State of Connecticut and a former employee of CMS. “However, we’re not shutting down a company; we’re shutting down an industry.” But Aetna’s attempted departure isn’t predictive of the changes that an insurance overhaul would bring about.
Medicare, as it currently exists, is a federal health insurance program for senior citizens and people with certain disabilities, regardless of income or medical history. When it was enacted in July 1965, the Medicare program was modeled on the private insurance system that was in place at the time; since then, however, the program has expanded and contracted at several points, including the addition of Medicare Part C, which gave people the ability to buy into private insurance plans approved by Medicare. Medicare is a program that “Americans know and largely love,” says Mark Schlesinger, a professor of health policy at the Yale School of Public Health. It’s come to represent the gold standard of public programs.
“Medicare for All,” however, means different things to different people. Broadly speaking, Medicare for All involves the elimination of private health insurance in the U.S.. Instead, the current multi-payer system would be replaced with a publicly-funded, single-payer system. (“Single-payer” means that one entity collects all the healthcare fees and pays for all the healthcare costs.) Under a single-payer system, all U.S. residents would be covered for all medically necessary services—including doctor and hospital visits, mental health, reproductive health, dental, vision, prescription drug and medical supply costs. Under some proposed plans, there would be no premiums, co-pays, or deductibles. “It would be far simpler,” imagines John Whitbeck, a retired physician assistant (PA) and a member of the Western Connecticut Democratic Socialists of America. “There would only be one insurance company to deal with: ‘The Office,’” he says with air quotes. “The Office of Medicare for All.”
Medicare for All uses Medicare as its basis, but it’s not simply a broadening of the current system. As it exists today, Medicare is not a single-payer program; it’s about two thirds public, and one third private. There is the option to buy into a private insurance plan—if, say, a patient wants to keep the plan they’re familiar with, or if the standard Medicare benefits don’t fit a patient’s specific needs. In this way, there are essential limits to likening Medicare to Medicare for All, and vice versa.
Since its conception, the government has contracted private, for-profit companies to administer Medicare benefits. The Centers for Medicare and Medicaid Services (CMS), a federal agency that runs Medicare and Medicaid, employs only 6,200 people. These employees—who are, notably, government employees—play an important role in overseeing Medicare and Medicaid. But Medicare isn’t run by government employees, for the most part. “The actual claims, the people who answer the phones, the call centers, all those people… they work for insurance companies, and subsidiaries of insurance companies,” says Doolittle.
So, is that public insurance? Is it private insurance? “It’s public insurance in the sense that the government [is] providing it, but the actual people who administer the benefits [are] all working for the private insurance companies,” says Schlesinger. In other words, he explains, “they process paper. Or process bills. Or whatever the electronic version is now.”
This relationship between Medicare and for-profit companies has been mostly left out of current healthcare discourse, but it’s always existed. In fact, the first ever Medicare claim was paid by Aetna: a check to Hartford Hospital for $517.57. It is likely that whatever form of Medicare for All is legalized, it will be administered in the same way that Medicare always has been: with private insurers acting as financial intermediaries. “When you say private insurance is going to go away,” Doolittle says, “think about the person at the desk, or the person in the call center—and most likely, that person is going to still work for the same employer, that’s going to get a contract.”
“I would see insurance companies’ role actually broadening and [getting] consolidated among a few players, but I would see an expanded role for insurance companies in a Medicare for All scenario,” says Eric Galvin, president of ConnectiCare, a non-profit insurance company in the state.
But Galvin doesn’t think that Medicare for All is the right policy because it doesn’t address the cost of care. He sees a larger problem of high costs and inefficiency in the healthcare industry—regardless of who is paying. Galvin emphasizes the role of private investment in innovation sponsored by private companies, hospitals, and doctors. In a Medicare for All system, those investments “wouldn’t be there to help improve the care of someone in Medicare…that innovation wouldn’t happen.” As an example: ConnectiCare is currently conducting research as to whether patients require a preoperative visit for cataract surgery. This is standard practice, but if the patient is in good health, it’s an unnecessary use of time and money. “If it weren’t for a private insurer like us, that patient would be spending more money, taking away a slot in their primary care office that somebody else might actually really need. It just adds to—in my opinion—the waste of medical spending.”
From the perspective of a nurse on the hospital floor, June imagines a future under Medicare for All where private insurance companies no longer control the way healthcare money is distributed at the point of care. “Medicare for All would free up more healthcare money to be put to the point of care, but […] for my working conditions to change, we also need to have policies enacted at the facility level. We need to have policies that say, yes, we’re going to invest in staffing for the patients.”
The transition period to a single-payer system will look different, depending on how much time is set aside for it. Rep. Pramila Jayapal’s (WA-07) House bill, H.R. 1384, plans for a four year phase-in; Vermont Senator Bernie Sanders’s bill, S. 1129, plans for a two year one. And California Senator Kamala Harris recently published her own Medicare for All plan, which allocates ten years for the transition. The time scale is important, particularly for those employed at companies that will undergo structural change. “It will define the careers of many senior and middle managers, as they pivot their companies to be exclusively serving the government,” says Doolittle.
Both the House and Senate bills have earmarked one percent of their total programming revenue to help people make the transition from a multi- to single-payer system. The Sanders bill guarantees assistance to anyone displaced by the transition—including wage replacement for near-retirement workers until they have access to their pensions, as well as job training and relocation support for people who lose their jobs. Administration for Medicare for All is an on-ramp, but not every worker in the current system will be able to keep their jobs. “There are going to be people who don’t fit into that on-ramp,” says June, “and there are also going to be people who say, I don’t want to work for the government.”
Maybe one of the most unique aspects of healthcare in Connecticut is a state-run agency called the Office of the Health Care Advocate. The office, founded in 1999, represents individuals and families in Connecticut who are fighting with their health insurance companies. The service is free to any resident of the state; if insurers act in a deceptive way, the state will intervene on behalf of the patient. Connecticut is one of only a few states in the country that has a patient-oriented advocacy program like this one.
“So, ironically, even though it’s the Insurance Capital of the World, [Connecticut] actually has one of the most aggressive consumer protection programs in the country,“ says Schlesinger. “For the longest time, people thought that insurers wouldn’t be regulated at all [in Connecticut] because they were too politically powerful. But [by 1999], the insurers were already abandoning the state a little bit. So they had already kind of lost their political power by the time it was created.”
The Office of the Health Care Advocate represents people regardless of whether they are on public or private insurance—meaning that these services will continue under Medicare for All. “When the Affordable Care Act [ACA] came in, it caused a lot of confusion. A lot of people didn’t know how this new Obamacare thing was supposed to work,” Doolittle recalls. “We get typically 5,000 calls a year, but it spiked up to around 8,000 in the first couple years of ACA implementation. But then people got more used to it. […] You can actually see [it] in our data, it’s like a snake had swallowed a rat.”
Should Medicare for All be implemented, the Office of the Healthcare Advocate will likely offer a similar form of support as people in Connecticut adjust to new ways of receiving care.
For four years before he retired, John Whitbeck was a PA at a doctor’s office in Western Connecticut. The office where he worked was composed of two doctors, one PA (himself), and a total of five additional, “multi-purpose” employees. These were the people who ran the front desk, answered the phone, did the billing, and took patients’ blood pressure before the doctor came in. Whitbeck recalls that “most of [the billing work] was behind the scenes—and most of it was why we had to hire five billing people for three care-givers. For them, medical billing was a daily problem.”
Under Medicare for All, a doctor’s office such as Whitbeck’s would no longer need five employees supporting two doctors. There would still be billing to do—but it wouldn’t take five people to do it.
And what else will change? First and foremost, everyone in Connecticut will have health insurance. Ellen Andrews, president of the Connecticut Health Policy Project, also imagines a more transparent healthcare system. “We’ll have better information on medications and treatments to see whether they actually worked or not—that won’t be proprietary information any more. We can invest in public health… I think we’ll all be healthier.”
The insurance industry will change shape, and a lot of insurance workers will lose their jobs—but many of them will likely get new jobs that don’t look very different. It’s difficult, if not impossible, to weigh the benefits of a single-payer system with the disruption of making it a reality. In the long term, however, people’s labor will be put towards different things—“put back into staffing bedside care and community care,” June says. “Those are jobs. […] There is a tremendous lot of work that needs to be done in the actual care of people.”