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Yes on Proposition 8: Your Chronic Illness Shouldn’t Be A Profit Center

Rein in a parasitic industry.

Dialysis is a fairly common medical treatment for people with chronic illnesses here in the US. Unlike chemotherapy or surgery, dialysis treatment is often a lifelong obligation for those suffering from kidney problems, and as such a parasitic industry has sprung up around it. I have a special stake in this particular proposition because I am a Type 1 diabetic, putting me at heightened risk of kidney failure which would require dialysis to treat. Proposition 8 seeks to bring down costs by capping how much dialysis companies can charge for treatments and require them to reimburse costs to health insurers, Medicare, and Medi-Cal.

Currently these companies charge around $150,000 per patient per year for treatment, a cost that most patients could never afford on their own. Despite the fact that the two biggest dialysis companies in California report annual profit margins of 17%, nearly 5 times the profit margin of most hospitals, the costs of treatment continue to rise while the technology largely remains unchanged. Proposition 8 would cap revenues for dialysis companies at 115% of costs, with any revenue over that being returned to insurers and the government.

If you’re not familiar with the treatment here’s a quick explainer. Your kidneys work to filter your blood, removing things that your body no longer needs and returning the clean blood. When your kidneys stop functioning the rest of your body begins to breakdown, your body is no longer removing the waste from your blood and this affects your other organs. Kidneys can stop functioning for a number of reasons: illnesses like diabetes, long term substance abuse, or just advanced age. Once you reach a certain point there are limited options: you can seek a transplant or dialysis. Transplant surgery is very expensive and finding a compatible donor can be very challenging. Often dialysis is used to keep patients healthy while they wait for a transplant. Dialysis generally requires two to four visits per week for a treatment lasting several hours. During dialysis you are hooked up to a machine that functions as an external kidney; blood is drawn out of you, filtered through the machine, and then returned to your body. Without regular treatment your body’s waste builds up in your system threatening sickness and death.

I am all too familiar with my chronic illness serving as a profit motive for the pharmaceutical industry and medical device industry. Here’s some quick math: I require two types of insulin, each one is sold in 300ml pens, each of these pens lasts about 10 days, meaning that I need a total of 6 pens per month to stay health. Each of these pens retails for about $275, add that all up at my total insulin bill per month is about $1650. Now that’s $1650 just to maintain my basic life functions, to not become incredibly sick and die. With insurance I pay about $150 month in copays for that medication, not cheap but not astronomical. But I can never shake the feeling that my chronic illness is a profit center for big pharmaceutical companies. We’ve seen the price of insulin rise about 1200% since 2000, and every year it gets more expensive.

It’s a game that big pharma plays: increase costs, rely on insurance companies to make it affordable to patients, but rely on those same insurance companies to spread the costs to all consumers. It’s a terrible feeling: not only is my survival at stake but just being insured means that I am costing everyone else money in the form of higher premiums and deductibles. The same thing is happening in dialysis.

DaVita and Fresenius are two of the largest providers of dialysis treatment in the US, each of them raking in billions a year in revenue on the backs of people in severe medical distress. Here in California they control about 75% of the dialysis treatment centers. They have perfected the art of squeezing money out of patients by charging sky high fees to insurance companies and Medicare/Medi-Cal. They have very questionable practices in how they measure and charge for medications used in the process, have long histories of unsanitary conditions that harm patients with infections, and treat their workers in an appalling manner. When you have a virtual monopoly why not see how far you can take it? How much you can make? When a company is insulated from consumer sentiment by charging the government or insurance companies outrageous prices it’s harder for individuals to get mad. People don’t see themselves getting taken to the cleaners, instead it is the slow steady rise of premiums that eats away at their wallets year after.

Now obviously the best option to solve this dilemma would be a universal healthcare system, but as that isn’t on the ballot November 6th we’ll have to stick with the issues that we can vote on, and voting Yes on 8 is a good step towards building a sustainable and equitable health care system.

Both the LA Times and the San Francisco Chronicle have come out against Prop 8, but not for the reasons you would expect. The Chronicle has decided to couch its criticism in a strong anti-union sentiment, basically claiming that the SEIU is trying to strong arm these companies into allowing unionization through the measure. Their thinking is that since the SEIU has fought with dialysis companies to unionize their workers and is also supporting the bill its only function must be to vindictively force workers into a union they don’t want. In fact the Chronicle is absolutely flabbergasted that a union would complain about heavy handed tactics used by private businesses to intimidate their workers, a struggle that surprises no one who has ever tried to unionize a workplace. The LA Times also takes an anti-union stance, but also argues that Prop 8 would cause fewer dialysis clinics to operate in the state of California. Somehow a 17% profit margin is the only thing keeping the lights on. LA Times goes on to argue that this is about competition, that smaller companies would be locked out of the market and forced to close. They neglect that many smaller clinics are not for profit and don’t compete with the behemoths DaVita and Fresenius. The dialysis market has already gone through consolidation, there are no tech startups waiting in the wings to “disrupt” the industry, and even if there were they would be extraneous: the technology and treatment is not dramatically changing year over year. We don’t need competition, we need stability and safety for patients.

What neither of these papers dares to address is the virtual monopoly that the dialysis companies have and how this directly harms patients. For people suffering from kidney failure or kidney disease the conflict between labor and management is the last thing on their mind. What is on their mind is their treatment and health. Patients want to know that they are receiving good care in a clean environment, something that the large dialysis companies have failed to provide. The solution to an ageing population that will require more dialysis treatment is not to allow private companies to extract more value from patients, it is to design a sustainable system that can provide care while not bankrupting everyone.

One of the most telling scandals that DaVita has weathered is a pay for play scandal involving doctors. Basically DaVita would target physicians and physicians groups for patient referrals, successful referrals resulted in a kickback for the doctors. After the scheme was discovered they settled for $389 million. Later they paid nearly $500 million in a settlement for overcharging for medication and discarding perfectly good vials of medication used in the process to pad their reimbursements from Medicare. Clearly these companies are not focused on patient care, but rather on their bottom line.

I’m somewhat loathe to share a John Oliver clip but he did a really good segment on the dialysis companies and exposed just how bad they are for patients.

Increased costs get passed along to everyone, not just patients. Your health premiums go up because large companies know that they can pull in billions more a year if they make sure that the pain is spread out. Instead of a patient paying $1000 per treatment that cost gets spread to everyone, we all end up paying far more than we should for medical treatments that are decades old. Just like with insulin we don’t see innovation, we see stagnation and rent seeking behavior.

Having a chronic illness in America means that you are a profit center for the health care industry. You require regular care for life, there’s no way around that. Private companies with an eye on profits will always move to charge as much as they can, this problem is exacerbated by our private insurance system which defuses these costs across society. We need to act decisively to rein in these companies and force them to stop treating patients like ATMs. Our lives should not be mere ledger entries, our health should not be a driver of greed, our survival should not be a commodity.

One of the strange things about this proposition is that supporting it brings me dangerously close to supporting our private insurers. If enacted Prop 8 would put caps on how much companies can charge for treatment and force them to reimburse health insurers for some of these costs. This wouldn’t just help insurance companies but would also save Medi-Cal (the California version of Medicaid) and Medicare millions a year.

Proposition 8 has drawn some strange battle lines in this state, with physicians groups arguing that forcing dialysis companies to cut their profit margin will result in worse care, not because the technology will get worse but because private companies will simply not be motivated to actually care for patients. It’s a disgustingly cynical and unfortunately correct. We cannot rely on the market to save us, profit always comes before patients in that world.

We need to see Prop 8 as a chance for consumers and patients to bring an end to this kind of privatized, for-profit health care. It is neither a complete nor total solution, but for the Californians who rely on dialysis to survive, for families struggling to pay insurance premiums, and for workers being ground down by greedy companies, Prop 8 represents a hope that we can force a change in the system. So I implore you: ignore the fancy ads paid for by incredibly wealthy corporations, look past the anti-union sentiment of our newspapers, and take a step to protect patients.

No one’s life should be a profit center, no one’s health should be extorted to pay a CEO’s salary, now is the time to let these companies know that they can’t gamble with our health anymore.