This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Justice Department Joins Lawsuit Alleging Massive Medicare Fraud By UnitedHealth
By Fred Schulte
Kaiser Health News, March 28, 2017
The Justice Department has joined a California whistleblower’s lawsuit that accuses insurance giant UnitedHealth Group of fraud in its popular Medicare Advantage health plans.
Justice officials filed legal papers to intervene in the suit, first brought by whistleblower James Swoben in 2009, on Friday in federal court in Los Angeles. On Monday, they sought a court order to combine Swoben’s case with that of another whistleblower.
Swoben has accused the insurer of “gaming” the Medicare Advantage payment system by “making patients look sicker than they are,” said his attorney, William K. Hanagami. Hanagami said the combined cases could prove to be among the “larger frauds” ever against Medicare, with damages that he speculates could top $1 billion.
“This is a very big development and sends a strong signal that the Trump administration is very serious when it comes to fighting fraud in the health care arena,” said Patrick Burns, associate director of Taxpayers Against Fraud in Washington, a nonprofit supported by whistleblowers and their lawyers.
“This is not one company engaged in episodic bad behavior, but a lucrative business plan that appears to be national in scope,” Burns said.
When Congress created the current Medicare Advantage program in 2003, it expected to pay higher rates for sicker patients than for people in good health using a formula called a risk score.
But overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity found that these improper payments have cost taxpayers tens of billions of dollars.
Regular readers know that the private Medicare Advantage plans have been cheating the taxpayers by upcoding the diagnoses of insured patients to make them appear sicker than they really are in order to qualify for extra risk adjustment payments. This update confirms the seriousness of the allegations in that the Justice Department has joined the lawsuit against the insurers. Damages could top a billion dollars.
This is particularly pertinent right now since there is intense political pressure to reduce entitlement spending (Medicare and Social Security) in the forthcoming federal budget negotiations. A plan favored by HHS Secretary Tom Price, House Speaker Paul Ryan, and others in the Republican leadership would convert traditional Medicare into a defined premium (voucher) program, turning all of Medicare over to these crooks.
Although our first priority must continue to be advocacy of a single payer national health program – an improved Medicare for all – it is imperative that we protect the Medicare that we do have if we are going to use an improved version of it to provide health care to all.
Special credit should go to the author of this KHN/NPR article, Fred Schulte, who has done extensive investigative reporting on this topic, having authored the articles on it previously published by the Center for Public Integrity. Thanks, Fred!
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Republicans for Single-Payer Health Care
By David Leonhardt
The New York Times, March 28, 2017
Without a viable health care agenda of their own, Republicans now face a choice between two options: Obamacare and a gradual shift toward a single-payer system. The early signs suggest they will choose single payer.
That would be the height of political irony, of course. Donald Trump, Paul Ryan and Tom Price may succeed where left-wing dreamers have long failed and move the country toward socialized medicine. And they would do it unwittingly, by undermining the most conservative health care system that Americans are willing to accept.
You’ve no doubt heard of that conservative system. It’s called Obamacare.
So if voters like government-provided health care and Republicans are going to undermine private markets, what should Democrats do? When they are next in charge, they should expand government health care.
The Republican Waterloo
By David Frum
The Atlantic, March 24, 2017
Seven years and three days ago, the House of Representatives grumblingly voted to approve the Senate’s version of the Affordable Care Act. Democrats in the House were displeased by many of the changes introduced by Senate Democrats. But in the interval after Senate passage, the Republicans had gained a 41st seat in the Senate. Any further tinkering with the law could trigger a Republican filibuster. Rather than lose the whole thing, the House swallowed hard and accepted a bill that liberals regarded as a giveaway to insurance companies and other interest groups. The finished law proceeded to President Obama for signature on March 23, 2010.
Over the next seven years, Republicans would vote again and again to repeal the Affordable Care Act. Total and permanent opposition to the law would become the absolute touchstone of Republican loyalty.
Some of the conservatives who voted “no” to the House leadership’s version of repeal may yet imagine that they will have some other opportunity to void the law. They are again deluding themselves. If the Republican Party tripped over its own feet walking across this empty ballroom, it will face only more fearsome difficulties in the months ahead, as mid-term elections draw closer. Too many people benefit from the law — and the Republican alternatives thus far offer too little to compensate for the loss of those benefits.
In that third week in March in 2010, America committed itself for the first time to the principle of universal (or near universal) health-care coverage. That principle has had seven years to work its way into American life and into the public sense of right and wrong. It’s not yet unanimously accepted. But it’s accepted by enough voters — and especially by enough Republican voters — to render impossible the seven-year Republican vision of removing that coverage from those who have gained it under the Affordable Care Act. Paul Ryan still upholds the right of Americans to “choose” to go uninsured if they cannot afford to pay the cost of their insurance on their own. His country no longer agrees.
Whatever else the 2016 election has done, it has emancipated Republicans from one of their own worst self-inflicted blind spots. Health care may not be a human right, but the lack of universal health coverage in a wealthy democracy is a severe, unjustifiable, and unnecessary human wrong. As Americans lift this worry from their fellow citizens, they’ll discover that they have addressed some other important problems too. They’ll find that they have removed one of the most important barriers to entrepreneurship, because people with bright ideas will fear less to quit the jobs through which they get their health care. They’ll find they have improved the troubled lives of the white working class succumbing at earlier ages from preventable deaths of despair. They’ll find that they have equalized the life chances of Americans of different races. They’ll find that they have discouraged workplace discrimination against women, older Americans, the disabled, and other employees with higher expected health-care costs. They’ll find that their people become less alienated from a country that has overcome at last one of the least attractive manifestations of American exceptionalism — and joined the rest of the civilized world in ameliorating and alleviating our common human vulnerability to illness and pain.
What I would urge is that those conservatives and Republicans who were wrong about the evolution of this debate please consider why they were wrong: Consider the destructive effect of ideological conformity, of ignorance of the experience of comparable countries, and of a conservative political culture that incentivizes intransigence, radicalism, and anger over prudence, moderation, and compassion.
Asking whether more Republicans can support single payer is probably not the best question. A better question would be, what sort of health care system do Americans want and how can we achieve that?
The intense political divide in this nation really played out during the debate over the Affordable Care Act. Opponents were vociferous in condemning the program, pointing out its various deficiencies – high premiums, limited choice of health plans, loss of personal physicians, narrow provider networks, high deductibles and other cost sharing creating financial barriers to care, and endless other complaints.
Supporters were not quite as animated but were very rigid in insisting on protecting the gains that ACA brought us. In a nation that was already highly politically polarized, the two sides congregated around the two dominant political parties – Republican and Democratic – even though many classified themselves as independent. The camp supporting ACA aligned behind the Democratic candidate – Hillary Clinton. The camp opposed to ACA aligned behind the Republican candidate – Donald Trump. But as is so often the case, things are not so simple.
The left was actually a divided camp with very strong support expressed for Bernie Sanders, to a large extent because of his spirited advocacy for single payer Medicare for all. When Clinton won the nomination, the neoliberal faction enthusiastically supported her and ACA. The progressive faction lost their enthusiasm since the hopes of enacting single payer essentially vanished, leaving us with a mediocre, unsatisfactory model of reform – ACA. Many of them stayed home on election day.
But what about the right? They were divided as well. The conservatives were emphatically opposed to Obamacare, wanting it to be repealed, with some of them even opposing any replacement. Moderate Republicans supported repeal and replace. Trump promised that his replacement would cover everyone, provide better care, and cost less. That message resonated, giving him enough votes for an electoral college victory.
However, the replace of repeal and replace turned out to be a fraud. The Republican leadership in the House tried to pass legislation that would reduce the government role in health care by cutting back on Medicaid, greatly reducing the numbers insured, reducing subsidies that had helped to make plans affordable, and reducing taxes on the wealthy that were paying for many of the improvements brought by ACA. This is certainly not the replacement that most Republicans wanted and thought Trump would bring us, though a few mean-spirited, heartless conservatives were quite satisfied with the proposal. It was easy for most Republican legislators to walk away from this ill-conceived model of reform, and there certainly was no clamor to try to extract other ideas for reform when the leadership’s policy cabinet had been emptied. The status quo was not satisfactory, but it seemed that the only good ideas were in the camp of the political opponents (though there were some lousy ideas there as well).
In spite of the political divide, both sides are largely in agreement that the deficiencies of ACA, listed above, are a problem and require correction. Many, especially on the Republican side and amongst the progressives, are convinced that the ACA model should not be sustained because it is inefficient, too expensive, and not very amenable to legislative patches. Also there is broad agreement that the Republican replacement proposal would only have made things worse.
The awakening that is taking place is that the popular Medicare program has been functioning well, though it needs improvements (which are quite feasible), and that other nations really have provided truly universal, comprehensive coverage at much lower costs – like Canada’s Medicare, for instance. A large minority of Republicans do believe that we should join the rest of the civilized world “in ameliorating and alleviating our common human vulnerability to illness and pain,” in the words of David Frum.
Medicare is our most efficient, effective and affordable model for reform. Both sides need to step back for perspective. The neoliberals in the Democratic party need to acknowledge the superiority of improved Medicare for all and join with the progressives. The moderates in the Republican party also need to make the same acknowledgement and support the model as well. The Trump independents who wanted a better health care system should learn from the process that unfolded this past month and dig up the Trump statements on how single payer systems work well. It would not take much to convince him that single payer Trumpcare would bring to the nation our health care salvation. Even conservatives who care can come on board after giving thought to the concepts presented by David Frum (next to last paragraph above).
Just don’t bother doing it through the dominant political parties. Do it in the streets or anywhere else citizen action can gain traction.
The death of the “do or die” GOP health care plan, as the bill was pulled from a floor vote in the House on March 24, 2017, comes as no surprise. It was a non-coherent bill that depended entirely on votes from a large Republican majority in the House, but exposed bitter divisions between the hard-right Freedom caucus and more moderate Republicans. Despite the addition of many late amendments intended to address the concerns of the opposing groups, they often lost as many votes as were gained. This became a momentous defeat for the House Speaker Paul Ryan, President Donald Trump, and the Republican Party on what was intended to be its signature and opening domestic success.
Despite the Republicans having had seven years to develop their own health care plan, the American Health Care Act (AHCA) was a hastily drafted assemblage of ideas, largely based on Paul Ryan’s 37-page white paper in 2016, Better Way, and the proposed Empowering Patients First Act by Dr. Tom Price, now the Secretary of Health and Human Services. As a replacement for a repealed Affordable Care Act (ACA) (1), the plan would have done away with the individual mandate, promoted a free market approach, deregulated the private health insurance industry, eliminated the ACA’s requirement for coverage of essential services, added tax credits and given insurers wide latitude to charge older enrollees higher prices, fully repeal Medicaid expansion, and cut back women’s health care. Their longer-term goal was to privatize both Medicare and Medicaid.
Unfortunately and predictably, the debate in the media was superficially covered, disinformation and false promises were common, and legislators at the end did not know what was actually in the bill. As Republicans retreated from the issue, they were unpersuasive as to what they would do next. One day after the defeat of the repeal and replace bill in the House, President Trump declared that “Obamacare will explode. We will all get together and piece together a plan for all the American people. Do not worry.” (Oval office statement, March 24, 2017). Meanwhile, leading Democrats hailed this event as a victory for saving the ACA and assurance of ongoing coverage for many millions of Americans.
Both the Republicans and Democrats were right in some respects. Democrats could take credit for the ACA’s many achievements, including 24 million people who gained insurance coverage, expansion of Medicaid in 31 states, increased funding of community health centers, banning insurers from denying coverage based on pre-existing conditions, and allowing children to remain on their parents’ coverage until age 26. On the other hand, Republicans could correctly say that the ACA did not bring cost containment, that insurance premiums have become increasingly unaffordable even as deductibles have soared, and that the ACA in the long run will not be sustainable.
But both major political parties are wrong in their current assessments of the situation. Democrats fail to acknowledge that the ACA will never bring universal coverage, that 28 million people are still uninsured seven years after the ACA’s passage, that underinsurance has become epidemic, that premiums have steadily increased for less coverage, that insurance markets have seen increased churning as patients lose choice and as networks narrow, and that more insurers are leaving the market in search of higher profits.
Meanwhile, Republicans still think that the only solution is deregulation of an unfettered private marketplace, expansion of health savings accounts, establishing more high risk pools, selling insurance across state lines, giving more responsibility for health care to the states with block grants, and further privatization of Medicare and Medicaid. None of these are new ideas, and all have proven to be more a problem than a solution.
What can we learn from the recent political dynamics of the failed GOP bill? Several conclusions stand out:
So where can we go from here? Since the plans being offered by both political parties can never bring universal access with cost containment, we need to confront a major cause of the cost and access problem—an inefficient multi-payer financing system that puts profits above service, as providers do with wide latitude to set their own prices. We need to mobilize grassroots support at local, state, regional and national levels for a real health care reform—single-payer national health insurance (NHI) based on an ethic of service that will immediately assure universal access to all Americans at costs that are affordable for patients, families, and taxpayers. This is not socialism since it will be tied to a private delivery system, within which providers will be adequately compensated through negotiated fees and prices of drugs and medical devices. We know that much of today’s bureaucracy will be eliminated and that we will save about $616 billion a year as soon as it is implemented ($503 billion by eliminating administrative overhead and $113 billion on outpatient prescription drugs). (6)
Towards this goal, advocates for NHI, or The Expanded and Improved Medicare for All Act (H.R. 676) will be organizing press conferences, rallies, die-ins and other events on April 8, 2017 all across the country. In this effort at this moment for progressive change with bipartisan support, these words by Frances Perkins as she accepted President Franklin Roosevelt’s appointment as Secretary of Labor in 1933, serve as useful guideposts in today’s challenging times:
The people are what matter to government, and a government should aim to give all the people under its jurisdiction the best possible life. (Her Life: The Woman Behind the New Deal. Frances Perkins Center.
John Geyman, M.D. is the author of The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans
(1) (Geyman, JP. Crisis in U.S. Health Care: Corporate Power vs. The Common Good, Friday Harbor, WA. Copernicus Healthcare, 2017, p. 322).
(2) (Firozi, P. Poll: Just 17 percent of voters back Obamacare repeal plan. The Hill, March 23, 2017).
(3) (Facebook page of Lawrence O’Donnell, March 25, 2017).
(4) (Sanger-Katz, M. Late GOP proposal could mean plans that cover aromatherapy but not chemotherapy. New York Times, March 13, 2017).
(5) (Geyman, JP. Ibid Crisis book, pp. 258-276)
(6) (Woolhandler, S, Himmelstein, DU. Single-payer reform: The only way to fulfill the President’s pledge of more coverage, better benefits, and lower costs. Annals of Internal Medicine online, February 21, 2017).
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
How to Build on Obamacare
By Paul Krugman
The New York Times, March 27, 2017
“Nobody knew that health care could be so complicated.” So declared Donald Trump three weeks before wimping out on his promise to repeal Obamacare.
But put politics aside for a minute, and ask, what could be done to make health care work better going forward?
One important answer would be to spend a bit more money. A report from the nonpartisan Urban Institute argues that the A.C.A. is “essentially underfunded,” and would work much better — in particular, it could offer policies with much lower deductibles — if it provided somewhat more generous subsidies.
What about the problem of inadequate insurance industry competition? Better subsidies would help enrollments, which in turn would probably bring in more insurers. But just in case, why not revive the idea of a public option — insurance sold directly by the government, for those who choose it?
There are other more technical things we should do too, like extending reinsurance: compensation for insurers whose risk pool turned out worse than expected. Some analysts also argue that there would be big gains from moving “off-exchange” plans onto the government-administered marketplaces.
NYT Reader Comment:
By Don McCanne, M.D.
San Juan Capistrano, CA
Paul Krugman had it right: “I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained” (NYT, 6/13/05).
Studies have shown that the most expensive model of health care financing is a fragmented, multi-payer, public and private system such as we have in the United States. Incremental patches increase costs even more and always fall short on universality, equity, and access while increasing the profound waste of administrative inefficiency (currently over $500 billion per year in recoverable waste – Annals of Internal Medicine, 2/21/17).
We should not accept bad policy because the politics of change is hard. We should support good policy and change the politics. That is happening. There is a surge of support for a single payer improved Medicare for all which would meet our goals of reform at a cost that each of us could afford.
Remember the words of Nobel laureate Paul Krugman, “good economics is also good politics.”
It’s too bad that those debating Obama’s ACA versus the Trump/Ryan AHCA didn’t listen to the surge of voices demanding Medicare for all. AHCA was defeated and now the other side wants to fix ACA. Paul Krugman, formerly a single payer supporter, is now in the latter camp.
But look at his proposals to fix ACA. He would pour more money into our costly, inefficient system in order to compensate for the high deductibles that the private insurers use to keep their premiums competitive. That passively perpetuates the profound administrative waste of our system.
He brings up the old saw about private insurer competition, as if over half a century of seeing how ineffective that would be hasn’t taught us anything. Further, he would try to entice more insurers into the market by, yes, pouring in more taxpayer money in in the form of subsidies.
He suggests bringing back the idea of a public option even though the last effort resulted in vitiation of the concept before it was dumped on the trash heap of failed policy politics. The general concept was briefly resuscitated in the form of co-ops – another effort that the insurance industry lobbyists were able to vitiate. Regardless, a public option would be only one small player that would have very little impact in cleaning up the highly flawed, fragmented infrastructure of our health care financing system.
He suggests reinsurance – the taxpayers taking over the role of insuring risk while continuing to richly reward the private insurers for selling us an abundance of superfluous administrative services.
Finally he suggests moving off-exchange plans into ACA exchanges. Wow! Think of all the ways that would provide a major impact in addressing the serious problems we have in health care financing…I can’t think of any either.
The policy debate is over. Tweaking ACA is the most expensive approach we could take, and it would still fall far short of the goals of reform. AHCA would have only made things worse. Single payer is not only more efficient, it also would actually achieve our goal of providing essential health care services to absolutely everyone in a system that is funded equitably so that each of us could afford it.
We have the policy, based on sound economics. Now let’s get the politics right. As Paul Krugman says, good economics is also good politics.
Where Both the ACA and AHCA Fall Short, and What the Health Insurance Market Really Needs
By David Blumenthal and Sara Collins
Harvard Business Review, March 21, 2017
To understand the ongoing battles about the individual, or non-group, markets and their reform, three points should be kept in mind.
First, these insurance markets were distressed before the enactment of the Affordable Care Act. Second, the ACA improved their functioning but was not sufficient as passed and implemented to stabilize all of them. Neither, however, is the American Health Care Act (AHCA), the repeal and replacement legislation proposed by House Republicans and embraced by President Trump. Third, the reforms that will improve individual markets, which we discuss below, are known. They include greater balance between premium subsidies and penalties for not taking up coverage, using proven mechanisms for stabilizing risks such as reinsurance, and accelerating efforts to control the costs of health care services. To date, the United States has just lacked the political will to adopt them.
What to do
There is no great mystery about how to shore up private insurance markets.
First, we need to create balanced risk pools that include both healthy and less healthy persons in individual insurance markets. This will require two types of actions. Subsidies for young healthy consumers must be increased without decreasing those for older Americans so that so-called young invincibles find the prices of insurance less off-putting but the neediest customers in individual markets can still afford to participate.
However, reducing financial barriers for good risks will not suffice. Unlike many other purchases in our lives, buying insurance is difficult, confusing, and provides little short-term gratification; so healthy young people will always tend to avoid it. That is why creating healthy risk pools for individual markets will require something like the individual mandate that has been so unpopular with conservatives. Unless consumers are required to purchase insurance — or face a meaningful penalty — individual markets may not function effectively over the long term. By meaningful, we mean a financial penalty that equals or exceeds the cost of buying insurance in the first place.
Second, we need to extend subsidies higher up the income scale than the ACA’s limit of 400% of the federal poverty level. This will enable more non-poor individuals — who tend to have lesser disease burdens — to purchase insurance. Unfortunately, health insurance has become so expensive in the United States that even many middle-income families cannot afford to purchase it without the kind of assistance that employers routinely offer their employees.
Third, if we want private insurers to participate in ensuring that Americans have access to affordable insurance, the business of selling this product must be viable. This means managing the inherent uncertainties associated with selling insurance in comparatively unpredictable individual markets. The most effective approaches — used in the Medicare private drug-insurance market without controversy — are reinsurance and risk corridors. The first of these means assuring that reinsurance is available and affordable for plans selling individual and small group products. Risk corridors protect plans that accumulate unexpectedly high risks by giving them access to funds collected from insurers that experience unexpectedly low risks.
Fourth, and perhaps most important, public and private stakeholders must accelerate efforts to control the costs of health care services, which are the primary determinants of the cost of health insurance in all markets, including employer-sponsored, individual, and public. One reason that other countries find it easier to insure their entire populations is that their costs of care are half or less what ours are.
The key to controlling health care costs in the United States is to implement aggressively the payment and delivery-system reforms that were included in the Affordable Care Act but rarely discussed in current debates.
The facts are clear. We can revive individual markets that were failing even before the ACA was enacted and are vital to making affordable care available to Americans. But we will have to pay for that revival — politically and fiscally.
David Blumenthal, M.D., is president of the Commonwealth Fund. Sara Collins is the Commonwealth Fund’s vice president for health care coverage and access.
It is quite appropriate that this article was published in the Harvard Business Review since it finds solutions to the deficiencies of both the Affordable Care Act (ACA) and the proposed American Health Care Act (AHCA) in the private health care insurance marketplace. The authors’ proposals are to use government regulations and funds to create a robust market for private insurance plans – an approach that Harvard MBAs understand and support.
They would make the individual mandate more effective by penalizing nonparticipants with a penalty equal to or larger than the insurance premiums. Forcing individuals to buy plans with excessive deductibles and inadequate provider networks is a cruel policy.
They would increase subsidies for middle-income individuals but that would still push individuals into low-actuarial value plans, not solving the problems of impaired access due to narrow networks and unaffordable out-of-pocket costs.
They would relieve insurers of bearing risk through the use of reinsurance and risk corridors. Insurers would be reduced to providing a profusion of expensive administrative functions, while being protected against the usual insurance function of bearing risk, allowing their actuaries to concentrate on profits instead of risk.
They would more aggressively control health care costs but do so through the payment and delivery-system reforms of ACA which have already proven to be quite ineffective. They acknowledge that other countries insure everyone at costs of care that are “half or less what ours are.”
Well how do those other nations include everyone and pay an average of half of what we do? Certainly not by embellishing the private insurance markets and throwing a bunch of government money at them. Yes, some countries do use private insurance but they are so heavily regulated that they qualify as social insurance programs. The governments require that the financing system serves first the needs of patients whereas we structure ours to serve first the needs of insurers while leaving patients exposed to financial hardship and impaired access.
Today we are at a decision point between ACA and AHCA. Absent any last minute back-door deals, the likely outcome will be the defeat of AHCA, and president Trump will walk, leaving ACA in place with little hope for even the very modest changes suggested by Commonwealth’s Blumenthal and Collins. And if it should pass in both the House and the Senate, an unlikely outcome, we will be even worse off than we are.
Instead of a debate between ACA and AHCA, the debate should have been between ACA/AHCA and an improved Medicare for all. We can still have that debate by continuing to educate the public on the deficiencies of ACA and the virtues of single payer Medicare for all, but we will have to make our presence felt lest we get lost in the next agenda item that the Republicans really want – altering the tax system to shift more income and wealth from the workers to the wealthy. That will really be bad for the physical and fiscal health of our nation and its people.
Late G.O.P. Proposal Could Mean Plans That Cover Aromatherapy but Not Chemotherapy
By Margot Sanger-Katz
The New York Times, March 23, 2017
Most Republicans in Congress prefer the type of health insurance market in which everyone could “choose the plan that’s right for them.”
Why should a 60-year-old man have to buy a plan that includes maternity benefits he’ll never use? (This is an example that comes up a lot.) In contrast, the Affordable Care Act includes a list of benefits that have to be in every plan, a reality that makes insurance comprehensive, but often costly.
Now, a group of conservative House members is trying to cut a deal to get those benefit requirements eliminated as part of the bill to repeal and replace the Affordable Care Act moving through Congress. (The vote in the House is expected later today.)
At first glance, this may sound like a wonderful policy. Why should that 60-year-old man have to pay for maternity benefits he will never use? If 60-year-old men don’t need to pay for benefits they won’t use, the price of insurance will come down, and more people will be able to afford that coverage, the thinking goes. And people who want fancy coverage with extra benefits can just pay a little more for the plan that’s right for them.
But there are two main problems with stripping away minimum benefit rules. One is that the meaning of “health insurance” can start to become a little murky. The second is that, in a world in which no one has to offer maternity coverage, no insurance company wants to be the only one that offers it.
David Cutler, a professor at Harvard who helped advise the Obama administration on the Affordable Care Act, said he thinks the kind of insurance products that would be offered under the proposed mix of policies could become much more bare-bones than plans before Obamacare. He envisioned an environment in which a typical plan might cover only emergency care and basic preventive services, with everything else as an add-on product, costing almost exactly as much as it would cost to pay for a service out-of-pocket.
There is most likely a middle way. Republican lawmakers might be comfortable with a system that shifts more of the costs of care onto people who are sick, if it makes the average insurance plan less costly for the healthy. But making those choices would mean engaging in very real trade-offs, less simple than their talking point.
NYT Reader Comment:
By Don McCanne, M.D.
San Juan Capistrano, CA
“There is most likely a middle way.”
Not really. Most of the 20 percent of people who use 80 percent of our health care cannot pay for it out of pocket. That is why we need to pool risk and fund it by all of us, certainly including the 80 percent who remain relatively healthy.
Our dysfunctional multi-payer system wastes a tremendous amount of resources in insurer administrative excesses that play games such as distributing the costs between a multitude of public and private programs, the variability and complexity in claims processing for the health care providers, and the allocation of out of pocket costs by individuals.
Over $500 billion of this waste is actually recoverable (Annals of Internal Medicine, Feb. 21, 2017) if we switched to a single payer national health program – an improved Medicare that covered everyone. The “middle way” would simply perpetuate this waste.
A very common theme is that we can design insurance products to provide only the coverage that we need. By not covering everything, the premiums would be much lower and thus affordable to everyone. Problem solved. (Not so quick.)
The most obvious problem is that nobody knows when they may suffer a catastrophic medical event or experience the onset of a serious chronic disorder. The health care financing system should automatically cover such occurrences, but, in doing so, since much of our health care spending falls into these categories, the savings in the insurance premiums would not be enough to make them affordable for too many of us. The coverage that a person might decline, such as management of breast cancer for men or prostate cancer for women, would still have to be paid for either out-of-pocket or through additional riders on the insurance. As soon as you allow riders, the costs would go up because of adverse selection – the people selecting the riders would be the people who would need them.
So the system would have to cover that 80 percent of health care that is used by the 20 percent of people with greater health problems. What about the other 20 percent that is used by individuals in better health? That is where much of the administrative waste occurs in our health care system. The insurers create and market a variety of insurance products with varying provider networks and variable cost sharing which place an administrative burden on the providers of health care. That negatively impacts the 80 percent of us who are healthy. For the 20 percent who use 80 percent of our health care, once the cost sharing requirement is reached, the additional administrative burden is not that great. So the half trillion dollars of recoverable administrative waste is providing essentially no value since it is wasted on superfluous up front interactions with the health care system and its patients.
Other nations have shown us that we do not need to have cost sharing and fragmented risk pools in order to control spending. They deliver comprehensive services to everyone at a lower cost. Fragmenting risk pools would only increase the administrative waste while subjecting elective risk pools to adverse selection, making them unaffordable. Who would sign up for a rider covering HIV and AIDS? What would the cost be when that rider is added to the basic insurance that everyone needs? Fragmenting the risk pools would result in modest reductions in the basic premium but those adding the riders would have premiums that would be unaffordable except for the wealthy. Customizing insurance by fragmenting risk pools defeats the goal of removing financial barriers to care. If we pool all risks together the special needs that might occur in the future would balance out.
By David U. Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.
American Journal of Public Health, March 21, 2017
Democrats as well as Republicans have offered too little that inspires and too much that appeases the rich and powerful. Trump won by attacking a status quo that is disastrous for many. In health care, the Affordable Care Act (ACA) extended coverage to 20 million and boosted funding for public health and community health centers. But it offered little help to 90% of the population, perpetuated a dysfunctional health care financing system, left 26 million uninsured, saddled covered families with unaffordable deductibles and narrow provider networks, and enriched drug firms, medical conglomerates, and insurers. Mobilizing for a reform that would fix these defects is a far better defense against Trump’s health-damaging plans than calls to retain the pre-Trump order.
Even before the inauguration, congressional Republicans initiated repeal of key pillars of the ACA. But although Republicans are unified in their desire to destroy what Obama wrought, crafting the replacement is more complicated. Unfortunately, going halfway — repealing without replacing — would likely cost thousands of lives (see numbers in PNHP release, below).
The health impacts of the administration’s antiscience bent are hard to gauge, but potentially devastating. Public health advance requires accurate data and honest assessment. When politicians threaten and muzzle scientists studying the environment, label inconvenient truths “fake news,” and propagate falsehoods under the guise of “alternative facts,” they chip at the foundations of scientific progress.
This grim litany reflects what President Trump and his allies want to do. But their agenda is already fraying under the pressure of popular opposition.
Perhaps as important, Democratic politicians are feeling pressed and emboldened to embrace progressive policies.
Moving forward from the ACA to single payer would up-end the market-based approach that has hobbled reform, allowing the redirection of hundreds of billions now wasted on insurers’ overhead, providers’ billing-related paperwork, and excessive drug prices. With that money we could ensure access for all, lift the threat of bankruptcy attributable to illness, and free up funds for much-needed expansions of long-term and mental health care, as well as public health work.
ACA’s repeal would cause tens of thousands of deaths, while single payer would save 20,000 more lives than ACA: AJPH editorial
Physicians for a National Health Program, March 22, 2017
Repealing the Affordable Care Act without replacing it, as some conservative hardliners are demanding, would cost a minimum of 37,127 lives over the next two years (14,528 in 2018 and 22,599 in 2019), and perhaps as many as four times that number, according to scientific studies summarized in an editorial in this week’s American Journal of Public Health.
In contrast, the editorial’s authors estimate the impact of replacing the ACA with a universal, single-payer health system, along the lines of the Expanded and Improved Medicare for All Act, H.R. 676, would provide immediate coverage to the 26 million Americans who are currently uninsured, saving at least 20,984 lives in year one.
There are at least three important concepts in this AJPH editorial by PNHP co-founders David Himmelstein and Steffie Woolhandler:
1. They cite the civil rights and social justice successes of the 1950s and 1960s and describe how there seems to be a growing renewal of that spirit in response to the current political regime.
2. They quantify the tragic loss of life that occurs today because of the inadequacies of the Affordable Care Act, and the increase in loss that would occur under repeal of ACA, while providing very reassuring estimates of the number of lives that would be saved by replacing ACA with a single payer national health program – an improved Medicare for all.
3. By including in their publication this editorial which extols the virtues of moving forward from the ACA to single payer, the prestigious American Journal of Public Health (“One of the 100 Most Influential Journals in Biology & Medicine over the last 100 Years”) has helped to moved the concept of single payer into the mainstream in our national discourse on health care reform.
Common-Agency Problems and Contracting in the U.S. Healthcare System
By Brigham Frandsen, Michael Powell, and James B. Rebitzer
National Bureau of Economic Research, NBER Working Paper No. 23177, February 2017
We propose a “common-agency” model for explaining inefficient contracting in the U.S. healthcare system. In our setting, common-agency problems arise when multiple payers seek to motivate a shared provider to invest in improved care coordination. Our approach differs from other common-agency models in that we analyze “sticking points,” that is, equilibria in which payers coordinate around Pareto-dominated contracts that do not offer providers incentives to implement efficient investments. These sticking points offer a straightforward explanation for three long observed but hard to explain features of the U.S. healthcare system: the ubiquity of fee-for-service contracting arrangements outside of Medicare; problematic care coordination; and the historic reliance on small, single specialty practices rather than larger multi-specialty group practices to deliver care. The common-agency model also provides insights on the effects of policies, such as Accountable Care Organizations, that aim to promote more efficient forms of contracting between payers and providers.
From the Conclusion
In this paper we have developed a common-agency model for explaining inefficient contracting in the U.S. healthcare system. In our setting, common agency problems arise when multiple payers seek to motivate a shared provider to invest in improved care coordination. Our approach differs from other common-agency models in that we analyze sticking points, that is, equilibria in which payers coordinate around Pareto dominated contracts that do not offer providers incentives to implement efficient investments. These sticking points offer a straightforward explanation for three long-observed but hard to explain features of the US healthcare system: the ubiquity of fee-for-service contracting arrangements outside of Medicare; problematic care coordination; and the historic reliance on small single-specialty practices rather than larger multi-specialty group practices to deliver care. The common-agency model also provides insights on the effects of policies (such as Accountable Care Organizations) that aim to promote more efficient forms of contracting between payers and providers.
We have examined the common-agency market failure in the context of payers trying to induce providers to make efficient investments in care coordination. We focused on incentives for these investments because they have played an important role in recent health care reform initiatives. The common-agency market failure is, however, much broader than this specific application and is likely to play a role wherever multiple payers seek to influence the actions of a shared provider.
Given the number and diversity of payers, exploring more broadly the implications of common-agency problems in the U.S. healthcare system is likely to be a fruitful avenue for future research. For example, Cutler and Ly (2011) remarks that “insurers have little incentive to coordinate their credentialing and billing requirements, because the costs of imposing different rules are spread across insurers as a whole, not partitioned to any single insurer,” leading to persistently high administrative expenses.
You do not have to be an economist to understand an important conclusion of this technical paper. Our complex multi-payer financing system results in persistently high administrative expenses.
In a health care system with multiple payers, sticking points result in the ubiquity of fee-for-service contracting arrangements outside of Medicare; problematic care coordination; and the historic reliance on small single-specialty practices rather than larger multi-specialty group practices to deliver care. The costs of imposing different rules are spread across insurers as a whole, not partitioned to any single insurer, leading to persistently high administrative expenses.
Rather than trying to understand and apply the economic theory of the common-agency model, Pareto-dominated contracts, sticking point equilibria, and the onerous quest for more efficient forms of contracting between multiple payers and providers, we can simply eliminate the multi-payer model by enacting a single payer national health program – an improved Medicare for all. That does away with the administrative excesses and inequities of the sticking points that would never be totally eliminated in a multi-payer system.
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Mayo to give preference to privately insured patients over Medicaid patients
By Jeremy Olson
StarTribune, March 15, 2017
Mayo Clinic’s chief executive made a startling announcement in a recent speech to employees: The Rochester-based health system will give preference to patients with private insurance over those with lower-paying Medicaid or Medicare coverage, if they seek care at the same time and have comparable conditions.
Mayo will always take patients, regardless of payer source, when it has medical expertise that they can’t find elsewhere, said Dr. John Noseworthy, Mayo’s CEO. But when two patients are referred with equivalent conditions, he said the health system should “prioritize” those with private insurance.
“We’re asking … if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so … we can be financially strong at the end of the year to continue to advance, advance our mission,” Noseworthy said in a videotaped speech to staff late last year.
Mayo reported a sharp increase in the amount of unreimbursed costs related to Medicaid patients, from $321 million in 2012 to $548 million in 2016. The figures include its campuses in Arizona and Florida. Mayo nonetheless remained profitable in 2016, with income of $475 million.
(Allan Baumgarten, a Twin Cities health analyst) added that complaints about the rise in Medicaid patients should be tempered by the corresponding decline in uninsured patients. “Aren’t you better off having bad payment through Medicaid compared to next to nothing from a patient who is uninsured?” he asked.
Cherry-picking patients? Mayo Clinic aims to ‘prioritize’ privately insured
By Elizabeth Whitman
Modern Healthcare, March 20, 2017
Late last year, CEO John Noseworthy had a message for the staff of the Mayo Clinic: We want patients with commercial insurance over Medicare or Medicaid.
For the Mayo Clinic health system to articulate its preference for patients with commercial insurance, which pays better than government insurance, was disappointing and surprising, said Arthur Caplan, head of the bioethics division at NYU Langone Medical Center.
“A cornerstone of our ethical thinking is you get the same care whether you’re rich or you’re poor, and we don’t triage by the size of your wallet,” Caplan said.
Noseworthy’s statement was a rare articulation of a broader trend – trying to make up for losses from Medicare or Medicaid patients with commercially insured patients – that the industry tends to try to conceal.
“I’ve heard of hospitals trying to do this behind the scenes, but I’ve never heard anybody say it up front,” Caplan said. “This statement is taking that dirty secret and bringing it into the open.”
The mission of our health care delivery system should be to provide everyone with the highest quality care possible within the limits of the finite resources available. That is an opinion not shared by all. The fact is that the mission of some sectors of our health care delivery system is to maximize revenues, and that may mean that patients of limited resources without generous public or private insurance coverage would be avoided by them.
This is a view not often expressed in public. In fact, Mayo’s CEO expressed it only in private to Mayo employees. But from decades of my exposure to conversations in physician dining rooms and locker rooms and in confidential board meetings, you can be assured that it is an exceptionally prevalent view, particularly regarding Medicaid, uninsured, and undocumented patients. This reality drives many of us to carry on the fight for an equitable system that serves everyone well.
Under a well designed single payer system in which payment is the same for all and capital improvements are distributed efficiently and equitably, everyone would have access to the highest quality care available within the limitations of our resources. We must intensify our advocacy efforts because we are a long, long way from that ideal.
By John Geyman, M.D.
March 15, 2017
Excerpts from the Preface
There is widespread acknowledgement today that our current health care system is dysfunctional and broken, and I believe that we have reached a crisis point in U.S. health care. We need to better understand why this has come to pass if we are to avoid continuing in the same directions. The sixty years we will discuss have had many policy choices in how we finance and deliver care in this country.
It is still a pervasive myth that U.S. health care is the best in the world – part of the American exceptionalism argument – but, as we will see, this is far from the case. Technology does not necessarily make things better, and we will look at how the traditional values of medicine as a profession have held up over the years.
How our health care system is organized and conducted should be above politics as a non-partisan issue, but we know that that is certainly not the case today nor has it been in earlier years. Despite ongoing national debates, we still have been unable to answer, as a society, even the most basic questions about health care, such as – Should we establish universal access to care for all Americans? Should health care be for-profit or not-foe-profit? Is health care a right or a privilege based on ability to pay?
The results of the 2016 election cycle, which turned over the White House and both chambers of Congress to the Republicans, has placed our already broken health care system in continuing crisis.
This book is organized in three parts. Part One includes reflections on system changes over sixty years. Part Two, then and now, gives my personal perspective from direct experience over those sixty years. In Part Three, today’s realities are described, as are lessons that can be learned from the evolution of health care, three major alternatives for financing health care, and projections for future health care reform.
As the ongoing debates over the future of health care continue across the political spectrum, I hope this book is of use in cutting through the smoke and mirrors to the basic questions we still need to answer. Although the health care establishment may appear to be too imposing to be amenable to change, we have well documented evidence over the years that this most expensive system in the world compares poorly with other advanced industrialized countries in access, cost, quality, equity, and outcomes of care. We have had pro-market forces well entrenched for more than three decades that want to preserve deregulated markets that serve corporate interests more than patients and families. How to reverse that in the public interest is a matter of education and political will.
Our health care system is designed to serve first the market stakeholders and only secondarily the patients. John Geyman explains to us the history and flawed policy decisions that brought this about. As an icon in family medicine, both in patient care and in the academic arena, he adds his invaluable personal experiences to provide us with a crystal clear picture of what is wrong and what we can do about it – finally placing patients first, where they belong.
This book is particularly timely since it is becoming more obvious to the nation that the modest changes under the Affordable Care Act were grossly inadequate, and that the Republican promises that health care would be much better and much less expensive under repeal and replace have represented nothing more than deceptive political rhetoric as it is clear that their replacement proposals would only compound the problems and deficiencies of our system.
John Geyman shows us that we must move beyond the debate over only two options – continue with the current deficient system under ACA or modify it through detrimental reductions in funding and regulatory oversight. We should be able to recognize the mess that we are in and how the third option – a single payer national health program – would take us out of this quagmire. A national health program is inevitable. We should make the move now while the glaring deficiencies are front and center on the national scene and highly visible to all.
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