How do you give thanks when you can’t pay your deductible?

Posted by on Wednesday, Nov 22, 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.

The biggest health issue we aren’t debating

By Drew Altman
Axios, November 22, 2017

Thanksgiving is always a time to think about those in need. How about, then, a group we don’t worry about enough: the many lower and moderate income Americans who can’t cover their cost sharing if they get sick? It raises the question: How much cost sharing is too much?

High deductible plans, which require people to pay large amounts out of pocket before their medical bills are covered, are a good deal for some middle and upper income people. But many lower and moderate income Americans simply don’t have $1,500 to $3,000 to pay for the colonoscopy that might save their life, or a stress test that might reveal the heart disease which is the cause of their chest discomfort.

Share of non-elderly households with liquid assets less than their deductibles, among people with private insurance:

Deductible of $1500 single/$3000 family:
28% – All non-elderly households
63% – Less than 150% of federal poverty level (FPL)
44% – 150-400% of FPL
10% – 400% or more of FPL

Deductible of $3000 single/$6000 family:
40% – All non-elderly households
76% – Less than 1505 of FPL
60% – 150-400% of FPL
20% – 400% or more of FPL

The chart, drawn from a new study, tells the tale: More than four in 10 households with private coverage and incomes between 150% and 400% of the federal poverty line do not have enough liquid assets to cover a deductible of $1,500 for single people and $3,000 for families.

* That’s not a high deductible plan, but about the average in an employer-provided insurance plan.

* Sixty percent couldn’t cover deductibles double those amounts, which are not uncommon, especially in the individual insurance market.

For many families, even if they have insurance, any significant illness could wipe out all their savings, making impossible to fix a broken car to get to work, or pay for school, or make a rent or mortgage payment.

Congress has passed no law declaring that the country will go with high deductible coverage as its main approach to health insurance.…

Over one-fourth of all households with a $1500/$3000 deductible plan (average employer-sponsored plan) do not have enough liquid assets to pay their deductible and two-fifths of those with a $3000/$6000 deductible (modest high-deductible plan) cannot either, yet these plans have become fairly standard today. And as many as three-fourths of low-income families with private insurance do not have enough funds to pay their deductibles.

Tomorrow we are supposed to be giving thanks for what we do have, but how difficult will it be for families to give thanks when they wiped out their savings and still owe more because their health insurance coverage was inadequate? Too many couldn’t fix their broken car they need to get to work; they couldn’t pay for school; they couldn’t make the rent payment.

Tomorrow let us resolve to reach the day wherein absolutely everyone will be able to give thanks for being able to access the health care that they need without having to face financial hardship. Giving thanks for what we, as a nation, already have is not enough.

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Beware the ‘Grand Bargain’ in health reform

Posted by on Tuesday, Nov 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.

Beyond Showmanship And Spite: Toward A Health Care “Grand Bargain”

By Gregg Bloche & David A. Hyman
Health Affairs Blog, November 20, 2017

Is a deal on health care possible? Conventional wisdom says no.

We’re alarmed. One of us is a Cato Institute-friendly “free-market”eer who wrote a book arguing (tongue in cheek) that Medicare is the work of the Devil. The other helped to develop President Barack Obama’s 2008 campaign health plan and believes that failure to ensure everyone’s access to health care is an assault on human decency. But we’ve come together because we believe that failure to resolve the present impasse will have hugely destructive consequences for millions of Americans’ access to health care.

Designing A Deal

We think a bipartisan “grand bargain” to stabilize the US health care system is feasible — if key decision makers can move beyond showmanship and spite. To this end, we outline a deal that: honors but balances the competing values at stake, steadies both market and public mechanisms of medical care financing, and puts the nation on a path toward sustainability in health spending.

Our grand bargain builds on federalism. Allowing states to sort out controversial matters within broader limits than the ACA now imposes would permit creative policy alternatives to unfold and encourage local buy-in.

The Long Game: Seven Steps Toward a Compromise that Can Work And Endure

1) Moving Beyond Maximalism — Medicaid Rollback And “Medicare for All”

Republicans should end their campaign to roll back the ACA’s Medicaid expansion, and Democrats should stand down on their quest for single payer. Both pursuits inspire true believers but will go nowhere on Capitol Hill for the imaginable future.

2) State Flexibility

Give states more flexibility to design their Medicaid programs and to govern their insurance exchanges. States could also be allowed but not required to offer a public option through their exchanges. Instead of an all-or-none answer to the public plan question, the nation would have a framework for market-driven, state-by-state resolution. Similarly, states should be allowed to decide whether to prohibit, permit, or require enrollment of Medicaid beneficiaries in private plans.

3) Health Savings Accounts That Appeal To Everyone

We propose that every lawful US resident be auto-enrolled in a health savings account (HSA), funded through a refundable tax credit, scaled to income and family size.

4) Repeal The Individual Mandate

Sacrilege, you’re surely thinking, if you’re a Democrat who’s spent seven-plus years defending the mandate, the ACA’s most disliked element. But the mandate isn’t needed to keep healthy people in community-rated risk pools — it’s the intensity of the incentives, whether framed as penalties or subsidies, that matters. Such subsidies could be supplied in conservative-friendly fashion by allowing all who buy coverage on the exchanges to put HSA funds (including the tax credit we urge) toward their premiums.

5) Congressional Authorization Of Funding For Both The ACA’s Cost-Sharing Reductions And CHIP

Congress should guarantee funding for the cost-sharing reductions for a two-year period, with automatic renewal for an additional two years if per capita subsidies rise by no more than the Consumer Price Index (CPI) during the prior two years. Likewise, Congress should renew CHIP’s funding for several years — we urge three as a compromise.

6) The “Long Game” — Reining In Medical Spending

A long-term effort to contain spending growth is essential for US fiscal stability and consumer well-being. The ACA created a framework for doing this. The Independent Payment Advisory Board (IPAB) can limit Medicare spending, subject to congressional veto, if growth exceeds target rates. And the 40 percent “Cadillac tax” on high-cost private health plans will cover a rising share of the private market as medical costs increase. Together, these policies have the potential to contain clinical spending by capping demand.

A grand bargain should follow through on both of these strategies, plus add similar restraints on Medicaid spending and on the amounts spent to subsidize coverage through the exchanges.

7) Pursuing Therapeutic Value

Much more must be done to use health care resources wisely as constraints tighten. Tying financial rewards closely to clinical value via payment practices, market exclusivity policies, and other incentives will be critical — and will require the clearing of legal and regulatory obstacles. Voluntary action must also play a role: The grand bargain we’ve sketched here creates myriad opportunities for providers, patients, and insurers to gain by insisting on value from a sector of the economy that too often fails to deliver it.…

This is a “Grand Bargain”? Tweaking our highly dysfunctional, fragmented, administratively inefficient, overpriced, inequitable health care financing system?

This is a call for more of the same. Numerous studies have shown that this is the most expensive model of health care reform and that it falls far short on reform goals of universality, comprehensiveness, access, equity, efficiency, quality, and affordability.

A well designed single payer model would achieve those goals. Just because the current Congress would not enact an improved Medicare for all does not mean that the concept should be abandoned. The current Congress will not enact the tweaks called for in this Grand Bargain either.

We can get the policy right, but we need to change the politics. We need to align ourselves behind reform that works for everyone, not behind measures that enrich the stakeholders while perpetuating mediocrity for the rest of us.

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Medicare Advantage plans using ‘service-level selection’ to cheat the taxpayers

Posted by on Monday, Nov 20, 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.

NBER Working Paper 24038; Service-level Selection: Strategic Risk Selection in Medicare Advantage in Response to Risk Adjustment

By Sungchul Park, Anirban Basu, Norma Coe, and Fahad Khalil
National Bureau of Economic Research, November 2017


The Centers for Medicare and Medicaid Services (CMS) has phased in the Hierarchical Condition Categories (HCC) risk adjustment model during 2004-2006 to more accurately estimate capitated payments to Medicare Advantage (MA) plans to reflect each beneficiary’s health status. However, it is debatable whether the CMS-HCC model has led to strategic evolutions of risk selection. We examine the competing claims and analyze the risk selection behavior of MA plans in response to the CMS-HCC model. We find that the CMS-HCC model reduced the phenomenon that MA plans avoid high-cost beneficiaries in traditional Medicare plans, whereas it led to increased disenrollment of high-cost beneficiaries, conditional on illness severity, from MA plans. We explain this phenomenon in relation to service-level selection. First, we show that MA plans have incentives to effectuate risk selection via service-level selection, by lowering coverage levels for services that are more likely to be used by beneficiaries who could be unprofitable under the CMS-HCC model. Then, we empirically test our theoretical prediction that compared to the pre-implementation period (2001-2003), MA plans have raised copayments disproportionately more for services needed by unprofitable beneficiaries than for other services in the post-implementation period (2007-2009). This induced unprofitable beneficiaries to voluntarily dis-enroll from their MA plans. Further evidence supporting this selection mechanism is that those dissatisfied with out-of-pocket costs were more likely to dis-enroll from MA plans. We estimate that such strategic behavior led MA plans to save $5.2 billion by transferring the costs to the federal government.

From the Introduction

Recent health care reforms have facilitated the transition from volume- to value-based payment models in hopes of achieving cost control and enhancing the quality of care. One such example is that the Centers for Medicare and Medicaid Services (CMS) reimburses Medicare Advantage (MA) plans with a capitated amount per beneficiary to encourage coordinated care in managed care settings. It has been shown that MA plans save money without sacrificing quality. However, as an unintended consequence, MA plans have selectively enrolled healthier people to receive overpayments, known as favorable selection. It remains inconclusive whether cost savings are attributable to cost-effective care management or to risk selection. To reduce risk selection, CMS has adjusted payments to MA plans to reflect the health status of their enrollees, a process known as risk adjustment. To more accurately estimate capitated payments, in 2004, CMS introduced a new risk adjustment model—the CMS-Hierarchical Condition Categories (HCC) model—which uses extensive inpatient and outpatient diagnostic information from the prior year to generate risk scores.

It is debatable whether the CMS-HCC model has been effective in reducing risk selection or whether it has led to strategic evolutions of risk selection. On one hand, it has been shown that the CMS-HCC model considerably reduced the phenomenon of avoiding sicker beneficiaries (i.e., those with high-risk scores) in traditional Medicare (TM) plans. As risk adjustment leads to neutral payments for beneficiaries with conditions included in the risk adjustment formula, MA plans no longer have incentive to avoid those with high-risk scores if their conditions are included in the CMS-HCC model.

On the other hand, there is suggestive evidence showing that MA plans could strategically respond to the CMS-HCC model. Brown et al. (2014) argue that the HCC model merely shifted the profitable population from healthy people (i.e., those with low-risk scores) to sick ones who are over-compensated, within their risk-score. This can be achieved because, first, there is considerable variability in actual expenditures of beneficiaries around their risk-adjusted payments. For all beneficiaries with a given health condition, the CMS-HCC model is designed to adjust payments to MA plans by the same rate. However, the severity of the condition and thus the cost of treating it can vary within a given condition (Medicare Payment Advisory Commission). Second, the variability of the within-risk-score expenditures is larger for those with higher risk scores. Because the CMS-HCC model only accounts for about 100 major conditions, this generates underpayments for those whose conditions are not accurately measured by the model, who tend to have multiple chronic conditions.

We examine these competing claims and analyze the risk selection behavior of MA plans in response to the CMS-HCC model. Specifically, we hypothesize that MA plans engage in service-level selection, in which they provide relatively lower coverage levels for some services to discourage enrollment of certain beneficiaries. While the CMS-HCC model encouraged MA plans to accept TM beneficiaries with high-risk scores, we claim that MA plans strategically behave to avoid beneficiaries who could be unprofitable under the CMS-HCC model (i.e., those with higher expenditures than their risk-adjusted payments). Although there is a large literature on investigating service-level selection as a risk selection strategy, to the best of our knowledge, there is no research explaining mechanisms through which MA plans could engage in service-level selection as a strategic risk selection behavior in response to risk adjustment.

We find that the CMS-HCC model achieved the goal of reducing favorable selection based on health; however, we also find that it led to increased disenrollment of unprofitable beneficiaries from MA plans, leading MA plans to save costs of $5.2 billion in 2007-2009. We explain this phenomenon via service-level selection. Building upon Ellis and McGuire (2007), we theoretically show that MA plans have incentives to effectuate risk selection through service-level selection, as unprofitable beneficiaries are more likely to use services that are expensive and are thus more vulnerable to under provision by MA plans. Specifically, we show that those with higher expenditures than their risk-adjusted payments are more likely to use services that health plans would ration more tightly (i.e., services with higher service-level selection index). This phenomenon is more likely to be pronounced for those with higher risk scores. Then, we find evidence supporting our theoretical prediction that MA plans have actually raised copayments disproportionately more for services with higher service-level selection index (i.e., ambulance, home health service, partial hospitalization, and inpatient hospital service) than services with lower service-level selection index (i.e., outpatient substance abuse services, outpatient X-rays, and outpatient hospital services). Such disproportionate increases in copayment induced unprofitable beneficiaries to voluntarily disenroll from MA plans. In additional analyses, we find evidence supporting this selection mechanism that those with dissatisfaction with out-of-pocket costs were more likely to disenroll from MA plans. Consequently, the variation of total Medicare expenditures for MA enrollees with high-risk scores reduced over time. These findings indicate that service-level selection allowed MA plans to avoid the risk of enrolling unprofitable beneficiaries.

Service-level selection

By Law, MA plans are not allowed to deny coverage based on beneficiaries’ health status. However, MA plans might practice risk selection in subtle ways so that unprofitable beneficiaries voluntarily disenroll from MA plans. To achieve such risk selection, MA plans could risk-select through collecting additional data or advertising. However, because such selection mechanisms would lead to substantial screening costs, MA plans are likely to seek screening approaches with lowest costs. One such approach that generates relatively low screening costs is service-level selection because MA plans do not need to predict each beneficiary’s expenditures but rather only need to predict services more likely used by beneficiaries who could be unprofitable under the CMS-HCC model.

Service-level selection is one type of risk selection, which is based on the phenomenon that unprofitable individuals are more likely to use services that are expensive to health plans subject to capitated payments and are thus more vulnerable to under-provision by health plans. As with risk selection, service-level selection occurs due to asymmetric information between two parties, in which health plans do not know individuals’ private information about health status and preferences for health care. The health plan only knows the probability of using the service at the population level, while the individual knows her need, or probability of need, for each health care service and chooses the best health plan that can satisfy her need. Since rational individuals respond to health plan design when selecting plans, reducing coverage levels for services related to financial losses (i.e., services more likely used by unprofitable individuals) would induce unprofitable individuals to voluntarily disenroll from the plan. In this way, service-level selection would allow health plans to reduce the scope of enrolling those who could be costly to them. Although unprofitable individuals enroll in the plan, service-level selection would also enable health plans to reduce their financial loss as they shift the costs to the individual.

From the Discussion and Conclusion

The goal of this paper is to shed light on the competing claims on the effectiveness of the CMS-HCC model and to comprehensively understand strategic risk selection behaviors of MA plans. We find that the CMS-HCC model reduced the phenomenon that MA plans avoid beneficiaries with high-risk scores in TM plans, whereas it led to increased disenrollment of high-cost beneficiaries, conditional on risk score, in MA plans. We explain this phenomenon through service-level selection. Through theoretical and empirical analysis, we show that after the full phase-in period of the CMS-HCC model, MA plans have the incentive to and did increase copayments disproportionately more for services that appeal to beneficiaries who could be unprofitable under the CMS-HCC model than other services. The disproportionate changes in copayments led to voluntary disenrollment of beneficiaries with need for these services, who tend to incur higher expenditures than their risk-adjusted payments. We also find evidence supporting our hypothesis that those who were less satisfied with out-of-pocket costs were more likely to disenroll from MA plans. Such strategic behavior led to MA plans to save $5.2 billion in 2007-2009 by simply transferring the costs to the federal government, thereby placing significant financial burdens on the federal government.

Findings from this study indicate that the CMS-HCC model reduced the MA plans’ risk selection of avoiding TM beneficiaries with high-risk scores, whereas it induced MA plans to strategically behave in response to the CMS-HCC model via service-level selection. MA plans have raised copayments disproportionately more for services needed by high-need beneficiaries than for other services, thereby inducing unprofitable beneficiaries to voluntarily disenroll from their MA plans, mainly due to increased out-of-pocket costs. This allows MA plans to avoid the risk of enrolling unprofitable beneficiaries.…

Since private Medicare Advantage plans initially were paid a flat capitation rate for each enrollee, they selectively marketed their plans to healthier Medicare beneficiaries and that was successful in increasing their profits since their patients were healthier than those enrolled in the traditional Medicare program. To counter this, the government established the Hierarchical Condition Categories (HCC) risk adjustment model so that capitation payments were were made based on the health status of each beneficiary.

To no surprise, the plans then upcoded their diagnoses so that they received capitation rates that were higher than the actual level of care required. It was suspected that the plans were also gaming the system through service-level selection, and this study confirms that they were. Specifically they determined which services would be used by high-cost beneficiaries, and then they disproportionately increased copayments for those services. The dissatisfaction caused by the high out-of-pocket costs for individuals using these services caused them to voluntarily disenroll from the Medicare Advantage plans.

Although the insurers had already been paid at higher capitation rates for this population, they were able to avoid paying for those individuals with costs even higher than the capitation payments, by this devious scheme of shifting more costs to these patients, thus causing them to disenroll. The authors calculated that this shifted $5.2 billion in costs from the insurers to the federal government, that is, to us the taxpayers.

Ironically the system of capitation payments supposedly represents a transition from volume- to value-based payments, yet the insurers have figured out ways to decrease value instead by selectively marketing to the healthy, by upcoding to qualify for higher risk-adjusted payments, and now by chasing away patients who need more care by penalizing them for accessing services normally used by patients with more serious disorders (service-level selection).

How much longer do we put up with this? Throwing these crooks out and replacing their plans with our own single payer national health program would fix this problem right now. What’s holding us back?

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Heading in the wrong direction on Medicare

Posted by on Friday, Nov 17, 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.

Older Americans Were Sicker And Faced More Financial Barriers To Health Care Than Counterparts In Other Countries

By Robin Osborn, Michelle M. Doty, Donald Moulds, Dana O. Sarnak, and Arnav Shah
Health Affairs, November 15, 2017


High-income countries are grappling with the challenge of caring for aging populations, many of whose members have chronic illnesses and declining capacity to manage activities of daily living. The 2017 Commonwealth Fund International Health Policy Survey of Older Adults in eleven countries showed that US seniors were sicker than their counterparts in other countries and, despite universal coverage under Medicare, faced more financial barriers to health care. The survey’s findings also highlight economic hardship and mental health problems that may affect older adults’ health, use of care, and outcomes. They show that in some countries, one in five elderly people have unmet needs for social care services — a gap that can undermine health. New to the survey is a focus on the “high-need” elderly (those with multiple chronic conditions or functional limitations), who reported high rates of emergency department use and care coordination failures. Across all eleven countries, many high-need elderly people expressed dissatisfaction with the quality of health care they had received.

From the Discussion

The elderly US population is already sicker than similar populations in other countries. Part of the cause is likely to be gaps in coverage and preventive care during Americans’ working years, which results in an older population that ages into Medicare with unmanaged chronic illness.

The US elderly face a “triple whammy,” as they experience higher cost sharing, higher levels of economic vulnerability, and dramatically higher health care costs — with prescription drugs often two or three times as expensive in the United States as in the other countries studied.

The Social Safety Net

The economic vulnerability of older adults emerged from this study as a key concern. Research shows that poverty, food insecurity, unstable housing, social isolation, and mental health problems contribute to higher rates of chronic illness, poorer health and outcomes, higher utilization of the health care system, and greater costs. The United States stands out for disproportionately low spending on social care services compared to health. A previous analysis has shown that some countries in the Organization for Economic Cooperation and Development spend, on average, two dollars on social services for every one dollar on health care. In the United States, less than sixty cents is spent on social services for every health care dollar spent.…


First, Republicans want tax cuts. Next, they’ll try gutting Medicare and Social Security.

By Bruce Bartlett
The Washington Post, November 16, 2017

For decades, conservative intellectuals have pushed for big tax cuts; less to grow the economy and more because they want to “starve the beast.” They want to force a major overall spending cut that would be a political non-starter without first passing a tax cut that creates a deficit so large, something must be done about it. Spending cuts must be enacted, then, as they would be presented as the only way to pay for the already passed tax cut’s lost revenue.

Once we can see the whole picture, Americans will have a clearer idea of the net benefit to them. The rich don’t need either Social Security or Medicare — it’s the middle class, which depends on both, that needs to know how tax cuts and spending cuts affect them. If Social Security and Medicare cuts follow tax cuts, on net, even those who would get a tiny tax cut will be much worse off when the spending cuts are factored in. This will give a true, complete picture of the distribution of pain and gain in the GOP program.…

Medicare beneficiaries are sicker and face more financial barriers to care than do the elderly in other wealthy nations. Further, the U.S. spends far less proportionately on social services. Clearly we need to do more.

So where is Congress headed? At a time that we have intolerable levels of transfer of income and wealth to the very top, Congress is going to decrease taxes for the very wealthy which will only increase that dastardly transfer. The budget deficits that will be created will supposedly prove that the federal government will no longer be able to afford Social Security and Medicare and thus it will be necessary to slash their budgets as the systems are privatized.

Where we should be headed instead is that we need to improve the Medicare program and then expand it to cover everyone. Since too much income and wealth is at the top we need to increase taxes on that sector rather than reduce them. This is the opposite of what we are witnessing right now. Where is the outrage?

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Reduce Medicaid spending? Look at Puerto Rico

Posted by on Thursday, Nov 16, 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.

Capping Medicaid Funding — Lessons From Puerto Rico

By Krista M. Perreira PhD, David K. Jones PhD, and Jonathan Oberlander PhD
American Journal of Public Health, December 2017 (Online November 8, 2017)

The United States already has experience with the consequences of limiting Medicaid funding. The federal government’s contribution to the Medicaid program in Puerto Rico, a US territory with 3.5 million residents, 46% of whom are enrolled in Medicaid or CHIP, is capped and grows with the medical consumer price index. When introduced in 1968, the statutory cap was set to cover 50% of the program’s costs. By 2010, it covered only 18% of Puerto Rico’s Medicaid expenditures. If Puerto Rico’s federal Medicaid payments instead were based on per-person income, as is currently the case in the 50 states, then the federal government would pay 83% of the commonwealth’s Medicaid bill.

The erosion of federal funding for Medicaid in Puerto Rico reflects a fundamental problem with block grants and spending caps. Under such arrangements, payments typically are neither sufficiently indexed to account for rising medical costs nor adequately responsive to changing economic circumstances that can increase the number of poor individuals eligible for benefits. Consequently, the share of Medicaid costs paid by the federal government can decline substantially over time, as it has in Puerto Rico. Puerto Rican officials have responded by setting low income-eligibility levels, based on a commonwealth-specific poverty measure, that covers pregnant women and children only up to 50% of the federal poverty level. Additionally, Puerto Rico provides only 10 of the 17 federally mandated Medicaid benefits. It does not cover nonemergency medical transportation and lacks the infrastructure to cover and regulate long-term care and nurse midwife services.

Puerto Rico’s circumstances are especially dire, but its experiences with capped federal Medicaid funding highlight the quandaries that states would face under Republican proposals to cap spending. Such plans would dramatically curtail the federal government’s role in financing Medicaid. States cannot afford the steep cuts in federal Medicaid financing — about $800 billion over 10 years, amounting to a 24% reduction that would increase to 35% in the following decade — that House and Senate Republicans have proposed. Capped funding inevitably would force states to make painful decisions about reducing Medicaid eligibility and benefits. Medicaid funding caps would unravel the program in many states, leaving millions of low-income persons without any health insurance.

Although the ACA repeal campaign stalled in the Senate, proposals to cap Medicaid spending are likely to resurface. Efforts to limit the federal government’s role in financing Medicaid will not stop, regardless of the ACA’s future. Medicaid is an inviting ideological and fiscal target. Indeed, pressures to reduce the federal budget deficit and pay for tax cuts could soon lead Congressional Republicans to reconsider block grants. Puerto Rico’s experiences with capped Medicaid funding are a warning of the dangers that such plans hold for the states.…

The Republicans want to cap Medicaid spending. Some of their proposals for doing so already apply to Puerto Rico. As this report indicates, it has been a disaster.

The Democrats are not without blame since they have been content with leaving Medicaid as a chronically underfunded program. It’s just that the Republican proposals would make it much worse.

The most important touted success of the Affordable Care Act has been the expansion of Medicaid, but as long as it remains chronically underfunded and a target for budget cuts, care for low-income individuals and families is at risk of falling below a standard acceptable to most of us – a lower tier of care than what we are capable of providing.

It does not have to be that way. We are spending enough now to provide top-tier health care for everyone – a level in which optimal care becomes the standard. Yes, top-tier care is affordable because it includes eliminating administrative waste, reducing excessive prices, reducing excessive capacity that drives overuse, and reducing care that is of no value.

Rather than expanding to low-income populations the disastrous level of care being experienced in Puerto Rico, we should be bringing Puerto Rico up to the standard of a high performance system that we should all be experiencing. All we have to do is enact a well designed single payer national health program.

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Uwe Reinhardt

Posted by on Wednesday, Nov 15, 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.

Uwe Reinhardt

“The issue of universal coverage is not a matter of economics. Little more than 1 percent of GDP assigned to health could cover it all. It is a matter of soul.”

Uwe E. Reinhardt
September 24, 1937 – November 13, 2017

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Kip Sullivan: Practicing medicine while black

Posted by on Tuesday, Nov 14, 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.

Practicing Medicine While Black

By Kip Sullivan, J.D.
The Health Care Blog, November 9, 2017

The managed care movement thrives on misleading words and phrases. Perhaps the worst example is the incessant use of the word “quality” to characterize a problem that has multiple causes, only one of which might be inferior physician or hospital quality. To illustrate with a non-medical analogy, no one would blame auto repair mechanics if 50 percent of their customers failed to bring their cars in for regular oil changes. We would attribute the underuse of mechanics’ services to forces far beyond the mechanic’s control and would not, therefore, refer to the problem as a “quality” problem.

But over the last three decades it has become acceptable among American health policy experts and policy-makers to characterize any measurement of under- or over-use of medical care, or any measurement of a medical outcome, no matter how poorly adjusted to reflect factors outside provider control, as an indication of “quality.” The widespread, inappropriate use of “quality” long ago set off a vicious cycle. It helped spread the folklore that the quality of America’s doctors and hospitals is awful, and that in turn was used to justify taking even more crude measurements of quality, and so on.

In the early 1990s when the measurement craze was limited to a few “quality” report cards, and grades on those report cards were not used to punish or reward doctors and hospitals, the craze posed less risk to providers who treated a disproportionate share of the poor and the sick. But over the last 15 years, inaccurate “quality” grades on report cards have been linked with financial penalties and rewards. Payment schemes that link rewards and punishments to quality scores were dubbed “pay-for-performance” (P4P) circa 2003. Payment schemes that link rewards and punishments to both quality and cost scores, which began to materialize in the late 2000s, were dubbed “value-based purchasing” (VBP) schemes. (“Value” implies both quality and price have been taken into account). These VBP schemes go by various names, the most important being “accountable care organization” and “medical home.” MACRA is one big VBP scheme.

A growing body of research indicates P4P and VBP schemes (I will refer to both from now on as VBP schemes) pose a much greater threat to the health of poorer and sicker Americans than the old report cards did. They do so because they pose a much greater threat to the financial health of the providers who treat poorer and sicker Americans. Because minorities represent a disproportionate share of our nation’s sickest and poorest, and because the responsibility for treating minorities falls disproportionately on a few clinics and hospitals, many of them staffed by minority health care professionals, VBP schemes punish minority providers for no reason other than that they see more minority patients.

In this article I will document what I have just said by focusing on black doctors as well as hospitals and ACOs that serve a large number of black patients. I will argue that those who promote VBP are guilty of racial profiling – punishing black doctors and other providers who treat a high proportion of black patients and, ultimately, black patients. We will see that three intractable conditions guarantee that VBP penalizes black providers and their patients:

(1) Black physicians, and a small number of hospitals, treat a disproportionate share of black patients;

(2) black patients tend to be sicker and poorer than white patients, which means the clinics and hospitals that treat a disproportionate number of them have to spend more on them and yet have fewer resources to do that, and are therefore less likely to score well on cost and quality measures; and

(3) administrators of VBP schemes are incapable of adjusting quality and cost scores accurately to take into account factors outside provider control, including the lower health status, lower incomes, worse insurance, worse access to transportation, and greater exposure to stressors such as crime and food insecurity suffered by black Americans.

Note that I am not criticizing measurement per se. Measurement is essential to quality improvement in every field of human endeavor. I’m criticizing inaccurate measurement and the reckless use of inaccurate measurement.

You can continue reading this article at the following link:…

There are many problems in our health care system. There are many problems in our nation. And they inevitably interact.

At PNHP we tend to focus on our health care financing system and the interaction it has with the delivery of health care. Application of solid health policy is important in correcting the deficiencies in these interactions. But today’s message suggests that health policy science may still be in its primitive stages, not so much because of the lack of intellect in the health policy community but rather because of lack of enlightenment that has been suppressed by the memes of the free market approach to our nation’s problems, expressed in the concept that the government’s legitimate role is merely to help the private marketplace work.

Of course the needs unmet by the marketplace could not be ignored and thus public programs such as Medicare for the elderly and Medicaid for the poor were enacted. Yet we are shoving the beneficiaries of these programs into market models such as private Medicare Advantage plans and private Medicaid managed care organizations. We are also inundating the delivery system with nebulous market concepts such as shifting from volume to value – an ill conceived concept with which we are moving rapidly forward with implementation when the policy science studies to date have failed to give much support for such concepts.

In the marketplace resources are allocated based on the prospect for optimal business success; health care is distributed based on ability to pay. In publicly administered health programs resources are distributed based on need. Public funds are already used to pay for 60 to 70 percent of health care in the United States, yet we place control of much of our resources in the private sector.

What does this have to do with practicing medicine while black? It should be obvious. The private sector is not inclined to direct its resources to endeavors that do not provide greater revenue opportunities, whereas publicly administered programs distribute based on need – not only for health care but for correction of all of the other social deficiencies that have resulted in worse outcomes for the poor, a sector disproportionately represented by minorities.

A quick look at the current tax proposals tell us where we are. The greatest economic problem we face today is the transfer of income and wealth from the struggling masses to the plutocrats at the top. Yet the proposals before Congress would increase that upward transfer when the need is for public policies to improve social justice. This need screams out for progressive public financing rather than the regressive policies proposed.

We need to get our public priorities in order. We should be rewarding black physicians who dedicate themselves to caring for black patients and other ill-served populations who are sicker and poorer and thus a greater challenge to care for. Instead we penalize these virtuous physicians through payment reductions based on quality scores designed for business models rather than patient service models. Yes, we punish them. That isn’t right.

Changing to a more equitable financing system – an improved Medicare for all – is crucial, but it is only a first step. Since it is imperative that we also address these other social and economic issues, we’ve got a lot more work to do.

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Narrow networks benefit insurers, not patients

Posted by on Monday, Nov 13, 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.

Kept in the Dark About Doctors, but Having to Pick a Health Plan

By Austin Frakt
The New York Times, November 13, 2017

When you select a health care plan, you probably consider premiums, and maybe you check deductibles and other cost sharing. But you can’t easily scrutinize the plans’ networks and the quality of the doctors in them. That’s too bad, because you may be missing something important.

Many health insurance options offered by employers or sold on the Obamacare marketplace come with narrower networks — covering treatment from a limited slate of doctors and hospitals. (Though there’s no official definition of a “narrow network,” many studies classify networks as narrow when they include less than about 30 percent of doctors or hospitals in the area.)

It’s virtually impossible to thoroughly check the quality of doctors in each insurance plan. A typical plan, even a narrow one, may have a network of hundreds or thousands of physicians.…

Narrow networks are a tool of private insurance companies designed to enhance their business model rather than to improve patient service. They add to the administrative waste that characterizes the private insurance model of health care financing.

A public insurance model, such as the traditional Medicare program, is designed to help patients receive the care that they need. Why should we pay private insurers more in administrative costs in order to prevent us from having access to 70 percent of the physicians and hospitals in the community?

Not only is the traditional Medicare program more efficient administratively, and gives us greater choice in our health care providers, Medicare also has been more effective than private insurers in controlling health care prices.

We really do need to replace the intrusive, superfluous private insurers with an improved Medicare that covers everyone.

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The question of how to regulate U. S. health care and for what purpose remains unanswered in this country. If we believe that the primary goal of regulatory oversight is to protect patients and families from poor care, fraud and abuse, we need to question what is happening now, does it work, and what changes should be made in the regulatory process?

Today’s Ineffective Health Care Regulation

We already have an immense regulatory burden that is costing some $39 billion a year in attempting to achieve compliance in nine domains: quality reporting, new models of care/value-based payment models, meaningful use of electronic records, hospital conditions of participation, program integrity, fraud and abuse, privacy and security, post-acute care, and billing and coverage verification requirements. Health systems, hospitals, and post-acute care providers have to comply with some 629 discrete regulatory requirements across these nine domains, according to a recent report by the American Hospital Association.

We can make the case that this high regulatory burden has not been effective in ensuring safe and effective patient care, but also that deregulation across the board will make matters even worse as budgets and staffs of necessary regulatory agencies are cut. These examples across the health care system make the point.

Insurance Industry

Administrative actions by HHS have already dropped advertising for and shortened the ACA enrollment period, scaled back maintenance of its website, relaxed IRS penalties for not getting insurance under the ACA’s individual mandate, withdrawn federal assistance to states as their counties without any insurer multiply, and spread disinformation that discourages enrollees of the ACA’s marketplace. The Trump administration supports selling insurance across state lines (which allows insurers to select states with the most lax regulations), radical cuts in Medicaid and Medicare, shifting control of health care back to the states, and marketing short-term plans lasting less than a year in order to get around the ACA’s requirements. All of these policies will lead to higher prices and costs of health insurance and care, less value of health insurance, and will increase by millions the numbers of uninsured and under-insured Americans.

Drug industry

Big PhRMA has long pushed for faster action by the FDA on drug approvals with less rigorous oversight while resisting any efforts that would allow importation of drugs from other countries or the government to negotiate drug prices. Since 1962, the FDA has required “substantial evidence” of a drug’s efficacy before granting approval on the basis of controlled clinical trials, but the industry argues for less rigorous criteria that could perhaps be provided by its own marketing “trials.” The industry has recently brought out a new argument based on the First Amendment to evade drug safety rules and sell more medications for off-label marketing of unapproved drugs.

Dr. Scott Gottlieb, a physician, investor and long advocate for quicker drug approvals, is the new commissioner of the FDA. On the side of a continuing rigorous approval process, however, is the fact that almost one-third of FDA-approved drugs have had a safety issue detected later on that required withdrawal from the market or warnings of new risks to the public. Tighter regulation of drug approvals is indicated by the FDA’s failure to protect patients taking prescription drugs from more than 81 adverse reactions that have resulted in 2.7 million hospitalizations.

Medical Devices

The FDA also regulates medical devices, such as heart valves, hip and knee replacements. Industry regularly lobbies the agency for faster reviews based on less evidence of efficacy and safety, but we already have had many examples showing that more rigor is needed in the approval process. A 2014 study by researchers in JAMA Internal Medicine found that 42 of 50 selected medical devices lacked enough scientific evidence to verify their safety and effectiveness.

Johnson & Johnson’s metal artificial hip replacement, the A.S.R., is a classic example of what can go wrong by an expedited FDA review. It had a high failure rate, with many patients disabled by pain as the device shed metal debris, so that many devices had to be removed with additional surgery. Before its delayed recall, the A.S.R. accounted for almost one-third of an estimated 250,000 hip replacements performed each year in this country.

As in the case of drug oversight, the FDA is hampered in its mission by underfunding, insufficient authority, cozy ties with the very industries it is regulating (and which provide some of its funding), and often political interference.

There are many examples across the system whereby patients are harmed by restricted access due to unaffordable prices and/or poor quality of care leading to worse outcomes. Regulators through the Federal Trade Commission have taken a blind eye to increasing consolidation that invariably results in increased prices through greater market share as well as more bargaining power with private insurers. Examples are legion, such as:


Although the nation’s hospitals have been subject to federal oversight dating back to 1965 when Medicare and Medicaid were enacted in order for them to receive payments from these programs, there is no rigorous safety program in place to ensure  quality of care. Most hospitals are accredited by a Joint Commission with a board largely made up of executives of health systems it accredits as well as members named by health care lobbying groups. According to an in-depth national study of hundreds of inspection reports by the Wall Street Journal  between 2014 and 2016, the vast majority of hospitals found to have safety violations retain full ‘Gold Seal of Approval.’ study of some 22 million hospital admissions found that patients are three times more likely to die in the worst hospitals, with 13 times more medical complications, compared to the best hospitals.

Nursing Homes

Two-thirds of the country’s nursing homes are for-profit, with more than one-half in large corporate chains where the mission is to enhance financial bottom lines, not quality patient care. Compared to not-for-profit nursing homes, for-profit chains that are typically investor owned, have lower staffing levels, worse quality of care, and higher death rates. A 2012 report by the Inspector General’s Office (OIG) found that for-profit nursing homes overbilled Medicare by $1.5 billion a year for treatments that patients didn’t need and never received. Life Care Centers of America Inc, one of the major nursing home chains, settled the largest claim yet of $145 million with the federal government in 2016 for violations of the False Claims Act for having provided unreasonable and unnecessary therapy to many patients.

Dialysis centers

This pattern of poor care continues at under-regulated for-profit dialysis centers, 90 percent of which are in corporate chains. Mortality rates for the nation’s two largest for-profit chains are 19 to 24 percent higher than for not-for-profit chains.


Two-thirds of the country’s hospices are for-profit, and also follow this same pattern—compared to their not-for-profit counterparts, for-profits offer fewer services and provide worse quality of care.

Is Deregulation the Answer?

The Republican-controlled Congress, in concert with the Trump administration, has put deregulation on the front burner of its policies. The unproven and incorrect theory holds that unfettered markets will regulate themselves through competition, and that regulations kill jobs and hold back the economy. Deregulation across the board has also been pushed by such groups as the Freedom Caucus on the far right, the Chamber of Commerce, the National Association of Manufacturers, and corporate lobbyists. Soon after his inauguration, Trump issued an executive order calling for the elimination of two existing regulatory safeguards for every new one adopted, which has been called unconstitutional by Public Citizen in its countering lawsuit. Steve Bannon, still a major influence on Trump’s policies, has called for a war against regulation and for “deconstruction of the administrative state.”

There are many reasons for the failure of our current regulatory attempts to assure Americans of safe and effective health care. These include the financial gain by corporate stakeholders to maintain the status quo where the government (and taxpayers) can be over-billed for unnecessary and sometimes harmful services, overly complex and often meaningless measures of “quality,” our dysfunctional multi-payer financing system without enough public accountability, the current business incentives of our mostly private system to profit from providing more services, regardless of their value to patients, and political interference that protects corporate interests and providers of services more than patients. Based on the these factors, deregulation through policies being advanced by the Republican-controlled Congress and the Trump administration would just make matters worse.

We have lost sight of the principal mission of our health care system—the best possible care of patients. Despite being so wasteful and overwhelming, current regulatory efforts don’t work, as documented  by previous examples of poor care throughout the system. Dr. Don McCanne, family physician and past president of Physicians for a National Health Program (PNHP) makes this cogent observation as to how best to regulate U. S. health care in a more productive and effective way:

A quick look at the nine domains of regulatory overload is all you need to be reminded of the nightmare created by these evolving requirements. Inefficiencies, wasted resources, and provider burnout ensue . . .  Most of the recoverable administrative waste is in the private sector. We spend over a trillion dollars a year on administration, and somewhere around $300 to $500 billion is recoverable merely by transitioning to a well-designed single-payer [financing] system. 

—McCanne, D. Quote of the Day, The cost of  regulatory overload, October 27, 2017.)

Toward More Effective Approaches to Regulation

If we have the political will to look at real solutions to this big problem that is so costly and harmful to our population, help could be on the way in the form of two bills now in the Congress—Bernie Sanders’ (I-VT) S. 1804. Medicare for All Act of 2017 in the Senate with 18 co-sponsors and John Conyers’ (D-MI) H.R. 676. Expanded & Improved Medicare for All Act of 2017 in the House, with 125 co-sponsors. These bills can transition us over to universal coverage for all Americans, with simplified administration and less bureaucracy while making all necessary health care available for everyone and providing better health outcomes for patients and our population.

Democrats and a growing number of Republican legislators need to wake up and deal with the big picture in health care before they are ushered out of office in the coming election campaigns of 2018 and 2020.

John Geyman, M.D. is the author of Common Sense about Health Care Reform in America (2017), and Crisis in U.S. Health Care: Corporate Power vs. The Common Good, and The Human Face of ObamaCare: Promises vs. Reality and What Comes Next


Koch brothers’ ideology trumps veterans

Posted by on Friday, Nov 10, 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.

With Obamacare Fight Lost, Conservatives Turn to Veterans’ Care

By Nicholas Fandos
The New York Times, November 9, 2017

With their hopes of repealing the Affordable Care Act dashed for now, deep-pocketed conservative activists have turned their attention to a smaller but still potent new effort: allowing private health care to compete with Veterans Affairs hospitals for the patronage of the nation’s veterans.

Concerned Veterans for America, a little-known advocacy group backed by the conservative billionaire industrialists Charles G. and David H. Koch, is pressing Republicans to make it easier for veterans to see private doctors at government expense. The group’s voice had been lonely until recently, when a raft of Koch-connected advocacy organizations and other conservative allies joined the effort.

The relative newcomers to the world of veterans policy see in the debate an opportunity to advance their campaign against government-provided medical care. Together, they have pledged millions of dollars for advertising and outreach, and have unleashed a small army of lobbyists and donors to pressure the Trump administration and Republican lawmakers.

Republicans and conservative groups would prefer new spending be at least partly offset by cost savings and other cuts to the Department of Veterans Affairs. Democrats and the old-line veterans groups say they are unlikely to support a plan unless it makes simultaneous investments in the agency’s own capacity. Without it, they argue, the problems that have necessitated private care in the first place will only fester.

“This is starve the beast to the point that it can’t function situation,” (Representative Tim) Walz said of the latter plan, “because if you don’t do this, the complaints against the V.A. are going to increase exponentially. The wait lists are going to increase. And then they are going to say, ‘See, we need more outside care.’”…


Battle over veterans’ health care comes down to VA Choice

By Michael Blecker
San Francisco Chronicle, November 8, 2017

Kevin Miller is a U.S. Marine Corps Iraq combat veteran who came home with a wide range of chronic health issues, including post-traumatic stress disorder, traumatic brain injury and injuries to his neck, spine and shoulders. Thanks to the U.S. Department of Veterans Affairs’ model of integrated care, Miller can coordinate and receive all his care at the VA hospital in San Francisco.

There he can see specialists for his physical injuries, as well as mental health practitioners who understand the unique experience of veterans. If we send veterans like Miller to private doctors for their specialty care, however, then their care would be fragmented and medical appointments scattered at facilities miles apart.

Yet that is what the federal government tried to do, setting off a battle for health care for weary warriors to wage with policymakers and a well-funded special interest over the VA and its future.

To address problems of long wait times at Veterans Health Administration hospitals, in 2014 Congress established the Veterans Choice Program, which provides private health care options for eligible veterans at government expense.

In their war against the VA, our nation’s only truly universal health care system, special interest groups such as Concerned Veterans of America backed by the Koch brothers led the federal government to adopt VA Choice. In their larger efforts to attack all government-funded programs and services, the Koch brothers led a misinformation campaign claiming the VA system — one of the largest government agencies with 320,000 public employees — is broken.

Advocates, however, had long warned that private-sector options increase the cost of veterans’ health care.

Because health care dollars follow the veteran, the migration of dollars out of the system affected the operating budgets at the VA facility programs. VA medical and regional directors wrote in an internal VA memo that the costs of outsourcing veterans’ care to the private sector has been a “major driver, in budget shortfalls for Veterans Health Administration facilities across the country.”

The VA is a system worth saving. If we continue to divert precious taxpayer dollars to private care, we risk dismantling a veteran-centered health care system designed for their special needs.

House and Senate veterans committees are drafting legislation due for action this week to determine how much the VA outsources care. The Koch brothers and their network are pushing for a multimillion-dollar campaign to include loopholes in the legislation that will move us closer to dismantling the VA.

Write your members of Congress and urge them to keep the Koch network out of our VA.

Michael Blecker is executive director of Swords to Plowshares.…

All health care systems have problems, including the Veterans Health Administration. It is not difficult to come to the conclusion that when problems exist you try to fix them. Yet Charles and David Koch, in their anti-government fervor, would destroy the government-run VA Health system by privatizing it since effectuating their libertarian ideology is vastly more important to them than fulfilling, in the very best way we can, our fundamental moral obligation to support the health of our veterans.

Although you might think that the conservatives believe they own the copyright for the American flag, they don’t. It belongs to all of us. Tomorrow, Veterans Day, I will mount the flag on my front lawn. I will salute the flag and then kneel before it as I pay respect for not only what it stands for but also for what it should stand for.


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