Can we talk about the ACA train wreck?

Posted by on Tuesday, May 14, 2013

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.

GOP Candidates’ Top Campaign Issue Will Be Obamacare ‘Train Wreck’

By Wendell Potter
The Huffington Post, May 6, 2013

Will the implementation of some of the most important provisions of ObamaCare this fall and next year result in the “train wreck” Senate Finance Chairman Max Baucus (D-Mont.) predicted a few days ago?

No. But you can be certain that there will be no shortage of political candidates and high-powered political spin doctors who will be working relentlessly between now and the 2014 midterms to convince us that it will be.

If the Democrats and consumer advocates who support ObamaCare are not at work developing their own strategies to counter the coming barrage of misleading spin, the GOP will have an excellent chance of controlling Capitol Hill after the next elections.

http://www.huffingtonpost.com/wendell-potter/gop-candidates-top-campai_b…

Of those who are serious about health care reform, some want to abandon the Affordable Care Act (ACA) and immediately enact single payer, and others want to abandon the single payer cause and move full steam ahead with implementation of the ACA. But should we really abandon either approach?

It is clear that ACA alone will be grossly deficient. Thirty million people will remain uninsured, inadequate low actuarial value plans will become the new standard, and wasteful spending will continue because of the highly flawed, administratively complex model of ACA. So single payer should not be abandoned since it is an imperative if we want to have affordable health care for everyone.

Why shouldn’t we abandon ACA? Because, quite simply, it is all that we have right now, and it will provide some limited relief for millions of people. If we were to abandon ACA now, mobilizing a social movement and then enacting and implementing single payer would still take many years – too long for those who would receive some benefit from ACA now.

So we should do both. Let the ACA enthusiasts continue with the implementation, while single payer forces step up the social movement for health care justice though advocacy for an improved Medicare for everyone.

So where is the train wreck? There isn’t any. But Wendell Potter is right. The opponents of reform will latch onto every ACA implementation glitch, real or imagined, and onto the criticisms which will inevitably follow. They will attempt to frame the implementation as a debacle, and run with that in their effort to use election politics to advance their anti-government agenda.

This complicates the message for the single payer camp. We need to educate people as to why ACA will fall intolerably short of reform goals, but we do not want that to become part of the Repeal ACA message. The opponents initially supported Repeal and Replace, but they have largely abandoned Replace, concentrating on Repeal. So how do we counter the Repeal message?

We need to emphasize the positive message of single payer – truly affordable health care for everyone. We can add that we don’t need to repeal ACA since it can help some during the transition to single payer. But our action message should be Replace – letting the public know that we really do have a much better program that will work for everyone, whereas the opponents do not.

So perhaps a unifying message for the supporters of health care justice should be:

Forget Repeal, REPLACE!

Keep people out of Medicaid to avoid fraud?

Posted by on Monday, May 13, 2013

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.

Healthcare puts Jerry Brown, Capitol Democrats on different sides

By Anthony York and Chris Megerian
Los Angeles Times, May 10, 2013

With California’s deficit wiped out and its economy starting to hum, this was to be a year when Gov. Jerry Brown was free of the budget logjams that have paralyzed the Capitol.

But instead, the governor has a fight on his hands — with his fellow Democrats. He is on a collision course with them over how to reshape the state’s sprawling, complicated healthcare system to conform with President Obama’s national overhaul.

The sticking points in extending public healthcare to more Californians include how many to add to state insurance rolls, how much to pay doctors and hospitals, and how much money to give counties for their care of the indigent.

The Democrats who control the Legislature — with a veto-proof supermajority — want to make it easier to obtain public insurance than Brown does and send more money to the doctors, hospitals and counties than the governor wants to part with.

The major bill that would expand public insurance under Medi-Cal is from Assembly Speaker John A. Pérez (D-Los Angeles). The measure would make it easier for Californians to enroll in the program by allowing people to sign up online and eliminating requirements that recipients file semiannual financial reports to prove they are still eligible.

Administration officials have said the governor opposes those changes out of concern that the easier enrollment process could lead to fraud.

http://www.latimes.com/health/la-me-brown-healthcare-20130511,0,6700749….

Isn’t the idea of the Affordable Care Act to get as many people covered as is possible, considering the administrative complexities of this highly flawed model of reform? So what does California Governor Jerry Brown recommend? Do not make enrollment easier since it might lead to fraud!

Enrollment fraud could not possibly occur under a single payer system since it automatically enrolls everyone. We need a change in attitude. A single payer system would start us thinking in the right way about how to cover everyone and still pay for it.

Medicare private plans overpaid $282 billion

Posted by on Friday, May 10, 2013

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.

Medicare Overpayments to Private Plans, 1985-2012: Shifting Seniors to Private Plans has Already Cost Medicare $282.6 Billion

By Ida Hellander, David U. Himmelstein, Steffie Woolhandler
International Journal of Health Services, Volume 43, Number 2 / 2013, Posted online May 10, 2013

Abstract:

Previous research has documented Medicare overpayments to the private Medicare Advantage (MA) plans that compete with traditional fee-for-service Medicare. This research has assessed individual categories of overpayment for, at most, a few years. However, no study has calculated the total overpayments to private plans since the program’s inception. Prior to 2004, selective enrollment of healthier seniors was the major source of excess payments. We estimate this has added US$41 billion to Medicare’s costs since 1985. Medicare adopted a risk-adjustment scheme in 2004, but this has not curbed private plans’ ability to game the payment system. This has added US$122.5 billion to Medicare’s costs since 2004. Congress mandated increased payment to private plans in the 2003 Medicare Modernization Act, which was mitigated, to a degree, by the subsequent Affordable Care Act. In total, we find that Medicare has overpaid private insurers by US$282.6 billion since 1985. Risk adjustment does not work in for-profit MA plans, which have a financial incentive, the data, and the ingenuity to game whatever system Medicare devises.

How Does Medicare Overpay Private Plans?

1. The selective enrollment of healthier beneficiaries before 2004, or what we will call “old cherry-picking.” Under the payment formula in effect until 2004, Medicare paid private plans a premium that was risk-adjusted only for a few demographic factors, such as age, gender, disability, whether an enrollee resided in a nursing home, and Medicaid eligibility (a proxy for poverty). Hence a healthy 70-year-old man would bring the same premium as his sicker, 70-year-old neighbor. Private plans used marketing, benefit design, enrollment office location, and other techniques to recruit the healthy and discourage sicker seniors from enrolling.

2. Gaming of Medicare’s more complex risk-adjustment scheme, known as Hierarchical Condition Categories (HCCs). Since 2004, private plans have been selectively enrolling beneficiaries with very mild cases
of the medical conditions included in the HCC risk-adjustment formula; such patients have, on average, substantially lower costs than the risk-adjusted premium payment that Medicare pays the private plan on their behalf. We refer to this as “new cherry-picking.”

3. Congressionally-mandated overpayments included in the 2003 Medicare Prescription Drug, Improvement, and Modernization Act (MMA), including duplicate payments for indirect medical education. The provisions that generated this overpayment were tacked onto the MMA after heavy lobbying by the private insurance industry.

4. Bonus payments from the $8.35 billion CMS Medicare Advantage Quality Bonus Payment Demonstration, an expansion of the $3 billion in quality bonuses contained in the ACA. This demonstration will award bonuses to plans covering more than 90 percent of MA beneficiaries and offset more than one-third of the cuts to MA overpayments mandated by the ACA between 2012 and 2014. According to the General Accountability Office (GAO), the demonstration is so poorly designed that it will generate almost no useful findings to improve quality.

5. Duplicate payments for private plan members who receive all or part of their care at Veterans Health Administration (VA) facilities. Medicare pays the private plan a full premium payment, no matter how much of the patient’s care is delivered (and paid for) by the VA. In an extreme case, a senior might receive all care at the VA, making the premium given to the private plan pure profit. In 2009, 8.3 percent of all MA enrollees were enrolled in the VA.

Conclusions

Advocates of market-based Medicare reforms suggest that competition among private plans will induce greater efficiency and result in cost savings. Our findings indicate that the opposite is true. Private plans have drained more than $280 billion from Medicare since 1985, most of it in the last eight years. Increasing private enrollment through voucher-type Medicare reform (as suggested by Republicans) or through quality bonuses and financial incentives to plans to enroll dual-eligible beneficiaries (as enacted by President Barack Obama’s administration) will almost certainly raise Medicare’s costs, not lower them.

Funds wasted on overpayments to private MA plans could instead have been used to improve benefits for seniors, extend the life of the Medicare Trust Fund by more than a decade, or reduce the federal deficit. Private insurers have enriched themselves at the expense of the taxpayers.

It is time to end Medicare’s long and costly experiment with privatization. The U.S. needs to adopt a single-payer national health insurance program with proven, effective methods for controlling costs.

http://baywood.metapress.com/app/home/contribution.asp?referrer=parent&b… (you may have to cut and paste this link)

Now we know that the private Medicare plans have been overpaid $282 billion in taxpayer funds. The Obama administration has continued to add to the overpayments by expanding eligibility for extra quality award payments to which the plans were not entitled, and by using a bookkeeping gimmick for suspended SGR adjustments. Congress and the administration, in using our taxpayer funds to reward this unprincipled industry, should pay a political price for their misdeeds.

CMS pushes price transparency

Posted by on Thursday, May 9, 2013

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.

Administration Offers Consumers an Unprecedented Look at Hospital Charges

Centers for Medicare and Medicaid Services, May 8, 2013

New data released today show significant variation across the country and within communities in what hospitals charge for common inpatient services.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Secretary Sebelius said.

These amounts can vary widely.  For example, average inpatient charges for services a hospital may provide in connection with a joint replacement range from a low of $5,300 at a hospital in Ada, Okla., to a high of $223,000 at a hospital in Monterey Park, Calif.

“Transformation of the health care delivery system cannot occur without greater price transparency,” said Risa Lavizzo-Mourey, M.D., RWJF president and CEO.

http://www.cms.gov/apps/media/press/release.asp?Counter=4596

Medicare Provider Charge Data: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trend…

So now we have access to hospital chargemaster prices – meaningless numbers that nobody pays. And that is going to make us better health care shoppers?

What matters are payments, not prices. Actual payments are negotiated prospectively by private insurers, and even more effectively by Medicare. Cash paying patients usually feebly attempt to conduct negotiations retroactively, if they pay at all.

This CMS effort on hospital price transparency will have almost no impact on controlling total health care spending since chargemaster prices are a fabrication.

There is a far better way to control spending without forcing patients to make unwise health care decisions in their efforts to avoid the financial burdens of health care. Each hospital should be placed on a global budget, just as we do with our police and fire departments. That way, services are rendered simply when needed, without having an associated price tag.

Requiring price shopping as a prerequisite to health care access is anathema to health care justice.

Bernie Sanders on primary care

Posted by on Wednesday, May 8, 2013

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.

Primary physician shortage calls for intervention

By Sen. Bernie Sanders
Politico, May 7, 2013

The American approach to primary health care is one of the more glaring failures of a dysfunctional health care system that costs almost twice as much per capita as that of any other major country — often with worse results.

Instituting major reforms in primary care and enabling people to see a doctor when they need one will save lives, ease suffering and save billions of dollars in wasteful health care costs. What should we do?

First, we need to substantially increase the number of primary-care practitioners. In most countries, about 70 percent of doctors practice primary care while 30 percent are specialists. We have it backward. Only 30 percent of doctors in America practice primary care.

Second, we must implement a major change in the culture of our medical schools. Some medical schools do an excellent job educating primary-care physicians, but too many do too little and some — believe it or not — do nothing at all. In 2011, about 17,000 doctors graduated from American medical schools. Only 7 percent of those graduates chose a primary-care career.

Third, we need to greatly expand the Federally Qualified Health Center program which today provides high quality and affordable health care, dental care, mental health treatment and low-cost prescription drugs to 22 million Americans, regardless of income. This is a program that provides some of the most cost-effective health care in the country and serves as a medical home for millions with nowhere else to go.

Finally, we should greatly expand the National Health Service Corps, which provides loan-forgiveness and scholarships to students who are prepared to provide medical, dental and mental health care in underserved areas. Like the community health center program, the health service corps has expanded in recent years. In 2012, the corps provided financial help to nearly 10,000 clinicians, nearly three times more than in 2008. That’s a good step forward, but nowhere near enough.

The bottom line is that we need a revolution in primary health care services and accessibility.

(Sen. Bernie Sanders (I-Vt.) is chairman of the Subcommittee on Primary Health Care and Aging of the Senate Health, Education, Labor and Pensions Committee.)

http://www.politico.com/story/2013/05/doctors-physician-shortage-calls-f…

Every expert understands the pressing need to reinforce our primary care infrastructure – a need that grows more urgent with the implementation of the Affordable Care Act. The inevitable transformation into a single payer system will be much smoother if we already have a high-performance primary care infrastructure in place.

Sen. Bernie Sanders provides us with a framework for expanding that system. It’s too bad that we don’t have a Congress that is willing to support the reforms that we need. We need to keep Sen. Sanders and his allies and replace the rest of them.

Health Affairs articles on Medicare reform options

Posted by on Wednesday, May 8, 2013

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.

Tackling the Cost Conundrum

Health Affairs, May 2013

Medicare Essential: An Option To Promote Better Care And Curb Spending Growth

By Karen Davis, Cathy Schoen and Stuart Guterman

We describe a new option we call Medicare Essential, which would combine Medicare’s hospital, physician, and prescription drug coverage into an integrated benefit with an annual limit on out-of-pocket expenses for covered benefits. Cost sharing would be reduced for enrollees who seek care from high-quality low-cost providers. Out-of-pocket savings from lower premiums and health care costs for a Medicare Essential enrollee could be $173 per month, compared to what an enrollee would pay with traditional Medicare, prescription drug and private supplemental coverage. Financed by a budget-neutral premium, we estimate that this new plan choice could reduce total health spending relative to current projections by $180 billion and reduce employer retiree spending by $90 billion during 2014–23. Given its potential, such an alternative should be a part of the debate over the future of Medicare.

http://content.healthaffairs.org/content/32/5/900.abstract

Supplemental Coverage Associated With More Rapid Spending Growth For Medicare Beneficiaries

By Ezra Golberstein, Kayo Walsh, Yulei He and Michael E. Chernew

Supplemental coverage makes health care more affordable for beneficiaries but also makes beneficiaries insensitive to the cost of their care, thereby increasing the demand for care. We found that supplemental insurance coverage was associated with significantly higher rates of overall spending growth. Specifically, employer-sponsored and self-purchased supplemental coverage were associated with annual total spending growth rates of 7.17 percent and 7.18 percent, respectively, compared to 6.08 percent annual growth for beneficiaries without supplemental coverage. Results for Medicare program spending were more equivocal, however. Our results are consistent with the belief that current trends away from generous employer-sponsored supplemental coverage and efforts to restrict the generosity of supplemental coverage may slow spending growth.

http://content.healthaffairs.org/content/32/5/873.abstract

Public Financing Of The Medicare Program Will Make Its Uniform Structure Increasingly Costly To Sustain

By Katherine Baicker, Mark Shepard and Jonathan Skinner

In this article we describe a model incorporating the benefits of public programs and the cost of tax financing. The model implies that the “one-size-fits-all” Medicare program, with everyone covered by the same insurance policy, will be increasingly difficult to sustain. We show that a Medicare program with guaranteed basic benefits and the option to purchase additional coverage could lead to more unequal health spending but slower growth in taxation, greater overall well-being, and more rapid growth of gross domestic product.

Our model thus helps explain the rapid growth in US health care expenditures relative to other countries. More important, the model highlights the trade-offs in different approaches to reining in public spending — from the current approach of providing a uniform benefit that increasingly crowds out other programs, to a less egalitarian model that guarantees only a basic benefit and redirects some redistribution toward other programs.

Our analysis suggests that the policy of providing a uniform benefit to all — rather than a basic benefit that higher-income residents can augment — may be increasingly untenable if health care expenditures continue to rise.

Other excerpts:

Why has the United States diverged so dramatically from its counterparts? This divergence is probably not explained by commonly cited factors such as administrative costs — already high by the 1980s — or physician salaries, which have stagnated over the past decade.

The implications of our model are not dissimilar to the idea of voucher-type premium support suggested over the years by Ezekiel Emanuel and Victor Fuchs, Henry Aaron and Robert Reischauer, and Rep. Paul Ryan (R-WI). Indeed, it may appear that this plan most closely resembles a Ryan-style premium support plan.

Our “basic” plan does not correspond so much to a high-deductible or higher-cost-sharing plan, but rather to one that covers a more limited set of treatments or providers. Unlike high-deductible plans, the basic plan need not expose poorer households to the risk of substantial cost sharing. Instead, it is designed to limit coverage to treatments with proven effectiveness at a reasonable cost. Of course, identifying which treatments are of high value — and for which patients — poses substantial challenges.

Perhaps the greatest challenge to offering this kind of plan choice more widely in Medicare is that it would require setting aside the egalitarian goals enshrined in the Medicare legislation of 1965. Publicly providing only basic coverage would implicitly recognize that higher-income households would probably elect to procure more generous coverage — and, ultimately, to obtain more health care and possibly better health outcomes.

http://content.healthaffairs.org/content/32/5/882.abstract

Background paper (40 pages): “Optimal Healthcare Spending with Redistributive Financing”

http://www.dartmouthatlas.org/downloads/papers/ShepardBaickerSkinner_Opt…

Three Large-Scale Changes To The Medicare Program Could Curb Its Costs But Also Reduce Enrollment

By Christine Eibner, Dana P. Goldman, Jeffrey Sullivan and Alan M. Garber

With Medicare spending projected to increase to 24 percent of all federal spending and to equal 6 percent of the gross domestic product by 2037, policy makers are again considering ways to curb the program’s spending growth. We used a microsimulation approach to estimate three scenarios: imposing a means-tested premium for Part A hospital insurance, introducing a premium support credit to purchase health insurance, and increasing the eligibility age to sixty-seven. We found that the scenarios would lead to reductions in cumulative Medicare spending in 2012–36 of 2.4–24.0 percent. However, the scenarios also would increase out-of-pocket spending for enrollees and, in some cases, cause millions of seniors not to enroll in the program and to be left without coverage.

http://content.healthaffairs.org/content/32/5/891.abstract

Additional Reductions In Medicare Spending Growth Will Likely Require Shifting Costs To Beneficiaries

By Michael E. Chernew

The Affordable Care Act created a projected trajectory for Medicare spending per beneficiary that is lower than historical growth rates. Although opportunities for one-time savings exist, any long-term savings from Medicare, beyond those already forecast, will probably require a shift in spending from taxpayers to beneficiaries via higher beneficiary premium contributions (overall or via means testing), changes in eligibility, or greater cost sharing at the point of service.

http://content.healthaffairs.org/content/32/5/859.abstract

At a time when our politicians have decided to open discussions on reducing government spending in Medicare, it likely is no coincidence that this cluster of articles on ways of reforming the financing of Medicare appears in the leading journal of health policy – Health Affairs. But beware; the thrust of most of the articles should raise our concerns.

The most alarming articles are the pair from Katherine Baicker and her colleagues. They support unlimited care with “better health outcomes” for higher-income households, with only “basic” care for for the rest of us, even though they note that defining basic care “poses substantial challenges.” Class division in health care seems to be a uniquely American concept. “It would require setting aside the egalitarian goals enshrined in the Medicare legislation of 1965.”

The article by Ezra Golberstein and his colleagues calls for diminishing the financial protection offered by supplemental Medigap and retiree health benefits “to restrict the generosity of supplemental coverage,” making beneficiaries more sensitive to the cost of their care, even though “results for Medicare program spending were more equivocal.” Feeling the pain of their health care spending seems to be the policy goal even if the total reduction in Medicare spending is only nominal.

Christine Eibner and her colleagues propose, “imposing a means-tested premium for Part A hospital insurance, introducing a premium support credit to purchase health insurance, and increasing the eligibility age to sixty-seven” as three means of reducing overall Medicare spending, even though these measures would shift costs to the beneficiaries and cause perhaps millions of them to withdraw from Medicare and remain uninsured.

Michael Chernew keeps it simple. Lowering the projected trajectory for Medicare spending “will probably require a shift in spending from taxpayers to beneficiaries via higher beneficiary premium contributions (overall or via means testing), changes in eligibility, or greater cost sharing at the point of service.” In other words, reduce the tax transfer by sticking it to the seniors.

We can thank Karen Davis, Cathy Schoen and Stuart Guterman for not causing us to lose all hope. Their proposal – “Medicare Essential” – is designed to increase the coverage and efficiency of Medicare. They would combine the hospital Part A, physician Part B, and drug Part D programs into a single program with less administrative complexity. They would also add much needed catastrophic coverage by placing a maximum on out-of-pocket expenses. They would also fold in the benefits of supplemental plans eliminating the need for wasteful, superfluous Medigap and retiree health plans. Their proposal would actually reduce spending for most Medicare beneficiaries while enhancing the benefits.

They would leave in place the flawed Medicare Advantage plans, although competing with a truly superior public plan could make them obsolete – the goal of “the public option.” They would have the deductible apply to Part A, opening the treacherous territory of a path for more cost shifting to beneficiaries. Also they do not mention that Medicare Essential could eventually be expanded to include everyone, becoming an improved Medicare for all. There are many other important features of the PNHP version of the single payer model that they do not address, and that we won’t mention here. Suffice it to say, that Medicare Essential is only a tiny though important step in the direction in which we should be headed.

For incrementalists, Medicare Essential should captivate you. For those of us who are impassioned single payer supporters, we should continue to advocate for moving the political process forward toward achieving an Improved Medicare for All single payer program as soon as possible.

Gerald Friedman: The Unhappy Marriage of Economics and Health Care

Posted by on Monday, May 6, 2013

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 Unhappy Marriage of Economics and Health Care

By Gerald Friedman, Ph.D., Professor of Economics, University of Massachusetts at Amherst
Unions for Single Payer Health Care, May 6, 2013

America’s health care system is collapsing, and we can blame the Economics profession. Most economists approach health care in the wrong way, viewing it as a commodity like shoes or the laptop on which I write. Instead, health care is an idiosyncratic commodity, subject to uncertainty and “asymmetric information” leading to destructive behavior. Trying to force health care into a box, treating it like other commodities, economists have promoted cost sharing, market competition, and insurance oversight of health care providers that have inflated the administrative burden while denying ever more Americans access.

While other countries have controlled health care costs by restraining administrative expenses and drug prices, ballooning costs in the United States come from policies promoted by economists who have urged governments and providers to control costs by making consumers responsible for more of the costs even while raising administrative costs and ignoring monopolistic pricing of pharmaceuticals. Viewing the injured, sick, and disabled as “consumers,” economists see insurance as the source of rising costs because they are not responsible for the costs of care they receive and, therefore, overuse health care. Rising copayments and deductibles are intended to discourage “consumers” from “abusing” health care, as if the victims of auto accidents or cancer should shop around for cheaper, and competition among insurers while limiting provider services by providing more administrative supervision. Ignoring evidence that Americans are less likely to see doctors and other health providers than are residents of other affluent countries, these economists have blamed the high cost of our health care on insurance which, they assume, leads to wasteful over-practice and the provision of unnecessary health care services. Their solution is greater cost sharing, more regulation of providers, capitation, and even the end to insurance by substituting medical savings accounts for insurance.

For 40 years, many economists’ have promoted increasing cost sharing through higher copayments and deductibles, the replacement of fee-for-service payment systems with capitation where providers are paid a fixed amount for patients as in Health Maintenance Organizations, and competition where multiple insurers offer a variety of plans catered to individual consumer’s interests and in competition with each other. Far from limiting health care cost increases, these practices have produced the worst of all worlds, rising costs along with restrictions on access. Costs have risen because these recommendations have inflated the administrative burden in health care, the costs of the billing and insurance activities within provider offices as well as the cost of the health insurance industry itself. While restricting access, limiting the benefit to Americans of some of the dramatic improvements in health care practice of the last decades, these practices have not bent the cost curve or slowed health care inflation even while denying more and more Americans access to affordable health care.

The waste involved in the current system has a redeeming feature: it provides abundant space for an improved system that could improve access and services even while dramatically lowering costs by eliminating administrative waste. If we lowered administrative costs and drug prices to the Canadian level, we could save nearly $600 billion dollars, more than enough to provide coverage to all of the uninsured while improving access for the millions of underinsured. If we see past the bad recommendations of market-fundamentalists, we can improve health care and save money. An outcome that even economists should favor.

http://unionsforsinglepayer.org/articles/2013-05-05/the-unhappy-marriage…

Which comes first, economic theory or policy? Intuitively, it seems that a solid understanding of economics should form the basis for developing policies. The obvious flaw is that economics is not a hard science, allowing you flexibility to choose economic theory that conforms to whatever policy you favor.

In the United States we have relied heavily on economists who are market-fundamentalists. They begin with market theory, and then they establish policies that supposedly would provide us the greatest value in health care. Yet we have ended up with a profoundly expensive, highly wasteful system of mediocre-to-poor quality, while falling far short of the goals of making health care affordable and accessible for everyone.

It seems unlikely that the market-fundamentalists would contend that they choose policies first and then use market theory to reach their goals. If so, then they would have to explain to us why they wanted today’s outcomes.  So much for market fundamentalism.

Advocates of health care justice first choose policies that would ensure quality care for everyone that is affordable for society as a whole. Then they apply economic theory to achieve the goals of those policies. Other nations have shown that this works.

In his article, Massachusetts Professor Gerald Friedman explains how we can get it right – producing better health care while saving money – an outcome that all economists should favor, that is if they are pure to the art and science of their profession.

Oregon Experiment update: Medicaid works, sort of

Posted by on Thursday, May 2, 2013

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 Oregon Experiment — Effects of Medicaid on Clinical Outcomes

By Katherine Baicker, Ph.D., Sarah L. Taubman, Sc.D., Heidi L. Allen, Ph.D., Mira Bernstein, Ph.D., Jonathan H. Gruber, Ph.D., Joseph P. Newhouse, Ph.D., Eric C. Schneider, M.D., Bill J. Wright, Ph.D., Alan M. Zaslavsky, Ph.D., and Amy N. Finkelstein, Ph.D. for the Oregon Health Study Group
The New England Journal of Medicine, May 2, 2013

Our study provides evidence of the effects of expanding Medicaid to low-income adults on the basis of a randomized design, which is rarely available in the evaluation of social insurance programs. We found that insurance led to increased access to and utilization of health care, substantial improvements in mental health, and reductions in financial strain, but we did not observe reductions in measured blood-pressure, cholesterol, or glycated hemoglobin levels.

http://www.nejm.org/doi/full/10.1056/NEJMsa1212321

And…

Protecting Finances and Improving Access to Care with Medicaid

By Richard Kronick, Ph.D., and Andrew B. Bindman, M.D.
Editorial, The New England Journal of Medicine, May 2, 2013

Insurance has three main purposes: to protect financial assets in the event of illness, to improve access to care, and to protect health.

First, Baicker and colleagues found that insurance provided a low-income population with considerable financial protection.

Second, Medicaid was associated with dramatically improved access to care.

It is less clear how well Medicaid accomplished the third goal — improving health.

The minimal effects of Medicaid coverage on measures of physical health are not entirely surprising given the many steps needed between the availability of insurance coverage and the delivery of appropriate care. In addition, the short follow-up period of the study, the small number of persons with chronic conditions in the study sample, and the limited number of outcomes may have contributed to a false negative result. This study did not or could not address many important potential health benefits of health insurance, including early detection of cancer, a reduction in sick days from school or work, and a reduction in mortality.

http://www.nejm.org/doi/full/10.1056/NEJMe1302107

The Oregon Health Insurance Experiment (A concise summary of findings): http://www.nber.org/oregon/

The Oregon Experiment unequivocally demonstrates that Medicaid improves access to care and provides considerable financial protection for the low-income population that it serves. Although it was not powered to demonstrate statistically significant improvements in health outcomes, a multitude of other research studies have already confirmed that the health-care interventions studied here are clinically effective.

Today there is a barrage of responses from conservatives and libertarians attacking Medicaid because this study supposedly shows that Medicaid had no significant effect on health outcomes. Thus they challenge the wisdom of implementing the Affordable Care Act provision that would greatly expand the Medicaid program.

Although there are many reasons to consider better options to Medicaid (e.g. single payer), withholding access to and affordability of care that has already been proven to be effective is certainly not one of them.

Perhaps the most significant set of observations in this study is the reduction in financial barriers to care. Most importantly, catastrophic expenditures (over 30 percent of household income) were reduced from 5.5 percent in the uninsured group to 1.0 percent in the Medicaid group. Those with medical debt were reduced from 57 percent to 44 percent, and those who had to borrow money to pay medical bills, or simply walked away from the bills, were reduced from 24 percent to 10 percent.

These reductions in financial barriers improve access which, in turn, improves health outcomes, although these numbers are still not good enough. With a well-designed single payer system, we could do much better.

Freestanding emergency departments?

Posted by on Wednesday, May 1, 2013

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.

Freestanding emergency department growth creates backlash

By Sue Ter Mat
American Medical News, April 29, 2013

Dr. McLaughlin, part-owner of Texas-based Elite, is among those embracing one of the growing segments of health care — freestanding emergency departments. The stand-alone emergency departments have similar equipment as hospital emergency departments but are usually miles from main hospitals. They can look from the outside like urgent care centers, but freestanding EDs can take more severe cases. If the centers take Medicare or Medicaid, they are subject to the federal Emergency Medical Treatment and Active Labor Act and must accept all patients regardless of their ability to pay.

Centers are opened by hospitals and physicians, sometimes separately, sometimes in alliance. Generally, local hospital EDs have agreements with the centers to take cases too severe for the freestanding centers, or to admit patients.

The centers’ numbers have doubled during the past decade, up to 284 in 45 states.

With that growth, however, has come a backlash over freestanding EDs charging, or attempting to charge, a facility fee, as a hospital ED would. Facility fees are charges that hospitals collect from insurers for operating EDs and cover the cost of running the departments.

Urgent care centers also have viewed freestanding emergency departments as a competitive threat.

Freestanding EDs are more lucrative than urgent care centers. Average net revenue per patient for urgent care centers range from $105 to $135, while average revenue is $350 to $500 for freestanding EDs.

A major concern has been that freestanding EDs take care of minor health problems like urgent care clinics but charge emergency departments fees.

http://www.amednews.com/article/20130429/business/130429966/4/?utm_sourc…

What is the difference between an urgent care center and a freestanding emergency department?

Urgent care centers are equipped and staffed to provide immediate care for urgent problems which arise when care may not be convenient or accessible at the patient’s primary source of health care. Emergency departments also provide urgent care, but, in addition, they triage patients, admitting patients with more serious disorders to the hospital with which they are associated.

Free standing emergency departments really are not much different from urgent care centers since the latter also can transfer patients to acute care hospitals when necessary. The primary difference seems to be that the freestanding emergency department will have an entrepreneurial arrangement with a hospital in order to be able to gouge patients and insurers with outrageous “facility fees” – a trick used by hospital emergency departments to increase revenues, partly to offset costs of EMTALA requirements that prohibit them from turning away uninsured or underinsured patients with conditions serious enough to require hospital admission. Urgent care centers typically have the facility fee built into their other charges.

Like urgent care centers, freestanding emergency departments do not have the financial responsibility for caring for patients requiring admission, yet they still charge the facility fee as if they did. If they accept Medicare and Medicaid patients, the only extra obligation of the freestanding emergency departments is to arrange transfer to an acute care hospital.

Freestanding emergency departments are established primarily to make money. Hospital emergency departments are established primarily to meet the health care needs of the community. They are different animals, as this scheme to cheat people by charging unwarranted facility fees demonstrates.

Under the PNHP single payer model, two issues presented here are addressed. One is that, through central planning, facilities are planned and developed based on the health-care needs of the community, rather than being based on the greatest opportunity for profit while avoiding communities with fewer resources. The other is that for-profit institutions are prohibited in the PNHP model; all resources go to patient care with none being diverted to investors.

Single payer is not just a matter of shooing away intrusive and wasteful private insurers. It is a matter of redesigning the health-care financing and delivery infrastructures to best meet the health-care needs of the community, while providing the greatest value in health care – for all of us.

Brookings’ disappointing recommendations for bending the cost curve

Posted by on Tuesday, Apr 30, 2013

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.

Bending the Curve: Person-Centered Health Care Reform: A Framework for Improving Care and Slowing Health Care Cost Growth

Authors: Joseph Antos, Katherine Baicker, Michael Chernew, Dan Crippin, David Cutler, Tom Daschle, Francois de Brantes, Dana Goldman, Glenn Hubbard, Bob Kocher, Michael Leavitt, Mark McClellan, Peter Orszag, Mark Pauly, Alice Rivlin, Leonard Schaeffer, Donna Shalala, Steve Shortell
Engelberg Center for Health Care Reform, Brookings, April 29, 2013

We propose a framework for health care reform that focuses on supporting person-centered care. With continued innovation toward more personalized care, this is the best way to improve care and health while also bending the curve of health care cost growth.

Simplify and Standardize Administrative Requirements

The time cost to clinicians of interacting with health plans has been estimated to be as high as $23 to 31 billion annually. Further, clinicians, health plans, and other participants in health care reform are currently subject to a wide range of diverse reporting requirements that add to costs and reduce the availability of actionable information. Some steps have been taken recently to reduce these administrative costs through standardization. Further administrative simplification steps should include the following, all of which can be accomplished through existing standard-setting entities and public-private implementation initiatives:

*  Implementation of an updated standardized claim form.

*  Standard methods for quality reporting by providers and plans, including clinical, outcome, and patient-level measures — this would be an administrative benefit for providers that adopt value-based payment reforms across all of their payment systems and would lead to reduced reliance on cumbersome coding for specific types of providers.

*  Standard methods for timely data sharing by plans with health care providers and patients who are involved in the financing reforms described in this report. Data sharing accomplished according to consistent standards would reduce the burden on providers and patients, and the it vendors who serve them, for implementing the analytic tools needed to achieve greater improvements in care.

*  Support for state investments to update their Medicaid information systems including standard quality measure reporting and access to CMS data for quality improvement.

Reforms for Private Health Insurance Markets and Coverage

*  Support employer efforts to engage employees in reducing overall health care costs through Employment Retirement Income Security Act (ERISA) and other health plan regulations that promote value-based insurance designs and tiered benefit designs, narrow networks of providers that demonstrate high performance, and employees’ ability to share in the savings from health care choices and changes in behavior that reduce costs.

Bending the Curve (49 pages):
http://www.brookings.edu/~/media/research/files/reports/2013/04/person%2…

This newest report on recommending changes to control health care costs is being presented as a “bipartisan” consensus representing “broad agreement” on reform. Those who have followed the national policy dialogue will recognize that the list of authors does, in fact, include representatives of both major political parties. Nevertheless, the views presented in the report confirms the presumption that these Democratic authors have moved into the Republican camp in the policy debate.

As an example, their recommendations for reducing administrative waste totally ignores the well documented sources of that waste, resulting in recommendations that will have no impact at all on the problem, when recovery of administrative waste should be front and center in reform.

As another an example of their right-wing approach, they recommend “value-based insurance designs and tiered benefit designs, narrow networks of providers that demonstrate high performance, and employees’ ability to share in the savings from health care choices and changes in behavior that reduce costs.” This is code language for consumer-driven approaches that shift more costs to those needing health care – terrible policies that defeat principles of health care justice.

The only good thing about this report is that you can quickly dump it with the “delete” button, without the environmental consequences of wasting 49 pages of paper.

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