Center for Public Integrity on the Medicare Advantage Money Grab

Posted by on Thursday, Jun 5, 2014

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 Medicare Advantage Money Grab

The Center for Public Integrity, June 4, 2014

Why Medicare Advantage costs taxpayers billions more than it should

By Fred Schulte, David Donald and Erin Durkin

(Medicare Advantage) plans have sharply driven up costs in many parts of the United States — larding on tens of billions of dollars in overcharges and other suspect billings based in part on inflated assessments of how sick patients are, an investigation by the Center for Public Integrity has found.

Dominated by private insurers, Medicare Advantage now covers nearly 16 million Americans at a cost expected to top $150 billion this year. Many seniors choose the managed-care Medicare Advantage option instead of the traditional government-run Medicare program because it fills gaps in coverage, can cost less in out-of-pocket expenses and offers extra benefits, such as dental and eye care.

But billions of tax dollars are misspent every year through billing errors linked to a payment tool called a “risk score,” which is supposed to pay Medicare Advantage plans higher rates for sicker patients and less for those in good health.

Government officials have struggled for years to halt health plans from running up patient risk scores and, in many cases, wresting higher Medicare payments than they deserve, records show.

The Center’s findings are based on an analysis of Medicare Advantage enrollment data from 2007 through 2011, as well as thousands of pages of government audits, research papers and other documents.

Federal officials who run the Medicare program repeatedly refused to be interviewed or answer written questions.

Key findings:

  • Federal officials have made billions in “improper” payments to Medicare Advantage plans traced to risk score errors.
  • Medicare Advantage risk scores rose much faster than the national average in hundreds of counties nationwide between 2007 and 2011. That rise in risk scores cost taxpayers more than $36 billion; critics attribute that more to aggressive billing than sicker patients.
  • Though federal health officials have recently disclosed some Medicare billing data, key financial records of Medicare Advantage plans have been kept under wraps.
  • The failure to crack down on health plans that overbill doesn’t bode well for the Affordable Care Act, which relies on a similar risk scoring system.

Thomas Scully, who helped get the program running under President George W. Bush, said rates were generous in hopes of enticing insurers to expand their Medicare business and not shy away from people in poor health.

“We very intentionally tried to overpay them a little bit,” said Scully, now a Washington lobbyist with numerous health care industry clients.…

“The Medicare Advantage Money Grab”:…

Medicare Advantage is a program in which our government has conspired with insurers to privatize Medicare, even though it costs far more when private insurers are inserted as intermediaries than it does when Medicare is administered as a public program. This report from The Center for Public Integrity is just the latest that has exposed this outrageous use of our tax funds.

The program was set up to deliberately overpay the plans so that they could offer additional benefits that would entice Medicare beneficiaries into the private plans (see Scully’s comment above). Recognizing these overpayments, Congress included in the Affordable Care Act gradual reductions. Not to be outdone, the insurance industry has conspired with the Obama administration and has enlisted individual members of Congress to fight these reductions. In response, the Obama administration has used dishonest budgetary manipulations to offset a portion of the reductions for 2013, 2014 and 2015.

Even more outrageous is that the private insurance industry has used “innovations” to selectively enroll healthier beneficiaries, yet used “touch of illness” serious diagnostic codes to game risk adjustment, which has rewarded the insurers handsomely for claiming that their beneficiaries were much sicker than they really were. According to this report, federal Medicare officials refused to answer questions about these perverse practices.

The insurance industry has been very successful in framing this as “cutting payments for Medicare,” while mobilizing citizens to demand that these cuts be prevented. The cuts are not in Medicare, but they are a reduction of overpayments to private insurers. Yes, those who sign up with the private plans often have lower out-of-pocket costs, but the rest of us are paying for that through higher taxes and through our Part B Medicare premiums that are partially transferred to the private insurers.

Since we are paying for it, we should be receiving in the traditional Medicare program the same benefits of reduced out-of-pocket expenses. Let the people enrolled in Medicare Advantage keep the same level of benefits, but increase the benefits in the traditional Medicare program to the same level, then fire the private insurers that have been responsible for most of the cost overruns in the Medicare Advantage program.

The politicians seem to agree that we should be spending these excess funds on Medicare, so let’s be fair and spend them equitably on an improved Medicare, but not on insurer profits and waste. While we’re at it, let’s make that an improved Medicare for all.

Large variation in cost-sharing reductions in silver plans harms patients

Posted by on Wednesday, Jun 4, 2014

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.

Analysis of Benefit Design in Silver Plan Variations

By Kelly Brantly, Hillary Bray and Caroline Pearson
Avalere Health, June 2014

Both state-based and federally-facilitated exchanges offer financial assistance for low-income enrollees. The assistance takes two forms: advanced premium tax credits and cost-sharing reductions (CSRs). This report focuses on CSR plans, which are available to individuals and families earning between 100% of the federal poverty level (FPL) and 250% FPL.

CSR plans use federal subsidies to increase their actuarial value (AV) and lower cost-sharing for low-income exchange enrollees. Avalere Health conducted an analysis of the standard silver and CSR plans offered in the federally-facilitated exchange (FFE) that spans 34 states.

  • Cost-sharing reductions are more often applied across multiple types of benefits
  • in 94% and 87% AV plans compared to 73% AV plans.
  • Many CSR plans have MOOP (maximum out-of-pocket) limits lower than the amount required by law.
  • Almost all CSR plans feature lower deductibles than the standard silver plans, though wide variation remains.
  • Consistent with standard silver plans, copays for specialist visits are higher than those for primary care visits.
  • Low-income consumers may face very high coinsurance for drugs on tiers three and four, which is least likely to be reduced in CSR plans.

The large variation in co-payments, co-insurance, and deductibles required by CSR plans may not be clear to exchange enrollees with limited income.

Across all CSR plans, there is broad variation in how issuers reduce cost-sharing across benefit categories relative to the standard silver plans. Because issuers have a high level of flexibility in designing these CSR plans, cost-sharing amounts vary across services and in some cases mirror the cost-sharing in standard silver plans.

The large variation in how plans apply the cost-sharing reductions across covered benefits may not be clear to consumers while they are shopping and comparing plans.

Notably, consumers with the lowest income who qualify for the highest level of financial assistance (100% to 150% FPL) could encounter some 94% AV CSR plans with cost-sharing requirements for specific services that are identical to standard silver plans. Even for CSR plan cost-sharing that is reduced, out-of-pocket costs could still serve as a barrier to accessing care.

(This analysis was funded by PhRMA.)

At this link, click “Download PDF” for full report:…

This report provides a highly technical explanation of the great variation in cost-sharing provisions for lower-income individuals insured by the various silver plans in the exchanges. This is just another example of the unnecessary increase in administrative complexity brought to us by the Affordable Care Act.

What is particularly egregious is the intolerably high cost-sharing required of low-income individuals who need higher-tier drugs. High cost drugs, such as those used to treat hepatitis C or those that meet the expanded recommendations for HIV prophylaxis, will be unaffordable for individuals with low incomes, in spite of the cost-sharing reductions.

By making these drugs unaffordable, the insurers accomplish two ends: 1) the cost sharing is so high that many lower-income individuals will not fill their prescriptions, saving the insurers those costs, and 2) those with chronic hepatitis C, those at high risk of HIV exposure, or the many others who have  disorders requiring expensive tier 4 drugs will likely select other insurers once they realize that the drugs that they need will be unaffordable (favorable selection). These are some of the newer innovations that the insurers are using since they are now prohibited from using medical underwriting to deny insurance to individuals with greater anticipated health care costs.

More administrative complexity. More insurer chicanery. More inequity in the provision of health care. And this is because our politicians selected the most expensive model of health care reform – one that places insurers and pharmaceutical firms above patients. Many studies have shown that the most efficient and equitable model of comprehensive health care coverage – single payer – is also the least expensive of the comprehensive models of reform. Amongst other important measures, it would put pharmaceutical firms in their place, and it would dismiss the intrusive and wasteful insurers from the scene.

We can still do that.

Phillip Longman: VA health care is still the best

Posted by on Tuesday, Jun 3, 2014

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.

Poll: Confidence in veterans’ care plummets to new low

By Susan Page
USA TODAY, June 2, 2014

Americans’ confidence in the medical care provided for soldiers returning from Iraq and Afghanistan has plummeted to new lows in the wake of the VA scandal, a USA TODAY Poll finds. Most people see the problem as widespread and systemic.

Just one in five rate the job the government does in providing veterans with medical care as excellent or good, about half the percentage who said that in a Pew Research Center survey in 2011. Then, half rated the care as “only fair” or poor; now seven in 10 do.

42% have little or no confidence that the problems can be fixed.

Eight in 10 worry that the issue is turning into a political battle in which Democrats and Republicans are more interested in scoring points than solving the issue. On that question, there is almost no difference by party affiliation.…


VA Care: Still the Best Care Anywhere?

By Phillip Longman
Washington Monthly, June 3, 2014

Last week, when I accepted an invitation to go on Hugh Hewitt’s nationally syndicated talk show, his first question to me was, “So how does it feel to be the author of a book about the VA that has been thoroughly discredited?”

Well, yes, as the author of the title Best Care Anywhere, Why VA Health Care would be Better for Everyone, it’s been dispiriting to have it confirmed by a preliminary inspector general’s report that some frontline VA employees in Phoenix and elsewhere have been gaming a key performance metric regarding wait times. But what’s really has me enervated is how the dominate media narrative of the VA “scandal” has become so essentially misleading and damaging to the cause of health care delivery system reform.

I don’t mean just the fulminations of the right wing press. It’s nothing new when Fox rolls out Ollie North to proclaim that any real or reported failure of the VA is proof of the case against socialized medicine.

I’m also talking about the work of hard-working and earnest reporters, who due to a combination insufficient background knowledge and the conventions of Washington scandal coverage, wind up giving the public a fundamentally false idea of how well the VA is performing as an institution. Over the next several days, I plan to make a series of posts here at Political Animal that I hope will be helpful to those covering the story, or for those who are just trying to get the full context for forming an opinion.

Today, let’s just start by scrutinizing the now almost universal assumption that there is a “systemic” problem at VA hospitals with excessive wait times. Even progressives, including the likes of Jon Stewart and Bill Maher, seem predisposed to believe this for their different reasons. Some voices, like my former colleague Brian Beutler of The New Republic, even speculate that the scandal may ultimately bounce in a way that harms the Republicans more than it does the Democrats.

But before we go there, can we get clear on just what the underlying reality is? There is, to be sure, a systemic backlog of vets of all ages trying to establish eligibility for VA health care. This is due to absurd laws passed by Congress, which reflect on all us, that make veterans essentially prove that they are “worthy” of VA treatment (about which more later). But this backlog often gets confused with the entirely separate issue of whether those who get into system face wait times that are longer than what Americans enrolled in non-VA health care plans generally must endure.

Just what do we know about how crowded VA hospitals are generally? Here’s a key relevant fact that is just the opposite of what most people think. For all the wars we’ve been fighting, the veterans population has been falling sharply (pdf). Nationwide, their number fell by 17 percent between 2000 and 2014, primarily due to the passing of the huge cohorts of World War II- and Korea War-era vets. The decline has been particularly steep in California and throughout much of New England, the Mid-Atlantic and industrial Midwest, where the fall off has ranged between 21 percent and 36.7 percent.

Reflecting this decline, as well a general trend toward more outpatient services, many VA hospitals in these areas, including flagship facilities, want for nothing except sufficient numbers of patients to maintain their long-term viability. I have visited VA hospitals around the county and often been unnerved by how empty they are. When I visited two of the VA’s four state-of-the-art, breathtakingly advanced polytrauma units, in Palo Alto and Minneapolis, there was hardly a patient to be found.

But at the same time there is a comparatively small countertrend that results from large migrations of aging veterans from the Rust Belt and California to lower-cost retirement centers in the Sun Belt. And this flow, combined with more liberal eligibility standards that allow more Vietnam vets to receive VA treatment for such chronic conditions as ischemic heart disease and Parkinson’s, means that in some of these areas, such as, Phoenix, VA capacity is indeed under significant strain.

This regional imbalance in capacity relatively to demand makes it very difficult to manage the VA with system-wide performance metrics. Setting a benchmark of 14 days to see a new primary care doc at a VA hospital or clinic in Boston or Northern California may be completely reasonable. But trying to do the same in Phoenix and in a handful of other sunbelt retirement meccas is not workable without Congress ponying up for building more capacity there.

Once you have this background, it becomes easy to understand certain anomalies in this scandal. If care is really so bad, for example, why did all the major veterans services remain unanimous in recent testimony before Congress in their long-stranding praise for the quality of VA health care? And why have they remained stalwart in defending the VA against its many ideological enemies who want to see it privatized? It’s because, by and large, VA care is as good, if not better than what vets can find outside the system, including by such metrics as wait times.

Similarly, if VA care were not generally very good, the VA would not continue to rank extraordinarily high in independent surveys of patient satisfaction. Recently discharged VA hospital patients for example, rate their experience 4 points higher than the average (pdf) for the health care industry as a whole. Fully 96 percent say they would turn to VA inpatient care again.

Now if you go out looking for vets who say they have been victimized by the VA, you will have no trouble finding them, and many will be justified in their complaints. But as I’ll argue further in future posts, the key question to ask when confronting the real deficiencies of the VA is “compared to what?” Once that context is established, it becomes clear that VA as a whole continues to outperform the rest of the American health system, making its true lessons extremely important to learn.

Phillip Longman is senior editor of the Washington Monthly.…

Phillip Longman, as the author of “Best Care Anywhere, Why VA Health Care would be Better for Everyone,” is a person to whom we can turn to get the full story on the VA health care “scandal” and how representative it is of the system at large. According to him it is not only the right wing attacks claiming that this is proof of the case against socialized medicine, but it is also “hard-working and earnest reporters” who “wind up giving the public a fundamentally false idea of how well the VA is performing as an institution.”

The new USA Today poll confirms that the reporting has caused Americans’ confidence in the VA health system to plummet, with the perception that the problem is widespread and systemic. Americans do recognize that the politicians are more interested in scoring points than they are in solving the issues (Sen. Bernie Sanders being a notable exception). Nevertheless, the poll indicates that they now believe that the government is doing a poor job and 42% have little or no confidence that they can fix the problems.

Longman states, “it becomes clear that VA as a whole continues to outperform the rest of the American health system, making its true lessons extremely important to learn.” When individuals make the claim that the VA “scandal” proves that single payer would not work in the United States, refer them to this series being written by Phillip Longman where they can learn the truth.

VA: Do we awfulize, or do we fix it?

Posted by on Monday, Jun 2, 2014

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.

Chairman Sanders Lays Out Legislative Action Plan for Veterans

Senator Bernie Sanders, June 1, 2014

Senate Veterans’ Affairs Committee Chairman Bernie Sanders (I-Vt.) today outlined a comprehensive legislative package to address “reprehensible” behavior by VA officials and to correct underlying problems in access to medical care.

“There must be a culture of honesty and accountability within the VA and people who have lied or manipulated data must be punished. But we also have to get to the root causes of the problems that have been exposed. The simple truth is that with 2 million more veterans coming into the system in recent years there are many facilities within the VA that do not have the doctors, nurses and other personnel that they need to provide quality care in a timely way.”

Sanders said a Thursday hearing of the veterans committee will consider the Restoring Veterans’ Trust Act of 2014. The measure then could be put on a fast track for consideration by the full Senate. It would give the VA authority to immediately remove senior executives based on poor job performance while preventing wholesale political firings. It would provide veterans who can’t get timely appointments with VA doctors the option of going to community health centers, military hospitals or private doctors. It would authorize VA to lease 27 new health facilities in 18 states. It would authorize emergency funding to hire new doctors, nurses and other providers in order to address system-wide health care provider shortages and to take other steps necessary to ensure timely access to care.  To address primary care doctor shortage for the long-term, the bill would authorize the National Health Service Corps to award scholarships to medical school students and to forgive college loans for doctors and nurses who go to work at the VA.

Altogether, the bill would provide education, retirement security and other benefits for millions of veterans and their families. Virtually all of the provisions already have been approved by the Senate committee, many of them by unanimous votes, during previous legislative markup sessions.

Sanders said the need for congressional action was underscored last Wednesday when the VA’s independent Office of Inspector General found that officials had lied about wait times for appointments at the Phoenix VA and other medical facilities. A separate audit delivered to President Barack Obama on Friday disclosed attempts by VA employees at two-thirds of VA hospitals and clinics to cover up delays in providing patient care.…



VA Scandal Gives Single-Payer Opponents Ammunition

By Brianna Ehley
The Fiscal Times, May 27, 2014

The ongoing scandal at the Veterans Affairs Department has forced the idea of government-managed health care into the spotlight, with opponents pointing to the VA’s failures as an example of what could happen if the country were to adopt government run health care or a single payer insurance policy on a larger scale.

Larry Kudlow of the Kudlow Report was quick to pounce on the VA scandal as testament to what goes wrong when you adopt socialized medicine. “This VA scandal is a reminder that government-run single-payer health care does not work.”

However, single payer advocates say what’s happening at the VA isn’t relevant to single payer at all, since the VA is completely government-run and in a single- payer system, the delivery of care would remain largely in the private sector’s hands.

Sen. Bernie Sanders, the independent Senator from Vermont and potential 2016 presidential contender, has been a leading advocate of a single-payer health care system for years. Last week, Sanders led a panel discussion on Capitol Hill over the future of single payer, since his home state of Vermont is expected to serve as a single payer guinea pig for other states.…

To no surprise, opponents of government involvement in health care have jumped on the malfeasance exposed at the Veterans Health Administration as proof that the government can’t do anything right. Many have expanded that by saying that this is proof that a single payer health care system cannot work – a non sequitur if there ever was one. This nonproductive awfulizing that is taking place (imagining horrific situations and outcomes that don’t yet exist) is a totally inappropriate response when what we need is intervention to correct the deficiencies. Fortunately Sen. Bernie Sanders understands that.

The problem provoking the current furor is the tolerance and mismanagement of excessive queues. It is well within our capabilities to reduce queues to acceptable levels. More attention should be given to queue management (the process that reduced long lines at airports after 9/11). Capacities within the system need to be adjusted. Often small expenditures directed to increasing capacity can dramatically reduce queues. Reinforcing primary care has long been recognized as a priority, yet members of Congress sit on their duffs. Perhaps this will awaken some members to the need to fulfill their responsibilities to the people.

In February, Sen. Sanders submitted a bill to Congress designed to improve the functioning of the VA health system. It was blocked by the Republican Senators. Sen. Sanders is now using the political capital created by this mismanagement in an effort to enact The Restoring Veterans’ Trust Act of 2014. It not only addresses the queues, but it also establishes other important policies designed to improve the functioning of the VA health system. Although he may be able to gain enough Republican support to pass this bill in the Senate, some Republican members of the House this weekend said that we do not have the money required to implement the proposals. Of course that is nonsense. With midterm elections around the corner, the Republicans are going to have to decide whether they want to take the blame for refusing to act on behalf of our veterans.

This really is about what we are as a country. Do we take care of our veterans, or do we move forward with efforts to defund the government so it will drown in a bathtub? We have our choice of politicians who will align themselves with one side or the other. In a democracy, it is up to the voters to decide which politicians we want representing us. So, what do we support, social solidarity or trashing of our revered government institutions?


by John Geyman, M.D.

The V.A. scandal over access to care for our veterans is, of course, a betrayal of our government’s debt to our veterans and a national disgrace that needs fixing on an urgent basis. Typical of such scandals, there is piling on from all quarters about what should be done, although we still don’t know the full extent of the problems.

Some things we do already know, thanks to an expedited Interim Report by Richard J. Griffin, the Acting Inspector General for Veterans Affairs. That report tells us that:

  •     average waiting times for first primary care appointments at the Phoenix V.A. have been 115 days, nearly five times as long as what last year’s annual report acknowledged;
  •     1,700 patients were not placed on the official waiting list at Phoenix;
  •     scheduling data were being falsified and secret lists maintained, presumably to manipulate the data for more favorable performance reviews;
  •     these problems are probably systemic throughout the V.A. system, to the extent that the Inspector General will expand his investigation to 41 other V.A. facilities around the country and even involve the Department of Justice to investigate possible criminal conduct;
  •     and  the 35-page preliminary report found that scheduling problems have been found at both local and national levels by eighteen previous Inspector General reports since 2005.  (1,2)

At this early point, there is much that we don’t know as we await the IG’s full report, due in August. As the investigation expands to include clinical reviews of the consequences of these scheduling problems, we can also expect to learn examples of gross mismanagement and unethical behavior by some in charge.

Naturally, we are now seeing a firestorm of protest, casting blame in all directions. Some are calling for immediate action to include referral of veterans to the private sector, which raises still other questions, such as reimbursement levels and availability of primary care physicians. Many called for the resignation of General Eric Shinseki, Secretary of Veterans Affairs, which he did after so many years of meritorious service.

As this crisis unfolds and we get more information on what has occurred, we need to sort out disinformation and demagoguery from the facts. We will hear “lessons” being advanced from various perspectives. We should also ask ourselves what lessons we cannot learn from this failure. There is a political risk that once resignations have occurred, we will go on as usual without considering more fundamental problems.

Without knowing yet what the full IG’s report will find, we need to wonder if the V.A. has been underfunded by austerity budgets pushed especially by  Republicans. The V.A. has been facing large increases in demand as a result of several factors, including aging of the baby boom-era Vietnam veterans, the influx of wounded warriors from more than twelve years of combat in Iraq and Afghanistan, and recent changes in the law for veterans to qualify for benefits if they were exposed to Agent Orange or to hazardous substances in Iraq and surrounding areas. (3) The number of eligible veterans has more than doubled from 400,000 to 918,000 since 2009. (4)

These questions need to be asked and answered:

  •     Is the V.A.’s budget and primary care capacity adequate to meet its increased demands?
  •     How many veterans died or had preventable worse outcomes as a result of delayed appointments?
  •     How was it possible that the V.A., which played a leadership role in developing electronic medical records in years past, tolerated systems that didn’t talk to each other?
  •     What’s been happening in the V.A. culture that encourages gaming of performance reports as a means to seek bonuses and gloss over problems?
  •     Why wasn’t corrective action taken by the V.A. over the last nine years as these problems progressed?


As this situation evolves over coming months and even into the 2016 election cycle, we can expect to hear dispersions cast on the V.A. as an example of “the government can’t do anything right” and claims that the private delivery “system” is more efficient and less bureaucratic. These disproven claims are predictable from the right as the problems of the Affordable Care Act are further debated and alternatives considered. Meanwhile, we need to remember that the V.A. system has many successes to be proud of over the years. A good example is a 2006 report, based on studies by RAND and the Agency for Healthcare Research and Quality (AHRQ) comparing the quality of care in V.A. hospitals vs. non-V.A. hospitals (Table 1 (5) Superior quality of care in V.A. facilities has also been documented for the care of diabetes (6) and heart attacks (7).

Table 1

We can draw two parallels already between the V.A. system and our civilian counterpart. Both are challenged by increasing demands for primary care at a time when we have a national shortage of primary care physicians. And both are encouraged by various financial incentives to misrepresent performance and actual services delivered in an effort to increase funding. We know in the civilian sector that all efforts so far to “improve quality” through various financial incentives have not worked, are gamed in many ways, and even unfairly penalize doctors and hospitals that care for large numbers of lower-income, sicker people. (8) The highly respected Cochrane Collaboration, an international research body, has “found no evidence that financial incentives can improve patient outcomes.” (9)

The V.A.’s failures are a failure of its delivery system, not its financing system (except to the extent that it is probably underfunded to meet expanded needs}. Contrast that with our civilian health care system, based as it is not on service but ability to pay, which continues to be a failed system on both the financing and delivery sides. Its failures have been documented in my latest book Health Care Wars: How Market Ideology and Corporate Power Are Killing Americans, and many of the posts from my fellow Health Care Disconnects panel members over the last year.

The health care debate will get more intense as the mid-term and general election cycles gain momentum. We will need to separate facts and evidence from ideology, disinformation and unproven claims. The current V.A. problems can and will be fixed. We need to remember the strengths of the V.A. system—especially its universal access for veterans, its not-for-profit and service ethic, and its cost containment successes, such as its bulk purchasing of prescription drugs with discounts down to about 58 percent of what civilians pay. On the civilian side, we can learn from the V.A.’s strengths as we debate how to achieve universal access to all necessary care for all Americans in a reformed system that is affordable, efficient, fair, of good quality, and sustainable in the long run. The only alternative that will do all that is a single-payer financing system of universal access, much like the V.A. accomplishes for almost 9 million veterans.

Suggested Reading:

1. Oppel, RA Jr, Shear, MD. Severe report finds V.A. hid waiting lists at hospitals. New York Times, May 28, 2014.
2. Herb, J. V.A. IG finds ‘systemic’ problems. Politico Pro, May 28, 2014.
3. Rovner, J. FAQ: V.A. and military care are different, but often confused. Kaiser Health News, May 29, 2014.
4. Blades, M. Inspector General’s interim report confirms long delays for patients at Phoenix V.A. hospital.
5. Arnst, C. The best medical care in the U.S. Business Week, July 17, 2006.
6. Kerr, EA, Gerzoff, RB, Krein, SL et al. Diabetes care quality in the Veterans Affairs Health Care System and commercial managed care: the TRIAD study. Ann Intern Med 141(4): 272-281, 2004.
7. Peterson, LA, Normand, SL, Leape, LL et al. Comparison of use of medications after acute myocardial infarction in the Veterans Health Administration and Medicare. Circulation 104(24): 2898-2904, 2001.
8. Pear, R. Health law’s pay policy is skewed, panel finds. New York Times, April 28, 2014.
9. Flodgren, G, Eccles, MP, Shepperd, S et al. An overview of reviews evaluating the effectiveness of financial incentives in changing healthcare professional behaviors and patient outcomes. Cochrane Collaboration, July 6, 2011.

Health policy experts versus everyone else: Why do the experts believe themselves?

Posted by on Friday, May 30, 2014

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.

Unnecessary Tests and Procedures In the Health Care System: What Physicians Say About The Problem, the Causes, and the Solutions: Results from a National Survey of Physicians

ABIM Foundation, May 1, 2014

Nearly three-quarters (73 percent) of physicians say the frequency of unnecessary tests and procedures in the health care system is a very (29 percent) or somewhat (44 percent) serious problem. ….

The top reasons physicians say they order unnecessary tests and procedures are concern about malpractice issues (52 percent say a major reason), just to be safe (36 percent), and wanting more information for reassurance (30 percent). …

The second-tier influences are patients’ insistence (28 percent) and wanting to keep patients happy (23 percent). Third-tier reasons include other factors such as … the fee-for-service system (5 percent)…. [p 5]…


Phasing out fee-for-service payment

By William Frist and Steven Schroeder
New England Journal of Medicine, 2013; 368:2029-2032

The fee-for-service mechanism of paying physicians is the major driver of higher health care costs in the United States [citation omitted] ….. The long-range solution is [to] shift from a payment system based on a fee-for-service model to one based on value through mechanisms such as bundled payment, capitation, and increased financial risk sharing.

There is an enormous gap between the opinions of the health policy elite in this country and those of the public, including physicians. The health policy elite find this gap too boring to analyze. They know why this gap exists. The problem is not them, it’s the hoi polloi and the doctors. Patients are bewitched by “technology” and think “more is better,” and doctors’ minds are warped by the incentives of the fee-for-service system. It does not occur to health policy experts that there might be something very wrong with their culture. The idea that there is even a “culture” within the health policy establishment would strike the establishment as at best uninteresting and at worst silly. That this culture might be dysfunctional is unthinkable. In their view, the only “culture” that needs analysis is that of the medical profession and of the unwashed masses.

Although the gap between public and expert opinion was documented by the early 1990s, the health policy community has shown no interest in understanding its cause. For the health policy elite, there is nothing to explain: The public is wrong and they are right. Pollster Daniel Yankelovich articulated the establishment point of view in a 1995 paper on the muddled debate about the Clintons’ Health Security Act. “The nation’s leadership and the public are carrying out a bizarre dialogue of the deaf,” Yankelovich wrote. “The nation’s elites have little trouble conversing with one another, but when it comes to engaging the public, there is an astonishing lack of dialogue.” [p. 8]…

The problem, said Yankelovich, is the public does not agree with the experts’ diagnosis of the health care crisis. Virtually the entire health policy establishment thinks US expenditures are high because the volume of health care is excessive. But the public disagrees. As Yankelovich put it, “[M]ost Americans attribute the rising costs of health care to waste, fraud, greed, and inefficiency, [and] they assume that whatever is wrong can be fixed by cracking down on these expressions of venality….” [p. 14] The public, Yankelovich concluded, is “on a collision course with the majority of experts”. [p. 14] Yankelovich’s explanation for this standoff was “lack of realism” and “wishful thinking” by the masses. The elite couldn’t possibly be wrong.

The health policy cognoscenti treat the gap between physician and expert opinion with the same incuriosity and arrogance. The latest evidence of how drastically physician opinion departs from that of the establishment appeared in a poll published by the ABIM Foundation (created by the American Board of Internal Medicine) on May 1. The poll found that only 5 percent of physicians believe the fee-for-service payment method is a major cause of overuse of medical care. The three most common explanations doctors offered were variations on the same theme: Reducing uncertainty. Other polls report similar results…(see p. 8) (see Table 3).

The health policy elite emphatically disagrees. “The fee-for-service model is like asking a butcher how much steak you should eat,” Jonathan Gruber, a prominent advisor to the Obama administration, “explained” to NPR.

According to former Senator William Frist and Steven Schroeder (see article quoted above), the “fee-for-service mechanism is the major driver of higher health care costs.”

How do we explain this divergence of opinion? I propose a modest hypothesis: That the health policy community is as deeply influenced by incentives peculiar to their profession as physicians are by incentives peculiar to their profession. I propose that researchers both inside and outside the health policy community begin their analysis of my hypothesis by documenting the pattern I have outlined above – the experts’ habit of issuing pronouncements on the allegedly irresponsible behavior of doctors as the chief cause of the health care crisis – and comparing that pattern with analogous patterns in physician explanations. Investigators would then examine the evidence behind the different world views.

Let me offer an illustration.  The paper from the New England Journal of Medicine quoted above – “Phasing out fee-for-service payment” – contained one of those extremely rare instances in which proponents of the FFS-is-to-blame diagnosis tried to document their claim. The authors, Frist and Schroeder, cited one and only one paper – a paper published in 2011 by Laugeson and Glied entitled, “Higher fees paid to US physicians drive higher spending for physician services compared to other countries.” The paper didn’t merely fail to support Frist and Schroeder’s claim, it contradicted it. It demonstrated that volume of services (in other words, overuse) could not explain why expenditures on physicians are so much higher in the US than in other countries that also rely primarily on the FFS method, and that higher physician fees in the US explained the difference. To paraphrase Gerard Anderson et al., it’s the prices stupid, not FFS.

Researchers investigating my hypothesis might ask, What incentives are Frist and Schroeder exposed to that would incline them to make such a sloppy mistake? Do proponents of the FFS-is-to-blame mantra and managed care in general make more money, publish more often, advance faster within the ranks of politics and academia, have greater access to the media, or have more luck raising money from foundations than, say, single-payer advocates or observers who are less passionate about their criticism of doctors and patients?

I’m not proposing to exempt doctors and patients from similar scrutiny. I’m proposing that the scrutiny, at long last, become even-handed. I have little doubt even-handed scrutiny would either force the health policy illuminati to honor the rules of scientific discourse and stop promoting diagnoses and solutions with little or no evidence, or it would lower the credibility of the illuminati in the eyes of the public and the media. In either event, the decks would be cleared for a real debate about single payer. Then the most profound gap between the public (including physicians) and the experts would become more visible: By large majorities the public supports single-payer.…

Is the Urban Institute asking the right question on ending the employer mandate?

Posted by on Thursday, May 29, 2014

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.

Why Not Just Eliminate the Employer Mandate?

By Linda J. Blumberg, John Holahan, and Matthew Buettgens
Urban Institute, May 2014

Controversy over the Affordable Care Act’s employer mandate continues. The requirement’s implications for coverage are small, and yet the negative labor market effects of keeping it in place could harm some low-wage workers.

Under the law, employers of 50 or more workers are subject to a penalty if at least one of their full-time workers obtains a Marketplace subsidy. Employees offered coverage deemed affordable and adequate are prohibited from obtaining subsidies, as are their family members, and employers can avoid penalties by offering coverage to at least 95 percent of workers. However, the Administration has delayed the requirements until 2016 for employers of 50-99, for larger employers until 2015, and softened requirements for that first year. Yet there are anecdotal reports of employers changing labor practices even though penalties have yet to be implemented.

Our analyses as well as that of others find that eliminating the employer mandate will not reduce insurance coverage significantly, contrary to its supporters’ expectations. Eliminating it will remove labor market distortions that have troubled employer groups and which would harm some workers. However, new revenue sources will be required to replace that anticipated to be raised by the employer mandate.


In summary, eliminating the employer mandate would eliminate labor market distortions in the law, lessen opposition to the law from employers, and have little effect on coverage. Alternative sources of revenue would have to be found to compensate for the federal loss of penalties. Both the elimination of the mandate and creating a new source of revenue to replace it will require legislation. Current legislation before Congress proposes to move the employer requirement from employers of 50 or more workers to employers of 100 or more. While this approach would help those firms between 50 and 99 employees and decrease the exposure to adverse incentives within that group, it shifts the threshold where labor market effects could take place to a different point and does not address the concerns of large, low-wage firms. The individual mandate, together with the Medicaid expansion and income related subsidies, is, as we have shown elsewhere,14 critical to expanding coverage under the ACA; the employer mandate is not.…


Study Questions Need For Employer Health Care Requirement

By John Ydstie
NPR, May 28, 2014

A study called “Why Not Just Eliminate the Employer Mandate?” has been published by the Urban Institute, a center-left think tank based in Washington, D.C. It lists a number of reasons why dropping the mandate might be a good idea.

Linda Blumberg, one of the authors, says first of all, requiring firms to offer health insurance could be a bad deal for lots of low-wage workers.

“A lower-income worker is going to do better, most likely — financially — by getting subsidized coverage through one of the health insurance marketplaces instead of through their employer,” she says.

That’s because many of those workers make so little that they qualify for free coverage under Medicaid. Even workers making as much as 2 1/2 times poverty-level wages would get subsidies in the Obamacare exchanges, and that could make it a better deal than the coverage provided by their company.

Employer-sponsored plans do make sense for lots of workers because they allow those workers to buy their insurance with tax-free dollars. But for low-income workers who may not pay any income tax, there’s little benefit.

The Urban Institute study also concludes that the employer mandate won’t be very helpful in increasing insurance coverage. It finds that only about 200,000 more people will be covered under the mandate.

So, with these kinds of negatives, what’s the incentive for hanging on to the employer mandate?

Jon Gruber is an economist at the Massachusetts Institute of Technology who helped design the Massachusetts health care exchange under then-Gov. Mitt Romney. Gruber, who also consulted with the Obama administration on the Affordable Care Act, says that the most important incentive is money.

“The right way to think about the employer mandate is really as a revenue-raising tool,” Gruber says. “It does raise a lot of money.”

Gruber says the mandate has its pluses and minuses, but he says there’s about an even chance it won’t ever take effect.

“The strongest argument probably for getting rid of this is political, which is that while this is really not a very fundamental piece of the law, it’s catching a huge share of the flak around the law,” he says.

The Obama administration continues to stand behind the employer mandate, arguing that it will help get health insurance to more people and save taxpayers money.…

The Affordable Care Act is a highly inefficient, expensive, and administratively complex method of expanding health care coverage. One of the complexities is the mandate for employers to provide health insurance for their employees. The Urban Institute asks if the employer mandate should be eliminated, but is this the right question?

Once it was decided to use a multi-payer model of a multitude of private health plans and public programs to expand health care coverage, it was recognized that the funds provided by employers for their health benefit programs were an important revenue source in funding our national health expenditures. To ensure that those funds would still be there, the mandate for employer participation was included in the legislation.

This analysis by experts at the Urban Institute reveals that eliminating the employer mandate would result in only a modest increase in the numbers of uninsured – maybe 200,000 – though other estimates are higher. Of course, those individuals who would not be covered may not agree that this would be only a “modest” impact of this policy change.

The primary benefit would be to end the opposition of the business community. Some businesses would encourage their employees to obtain their coverage though government-subsidized exchange plans or the government-financed Medicaid program.

The Obama administration is opposed to this change since it would reintroduce the problem they were trying to avoid – finding new sources of government revenue to pay for the increases in enrollment in these tax-supported programs. But Jonathan Gruber suggests that the politics behind this unpopular provision may force the change.

So should we be asking if eliminating the employer mandate is a wise decision? It would be only one tweak in a highly complex system which supporters agree requires a great multitude of tweaks. The problem with incremental repair of this system is that the basic structure will still remain highly inefficient and will continue to waste tremendous resources, while falling short on on the goals of universality, equity, and affordability.

No, the correct question is, should we replace our highly dysfunctional health care financing system with an efficient, equitable, truly universal, affordable single payer national health program? Presumably only uncaring ideologues would answer in the negative.

Another Green Flag for Single Payer

Posted by on Thursday, May 29, 2014

Reflections on the VA Scandal

KevinMD — Dr. Kevin Pho — the popular physician blogger, suggests that single-payer advocates reevaluate the single-payer idea in light of the scandal now unfolding within the Veterans Health Administration. He calls the scandal “a red flag for those who want a national single-payer system in the United States.”

While his thoughtful essay teases out crucial details hidden in the mainstream discussion over the failures at the VA health system, the conclusion he draws seems to point in a direction opposite from the observations he makes.

Dr. Pho offers a succinct and powerful analysis of what led to the inability to keep up with the needs of many VA patients: “underfunding.” He adds several statistics (including data compiled by the libertarian Cato Institute) to demonstrate that the VA has been underfunded.

“While there are certainly advantages to a single-payer system, what happens if that single-payer doesn’t adequately fund the system?” Dr. Pho asks. “Lengthy waiting times and rationed care. The VA is a case study of that scenario.”

“The government,” Dr. Pho further observes, “has a track record of underfunding their single-payer health models.” Also, like many people, he equates “single-payer” with any publicly funded health care system.

Some of us might take pains to characterize the VA system as a publicly owned, publicly funded health system, analogous to the Scottish National Health Service, in order to distinguish it from a privately owned but publicly funded delivery system, like Canada’s Medicare. But KevinMD still has a point — if the public chooses not to provide adequate funds for its own system, it won’t work for its patients or its caregivers.

It is true that government austerity programs — programs to reduce taxes upon the wealthy that we’ve seen across the world and over several recent decades — have gutted a panoply social programs. Like millions of recipients of public health and safety-net programs worldwide, VA patients (and caregivers) have suffered the consequences of austerity.

But it is not true that “the government” always and everywhere underfunds public health programs. Take two very recent examples: the Scottish National Health Service and the health system in Madrid, Spain.

In February 2014, Scotland’s territorial health boards, which run the Scottish NHS, found their funding raised by an amount equal to the rate of inflation plus 1 percent. Announcing the funding increase, Health Secretary Alex Neil said, “The Scottish Government is committed to protecting spending on health.”

In January 2014, in Madrid, following months of sustained and vigorous public rebellion, the region’s government abandoned efforts to privatize the health system, a scheme to cut public funding for health care by over 700 million euros annually.

Dr. Patricia Alonso of the Madrid Physicians Association explained the essence of the matter on behalf of patients and caregivers alike when she said, “We were not going to allow somebody else to sell our system.”

Dr. Alonso’s remark illuminates an important aspect of taxpayer-financed health programs (in any democracy worthy of the name):  the patients and caregivers within the system are also its owners.

Dr. Pho introduces his piece saying that “Some are eager to link the VA scandal to Obamacare, and more broadly, government-run health care. Others extol the virtues of the VA, holding it as an ideal of what our health care system should look like. The truth, as always, probably lies somewhere in the middle.”

He concludes that the narrow political goal of Republicans fanning the flames of scandal is to “indict Obamacare” — and points out that this make little sense. KevinMD also recognizes a larger ideological goal — to use the VA scandal to impugn the idea that “the government” can provide healthcare (or anything worthwhile to the public.)

Right-wing ideologues often assert that “the government” is the enemy of “the public” — for in their view, there is no social or personal issue that the profit motive can’t fix, if only the hidden hand of the market could be free of government regulation.

And yet no one has been calling for the closure of the VA — nor has anyone suggested that either the public or the government abandon veterans by forcing them to purchase their care on the “free market,” individually, with their own money, instead.

The starting point for all sides in the debate over the VA scandal is the remarkable idea that every veteran deserves ready access to comprehensive health care, without a personal financial burden. It is significant that public funding for veterans’ healthcare is assumed. The idea that all the patients in the system deserve care — that no one deserves to be left out — is also assumed.

Some leading Republicans have called for a system that would allow veterans to use VA resources to purchase their care privately — with public funds — in addition to getting care from the VA hospitals and clinics. This would be change the VA into a system more analogous to the way that Medicare works (in the U.S. as well as Canada) than, to repeat the example, the Scottish National Health Service. Even this proposal would keep (and perhaps expand) public funding for veterans’ healthcare.

It is overall quite significant Dr. Pho (and many others) see so clearly that the fundamental problem for patients at the the VA amounts to underfunding. And true to form as a blogger, KevinMD traces the contours of the mainstream debate from a doctor’s point of view. In doing so he helps reveal that within the United States establishment, an important shift is underway when it comes to the debate over healthcare.

To use a NASCAR analogy, it may well turn out that the VA scandal really suggests a green flag moment for single payer.

Dr. Andrew D. Coates practices hospital medicine in upstate New York. He is president of Physicians for a National Health Program.

Aflac: American workers are at the edge of a financial cliff

Posted by on Wednesday, May 28, 2014

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.

American workers are at the edge of a financial cliff

2014 Aflac WorkForces Report

The economy is showing signs of improving, but Americans’ bank accounts are in need of resuscitation: Put simply, anemic pay raises combined with sharp increases in out-of-pocket health care costs have creditors knocking on many consumers’ doors.

  • 66 percent of employees would not be able to adjust to the large financial costs associated with a serious injury or illness.
  • 13 percent of workers are currently dealing with high medical bills.
  • 49 percent of employees have less than $1,000 on hand to pay out-of-pocket medical expenses.
  • 53 percent of workers would need to borrow from a 401(k) and/or use a credit card to cover unexpected medical costs.
  • 8 percent say high medical bills have hindered their ability to save.
  • 10 percent say high medical costs have negatively affected their credit scores.
  • 13 percent have been contacted by collection agencies about outstanding medical bills.

A well functioning health care system should make all appropriate health care accessible to everyone, and paying for the system should not lead to financial insecurity. The sector of health care financing that the Affordable Care Act was designed to protect was employer-sponsored coverage, based on the belief that this was the sector that was functioning well. Yet the 2014 Aflac WorkForces Report shows that this sector often is not providing the financial security that patients need.

We should quit trying to finance health care though a multitude of private and public plans that apply to individuals based on their continually evolving personal circumstances. That approach creates tremendous costly and wasteful administrative inefficiencies. Worse, even what are supposedly the best programs – employer-sponsored health plans – too often fail to provide the financial security that patients want and need.

Medical bill related financial insecurity would disappear for everyone if we would replace our current fragmented financing system with a single payer national health program that included first dollar coverage. Since it would use progressive financing, each of us would be able to afford it.

This is a simple concept. We don’t need the Aflac duck to explain it to us.

ACA exchange plans are creating new administrative headaches for physicians

Posted by on Tuesday, May 27, 2014

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.

MGMA ACA Exchange Implementation Survey Report

Medical Group Management Association, May 2014

Medical Group Management Association (MGMA) conducted member research in April 2014 to better understand the impact of the Affordable Care Act’s (ACA) insurance exchange implementation on medical group practices.

Summary of Findings

MGMA noted three main themes within the findings.


Practices have experienced difficulty identifying patients with ACA exchange coverage and obtaining essential information related to that coverage.

  • 62% of respondents reported moderate to extreme difficulty with identifying a patient that has ACA exchange coverage as opposed to traditional commercial health insurance.
  • Compared to patients with traditional commercial coverage, nearly 60% of respondents indicated that for patients with ACA exchange coverage it is somewhat or much more difficult to:
  • Verify patient eligibility
  • Obtain cost-sharing or network information
  • Obtain information about the plan’s provider network in order to facilitate referrals

“We are going to have to hire additional staff just to manage the insurance verification processs.”

“Identification of ACA plans has been an administrative nightmare.”

“We thought we would be able to identify ACA insurance exchange products by their insurance card, but quickly found out this isn’t so. “


Practices are facing a number of challenges related to patient cost-sharing for ACA exchange coverage.

  • 75% of respondents reported that patients with ACA exchange coverage are very or extremely likely to have high deductibles compared to patients with traditional commercial coverage.
  • Practices reported significant patient confusion about the substantial cost-sharing related to many ACA exchange products, and practices are working to help patients understand the complexities of their coverage.
  • Practices cited some of the main reasons for not participating with ACA exchange products were related to concerns about financial burdens from patient collections (such as burdens related to collecting high deductibles from patients and concerns about financial liability from the 90-day grace period).

“Patients have been very confused about benefits and their portion of the cost. Once the patients find out their deductible, they’ve cancelled appointments and procedures.”

“The at-risk piece of eligibility is tremendously hard to determine and explain to patients.”

“Patients don’t always understand how health insurance works, so we’ve been engaging in educational events for the community.”


Practices have concerns about the impact of the network design of many ACA exchange products.

  • Almost half of respondents reported they have been unable to provide covered services to ACA exchange patients because the practice is out of network.
  • 20% of respondents reported that their practice was excluded from a narrow network that they would have liked to participate in and 10% of respondents chose not to participate in a narrow network.
  • Narrow networks may create challenges related to patient referrals for appropriate treatment and hospital care. Even if the practice is included in the network, without robust representation by a wide range of providers, it may be difficult for a practice to coordinate a continuum of care consistent with the patient’s needs.

“Many patients purchased products with a very narrow network and didn’t understand the ramifications. They are very upset once they learn that they can’t go to the specialist or hospital of their choice. As primary care providers, we are now faced with the extra burden of trying to find them care within their new narrow network. Payer directories are woefully inaccurate and impossible to rely on.”

“Former patients were shocked to learn about their very narrow network of providers. It was terrible to have to inform them of their lack of coverage.”

“We are consistently denied ‘out of network’ approvals for the very sick who truly need to continue their care with providers who have worked with the patient for years.”…

Statement of Susan Turney, MD, MS, FACP, FACMPE, president and CEO of MGMA:

“Physician group practices are expressing dissatisfaction with the complexity and lack of information associated with insurance products sold on ACA exchanges. The more administrative complexity introduced into the healthcare system, the less time and resources practices can devote to patient care. Even though there hasn’t been a huge influx of patients into physician offices as many predicted, simple tasks such as obtaining patient insurance coverage information or finding specialists for in-network referrals have proven to be significant challenges.”…

Much has been written about the consequences of the high deductibles and narrow networks of the ACA exchange plans in impairing access and affordability for patients. This new survey demonstrates that these same features add more administrative headaches for physicians who are already overburdened by the administrative complexity of our dysfunctional health care financing system. For those who could care less about the physicians, keep in mind that these ACA plan features are preventing physicians from assisting patients in obtaining the health care that they should have. It is really about the patients.

The quotations in the report above are especially helpful to our understanding of the problems because they reveal the real world consequences of the highly flawed ACA exchange infrastructure.

Single payer would eliminate the confusion over coverage, the barriers of patient cost sharing, and the loss of choice due to network limitations. People would simply get the care that they need when they need it.

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