Should Medicare patients pay more?

Posted by on Friday, Oct 19, 2012

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 Planning and Trends Among Seniors

Allsup Medicare Advisor Seniors Survey
October 2012

An independently conducted telephone survey of 1,000 randomly selected individuals 65 years and older who currently have Medicare coverage

Thinking about retirement, are any of the following concerns for you?

61% – Future of Medicare
52% – Having enough money to enjoy retirement
43% – Paying for long-term care
41% – Paying for health care
38% – Outliving money
24% – Paying for housing

In general, how satisfied are you with your current Medicare coverage?

45% – Extremely satisfied
44% – Somewhat satisfied
6% – Not satisfied
5% – Not sure

As you may know, costs for the Medicare program are rapidly increasing. New funding or benefit restructuring will likely be needed. To keep the Medicare coverage you have right now, would you be willing to pay: 20% more/10% more/5% more/1% more?

32% – Pay 20% more
19% – Pay 10% more
10% – Pay 5% more
10% – Pay 1% more
23% – Pay nothing more
4% – Don’t know
2% – Medicare won’t need new funding

This survey confirms what we already knew. Most seniors are satisfied with Medicare, but a majority of them also are concerned about the future of Medicare, doubtlessly provoked by the current political threats to convert Medicare into a defined contribution (voucher) under the rubric of the imperative for entitlement reform. An intriguing inquiry in this survey is whether or not Medicare beneficiaries would be willing to pay more in order to keep their current Medicare coverage.

Sixty-one percent of responders indicated that they would be willing to pay five to twenty percent more to keep their current Medicare coverage. This probably does not communicate their belief that they should be paying more, but rather expresses the view that they are protective of Medicare and would be willing to reach deeper into their pockets to preserve the program.

It would not surprise anyone if the politicians used this result to decide to increase the out-of-pocket expenses for Medicare beneficiaries, again in the name of entitlement reform. But this would be a mistake. In a recent Quote of the Day message, we discussed Medicare’s failure to protect personal finances (…). Instead of increasing out-of-pocket costs, financial barriers should be removed by providing first-dollar coverage. You could do that by adopting a single payer system. Health care costs can be controlled by using the other economic tools of a well-designed single payer system.

Rather than using premiums, deductibles and coinsurance assigned to the individual Medicare beneficiary, an improved Medicare program that covered everyone should be separately funded through progressive taxes. The current proposal to adjust Medicare premiums based on income would seem like a step in the right direction, but it would add more unnecessary administrative complexity to Medicare financing. It would be far better to establish a single, separate universal risk pool, funded based on ability to pay, and then to provide health services based on need regardless of the individual’s financial status. We should totally separate health care funding from the delivery of health care services, just like we do with police protection, fire protection, highway systems, public education and the many other government functions that we rightfully take for granted.

Medicaid, red and blue

Posted by on Thursday, Oct 18, 2012

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.

E Pluribus Duo

By Jonathan Cohn
The New Republic, October 25, 2012

In all kinds of real and practical ways, the United States today is not one nation, but two.

We’ve come to think of “blue” and “red” states as political and cultural categories. The rift, though, goes much deeper than partisan differences of opinion. The borders of the United States contain two different forms of government, based on two different visions of the social contract.

In blue America, state government costs more — and it spends more to ensure that everybody can pay for basic necessities such as food, housing, and health care. It invests more heavily in the long-term welfare of its population, with better-funded public schools, subsidized day care, and support for people with disabilities.

In the red states, government is cheaper, which means the people who live there pay lower taxes. But they also get a lot less in return. The unemployment checks run out more quickly and the schools generally aren’t as good. Assistance with health care, child care, and housing is skimpier, if it exists at all.

The result of this divergence is that one half of the country looks more and more like Scandinavia, while the other increasingly resembles a social Darwinist’s paradise.

The easiest way to grasp what this means for the actual residents of red and blue America is to look at Medicaid. Although the federal government sets minimum standards for coverage and benefits, states have discretion over how many additional people to include. Based on data compiled by the Kaiser Family Foundation, the five states with the strictest criteria for working parents are Arkansas, Alabama, Indiana, Louisiana, and Texas. The five states with the least restrictive requirements are Minnesota, Connecticut, Maine, Vermont, and Wisconsin. A Minnesota mom with two kids and a job that doesn’t offer health insurance can get Medicaid as long her annual income doesn’t exceed about $40,000. But if she moves to Arkansas, she’ll be ineligible for Medicaid as soon as her household income reaches $3,150 a year—not nearly enough to pay for basic living costs, let alone health insurance.

By nearly every measure, people who live in the blue states are healthier, wealthier, and generally better off than people in the red states. It’s impossible to prove that this is the direct result of government spending. But the correlation is hard to dismiss. The four states with the highest poverty rates are all red: Mississippi, Louisiana, Alabama, and Texas. (The fifth is New Mexico, which has turned blue.) And the five states with the lowest poverty rates are all blue: New Hampshire, New Jersey, Vermont, Minnesota, and Hawaii. The numbers on infant mortality, life expectancy, teen pregnancy, and obesity break down in similar ways.

Advocates for the red-state approach to government invoke lofty principles: By resisting federal programs and defying federal laws, they say, they are standing up for liberty. These were the same arguments that the original red-staters made in the 1800s, before the Civil War, and in the 1900s, before the Civil Rights movement. Now, as then, the liberty the red states seek is the liberty to let a whole class of citizens suffer. That’s not something the rest of us should tolerate. This country has room for different approaches to policy. It doesn’t have room for different standards of human decency.…


Miss. says no thanks to Medicaid expansion dollars

By The Associated Press
Picayune Item, October 17, 2012

Mississippi has long been one of the sickest and poorest states in America, with some of the highest rates of obesity, diabetes and heart disease and more than 1 in 7 residents without insurance. And so you might think Mississippi would jump at the prospect of billions of federal dollars to expand Medicaid.

You’d be wrong.

Leaders of the deeply conservative state say that even if Mississippi receives boatloads of cash under President Barack Obama’s health care law, it can’t afford the corresponding share of state money it will have to put up to add hundreds of thousands of people to the government health insurance program for the poor.

Under the law, Washington would pay 100 percent of the costs of expanding Medicaid from 2014 to 2016. Between 2017 and 2020, the federal share would decrease to 90 percent and the states’ contribution would rise in stages to 10 percent, and that’s where it would stay.

“While some people say Obamacare will come as an economic boost with ‘free’ money, the reality is simple: No money is free,” said Republican Gov. Phil Bryant. “Since when did the federal government ever give free money without asking for something in return?”

The governor and GOP leaders in the Republican-controlled Legislature have argued that the expansion will foster a culture of dependency on government.

GOP Govs. Rick Scott of Florida, Bobby Jindal of Louisiana, Nathan Deal of Georgia, Nikki Haley of South Carolina and Rick Perry of Texas have said they, too, will reject a Medicaid expansion, calling it too expensive.…

One strategy in the Affordable Care Act that was introduced to help cover everyone was to expand the Medicaid program for low-income individuals. To encourage state participation, the federal government would pay the full costs of care for three years and then taper down to 90 percent, leaving the states responsible for only 10 percent of the costs. Yet Governors Bryant, Scott, Jindal, Deal, Haley, and Perry have rejected the program, decisions which will surely leave many otherwise qualified individuals with no coverage.

Those of us who supported single payer reform – an improved Medicare for all – warned repeatedly that the model enacted in the Affordable Care Act could never cover everyone. Current predictions are that 30 million people will remain uninsured (CBO).

This is shocking and fills with grief those of us who have been fighting so long and hard for health care justice in America. It is worth repeating the last paragraph in Jonathan Cohn’s article because he states it so well:

“Advocates for the red-state approach to government invoke lofty principles: By resisting federal programs and defying federal laws, they say, they are standing up for liberty. These were the same arguments that the original red-staters made in the 1800s, before the Civil War, and in the 1900s, before the Civil Rights movement. Now, as then, the liberty the red states seek is the liberty to let a whole class of citizens suffer. That’s not something the rest of us should tolerate. This country has room for different approaches to policy. It doesn’t have room for different standards of human decency.”

The Cochrane study of general health checkups

Posted by on Wednesday, Oct 17, 2012

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.

General health checks in adults for reducing morbidity and mortality from disease

By Lasse T Krogsbøll, Karsten Juhl Jørgensen, Christian Grønhøj Larsen, Peter C Gøtzsche
The Cochrane Library, October 17, 2012

Plain language summary

General health checks involve multiple tests in a person who does not feel ill with the purpose of finding disease early, preventing disease from developing, or providing reassurance. Health checks are a common element of health care in some countries. To many people health checks intuitively make sense, but experience from screening programmes for individual diseases have shown that the benefits may be smaller than expected and the harms greater. One possible harm from health checks is the diagnosis and treatment of conditions that were not destined to cause symptoms or death. Their diagnosis will, therefore, be superfluous and carry the risk of unnecessary treatment.

We identified 16 randomised trials which had compared a group of adults offered general health checks to a group not offered health checks. Results were available from 14 trials, including 182,880 participants. Nine trials studied the risk of death and included 155,899 participants and 11,940 deaths. There was no effect on the risk of death, or on the risk of death due to cardiovascular diseases or cancer. We did not find an effect on the risk of illness but one trial found an increased number of people identified with high blood pressure and high cholesterol, and one trial found an increased number with chronic diseases. One trial reported the total number of new diagnoses per participant and found a 20% increase over six years compared to the control group. No trials compared the total number of new prescriptions but two out of four trials found an increased number of people using drugs for high blood pressure. Two out of four trials found that health checks made people feel somewhat healthier, but this result is not reliable. We did not find that health checks had an effect on the number of admissions to hospital, disability, worry, the number of referrals to specialists, additional visits to the physician, or absence from work, but most of these outcomes were poorly studied. None of the trials reported on the number of follow-up tests after positive screening results, or the amount of surgery used.

One reason for the apparent lack of effect may be that primary care physicians already identify and intervene when they suspect a patient to be at high risk of developing disease when they see them for other reasons. Also, those at high risk of developing disease may not attend general health checks when invited. Most of the trials were old, which makes the results less applicable to today’s settings because the treatments used for conditions and risk factors have changed.

With the large number of participants and deaths included, the long follow-up periods used in the trials, and considering that death from cardiovascular diseases and cancer were not reduced, general health checks are unlikely to be beneficial.



Comment on this study by H. Gilbert Welch, MD, The Dartmouth Institute, Community and Family Medicine

I think that there has been a growing realization that we’ve oversold the value of screening for early cancers or early disease, that we sort of suggested that there is considerable benefit when, in fact, the evidence about benefit is at least open to question. It’s not a huge benefit. And we’ve downplayed or ignored entirely the downsides of the problem. I’m not saying there’s one right answer, but I am saying that there are two sides to the story. And I think that there is a growing realization that there are benefits – that everyone knew – but there are also harms, and people have to balance those.

Video of Dr. Welch’s response to the Cochrane study:

General health checkups or routine physicals have been a mainstay of keeping people healthy, or so we thought. Finding disease early and providing appropriate interventions seems like a recipe for success in maintaining health. However, because some doubts have arisen over this concept, The Cochrane Collaboration studied randomized trials of health checks and found that “general health checks are unlikely to be beneficial.”

Though this study does indicate that the formal health check is unlikely to be beneficial, does that apply to isolated procedures such as blood pressure checks, serum lipid screening, cervical cancer screening, or skin screening for melanomas? Numerous studies have suggested that early intervention is effective in these disorders. If not, then it wouldn’t be logical to treat hypertension, hypercholesterolemia, or most early cancers, yet we do it all the time.

H. Gilbert Welch, MD, co-author of the enlightening book, “Overdiagnosed – Making People Sick in the Pursuit of Health,” provides perspective in his comments on the Cochrane study. He says that we need to balance the benefits “that everyone knew” with the harms that interventions can cause.

It seems that rather than promoting general health checkups as an isolated process, we should use this information to promote primary care. Establishing a long-term relationship with a primary care professional or team can provide continuity in health screening procedures, both in their timeliness and appropriateness.

What does this have to do with single payer reform? Simply that the single payer model includes reinforcement of our primary care infrastructure as an important and effective means of providing higher quality and less costly care for everyone.

Premium support would affect much more than the premiums

Posted by on Tuesday, Oct 16, 2012

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.

Transforming Medicare into a Premium Support System: Implications for Beneficiary Premiums

By Gretchen Jacobson, Tricia Neuman and Anthony Damico
Kaiser Family Foundation, October 2012

Over the past several decades, the idea of transforming Medicare from its current structure to one known as “premium support” has been raised intermittently as an approach for reforming the Medicare program, often in the context of efforts to reduce the federal debt and deficit.  The primary goals of a premium support system are to reduce the growth in Medicare spending, and rely more on a competitive marketplace.  While the parameters of various premium support proposals differ, the general idea is for the federal government to make a predetermined contribution on behalf of each person on Medicare that would be applied toward the premium for a health insurance plan.

This paper aims to help inform policy discussions by examining the potential implications of a leading premium support approach on Medicare premiums, the extent to which Medicare premiums would vary by state and by county, and the key factors that could drive variations in premiums under this approach.  The analysis looks at an approach to premium support that ties federal payments to the second lowest cost plan offered in an area or traditional Medicare, whichever is lower.  This approach is similar to the premium support proposal included in Chairman Paul Ryan’s (R-WI) budget proposal for FY2013 that was embraced by Presidential nominee Mitt Romney, and previously included in the Wyden-Ryan and Domenici-Rivlin proposals.  The study focuses on beneficiaries’ Medicare premiums, but does not take into consideration out-of-pocket spending due to the effects of changes in benefits, cost-sharing requirements and premiums for supplemental insurance.

From the Discussion

These findings underscore the potential for highly disparate effects of a premium support system for beneficiaries across the country.  The results show how individual decision making (plan choices), coupled with geographical variations in the cost of traditional Medicare and the private health plans, would play a major role in determining how well beneficiaries fare with respect to premiums under this approach.

The study estimates that the majority (59%) of Medicare beneficiaries would be expected to face additional premiums, based on current plan preferences, under the modeled premium support system.  Clearly, a smaller share of beneficiaries would pay higher premiums if they instead enrolled in a low-cost plan offered in their area.  In high-cost areas, such as Miami and Los Angeles, most beneficiaries in the traditional Medicare program would see a significant increase in Medicare premiums, unless they opted to enroll in a lower-cost private plan.  Conversely, in low-cost areas, such as Honolulu County in Hawaii and Multnomah County in Oregon (which includes Portland), the majority of beneficiaries would not pay additional premiums if they remained in their plan (based on current enrollment in that county), but a sizeable minority (17% and 43%, respectively) would pay at least $100 more in monthly premiums for their Medicare coverage in a private plan.

Further, this analysis shows that premiums for traditional Medicare would likely vary across states, and within states, by county.  If this system had been fully implemented in 2010, some would have paid the same Medicare premium, while others would have paid an additional $200 more per month in Medicare premiums, not considering other additional costs beneficiaries could potentially face, such as cost-sharing requirements for benefits covered by the plan, the cost of benefits not covered by the plan, and premiums for supplemental insurance.

Beyond premiums, other factors could be considered in choosing a plan, which may or may not be consistent with the choice of a low-cost plan.  First, enrolling in a low-cost plan, if it requires changing from another plan, may require beneficiaries to change their doctors and other health care providers, posing potential problems for beneficiaries with long-standing relationships with their doctors, especially those with chronic conditions.  Second, some beneficiaries may value the option to enroll in a highly-rated plan, but quality is not a factor in determining which plan is the benchmark plan.  Third, low-cost plans in a given area may or may not have the capacity to accommodate all beneficiaries who wish to enroll in the plan. Fourth, the low-cost plans offered in an area could change each year or so, as has occurred in the Medicare Part D program, potentially creating instability for beneficiaries with modest incomes who would have a strong financial incentive to remain in a low-cost plan each year.

Given a lack of specificity about some of the key policy elements and questions about the likely response of the insurance industry and beneficiaries, there remains great uncertainty about the expected effects of this approach for elderly and disabled Americans in the future.


* This study focuses narrowly on the expected effects of a premium support system on beneficiaries’ Medicare premiums – an approach that excludes the effects of changes in benefits, cost-sharing requirements and premiums for supplemental insurance.

* This study models the effects of a premium support system in a given year, but not the expected costs for beneficiaries over the longer term, including the effects of adverse selection for beneficiaries in traditional Medicare or the potential for Medicare spending caps to increase premiums for beneficiaries over time.

* This study does not examine the effects of a premium support system for beneficiaries with low-incomes, including dual-eligible beneficiaries who could also be affected by changes made to Medicaid, such as a Medicaid block grant.

* This study considers potential changes in plan behavior (changes in bids), but does not analyze the potential for insurers’ responses to vary, based on local market conditions.

* This study does not capture the nuances of beneficiaries’ plan switching behavior and only allows for beneficiaries to switch into a benchmark plan, rather than a plan that is less expensive than their current plan, but is not a benchmark plan.

* This study does not consider whether benchmark plans (if not traditional Medicare) would have sufficient capacity to serve all potential enrollees.

* Finally, this analysis does not consider the effect of a premium support system for other payers, including the federal government, state governments (Medicaid), or employers.

When reforms for health care are proposed, the first response by many is, what will it cost me? In the case of the premium support model (voucher, or defined contribution), most people want to know what the premium will be. This meticulous 48-page study by Kaiser Family Foundation shows that for the majority of individuals, premiums would increase. But there is much more to premium support than merely the premium to be paid.

Reading the full report might be of interest to individuals who would want to see the complexities involved in simply determining the impact on premiums. In the excerpts above, some of the factors that were not considered are emphasized, especially in the list of limitations of the study. Because the proposal depends heavily on private insurance plans, there are a slew of potential negative impacts which can increase costs and impair access for the Medicare beneficiary – impacts that are far beyond those suggested by the list of limitations.

If you aren’t convinced by now that premium support is a terrible idea, go to our website at and type in “premium support” in the search window and spend a an hour or so reading what we have to say. Then go back and read what Romney and Ryan have to say, and you’ll see what they deliberately left out. It is a scheme to slowly unwind the social contract of health care justice, when what we need to do is to improve that contract and expand it to cover everyone.

Physician advocacy, activism and politics

Posted by on Monday, Oct 15, 2012

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.

Physician advocacy: for patients and for social change

By Josh Freeman
Medicine and Social Justice, October 13, 2012

A recurring question for physicians and others in the health profession is what degree of health advocacy is expected or appropriate. For those of us in medical education, the question becomes how much of the training (and evaluation) of medical students and residents should be based on advocacy for their patients or populations.

In the United States, the clearest expression of the role of advocate is in the American Medical Association’s (AMA) Declaration of Professional Responsibility: Medicine’s Contract with Humanity, which contains, as item #8, “Advocate for social, economic, educational, and political changes that ameliorate suffering and contribute to human well-being.”

Dobson and colleagues propose a parsing of the concept of advocacy into two components. They call these “agency”, working on behalf of the interests of a specific patient, and “activism”, which is more directed toward changing social conditions that impact health, and whose effect is seen on populations more than individuals.

They note that “…several studies have concluded that although physicians generally endorse the idea of advocacy, they rarely engage in it.” They summarize the difference between agency and activism by saying “…whereas agency is about working the system, engaging in activism is about changing the system.”

There are, however, many physicians who do act as social activists, and we need more of them. The source will be medical students who then become residents. Luckily, there seem to be no shortage of entering medical students with this commitment. They demonstrate it by community volunteer work, creating and working in free clinics, volunteering their time to work in schools, and pursuing training in public health, public policy, and community involvement. Sadly, however, along with empathy, which has been shown to dramatically drop as medical students enter their clinical training (Hojat, et al.[2], and this blog, “Are we training physicians to be empathic? Apparently not.”, September 12, 2009), so does volunteerism and commitment to social change.

When we look at the American political landscape, we see a fair number of physicians involved in politics. It could be argued that, in these roles, they are advocating for social, economic, educational, and political changes. What is disconcerting is that the majority of these physician politicians seem to ignore the second half of that sentence, “…that ameliorate suffering and contribute to human well-being”. They are often found among, and sometimes as leaders, in advocating policies that slash the social safety net, decrease funding for public education, and oppose universal health insurance. Too frequently, they act as agents of their own social class than as advocates for those most in need.

That doctors will most often adopt the “agency” role when it comes to issues that most directly affect the health of their patients, that can be arguably seen as “medical”, is very reassuring.

The advocacy role is more complex. Not only are many physicians socially conservative and not, perhaps, in support of policies “…that ameliorate suffering and contribute to human well-being,” physicians are busy people who mostly see themselves in the role of providing direct patient care, not advocating for systemic societal change.

I would like to think that all physicians manifest advocacy in the “agency” sense for their patients. It may be wishful thinking to hope that all physicians will manifest advocacy in the “activist” sense, that they will fulfill the AMA’s Declaration by actually advocating “…for social, economic, educational, and political changes that ameliorate suffering and contribute to human well-being.” But if we do not make this a core value for physicians that is ubiquitously taught in medical school and residency, if we do not select students because of their commitment to advocacy, we will have much less of it.

And we need it badly.

(Joshua Freeman, MD is Chair of the Department of Family Medicine, University of Kansas Medical Center. These excerpts are from his blog and do not represent the views of the University of Kansas.)…


GOP Doctors Caucus, U.S. Congress

True health care reform can only begin with a complete repeal of Obamacare.

The Doctors Caucus is committed to ensuring that all Americans have access to quality health care. Doctors believe that chronic illness and cost are two main barriers between patients and quality coverage. Consumer-driven health reforms that seek to put the patient and their physicians in control of how care is accessed can greatly increase a patient’s access to quality health care.

21 members of the GOP Doctors Caucus:

What is the disconnect between the activism of physicians who serve in Congress advocating for social, economic and political changes, and physicians in the community who advocate for ameliorating suffering while contributing to human well-being? Didn’t they all enter medical school with the same altruism? Apparently not.

We now have a politically polarized nation. The medical profession has not escaped this dichotomy. In Congress, it is not as balanced as it is throughout the nation. The GOP Doctors Caucus has twenty-one members, whereas there are only two Democratic physicians in Congress and one of those, as a delegate, is not even allowed a vote on the House floor.

When you read the Priorities of the GOP Doctors Caucus, it is loaded with warm, fuzzy, feel-good language. But if you are a student of health policy, you recognize that they support policies that would greatly increase the numbers of uninsured, and would expand a market of “affordable” health plans that really just shift costs to users, making health care access unaffordable for far too many. That might meet the social, economic and political goals of the GOP Doctors Caucus, but at the cost of exacerbating suffering and further impairing human well-being.

We wish that the partisan divide wasn’t a chasm, but it won’t go away. Voters do bear some responsibility for having selected these physicians to be their senators and representatives in Congress, but it is difficult to blame them when the GOP Doctors Caucus stated mission is “Utilizing medical expertise to develop patient-centered health care reforms focused on quality, access, affordability, portability, and choice.” That sounds pretty good. How could the voters be expected to understand the nefarious policy positions behind that statement?

For health care, many would agree that the filter should be at the medical school admissions committee. Medical schools should select students for whom ameliorating suffering and contributing to human well-being is a part of their soul. The problem is that it may be difficult to find enough admissions committee members who can pierce the obfuscating feel-good language used by too many of the applicants – the type of language that is so effectively used by the GOP Doctors Caucus.

(I apologize to Republican single payer supporters who might object to what seems to be a partisan message. In my defense, the message is about physician politicians and health care justice. It is the Republican physicians in Congress who have made it partisan.)

What is wrong with P4P schemes?

Posted by on Friday, Oct 12, 2012

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.

Financial incentives may sap motivation, undermine quality: Health Affairs article

Physicians for a National Health Program (PNHP)
Press Release, October 12, 2012

A leading authority on behavioral economics has teamed up with two health policy experts in an article at the Health Affairs blog to argue that pay-for-performance (P4P) schemes in medicine may do more harm than good by “crowding out” altruism and other intrinsic motivations to do a good job.

Such P4P schemes, which are being quickly adopted by Medicare and many private insurers under the new federal health law, typically involve giving bonuses to doctors and hospitals for hitting specific, numerical targets in such matters as prescribing certain drugs or ordering screening tests.

However, despite the widespread rush to embrace P4P, a growing body of research has found no evidence that these schemes actually benefit patients, write professor Dan Ariely and physicians Dr. Steffie Woolhandler and Dr. David Himmelstein. Their article was posted to the blog late Thursday afternoon.

Moreover, it’s likely the introduction of such schemes into the cognitively complex work of medicine will backfire, they say.

“Traditionally, economists have viewed extrinsic (i.e. monetary) reward as either the only motivator or as simply additive to intrinsic motivators such as purpose, altruism, mastery, or autonomy,” the authors write.

“According to this view, higher pay induces better performance. But this simple model of reward-induced performance ignores the complexity of human drive, particularly the role of intrinsic motivation – the desire to perform an activity for its own inherent rewards.

“Offering your dinner-party host a $10 reward for cooking a wonderful meal isn’t likely to motivate future invitations.”

The authors cite multiple research studies – involving blood donors in the United States, volunteer workers in Switzerland, and Israelis with children in day care, to name just a few – that show how introducing financial incentives into the picture led to diminished motivation to do the right thing.

They also cite a meta-analysis summarizing 128 studies that show such findings are representative of a consistent body of research.

In addition, the authors warn that “crowd-out” of doctors’ intrinsic motivation may be particularly severe when contracts are more detailed and controlling.  P4P incentives may also lead providers to game the system by checking boxes or exaggerating diagnoses when they know that doing so will garner bonuses.

Pay-for-performance programs also increase administrative costs, they say, citing the extensive economics literature on the downsides of overly detailed contracts.

The authors are recognized experts in their respective fields. Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University. He is the author of numerous research studies and three bestselling books on behavioral economics, including “The (Honest) Truth about Dishonesty.”

Dr. Steffie Woolhandler and Dr. David Himmelstein are physicians and professors at the City University of New York’s School of Public Health at Hunter College and visiting professors of medicine at Harvard Medical School. They have published many articles in leading medical journals on health insurance and mortality, medical bankruptcy and administrative costs in health care, among other subjects. They are also co-founders of Physicians for a National Health Program, a single-payer advocacy group. PNHP provided no financial or other support for their research.…

And excerpts from the cited article…

Will Pay For Performance Backfire? Insights From Behavioral Economics

By Steffie Woolhandler, Dan Ariely and David Himmelstein
Health Affairs Blog, October 11, 2012

Paying for performance (P4P) has strong intuitive appeal.  Common sense and rigorous studies tell us that paying more for, say, angioplasties or immunizations yields more of them.  So paying doctors and hospitals for better care, not just more of it, seems like a no-brainer.  Yet while Medicare and many private insurers are charging ahead with pay-for-performance (P4P), researchers have been unable to show that it benefits patients.

Findings from the new field of behavioral economics may explain these negative results.  They challenge the traditional economic view that monetary reward is either the only motivator or is simply additive to intrinsic motivators such as purpose or altruism.  Studies have shown that monetary rewards can undermine motivation and worsen performance on cognitively complex and intrinsically rewarding work, suggesting that P4P may backfire.

The Science Of Performance And Reward

The quality improvement literature has pinpointed many causes of quality breeches in medical care: fatigue; poorly designed workflow and care systems; undue commercial influence; knowledge gaps; memory lapses; reliance on inappropriate heuristics; poor interpersonal skills and insufficient teamwork, to name just a few.  But “not trying” is rarely cited.  Yet P4P implicitly blames lack of motivation for poor quality care.

But even when motivation is the problem, money isn’t always the solution.  Findings from the new field of behavioral economics indicate that performance bonuses often backfire, particularly for cognitively challenging work.

Traditionally, economists have viewed extrinsic (i.e. monetary) reward as either the only motivator, or as simply additive to intrinsic motivators such as purpose, altruism, mastery, or autonomy.  According to this view, higher pay induces better performance. (Figures appear at the end of this post.)

But this simple model of reward-induced performance ignores the complexity of human drive, particularly the role of intrinsic motivation — the desire to perform an activity for its own inherent rewards.


None can doubt health care’s grave quality deficits and cost excesses.  As remedy, P4P suggests manipulating greed, a fuel that’s powered exponential growth in productivity in the overall economy.  But Adam Smith, who first recognized greed’s awesome power, was also a moral philosopher who believed that commodity production required a parallel public service economy driven by social duty.

Sadly, greed has caused many of the worst abuses within the current system.  Injecting different monetary incentives into health care can certainly change it, but not necessarily in the ways that policy makers would plan, much less hope for.…

Many of us cringe when we see various pay-for-performance (P4P) schemes. Why should that be? After all, providing monetary rewards for improving quality and possibly reducing costs intuitively might seem like a good thing. Dan Ariely, an expert on behavioral economics, along with Steffie Woolhandler and David Himmelstein, provide us with insight. Most of us really did enter the health professions to serve patients, not to sell a commodity.

Howard Waitzkin on commodification and the search for a universal health program

Posted by on Thursday, Oct 11, 2012

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 Commodification of Health Care and the Search for a Universal Health Program in the United States

By Howard Waitzkin, M.D.
Robert Wood Johnson Foundation, Human Capital Blog, October 11, 2012

For better or worse, we treat health care in the United States as a commodity. We buy and sell it, and would-be patients who don’t have enough money to buy it must either rely on limited public assistance or go without care. In very real terms, it’s not just health care that we have turned into a commodity, it’s health itself, so it should come as no surprise that poor Americans die sooner than affluent ones, by an average of close to five years.

I observed this dynamic up close for the first time about 40 years ago, while working as a primary care practitioner in the clinic system of the United Farm Workers (UFW) Union in the 1970s (which, for a time, my mentors in the RWJF Clinical Scholars Program viewed as my required activity in clinical medicine). As I treated hard-working patients living in unhealthy circumstances, it was easy to conclude that one does not need to travel outside the United States to find the so-called “Third World.” As I observed with many of the patients I treated while working with the UFW, the living conditions of the poor contribute to ill health.

Shortly after the military coup in Chile that occurred on September 11, 1973, while researching an article on the health consequences of the military dictatorship that later appeared in the New England Journal of Medicine, I discovered the work that President Salvador Allende had accomplished in the field of social medicine. In 1939, three decades before he became Chile’s democratically elected President, Allende wrote “La Realidad Médico-Social Chilena” (The Chilean Medico-Social Reality), in which he presented an analysis of the relationships among social structure, disease and suffering.  The book conceptualized illness as a disturbance of the individual fostered by deprived social conditions. Breaking new ground in Latin America at the time, Allende­—himself a pathologist—described the “living conditions of the working classes” that generated illness, with emphasis on the social conditions of underdevelopment, international dependency, and the effects of foreign debt and the work process. Growing out of those conditions, in his description, were a number of specific health problems, including maternal and infant mortality, tuberculosis, sexually transmitted and other communicable diseases, emotional disturbances, and occupational illnesses.

Making the case that improved living conditions exerted a more profound impact on population health than medical advances, Allende described the responsiveness of tuberculosis to economic advances rather than treatment innovations, the role of housing density in the causation of infectious diseases, and the adverse effects of the pharmaceutical industry’s financial practices (for instance, Allende offered the earliest known account of the differences between generic and brand-name pricing of essential medications). In this context, Allende also put his finger on a dynamic that has come to trouble physicians, patients, and policy makers worldwide during recent years, writing colorfully that a “problem in relation to the pharmaceutical specialties is…the excessive and charlatan propaganda attributing qualities and curative powers which are far from their real ones.”

After his election to Chile’s presidency in 1970, Allende began to move health care toward a universal model, while at the same time initiating a variety of public health initiatives, such as establishing maternity clinics in rural areas, imposing new health and safety requirements on mining companies, improving sanitation and housing in low-income areas, and more. But Allende’s nationalization of several industries dominated by North American interests, despite the compensation provided to those corporations, earned him powerful enemies, and a U.S.-supported military coup drove him from power three years into his administration, ending his efforts to improve Chileans’ health.

In Central and South America, the part of the world where I’ve focused much of my research, the United States and various international financial institutions have worked to support health care systems structured along the for-profit model. The World Bank, for example, worked to foster health care systems that served the objectives of private capital accumulation in less developed nations, with the inevitable result that health and health care became a commodity. Commodification burdens poor people’s health in many ways, and the adverse impacts of corporatized health care have spread throughout the world.

One irony, however, is that some less developed countries have found ways to uncouple health from wealth. But it hasn’t come easily. In recent years, the commodification of health in Latin America has receded somewhat, particularly in the wake of the worldwide economic crisis and widespread protests that have followed. Regimes that previously embraced corporate interests have grown weak and largely have disappeared, replaced by elected governments that have refused to accept the historical patterns of economic empire that fostered exploitation and poverty around the world. National and local leaders have entered into novel coalitions that have given rise to a new era of social medicine in Latin America.

In the 1990s, for example, El Salvador saw sustained efforts to resist efforts by the World Bank and the ruling right-wing political party to privatize public hospitals. Strikes by health care workers at affected hospitals spread elsewhere, leading to a commitment from the government that it would abandon the privatization push. When the government subsequently began contracting out hospital services to private entities, more strikes followed. Eventually, the World Bank flinched, backing away from a privatization requirement in a loan it was extending to the country, and efforts to expand public-sector health care are again under way.

Popular efforts to accomplish similar objectives have taken root in a number of Latin American nations, and the idea of universal health care has even taken root right here in the United States. It was a key part of the agenda on which Barack Obama rode to victory in the 2008 Democratic election. However, the principle of universal access to health services through a strengthened public sector largely disappeared from the health care reform bill he eventually signed into law.

As many critics have pointed out, Obamacare, the Patient Protection and Affordable Care Act (PPACA), uses public-sector funds and mandatory patient-generated premiums to buy insurance coverage from the private, for-profit insurance industry. This approach ultimately will provide coverage for only about half of the uninsured, with costs that will continue to rise over time due to the administrative waste inherent in private insurance. In addition, Obamacare will provide yet another enormous public subsidy for the private insurance industry, despite its dismal historical record. Ironically PPACA closely resembles the “neoliberal” health reforms promoted previously by the World Bank in Latin America and other regions, for instance the widely criticized reform that began in Colombia during 1994.

This paradoxical situation becomes quite striking because Medicare offered a model for a successful system. Medicare provides universal access to publicly financed services with low levels of administrative waste and more effective cost control than seen under private insurance. Although Medicare retains various flaws, these flaws are far less critical than the continued commodification of health as preserved under Obamacare. The Obama administration could have proposed an expansion of Medicare for the entire population of the United States. Obama himself favored this type of “single payer” approach while he was a state legislator in Illinois but later changed his views when he began to accept large financial contributions from the private insurance industry.

Despite widespread support from professionals (see for instance Physicians for a National Health Program) and the general public (see for instance Health Care Now), “opinion leaders” like those who lead the RWJF have declined to advocate for the particular model of universal health care embodied in the Medicare for All approach. At the risk of appearing to bite the hand that feeds (which actually feeds only to a very minor extent), let me say that one of my major disappointments in the RWJF during its more than 40 years of trying to improve access to affordable health care is that its leaders consistently have declined to advocate for a coherent, unified model for a national health program.

The simple truth is that the United States remains the only economically advanced country without a viable national program that ensures access to needed care for all. As a result health care—and health—remain a commodity for sale. Until we in the United States decide to de-commodify our health care and health by implementing a universal, single, publicly financed, national health program such as Medicare for All, we will remain in our current state of ethical underdevelopment.

Howard Waitzkin, MD, PhD, is senior fellow at the Robert Wood Johnson Foundation (RWJF) Center for Health Policy at the University of New Mexico, as well as distinguished professor emeritus in the Department of Sociology, and clinical professor in the Department of Medicine. He is an alumnus of the RWJF Clinical Scholars Program. Waitzkin recently received the American Sociology Association Medical Sociology Section’s 2012 Eliot Freidson Outstanding Publication Award for his new book, “Medicine and Public Health at the End of Empire,” from which this blog post draws.…

Howard Waitzkin’s article is too important to edit it for Quote of the Day. It is presented here in its entirety. No comment necessary.

Important! Medicare Advantage rip-off now quantified

Posted by on Wednesday, Oct 10, 2012

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, M.D., Steffie Woolhandler, M.D., M.P.H., David U. Himmelstein, M.D.
International Journal of Health Services (Forthcoming), October 2012


Previous research has documented Medicare overpayments to the private Medicare Advantage (MA) plans (also known as Medicare Part C or Medicare HMOs) that compete with traditional fee-for-service Medicare. This research has assessed individual categories of overpayment for a single year, or at most a few years. However, no previous study has calculated the total Medicare overpayments to private plans since the inception of the Medicare program.

There are five ways in which private insurers systematically garner excess Medicare Advantage payments from the Medicare program.

Prior to 2004, the selective enrollment of healthier seniors by private plans – what we call “old cherry-picking” – was the major source of excess payments. We conservatively estimate that this old cherry-picking has added $41 billion to Medicare’s costs since 1985. Medicare adopted a new risk-adjustment scheme in 2004 based on 70 medical diagnoses (“hierarchical condition categories”), but this scheme has not curbed, and may have increased, private plans’ ability to game Medicare’s payment system, albeit with a new strategy: now, plans seek to selectively enroll patients who have mild versions of the medical conditions that determine payment. This “new cherry-picking” has added $122.5 billion to Medicare’s costs since 2004.

Congress mandated increased payment to private plans in the 2003 Medicare Modernization Act, adding $84.4 billion to the cost of Medicare through 2012.

The Affordable Care Act (ACA) mandated a drop in these overpayments, but a new demonstration project on quality will offset one-third of the reductions called for by the ACA through 2014.

Another major way that private plans are overpaid is by enrolling persons who are eligible for Veterans Health Administration (VA) benefits. The VA has provided $34.8 billion in care to MA enrollees since 1985.

In total, we find that Medicare has overpaid private insurers by $282.6 billion, or 24.4 percent of all MA payments, since 1985. In 2012 alone, we find that MA plans are being overpaid by $34.1 billion, or 6.2 percent of total Medicare spending.

In 2012, 13.5 million Medicare beneficiaries are in private plans, 27 percent of total enrollment. Some proposals would push millions more beneficiaries into private plans (e.g. voucher-type Medicare reform).

Risk adjustment does not and cannot work in the setting of for-profit MA plans, which have a strong financial incentive, and the data and ingenuity, to game whatever payment system Medicare devises. It is time to end Medicare’s long experiment with privatization and look toward proven-effective methods for controlling costs and improving coverage.

PNHP press release (The full article can be accessed through a link provided in this press release):…

Although we have known all along that the private Medicare Advantage plans have been ripping off the taxpayers, this study brings together the data that quantifies the extent to which the taxpayers have been cheated by the private insurance firms: $282.6 billion!

The full report provides the details. It should be downloaded and read in full, and then used in your activism. Use the link above to access the press release (which is also well worth reading), and then use the link in the press release to download the full report.

The reason that this is so important is that it reveals the dishonesty behind the efforts to privatize Medicare through “premium support” – code for vouchers. Telling us that private insurers could provide equivalent Medicare benefits at a lower cost was the first deception, now proven false by three decades of experience. Nevertheless, because of anti-government ideology, legislators moved forward with the Medicare Advantage plans, deliberately paying them extra in order to draw beneficiaries into their plans through extra funds for high-profile marketing while affording them the ability to offer attractive extra benefits.

Once enough beneficiaries are drawn into these private plans, legislators could then begin the gradual process of defunding the traditional Medicare program. The premium support vouchers would provide a means to that end. As access in the underfunded traditional program diminished due to a decline in willing providers, beneficiaries would be able to use their premium support to move into the “better” plans offered in the private sector.

The traditional program might survive as a vestigial Medicaid-like welfare program, but essentially all who could afford it would have moved into the private plans. The next step? Reduce the value of the premium support both through attrition and through more nudges and pushes that the politicians would claim are absolutely essential to help close the gaping deficit hole.

As many have figured out, a primary purpose of the tax cuts that the politicians are telling us are essential is to increase the deficit even more to force other cuts in spending – deficits that “cannot be made up by tax increases because those taxes would destroy the economy.” Closing the deficit with tax cuts is one of the biggest lies of this campaign. They want to increase the deficit to force upon us a government austerity program.

We desperately need single payer – an improved Medicare that covers everyone. A more urgent task for us to address immediately is to cut the overpayments in the Medicare Advantage plans before the politicians shove us into their fraudulent premium support scheme. Check Figure 1 in the full report that you are downloading.  When we had Medicare + Choice plans, the deception was exposed and you will see that the plans started dropping out. The rebound of the plans is directly attributable to the fraud exposed in this report – deliberate overpayment of the private Medicare Advantage plans.

People keep asking what they can do. This one’s easy. Start organizing protests against this outrageous scheme that has cheated us taxpayers out of so much. Begin now, or start planning for your own austerity program when premium support vouchers won’t buy you or your children the health care plan that you need. It’s your choice.

Who will remain uninsured?

Posted by on Tuesday, Oct 9, 2012

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.

After Millions of Californians Gain Health Coverage Under the Affordable Care Act, Who Will Remain Uninsured?

By Laurel Lucia, Ken Jacobs, Miranda Dietz, Dave Graham-Squire, Nadereh Pourat, and Dylan H. Roby
UC Berkeley Labor Center, September 2012

The implementation of the Affordable Care Act (ACA) is predicted to expand coverage to millions of Californians by 2019. This increase in coverage will primarily result from the expansion of Medi-Cal and the availability of subsidized coverage in the California Health Benefit Exchange (Exchange). However, three to four million Californians could remain uninsured even after the law is fully implemented.

Many Californians will remain uninsured

* 3.1 to 4 million Californians are predicted to remain uninsured in 2019.

* Almost three-quarters of the remaining uninsured in California will be U.S. citizens or lawfully present immigrants.

* Half of all remaining uninsured, or two million Californians, will be eligible for Medi-Cal or Exchange subsidies but remain unenrolled under the base scenario. Barriers to enrollment could include lack of awareness about the programs, challenges in the enrollment process, or inability to afford subsidized coverage.

* 72 percent of remaining uninsured Californians will be exempt from paying tax penalties under the minimum coverage requirements of the ACA due to income, lack of an affordable offer of coverage or immigration status. Approximately three percent of all Californians will owe a tax penalty due to not obtaining minimum coverage.

* Nearly 40 percent of the remaining uninsured will lack an offer of affordable coverage with premiums costing eight percent of household income or less. Some uninsured Californians will be ineligible for subsidized coverage due to income or immigration status, while others will be eligible for subsidized plans in the Exchange with premiums that exceed the affordability standard.

* Some of the remaining uninsured will lack coverage for short time periods due to life transitions.

Some demographic groups will be more likely to remain uninsured

* Two-thirds (66%) of Californians remaining uninsured will be Latino, compared to a projected 45 percent of the non-elderly population in 2020.

* Nearly three out of five California adults who remain uninsured will be Limited English Proficient.

* 57 percent of Californians who remain uninsured will have household incomes at or below 200 percent of the Federal Poverty Level.

The projected numbers and demographics of the uninsured after full implementation of the Affordable Care Act in California are shameful. Although there would be regional differences in demographics, the national numbers would be roughly tenfold. We can do far better by enacting an improved Medicare for all.

Universal health care and the Iron Triangle myth of U.S. policy makers

Posted by on Monday, Oct 8, 2012

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.

Donald Light on the Iron Triangle Myth

By Donald Light

Response to the October 4, 2012 Quote of the Day on the meme of access, cost and quality (…):

In my comparative studies of universal health care systems, I find their cost/quality profiles vary quite a bit between each other, and over time for the following reasons. The more such systems pay by fee, the more providers drive up costs in the name of “quality” from which they profit, such as Germany from after World War II up to the 1980s. The Canadian system has been suffering from this seeming trade-off for decades. Access stays universal but there seems to be “an iron trade-off” between cost and quality, until systems start moving towards bundled payments and then population-based capitation or salary within a national health service and an ethos of shared responsibility to improve quality within a fixed budget. (Notice the so-called “iron triangle” has faded from view.)

Thus it’s holding costs constant while maintaining universal access that is key to improving quality, not only by eliminating care that is detrimental but also unnecessary or avoidable care, by rethinking clinical strategies. Ironically, some of the models of shared access and budgets increasing quality are in the United States. Few, if any national systems, can match the steady improvements in quality and value of Kaiser Permanente, Intermountain, Marshfield, or the reformed VHA (Veterans Health Administration). For example, the English NHS has been learning from them for years.

The transformation of the VHA from a single-payer, fee-based, poor-quality set of hospital-centered services, to a single-payer system based on area population budgets centered on primary care, with coordinated, community-based specialty back-up and hospitals as a last resort offers inspiring lessons. Quality improved and costs sharply dropped, so that 30 percent more veterans could be treated within the same, fixed budget.

Reforms in Germany in the 1990s through today have also improved quality while lowering relative costs and expanding access from about 94 percent to 99 percent. Germany’s multi-insurer base has been made single payer-like by the government creating a single channel where all insurers’ premiums are risk-adjusted so all insurers operate on the same risk-adjusted budgetary basis. The Dutch reforms since 2006 operate in a similar way, with some distinct differences.

In sum, I would say the key is not single-payer per se but population-based budgeting together with universal access, and a shared ethos to improve quality within budgetary frames that give the lie to the so-called iron triangle.

The Iron Triangle is an American myth for lazy and unobservant policy leaders.

Donald W. Light, Ph.D.
Professor, UMDNJ-SOM
Visiting Researcher, Center for Migration & Development, Princeton University
Resident Fellow, Edmond J. Safra Center for Ethics, Harvard University
Senior Fellow, Center for Bioethics, University of Pennsylvania


As Professor Light shows us, with controlled budgets you can still improve quality in a system that ensures appropriate access for everyone. Although he states that the key is not single payer per se, it is clear that the Iron Triangle (interdependency of cost, quality and access) still applies to our fragmented, dysfunctional financing system in the United States – a system that has only been perpetuated with the Affordable Care Act. However, social insurance programs, including single payer and health service models, have shown that the inevitability of the Iron Triangle is a myth. An improved Medicare for all would provide us with “population-based budgeting together with universal access, and a shared ethos to improve quality within budgetary frames.”

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