A noted Republican physician executive talks about single payer

Posted by on Thursday, Apr 25, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

I Am A Republican… Can We Talk About A Single Payer System?

By David May
ACC-in-Touch Blog, American College of Cardiology, April 23, 2013

I am a Republican. For those who know me that is not a surprise. I live in a red state. I have never voted for a Democratic presidential candidate. I can field strip, clean and reassemble a Remington 12-gauge pump blindfolded. And on top of it, I think we should talk about having a single payer national health care plan. The reason is quite simple. In my view, we already have one; we just don’t take advantage of it.

Firstly, Medicare and the Center for Medicare and Medicaid Services (CMS) are de facto setting all of the rules now. They are a single payer system.  When we go to lobby the Hill, we lobby Congress and CMS.  Talking to Blue Cross, Aetna, Cigna and United Health care is essentially a waste of time. All the third party payers do is play off the Medicare rules to their advantage and profit. They have higher premiums, pay a somewhat higher benefit and have a significantly higher level of regulation which impedes the care of their customers.  This is no longer consumer choice but effectively extortion, a less than hidden shake down in which the “choice” for a family of four is company A at $900 per month or company B at $1100 per month.  The payers are simply taking advantage of the system, playing both ends against the middle.

Secondly, in order to move forward with true health care finance we need complete transparency in cost and expense… and we need it now. As was noted in a recent Time magazine piece on the hidden cost of health care, our current system is a vulgar, less than honorable construct more akin to used car sales than medical care, cloaked under the guise of generally accepted accounting principles and hospital cost shifting.

Thirdly, with a single payer system would potentially come real utilization data, real quality metrics and real accountability. The promise of ICD-10 with all of its difficulties is that of a much more granular claims-made data. We could use some granularity in health care data and we will never achieve it in big data quantities without a single payer system.

Lastly, I think that the physicians should be in charge of health care and not the insurance companies and hospital systems. With a single price structure, it becomes all about medical decision making, efficiency, the provision of care to our patients, and shared decision making, all of which we do well.

How, you might say, could a Republican come to such a position? The simple answer is I really think it is quite Republican.  Oh, I know there will be many raised eyebrows and many critics. I accept that.  I understand the fact that no single payer system is perfect, that it is “socialist,” that it is “un-American.”

I would submit to you, however, that it is un-American to allow many of our citizens to be uninsured, that it is un-American to shunt money away from a strong military in order to support a bloated, inefficient and fraud-laden health care system, that it is un-American not to be open and above board with the cost of what we do, the expense of that service and the profit that we make. Mostly, it is un-American to let this outrageous health care injustice continue.

(David May, MD, PhD, FACC, is chair of the Board of Governors of the American College of Cardiology. He invites responses to his comments at the link below.)

http://blog.cardiosource.org/post/I-Am-A-Republicane280a6-Can-We-Talk-Ab…

David May provides an important lesson for those who think that the single payer concept falls on the far left of a linear political spectrum. Society is not linear; it’s four dimensional. If we look at all dimensions, single payer clearly prevails. We can thank Dr. May for shattering the traditional but flawed construct of health care ideology.

Workers not prepared financially for unexpected health costs

Posted by on Wednesday, Apr 24, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

American Workers on an Uphill Road with Consumer-Driven Health Care

Aflac
2013 Aflac WorkForces Report, April 24, 2013

New Aflac survey reveals employees are not prepared for increased costs, may not want control and lack education

The 2013 Aflac WorkForces Report is the 3rd annual Aflac employee benefits study examining benefit trends and attitudes.

Not Prepared Financially

*  Only 24 percent of workers completely agree or strongly agree they will be financially prepared in the event of an unexpected emergency or serious illness.

*  Further, 46 percent of employees have less than $1,000 to be able to pay for out-of-pocket expenses associated with an unexpected serious illness or accident, and 25 percent of employees have less than $500.

*  Four-in-ten (40 percent) workers would have to borrow from their 401(k), friends and family to pay for out-of-pocket expenses associated with an unexpected serious illness or accident; 28 percent would have to use a credit card.

Press release:
http://www.aflac.com/us/en/docs/insights/aflac_prtemplateawr2013.pdf

Fast Facts:
http://www.aflac.com/aflac_workforces_report/2013/fast_facts.aspx

And…

The Center for Consumer Information & Insurance Oversight
Centers for Medicare and Medicaid Services

Section 1402 of the Affordable Care Act requires reductions in the maximum out-of-pocket limits on silver plans for individuals with household incomes between 100 and 400 percent of the FPL. However, the statute also requires the Secretary to ensure that the reductions in the maximum out-of-pocket limits do not cause the AVs (actuarial values) of these silver plan variations to exceed certain levels.

For reasons described in more detail below, we do not plan to reduce the maximum out-of-pocket limits for individuals with income between 250 and 400 percent of FPL.

http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf

With a major trend expanding in the direction of employer-sponsored consumer-driven health care, this new Aflac report shows that workers are not ready for the change. If you look only at the financial challenge, workers may never be ready. They cannot afford to pay the out-of-pocket expenses that they would face should they or their families develop significant medical problems.

Although the Aflac study was limited to employer-sponsored benefit programs, most people purchasing plans in the new state insurance exchanges also will be selecting plans that use high-deductibles – the defining characteristic of consumer-driven health plans.

The Affordable Care Act (ACA) does require reductions in out-of-pocket expenses for individuals with household incomes between 100 and 400 percent of the federal poverty level (FPL), but another ACA requirement prohibits the covered silver plans from having an actuarial value over 70 percent (the percent the plan pays on average) for individuals with household incomes over 250 percent of FPL ($27,925 for an individual). Since it is impossible to keep the actuarial value down at 70 percent if out-of-pocket expenses are subsidized, it was decided to eliminate out-of-pocket support for individuals above 250 percent of FPL.

Some workers will benefit from employer contributions to health spending accounts (HSAs and HRAs), just as some individuals will benefit from out-of-pocket subsidies in the exchanges. In either instance, it can be anticipated that far too many still will not be prepared financially for unanticipated medical costs, just as the Aflac study reported.

Newer employer-sponsored plans and plans under ACA are moving in the wrong direction. We need a program that removes financial barriers to care, not plans that erect them. All you have to do is read the 16 page CCIIO/CMS bulletin on actuarial value and cost-sharing reductions (link above) to see how ridiculously complicated and irrational we made this system.

We really do need a single payer system. Then everyone would be prepared financially in the event of medical need.

Is the slowdown in health care spending good news?

Posted by on Tuesday, Apr 23, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

We still have a health-care spending problem

By Drew Altman and Larry Levitt
The Washington Post, April 21, 2013

For the past several months, analysts at the Kaiser Family Foundation and the Altarum Institute have been analyzing the recent slowdown in health spending. On average, health spending grew by 4.2 percent per year from 2008 to 2012, down from the recent peak of 8.8 percent from 2001 to 2003 and the lowest rate of growth in five decades. Our main conclusion is that most of this slowdown, 77 percent, has been due to years of a weak economy, which causes people to put off health services when they can and prompts employers and states to reduce health spending. The other 23 percent is explained by changes in the health system, including increased consumer cost-sharing, tighter managed care and modifications in payment and delivery (we can’t precisely pinpoint the separate effects of these three factors).

We need to be realistic about the fact that health spending will start going up more rapidly again as the economy improves. But how much costs escalate is at least in part within our control, and that matters a lot for federal and state budgets, employers and families. The place to start is by recognizing that the problem of health-care costs is far from solved.

Drew Altman is president and chief executive of the Kaiser Family Foundation, of which Larry Levitt is senior vice president.

http://www.washingtonpost.com/opinions/we-still-have-a-health-care-spend…

KFF Snapshot – Assessing the Effects of the Economy on the Recent Slowdown in Health Spending: http://www.kff.org/insurance/snapshot/chcm042213oth.cfm

We are now experiencing the slowest growth in health-care spending in the past half century. Though most agree that the weak economy slowed the rate of growth, many now claim that implementation of the Affordable Care Act is responsible for the protracted slowing while predicting that further implementation will finally bring excessive cost escalation under containment. What is really happening here?

Although the growth of spending – at 4.2 percent – is much lower than recent historical trends, it still represents excess growth since inflation has been flat and the growth of GDP has been very sluggish. Should we return to a more vibrant economy and more typical inflation rates, with no other changes, the rate of growth in health-care costs would be in the higher ranges that we no longer tolerate. So the good news in the slowing of health-care spending may not be such good news after all.

An important finding in this Kaiser Family Foundation report is that over three-fourths of the slowing has been due to the weak economy. We are not only facing a disappointing recovery, this factor in the slowing of health-care spending does not bode well for the future. If the economy recovers fully, high rates of spending increases will return. If, as some economists warn, we remain in a protracted stagnant economy with relatively high unemployment rates – a new “normal” for our economy – rates in the mid-single digits will still represent excess rates of increased health-care spending.

What about the other trends that have slowed spending? Of course, they are not as important as the vibrancy of the economy since they represent less than one-fourth of the slowing, but we can use any help. Or can we?

This study was not able to quantify the effect of the provisions of the Affordable Care Act in reducing spending. What is clear though is that much of the slowing not related to the economy has been due to the imposition of greater cost sharing, especially higher deductibles, and to the ratcheting up of managed care intrusions such as more restrictive provider lists and greater use of tiering of benefits. For containing costs, these are unwise policies because they create barriers that impair access to health-care services that patients should have. That is a terrible way to control spending.

So what hope is there? The policy community seems to be hanging its hat on accountable care organizations ACOs) and bundled payments. Think about what percentage of services delivered would be significantly altered by these tools. There should be very little change in the amount of appropriate care. Teasing out inappropriate care is difficult if for no other reason than there are few guidelines to determine what should be eliminated. Further, how much can you really pare off of the spending, when, even if bundled, most of the services would still have to be rendered? Are you really reducing spending, or just shifting the costs? Even if ACOs and bundled payments worked as intended, the amount of savings would be negligible when considering the magnitude of the problem.

Drew Altman and Larry Levitt write, “The place to start is by recognizing that the problem of health-care costs is far from solved.” If ever there was a time to pull out the drawer and look for proven policy solutions, that time is now. The single payer model is a proven model, and is just what we need. Without it, we can anticipate higher health-care spending and worse health-care access in an economy that is working well for the wealthy, but not very well for the rest of us.

Businessman Allan Tweddle responds to Uwe Reinhardt on “one size fits all”

Posted by on Monday, Apr 22, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Allan Tweddle responds to Uwe Reinhardt on “one size fits all”

(Quote of the Day for April 16, 2013 http://www.pnhp.org/news/2013/april/uwe-reinhardt-on-one-size-fits-all):

I am no expert, just a Canadian born US Citizen with family still north of the border.  I have seen the personal value of their system many, many times.  From horrific cancer in children, to heart and cancer in elderly, to total hip replacements, all covered at zero expense to the citizen patient.

And even that needs clarification.  In the Canadian Immigration web page, once a person is accepted by their immigration department, a new arrival into Canada will get full coverage within 3 months after arrival.  That is remarkable, considering that that person has not yet contributed one dime to the system.

Their system, like in Britain, provides basic health care for all and lets the private insurers pick up the tab for luxury items like fancy hospital suites, Viagra, etc.

The Canadian system is controlled, designed and managed by each province.  It has Federal dollars in each plan, so while their experience is NOT “One size fits all”, they have made it work for 30 years or more.  Did we make any attempt to study their success and learn from their mistakes?  I doubt it.

However, there are only 10 provinces.

Our ACA plan that tries to take into consideration 50 States does look far too complicated. I’ve been in briefings for the West Virginia plan alone, and it’s too complicated.  We need to just lower the eligibility age of Medicare to age zero less 9 months!

We need a single payer for the basics so we eliminate bankruptcy due to unexpected and financially catastrophic health care costs to individuals.  It is my understanding that in the U.S., medical debt contributes to 62% of all bankruptcies. In Canada that number is ZERO!

Shouldn’t we be protecting the citizens and not the greed-driven insurance industry?

****

Our emerging manufacturing company has been considering a location for our production operations.  We have concluded, like so many automobile companies* have, that Southern Ontario would be financially attractive due, among other reasons, to the differential in payroll burden.  Aerospace payroll burden here is about 36%, whereas it is 15 to 18% in Ontario.  That’s a significant differential…20%!  And from everything we have been able to determine, the difference is health care expense. (*Did you know that the expense of health care is almost always cited as a primary reason for the announcement of new plants in Ontario, so that now more cars are made and assembled in Ontario than Michigan?)

The financial/economic value of a universal single payer system is obvious to us.  And when you learn that the system they have there has better health results, then the choice becomes clear.  And if any right-wing free enterprise enthusiast who has an open mind would pay attention to the sheer economic advantages, they would join us on a bandwagon to get it here.

But we cannot wait for that to happen, so we will in all probability be locating there.

Allan Tweddle, of Charleston, West Virginia, is Chairman and CEO of an aerospace manufacturing firm. His email address: allantweddle@msn.com

We should listen to this Canadian-born, U.S. businessman who is very familiar with the health-care systems and the business climates in both the United States and Canada. The lure of Canada’s health-care system may be too great for his company to establish production operations here in the United States. That should awaken us all, especially the business community.

Much less important, a comment on “one size fits all” is warranted. That phrase has been used endless times to dismiss single payer reform. Used this way, it implies that there are many “sizes” in health care. In reality, when you need health care, you aren’t checking out “sizes.” You merely want unrestricted access to the health care delivery system that we have.

The “sizes” they speak of usually refer to different insurance products, ranging from almost worthless mini-med plans to comprehensive, integrated HMOs. (For purposes this discussion, integrated health care delivery systems such as Kaiser and Group Health are considered components of our health care delivery system rather than as intermediary insurers.)

When individuals select their own insurance plans, which do they choose most often? They select high-deductible, preferred provider organizations. That is, they select a “size” that works if they stay healthy. Should they develop significant health problems, that particular “size” will prevent them from being able to have free choice of their health care professionals and institutions, and it will leave them with out-of-pocket financial burdens – neither of which is the “size” that they really wanted, especially when they find out too late that it didn’t fit.

Mr. Tweddle points out that Canada’s single payer system is not “one size fits all” since it is separately administered in each of their ten provinces. But, refocusing, the Canada Health Act does pull all of the provinces together into one “size” that is universal, comprehensive, accessible, portable, and publicly administered. Quite clearly, this is not a “size” that is inflexible to varying needs, but rather it is a comprehensive program that fits all.

When you shop for health insurance, it is important to keep in mind that all of the private insurance choices are the wrong size, to varying degrees. The only right size out there is the health care delivery system which can be readily accessed by getting all of the wrong-sized insurers out of the way, except for the one right-sized program that really does fit everyone – a single payer national health program, or improved Medicare for all.

Uwe Reinhardt on “one size fits all”

Posted by on Monday, Apr 22, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Author Interview

JAMA, April 16, 2013

Uwe E. Reinhardt, PhD, economics professor at Princeton:  On this point, I’m very disappointed that we Americans couldn’t even get the exchanges right. As Atul said, an exchange is really just like the personnel benefit department at General Motors. It’s just an electronic market to buy health insurance. I could show you the Swiss or the German exchanges. We have now made a horrendous mess of these exchanges. It cost close to a billion dollars to implement the California exchange, and heaven knows what’s happening in the other states. I was thinking if this generation of Americans had to plan the Normandy invasion, I think they would never have gotten there, or by the time they got there, the Russians would have been there. It is just unbelievable what an administrative nightmare the Affordable Care Act has become. Americans always tell me – I’m just an immigrant trying to learn about this country – they always tell me, oh, one size doesn’t fit all. Well, tell that to McDonald’s or to the Holiday Inn. In fact, Americans invented the idea that one size fits all, and built great industries on it – the auto companies, the food services, the hotels, the department stores – they’re all one size fits all.

Ed Livingston, deputy editor of JAMA:  You mentioned that companies like McDonald’s and Holiday Inn have been very successful in building large industries with uniformities, but those are private industries. Is the problem that when the government tries to take on something this complex they just can’t seem to get it done?

Uwe Reinhardt:  Well, it’s for the reason that Atul mentioned, that somehow we give enormous respect to regional variations, and, because we do, we make everything enormously complex. Imagine if you ran the U.S. Army that way. Soldiers from every state could pick their own rifles, and so on and so forth. Sometimes you have to do national things. I recently wrote a Health Affairs piece and said, every American is a dual citizen. He has citizenship in the state that they live in and citizens in America. And it really depends when you draft federal legislation, which citizenship do you make supreme. Typically you find Democrats put American citizenship up on top. The idea being that a baby in Mississippi should have the same rights to access to health care as a baby in Massachusetts, because they are both Americans. I think more on the Republican side they would say, no, what happens to a Mississippi baby is up to the people down there, and you can do what you want to a Massachusetts baby up there in Massachusetts. Now, that’s a different conception, neither right or wrong, but I’m saying on some issues we really, in my view, should have national policies because it would be much more easy to administer. After all, that’s what we said in Medicare. We said no matter where the elderly live, they should have the same deal in health care, and we created Medicare. Has Medicare been that much of a disaster?

Audio (April 16,2013): http://jama.jamanetwork.com/multimedia.aspx#AuthorInterviews

Hmmm.

“It is just unbelievable what an administrative nightmare the Affordable Care Act has become.”

“…they always tell me, oh, one size doesn’t fit all. Well, tell that to McDonald’s or to the Holiday Inn.”

“…but I’m saying on some issues we really, in my view, should have national policies because it would be much more easy to administer.”

“We said no matter where the elderly live, they should have the same deal in health care, and we created Medicare. Has Medicare been that much of a disaster?”

So can we draw the conclusion that we should adopt the administrative simplicity of a national, one-size-fits-all Medicare that gives everyone the same deal in health care? Seems like a really good idea.

Greece’s crucial lessons on austerity and health

Posted by on Thursday, Apr 18, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Economic Crisis, Restrictive Policies, and the Population’s Health and Health Care: The Greek Case

By Elias Kondilis, MD, PhD, Stathis Giannakopoulos, MD, PhD, Magda Gavana, MD, PhD, Ioanna Ierodiakonou, MD, PhD, Howard Waitzkin, MD, PhD, and Alexis Benos, MD, PhD
American Journal of Public Health, Published online April 18, 2013

The global economic crisis has affected the Greek economy with unprecedented severity, making Greece an important test of the relationship between socioeconomic determinants and a population’s well-being.

Suicide and homicide mortality rates among men increased by 22.7% and 27.6%, respectively, between 2007 and 2009, and mental disorders, substance abuse, and infectious disease morbidity showed deteriorating trends during 2010 and 2011. Utilization of public inpatient and primary care services rose by 6.2% and 21.9%, respectively, between 2010 and 2011, while the Ministry of Health’s total expenditures fell by 23.7% between 2009 and 2011.

What to Learn from the Greek Case

It is tragic that Greece has become an important test regarding the impact of economic and social determinants on a population’s health and well-being. Evidence presented indicates that economic recession and its consequences (unemployment, poverty and social exclusion, homelessness, and insecurity) exert important effects on Greece’s population health and health care services. Several causes of mortality and morbidity related to mental health, substance abuse, and infectious disease already show clear rising trends. Heightened needs and increased demand on public services collide with austerity and privatization policies.

http://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2012.301126

And…

More Children in Greece Are Going Hungry

By Liz Alderman
The New York Times, April 17, 2013

Last year, an estimated 10 percent of Greek elementary- and middle-school students suffered from what public health professionals call “food insecurity,” meaning they faced hunger or the risk of it, said Dr. Athena Linos, a professor at the University of Athens Medical School.

(Principal Leonidas) Nikas has taken matters into his own hands and is organizing food drives at (his) school. He is angry at what he sees as broader neglect of Greece’s troubles by Europe.

“I’m not saying we should just wait for others to help us,” he said. “But unless the European Union acts like this school, where families help other families because we’re one big family, we’re done for.”

http://www.nytimes.com/2013/04/18/world/europe/more-children-in-greece-s…

And…

Child Well-Being in Rich Countries

UNICEF, April 2013

Rank of child well-being in 29 nations of the industrialized world

25th – Greece
26th – United States

http://www.unicef-irc.org/Report-Card-11/

And…

Growth in a Time of Debt

By Carmen M. Reinhart, Kenneth S. Rogoff
National Bureau of Economic Research (NBER), January 2010

Our main findings are: First, the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more.

http://www.nber.org/papers/w15639

And…

Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff

By Thomas Herndon, Michael Ash, Robert Pollin
Political Economy Research Institute, University of Massachusetts Amherst, April 15, 2013

Herndon, Ash and Pollin replicate Reinhart and Rogoff and find that coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period. They find that when properly calculated, the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0:1 percent as published in Reinhart and Rogo ff. That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.

Overall, the evidence we review contradicts Reinhart and Rogoff ‘s claim to have identified an important stylized fact, that public debt loads greater than 90 percent of GDP consistently reduce GDP growth.

http://www.peri.umass.edu/236/hash/31e2ff374b6377b2ddec04deaa6388b1/publ…

Greece’s austerity program, accompanied with privatization of public health services, is having tragic consequences, reflected in the health of the people. Not only is health care impaired, the children are going hungry! It is particularly tragic when you consider that there are solutions to their economic crisis, other than austerity, that would keep their children fed and in good health.

The world-wide austerity movement received a big boost with the publication three years ago of the paper by Carmen Reinhart and Kenneth Rogoff supposedly showing that public debt to GDP ratios over 90 percent resulted in considerable declines in the growth rate of the economy. The “austerians” were off and running. Paul Ryan even included the concept in the budget passed this year by the Republican-controlled House of Representatives.

The problem with the Reinhart/Rogoff thesis is that it is flat-out wrong. The paper by Thomas Herndon and his colleagues proved to be a bombshell that refuted the R/R doctrine and demonstrated that “average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.” Economists and policy makers are in a frenzy, and let’s hope that it results in a conclusion that transitional resolutions to economic crises require the use of debt to prevent austerity measures that negatively impact the most basic of needs for the people.

So when we look at the UNICEF rankings of child well-being in industrialized nations, we are saddened by the fact that Greece ranks 25th amongst 29 nations. If the European Union had a little heart, they would be helping their sister country pull out of the crisis without extracting a requirement that Greece raises its misery index.

(Excuse the deliberate deception, but it is to make a point. The misery index is a combination of high unemployment and high rates of inflation. Yet inflation is very low, but the austerians are convinced that it should be high even if it isn’t, and so they are acting accordingly – more austerity!)

At least in the United States we are smart enough to not let our budget deficits shift us into an austerity mode. Or are we? President Obama is now negotiating with Republicans to cut back on two of our most successful social programs – Social Security and Medicare, as part of an austerity program.

Where do we stand now? The UNICEF ranking of child well-being has placed the United States in the 26th position, below Greece! More austerity is the very last thing we need!

For those who have been feeling so smug as we look at Greece’s tragic circumstance, think again! Then fire the austerians! It’s a matter of social justice.

Public and private payment of hospital complications

Posted by on Wednesday, Apr 17, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Relationship Between Occurrence of Surgical Complications and Hospital Finances

By Sunil Eappen, MD; Bennett H. Lane, MS; Barry Rosenberg, MD, MBA; Stuart A. Lipsitz, ScD; David Sadoff, BA; Dave Matheson, JD, MBA; William R. Berry, MD, MPA, MPH; Mark Lester, MD, MBA; Atul A. Gawande, MD, MPH
JAMA, April 17, 2013

We found that under private insurance and Medicare, which cover the majority of US patients, the occurrence of surgical complications was associated with higher hospital contribution margins. Depending on payer mix, efforts to reduce surgical complications may result in worsened near-term financial performance.

The financial effects of surgical complications varied considerably by payer type. Complications were associated with more than $30 000 greater contribution margin per privately insured patient ($16 936 vs $55 953) compared with less than $2000 per Medicare patient ($1880 vs $3629). In contrast, for Medicaid and self-pay procedures, those with complications were associated with significantly lower contribution margins than those without complications.

http://jama.jamanetwork.com/article.aspx?articleid=1679400

And…

Making Surgical Complications Pay

By Uwe E. Reinhardt, PhD
Editorial, April 17, 2013, JAMA

In this issue of JAMA, Eappen et al reach the troublesome but not surprising conclusion that hospitals in the United States can profit handsomely from postsurgical complications, even if the hospitals could avoid them.

Under the federal Medicare program, payment for all of the services involved in hospital inpatient treatment has been bundled since the mid-1980s into 1 payment per inpatient case categorized into 1 of 745 distinct diagnosis related groups (DRGs) of cases, which are categorized by adjustments for complications and comorbidities. This approach has made Medicare a pioneer in payment reform that has since been copied worldwide.

According to the authors’ propensity-adjusted estimates, a patient with 1 or more complications results in a $39 017 (95% CI, $20 069-$50 394) greater contribution margin than a patient without complications if the care is reimbursed by a private payer. In contrast, for Medicare, the gain in complication-related contribution margins is only $1749 (95% CI, $976-$3287). This observation contradicts the prevailing perspective that private insurers are axiomatically assumed to be smarter payers than government-run Medicare. However, if, as the authors imply, many of the observed postsurgical complications were avoidable, then perhaps Medicare should more appropriately be considered a smarter payer than private insurers. By having moved to the bundled DRG payments for inpatient care as early as the mid-1980s, Medicare appears to have largely avoided rewarding hospitals financially for avoidable mistakes.

However, the data reported by the authors appear different for the state-run Medicaid programs. Essentially, Medicaid did not even cover the hospital’s variable costs of treating Medicaid patients. Suggesting to the public that fellow citizens receiving Medicaid have adequate health insurance but then not covering even the clinicians’ and hospitals’ variable costs of treating those patients might warrant the label of “government-initiated Medicaid fraud.”

http://jama.jamanetwork.com/article.aspx?articleid=1679384

In reporting this JAMA article on surgical complications and hospital finances, headlines throughout the nation are stating that hospitals profit from surgical errors. The story that should be reported is that private insurers have been richly rewarding hospitals for surgical complications, whereas Medicare has largely avoided paying these rewards.

Specifically, private insurers pay an average of $39,000 more for surgical complications whereas Medicare pays only $1,700 extra. Obviously the government has done a much better job than the private sector in ensuring value in our health care purchasing, not to mention providing incentives to improve performance.

The government isn’t always right, as the Medicaid program demonstrates. Being chronically underfunded, Uwe Reinhardt suggests that the resulting underpayments “might warrant the label of ‘government-initiated Medicaid fraud.'”

Medicare’s prospective payment system using DRGs (745 diagnosis-related groups) has improved payment levels, but it still provides an incentive for the provision of excess care. There is a better way. Hospitals should receive global budgets based on legitimate costs, just as our fire and police departments are budgeted. Periodic re-budgeting will compensate for changing medical and community requirements. Of course, incentives catering to passive investors should be removed by converting all hospitals to nonprofit status.

Global budgeting for hospitals is just one of the features of the single payer model of reform as advocated by Physicians for a National Health Program, all of which together would result in an affordable system of high-quality care for everyone. We should go for it.

Fox News: Obamacare takes food off the table

Posted by on Tuesday, Apr 16, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Nation’s biggest movie theater chain cuts workweek, blaming ObamaCare

By Perry Chiaramonte
FoxNews.com, April 15, 2013

The nation’s largest movie theater chain has cut the hours of thousands of employees, saying in a company memo that ObamaCare requirements are to blame.

Regal Entertainment Group, which operates more than 500 theaters in 38 states, last month rolled back shifts for non-salaried workers to 30 hours per week, putting them under the threshold at which employers are required to provide health insurance. The Nashville-based company said in a letter to managers that the move was a direct result of ObamaCare.

One Regal theater manager told FoxNews.com the move has sparked a wave of resignations from full-time managers who have seen their hours cut by 25 percent or more.

The manager told FoxNews.com ObamaCare has had the unintended consequence of taking food off his table.

“Mandating businesses to offer health care under threat of debilitating fines does not fix a problem, it creates one,” he said. “It fosters a new business culture where 30 hours is now considered the maximum in order to avoid paying the high costs associated with this law.

Regal, which operates cinemas under the names Regal Cinemas, Edwards Theatres and United Artists Theaters and recently purchased Oregon-based Hollywood Theaters for $191 million, did not respond to repeated requests for comment from FoxNews.com. The publicly-traded company’s stock has risen nearly 30 percent over the last year.

http://www.foxnews.com/us/2013/04/15/nation-biggest-movie-theater-chain-…

It is no surprise that Fox News would frame the 30 hour work week requirement under the Affordable Care Act as “ObamaCare has had the unintended consequence of taking food off (the) table.”

Regal Entertainment Group is only one of many employers who have decided to limit part time workers to 30 hours to avoid the requirement of providing them with health insurance. That does create financial hardships for lower-income employees. They must either find more part time work, in which case they still wouldn’t be eligible for employer-sponsored health plans, or they must find a new, full-time job at a time in which unemployment rates are quite high.

Fox’s framing indicates that the problem is the requirement in “ObamaCare” for larger employers to provide health insurance for their employees, or face a penalty for not doing so. Fox is right when you consider that legislation designed to expand health care coverage instead has the result of causing low-income workers to lose one-fourth of their work week hours, and still remain uninsured. But is this really the prime issue?

The problem that needs to be framed properly is the tens of millions in our nation who have no insurance. How do we cover those people? Obviously a single payer national health program financed equitably through progressive taxes would solve the problem, without taking food off of anyone’s table.

Instead, if we look only at the coverage provisions of the Affordable Care Act, we see an administratively complex, wasteful, fragmented system of a multitude of varying eligibilities and coverage requirements that can never ensure that everyone has stable coverage indefinitely. In fact, it is estimated that after the provisions are in full force, there will still be 30 million people without any coverage at all (CBO). What is worse, we will be paying much more than we would have if we were instead to adopt a single payer, improved Medicare for all.

Until we start doing a better job of framing the problems, we are not going to come up with the right solutions.

U.S. cancer drug policy is scandalous

Posted by on Monday, Apr 15, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Compared To US Practice, Evidence-Based Reviews In Europe Appear To Lead To Lower Prices For Some Drugs

By Joshua Cohen, Ashley Malins and Zainab Shahpurwala
Health Affairs, April 2013

Abstract

In Europe drug reimbursement decisions often weigh how new drugs perform relative to those already on the market and how cost-effective they are relative to certain metrics. In the United States such comparative-effectiveness and cost-effectiveness evidence is rarely considered. Which approach allows patients greater access to drugs? In 2000–11 forty-one oncology drugs were approved for use in the United States and thirty-one were approved in Europe. We compared patients’ access to the twenty-nine cancer drugs introduced into the health care systems of the United States and four European countries (England and Wales, France, Germany, and the Netherlands). Relative to the approach used in the US Medicare program in particular, the European evidence-based approach appears to have led to reduced prices for those drugs deemed worthy of approval and reimbursement. The result is improved affordability for payers and increased access for patients to those drugs that were available. The United States lacks a systematic approach to assessing such evidence in the coverage decision-making process, which may prove inadequate for controlling costs, improving outcomes, and reducing inequities in access to care.

From the Discussion

The current method in the US Medicare program of seemingly “muddling through elegantly” appears incapable of striking a fiscally sustainable balance between cost and access, particularly with respect to cancer drugs. Spending on cancer treatments continues to grow at double-digit rates annually, which in turn has led to much higher cost sharing for patients. This has an impact on the kind of treatment that Medicare beneficiaries get because patients with better insurance, or those who are able to pay higher out-of-pocket costs, have better access to care.

Conclusion

Medicare policy makers might do well to draw lessons cautiously from the experiences of health care systems that have integrated clinical and economic evaluations into decision making. Should the US Medicare program decide to move toward more systematic use of comparative effectiveness findings, there are formidable challenges inherent in the US system that will need to be addressed.

One challenge is payer fragmentation. The diffuse system of payers would probably make the uptake of comparative effectiveness evidence segmented and uneven.

A second challenge is the view of many oncologists that resources are unlimited. In a US-based survey conducted in 2009, nearly 80 percent of oncologist respondents said that patients should have access to “effective” care regardless of costs. An implied cost-effectiveness threshold was calculated at $300,000 per quality-adjusted life-year. Needless to say, having Medicare pay for every cancer treatment that cost up to that amount would not be feasible in the long run.

There is room in the US Medicare program for more systematic and coordinated methods and a process for developing and implementing evidence relative to cost and cost-effectiveness. The immediate goal should be to encourage a more evidence-based process of decision making by closing the gap between what providers, payers, and policy makers know in pharmaceutical care and what they do.

http://content.healthaffairs.org/content/32/4/762.abstract

Cancer drug policies in the United States, compared to other nations, result in higher drug costs, intolerable out-of-pocket costs, and inequitable access to the drugs – preventing many people from receiving comparatively effective drugs, while enabling others to have very expensive drugs of little or no value, wasting our healthcare dollars.

We can do far better in establishing drug policies that are evidence-based and cost-effective based on quality-adjusted life-years. First we need to elect leaders who care more about us, as patients, than they care about kowtowing to the pharmaceutical giants and other special interests.

When it comes down to it, it really is our fault when we fall for the government-can’t-do-anything-right malarkey, and elect those who disseminate this false notion.

Stanford Business Professor Jeffrey Pfeffer on Administrative Waste

Posted by on Friday, Apr 12, 2013

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

The Reason Health Care Is So Expensive: Insurance Companies

By Jeffrey Pfeffer
Bloomberg Businessweek, April 10, 2013

As Congressional budget battles heat up—or roll along, depending on your time perspective—the cost of health care in America receives a lot of attention. Unfortunately most of the discussion is largely off the mark about where the preventable, unnecessary costs really are.

The thing that few people talk about, and that no serious policy proposal attempts to fix—the arrangement that accounts for much of the difference between health spending in the U.S. and other places—is the enormous administrative overhead costs that come from lodging health-care reimbursement in the hands of insurance companies that have no incentive to perform their role efficiently as payment intermediaries.

More than 20 years ago, two Harvard professors published an article in the prestigious New England Journal of Medicine showing that health-care administration cost somewhere between 19 percent and 24 percent of total spending on health care and that this administrative burden helped explain why health care costs so much in the U.S. compared, for instance, with Canada or the United Kingdom. An update of that analysis more than a decade later, after the diffusion of managed care and the widespread adoption of computerization, found that administration constituted some 30 percent of U.S. health-care costs and that the share of the health-care labor force comprising administrative (as opposed to care delivery) workers had grown 50 percent to constitute more than one of every four health-sector employees.

What remains missing even in the discussion of the enormous administrative burden is not just how large, both in absolute dollars and as a percentage of health costs, it is, but also how few incentives there are for insurance companies to stop wasting their and everyone else’s time.

Unless and until we as a society pay attention to the enormous costs and the time wasted by the current administrative arrangements, we will continue to pay much too much for health care.

(Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at Stanford University’s Graduate School of Business.)

http://www.businessweek.com/articles/2013-04-10/the-reason-health-care-i…

Individuals who understand the single payer model will find nothing new here from a policy perspective. What is important about this article is that it is a precise statement about administrative waste, coming from a professor at Stanford University’s Graduate School of Business, and published in Bloomberg Businessweek.

There is hope that others may finally understand how we can control spending while improving value in health care, and then join together to act on it. The Harvard/CUNY professors cited by Pfeffer – PNHP’s David Himmelstein and Steffie Woolhandler – stand ready to provide guidance on the reform that we so desperately need.

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.

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