Arnold “Bud” Relman

Posted by on Monday, Jun 23, 2014

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

Dr. Arnold Relman, Outspoken Medical Editor, Dies at 91

By Douglas Martin
The New York Times, June 21, 2014

In a provocative essay in the New England journal on Oct. 23, 1980, Dr. Relman, the editor in chief, issued the clarion call that would resound through his career, assailing the American health care system as caring more about making money than curing the sick. He called it a “new medical-industrial complex.”

His targets were not the old-line drug companies and medical-equipment suppliers, but rather a new generation of health care and medical services — profit-driven hospitals and nursing homes, diagnostic laboratories, home-care services, kidney dialysis centers and other businesses that made up a multibillion-dollar industry.

“The private health care industry is primarily interested in selling services that are profitable, but patients are interested only in services that they need,” he wrote. In an editorial, The Times said he had “raised a timely warning.”

In 2012, asked how his prediction had turned out, Dr. Relman said medical profiteering had become even worse than he could have imagined.

His prescription was a single taxpayer-supported insurance system, like Medicare, to replace hundreds of private, high-overhead insurance companies, which he called “parasites.” To control costs, he advocated that doctors be paid a salary rather than a fee for each service performed.

Dr. Relman recognized that his recommendations for repairing the health care system might be politically impossible, but he insisted that it was imperative to keep trying. Though he said he was glad that the health care law signed by President Obama in 2010 enabled more people to get insurance, he saw the legislation as a partial reform at best.

The health care system, he said, was in need of a more aggressive solution to fundamental problems, which he had discussed, somewhat philosophically, in an interview with Technology Review in 1989.

“Many people think that doctors make their recommendations from a basis of scientific certainty, that the facts are very clear and there’s only one way to diagnose or treat an illness,” he told the review. “In reality, that’s not always the case. Many things are a matter of conjecture, tradition, convenience, habit. In this gray area, where the facts are not clear and one has to make certain assumptions, it is unfortunately very easy to do things primarily because they are economically attractive.”…


The Arnold Relman Memorial Fund

Physicians for a National Health Program (PNHP)
From “Physicians and Politics” by Arnold S. Relman, M.D., in JAMA Internal Medicine, June 2, 2014:

“A new health care system that provides universal access and is affordable and efficient will be difficult to achieve. The private insurers and all the other businesses that profit from the current commercial system will resist it. Major reform will need wide public support, which in turn will rely on advocacy by the medical profession. But I believe that reform will nevertheless be eventually enacted because it meets a widely shared and growing public desire for more fairness in an American society pervaded by inequality in access to good health care and many other social benefits.

“Physicians have a unique power to reshape the medical care system. They are what makes it work and are best qualified to use and evaluate its resources. But if they never unite to press for major reform, the future of health care in the United States will indeed be bleak. We will end up either with a system controlled by blind market forces or with a system entangled in complicated and intrusive government regulations. In either case it would be impossible to practice good patient-centered medicine, and the quality and effectiveness of our health care system would sink even lower among the ranks of developed countries. It is up to the medical profession to see that this does not happen.”

Dr. Arnold S. Relman, professor emeritus of medicine and social medicine at Harvard Medical School, and past editor-in-chief of The New England Journal of Medicine, died on June 17, 2014. He was 91.

Dr. Relman was one of the most distinguished figures in U.S. medicine, and he leaves a rich legacy of research and writing on the economic, ethical, legal and social dimensions of health care.

An important part of this legacy is embodied in his influential book, “A Second Opinion: A Plan for Universal Coverage Serving Patients Over Profit,” in which he makes an impassioned case for establishing “a single-payer system sponsored by the federal government” coupled with “a reorganized medical care system based on independent multispecialty group practice with salaried physicians.”

Among Dr. Relman’s many achievements during his tenure as editor-in-chief at the NEJM, he oversaw the journal’s publication of “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. At the time, in 1989, the article’s appearance in the NEJM represented a major breakthrough for the mainstream discussion of single payer in the medical profession. It also served as a seminal article in the establishment of Physicians for a National Health Program.

In addition to Dr. Relman’s numerous awards and honors from professional societies, scientific academies, and universities, in November 2013 he was presented with PNHP’s Dr. Quentin D. Young Health Activist Award for his unswerving advocacy for a more just and equitable health care system in the United States.

Dr. Relman leaves his wife, Dr. Marcia Angell; two sons, Dr. David Relman and John Relman; a daughter, Margaret Batten; six granddaughters; and two stepdaughters, Lara and Eliza Goitein.

Shortly before his death, Dr. Relman asked that in lieu of flowers, donations in his memory be directed to PNHP.

Physicians for a National Health Program is honoring Dr. Relman’s legacy by establishing The Arnold Relman Memorial Fund, dedicated to expanding PNHP’s special outreach programs to the medical profession, including to medical residents and fellows, to advance the understanding and realization of Dr. Relman’s vision.

The Arnold Relman Memorial Fund:…

Although some have described Dr. Relman’s 1980 New England Journal of Medicine essay on the medical-industrial complex as controversial, it would better be described as a release of the medical profession from the shackles of the old conservative guard of organized medicine. Although always exercising editorial independence, the NEJM was a publication of the Massachusetts Medical Society – the state chapter of organized medicine. For those of us on the West Coast who were somewhat removed from Boston and Chicago medical politics, Dr. Relman became and remained a beacon of hope for the future of a health care system that would be wholly dedicated to the patient rather than to vested interests.

Perhaps the greatest breakthrough was in 1989 when he published in NEJM “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. That signaled the start of a movement coming from within the medical profession in support of health care justice for all.

Although Dr. Relman had requested that donations be made to PNHP in lieu of flowers, the paramount action that we should take is to honor his legacy by intensifying our efforts to transform our health care system from a medical-industrial complex into a nirvana of the healing arts. That does require that we become more thoroughly enmeshed in technical details such as enacting an Expanded and Improved Medicare for All. But Bud Relman wouldn’t have it any other way.

Facts disappoint both sides of the reform debate

Posted by on Friday, Jun 20, 2014

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

Survey of Non-Group Health Insurance Enrollees

By Liz Hamel, Mira Rao, Larry Levitt, Gary Claxton, Cynthia Cox, Karen Pollitz and Mollyann Brodie
Kaiser Family Foundation, June 19, 2014

The Kaiser Family Foundation Survey of Non-Group Health Insurance Enrollees is the first in a series of surveys taking a closer look at the entire non-group market. This first survey was conducted from early April to early May 2014, after the close of the first ACA open enrollment period. It reports the views and experience of all non-group enrollees, including those with coverage obtained both inside and outside the Exchanges, and those who were uninsured prior to the ACA as well as those who had a previous source of coverage (non-group or otherwise).

  • The ACA motivated many non-group enrollees to get coverage, and nearly six in ten Exchange enrollees were previously uninsured
  • Enrollees in ACA-compliant plans report somewhat worse health than those in pre-ACA plans
  • Majority gives positive ratings to their new insurance plans and says they are a good value, though four in ten find it difficult to afford their monthly premium
  • Among plan switchers, as many report paying less as paying more for their new plans, but survey shows some signs of a trend toward narrower provider networks
  • Plan switchers are less likely to be satisfied with plan costs, maybe because half of them report having their previous plan cancelled
  • Half got help with enrollment; most say the shopping process was easy, but a third say it was difficult to set up a Marketplace account
  • In the non-group market, those most likely to feel they have benefited from the ACA are people getting subsidies, those most likely to feel negatively impacted are those who had their plans cancelled

As a whole, non-group enrollees are more likely than the public overall to have a favorable view of the ACA – they are roughly evenly split between positive and negative views (47 percent favorable, 43 percent unfavorable), while views among 18-64 year-olds nationally are more negative than positive (38 percent favorable, 46 percent unfavorable1. Like it is nationally, opinion of the ACA among non-group enrollees is strongly divided along party lines. About equal shares of non-group enrollees feel their families have benefited (34 percent) and been negatively affected (29 percent) by the ACA. However, these averages mask substantial differences within the non-group market. Those who are most likely to feel they have benefited from the law are people receiving government financial assistance for Exchange plan premiums (60 percent benefited), while those most likely to feel they have been negatively affected by the law are people who experienced a plan cancellation in the past year (57 percent negatively affected).…

Does the Affordable Care Act Cover the Uninsured?

By Drew Altman
The Wall Street Journal, June 19, 2014

Among the facts: 57% of those who bought coverage from the new marketplaces during the first ACA open-enrollment period were previously uninsured, and seven out of 10 of them had been uninsured for two years or more.

The number of uninsured people covered through the exchanges is far higher than critics of the ACA have suggested. On the other hand, the number is probably a little lower than supporters of the health-care law would like. As is typical in the highly polarized debate about the ACA, the facts are not what either side would want them to be.…

It is ironic that we have a health reform program that satisfies neither proponents nor opponents. On the question of how effective has the Affordable Care Act been in insuring those who were previously uninsured, supporters are concerned that it was not enough and critics are disappointed to see that more people became insured under the program than had been insured under prior plans (since that refutes their argument that the exchanges are ineffective because it only shifted previously insured individuals into the exchanges).

WSJ’s Drew Altman makes the point that “in the highly polarized debate about the ACA, the facts are not what either side would want them to be.”

So is this a balanced debate between two sides with legitimate views? Opponents would like to see much of the Act repealed, but the few recommendations they do have, they can’t even agree on. Besides, most of their recommendations would not repair the flaws in our health care system, and some would make them worse.

Supporters at least want to see improvements in coverage, access and affordability, not to mention quality, but they realize that ACA is falling far short of goals (though they may not want to admit it) and has actually had a negative impact in lowering the actuarial value of plans – making health care less affordable for many by increasing out-of-pocket costs – while also reducing access by paring down the numbers of physicians and hospitals in the insurers’ provider networks.

We can reject the views of those polarized against reform as not being responsive to our overpriced and underperforming health care system.

Although we support the views of those who would repair the flaws, we can reject the policies they have selected as being cruelly inadequate. Those who really do want reform should join us in supporting single payer – a model that would be truly universal, accessible, affordable, and, properly designed, would improve the quality of health care in the United States. In fact, many of the current opponents might consider supporting a program that actually would work, especially if they see that it would not increase overall spending. We should tell them about it.

Aetna’s Bertolini assures us that premium increases will be less than 20%

Posted by on Thursday, Jun 19, 2014

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

Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law

By Louise Radnofsky
The Wall Street Journal, June 18, 2014

Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching.

That is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings, which stretch from Rhode Island to Washington state. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year, according to a Wall Street Journal review of the filings. That percentage represents the average rate increases for all individual health plans offered by that carrier.

At the same time, insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.

The rate proposals reflect a combination of big carriers stepping back from initial aggressive pricing, rising medical costs and increased competition during the second year of President Barack Obama’s health law.

With dominant market share now, analysts say, carriers feel they have room to raise rates. Nine of the carriers are proposing average increases for 2015 that range from 8.5% by Anthem Inc. in Virginia to 22.8% from CareFirst for its BlueChoice plans in Maryland. Most of these large carriers’ proposed rate increases hover around 10%.

Erin Shields Britt, a spokeswoman for the Department of Health and Human Services, said the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors, which is a trend we are already seeing accelerate in a number of states, with new plans entering the market.”…


Aetna CEO says 2015 Obamacare rates increase less than 20 pct

By Caroline Humer
Reuters, June 11, 2014

Health insurer Aetna Inc is submitting premium rates to regulators for 2015 Obamacare insurance plans that generally increase less than 20 percent from 2014, Chief Executive Officer Mark Bertolini said on Wednesday.

Bertolini said that customers are disenrolling from exchange plans on a regular basis but that the company still expects to have 450,000 exchange customers at year end. He said that while he did not know the reason for these customers leaving, he suspected that it was due to the out-of-pocket costs before members reach their deductibles.…

Because of uncertainty of claims experience and instability in enrollment, it is difficult for insurers to set their 2015 premiums to match market conditions. But what is projected so far is that the dominant insurers intend to raise their premiums about 10 percent, ranging between 8.5 and 22.8 percent, according to this WSJ report. Aetna’s Mark Bertolini assures us that increases will be “less than 20 percent.” What a relief.

Our Department of Health and Human Services is thoroughly sold on the concept of using markets to price insurance products. As their spokeswoman, Erin Britt, says, the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors.” Let’s look a little bit closer at what this market competition means.

The insurance underwriting cycle is a phenomenon in which insurers enter the market with low premiums in an effort to gain a larger share of the market. Once they have that share, they increase their premiums to the maximum tolerated. In the meantime, competitors with a smaller share of the market lower their premiums in an attempt to increase their share. Because their premiums are too low and their volume is too small, they fail and shut down. That leaves the dominant insurers in a position to charge even higher premiums than their costs would warrant. Patient/consumers end up being the losers.

That is precisely what is happening now, according to this report. The dominant insurers are raising their rates significantly (but “under 20%”) and “insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.”

These sick market dynamics are part of the reason that we have the least effective health care financing system in the world. Nobel laureate Kenneth Arrow explained to us decades ago why markets do not work in health care. While it is true that they do not work for the patient/consumer, market distortions work very well in moving our financial resources into the hands of those controlling the markets.

Mark Bertolini, who is keeping Aetna’s premium increases below 20 percent, for 2013 received an executive compensation of $30,712,565. Works pretty well for him.

Each day I write these comments, this is the point at which my blood pressure goes up and I have to restrain myself from using inappropriate language. I don’t know how much longer I can do that. Using the democratic process, we need to take over our government by electing representatives who serve us, the people, rather than serving those whose “r” is greater than our “g.”

At the following link, Paul Krugman explains Thomas Piketty’s r>g. It is very wonkish, but skim on through to the end and you’ll get the point.

Should private insurers be allowed to dictate rates to non-contracted hospitals?

Posted by on Wednesday, Jun 18, 2014

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

Calif. Court Rules Insurer Payments Should Reflect Value of Care

California Healthline, June 16, 2014

An appellate court ruling in Fresno last week could change the way California hospitals and health insurers enter into contracts and negotiate payments for services, the Sacramento Business Journal reports.

Background on Case

The lawsuit between Children’s Hospital Central California and Anthem Blue Cross involved a dispute over insurer reimbursement rates for hospital services.

In 2007, the hospital and insurer for about 10 months were unable to reach an agreement to renew a contract setting reimbursement rates for hospital services. During that time, federal and state laws required that Children’s Hospital continue to provide emergency care to Anthem beneficiaries.

The hospital later billed Anthem for post-stabilization emergency medical care that took place during the 10-month contract gap. In the billing, the hospital listed the full rate of services included in its “chargemaster” document instead of the usual discounted rate based on volume. In total, the hospital charged Anthem $10.8 million for care provided to 896 beneficiaries.

Anthem paid the hospital about $4.2 million based on Medi-Cal rates. Medi-Cal is California’s Medicaid program.

Children’s Hospital filed a lawsuit over the difference, and a jury awarded the hospital $6.6 million. Anthem then filed an appeal.

Details of Ruling

On Tuesday, the Fifth District Court of Appeals ruled that insurers are not required to reimburse hospitals for amounts that are more than the actual value of services.

The ruling states that the hospital “rarely received payment based on [their] published chargemaster rates.” Therefore, the trial court should have allowed Anthem to present evidence of the value of post-stabilization emergency services.

The appeals court ordered a new trial between Children’s Hospital and Anthem to establish damages that reflect the “reasonable value” of services, as opposed to the higher costs included on hospital’s bill to the insurer.


Dan Baxter, an attorney representing Anthem, said, “This ruling will absolutely change the landscape between hospitals and health plans in litigation going forward.” He added, “It’s a clear-cut California case we didn’t have until now — finally — that says in no uncertain terms you can consider a full body of information, not just billed charges.”

However, Glenn Solomon, an attorney representing Children’s Hospital, said the ruling could result in insurers paying contract rates for health care services without actually establishing a contract.

Solomon said, “If a health plan can get the benefit of contracted rates without actually engaging in a contract themselves, there’s less incentive for them to enter into a contract in the first place,” adding, “That’s not just bad for hospitals. It’s bad for all of California” (Robertson, Sacramento Business Journal, 6/13).…

This case centers around a dispute on whether an insurer pays list rates (chargemaster prices) or prior contracted rates during an interval in which the insurer/hospital contract had lapsed. But there is a much more important issue here: Should an insurer be able to dictate unilaterally to a hospital what rates will be paid during a time in which there is no contract with the hospital?

Regarding the particulars of this case, hospital chargemaster rates are usually pie-in-the-sky rates that nobody pays. The insurer, Anthem Blue Cross Medi-Cal managed care, should be able to negotiate rates down. On the other hand, Medicaid (Medi-Cal) rates in California are the lowest in the nation and result in a loss for most providers, so Children’s Hospital Central California should be able to negotiate up the rates for “post-stabilization emergency services” when it has no contract with the insurer. It appears that the intent of this court ruling was to prevent unreasonably high, binding rates from being set arbitrarily by hospital chargemaster programmers.

Although other laws apply, this ruling seems to be a step towards allowing private insurers to dictate rates when no contract is in force. It would be untenable if private insurers could enforce provisions of a contract that they would like to have without the necessity of formally contracting with the providers.

This is no way to set payment rates. Control should be completely removed from the private insurers. They should be dismissed from the health care financing scene anyway since they waste resources diverted to their intrusive exploitations. We also know that providers should not be allowed to set their own rates. During the implementation of Medicare, physicians were paid based on usual, customary and reasonable fees, and they responded by driving fees up exponentially. No, we know from the experience of other countries that the government must be involved if we expect fair pricing.

Under a single payer system, whether setting global budgets for hospitals or negotiating rates for professional services or health care products, including pharmaceuticals, our own government stewards would be there to represent us as patients and as taxpayers. As public servants, they would not be representing their own personal interests. Payments would be based on legitimate costs and fair margins.

Besides receiving greater value, we would be eliminating the costs and grief of the profound administrative waste of our current fragmented, dysfunctional financing system. That alone should be enough for us to decide to make the change.

P4P is failing in the UK

Posted by on Tuesday, Jun 17, 2014

Successes and failures of pay for performance in the United Kingdom

By Martin Roland and Stephen Campbell
The New England Journal of Medicine, May 15, 2014

In 2004, the United Kingdom introduced one of the world’s largest pay-for-performance programs, the Quality and Outcomes Framework. … The Quality and Outcomes Framework was originally designed in part to give family practitioners a substantial pay increase. … However, the amount of program-associated money (25% of family practitioners’ income) became increasingly regarded as a distraction, diverting their gaze onto limited parts of clinical practice and reducing the focus on the patient’s agenda during the consultation. …

In 2004, when the Quality and Outcomes Framework was introduced, much changed overnight. Family practitioners and practice staff started using full electronic medical records. …They also changed the structure and staffing of their practices in two key respects. First, there was an increase in nursing staff. … Second, there was an increase in administrative staff so that family practitioners could have rapid access to their performance… …

Over time however, the program became more intrusive into regular consultations with family practitioners. … [P]ractitioners resented constant electronic reminders of “boxes to be ticked” which led to a more biomedical focus on consultations with less attention being paid to patients’ concerns. …

Clinical care probably [italics added] improved after the introduction of the Quality and Outcomes Framework, though the effects were not compelling. …

There is clearly a problem in trying to include more and more conditions into a pay-for-performance program. … Progressively, the burden of the recording of data mounts, with consultations becoming increasing disrupted by the need to respond to requests or prompts for information.

Two months ago I commented on the Medicare Payment Advisory Commission’s aimless debate about whether to alter the hazy definition of “medical home.”  I began with this question: “If you endorse a vague plan based on conventional wisdom rather than evidence and it doesn’t work, how do you revise it? Upon what evidence, by what logic, do you alter this or that part of the plan?”

Advocates of another hot managed care fad, pay-for-performance (P4P), are facing the same dilemma. The P4P fad struck the U.S. and the U.K. simultaneously in the early 2000s, approximately five years before the “medical home” fad arrived. Like “medical home” proponents, P4P proponents hyped P4P without any evidence that it would work. In an introduction to a 2006 supplement to Medical Care Research and Review devoted entirely to the emerging P4P fad, Peggy McNamara with the U.S. Agency for Healthcare Research and Quality attributed the P4P fad to the actions of “visionaries.” She then presented excerpts from nine papers which stated there is no scientific evidence for P4P (“Forward: Payment Matters?” February 2006, pp.7S-8S). The three guest editors for that supplement agreed. They stated, “P4P programs are being implemented in a near-scientific vacuum.” (Dan Berlowitz et al., “Introduction,” 10S).

The U.K.’s giant experiment with P4P is 10 years old, and the evidence indicates it is not working. It therefore presents students of the managed care movement a golden opportunity to study how movement activists cope with failure. How do you revise a P4P program that isn’t working when you had no logical or evidentiary basis for setting up the program in the first place?

The Quality and Outcomes Framework (QOF), the U.K.’s P4P scheme, was implemented in 2004 by the Tony Blair administration. The program applies to family practitioners – “half of the medical work force in the National Health Service (NHS).” Its implementation in 2004 was accompanied by a 25 percent increase in funding for primary care doctors.

The evidence that the QOF is not working is substantial. Much of that evidence is cited in the article quoted above by British experts Martin Roland and Stephen Campbell. Roland and Campbell are clearly sympathetic to the QOF. But the best they can say about this richly endowed P4P scheme is that it “probably” improved quality for patients whose care was measured, but the evidence is “not compelling,” and it might not have improved quality overall because the QOF encourages “gaming” by physicians (which may have exaggerated the apparent improvements) and has had negative side effects including “adverse effects on the quality of care for medical conditions that are not included in the incentive program” (p. 1947).

A 2012 literature review by Gillam et al. produced an even more negative assessment. Here are excerpts:

“Both groups [doctors and nurses] believed that the person-centeredness of consultations and continuity were negatively affected. Patients’ satisfaction with continuity declined, with little change in other domains of patient experience.

“Observed improvements in quality of care for chronic diseases in the framework were modest, and the impact on costs, professional behavior, and patient experience remains uncertain….. Health care organizations should remain cautious about the benefits of similar schemes.” (“Pay-for-Performance in the United Kingdom,” Annals of Family Medicine, 2012)

What do QOF proponents do now? Do they reduce the number of measures that allegedly measure quality? Do they leave the measures in place but reduce the size of the bonuses? Do they do nothing? And for any of the above, upon what basis?

If Blair and his fellow advocates of P4P had laid out a clear rationale for P4P – a diagnosis of the problem, an explanation of how P4P addresses the diagnosis, and at least some empirical evidence for their diagnosis and solution – QOF proponents might now be in a better position to adjust the QOF intelligently. But precisely because the QOF was introduced in a scientific vacuum, QOF proponents are flying blind, just as Medpac and “home” proponents are now flying blind in their attempts to redefine the “home” concept.

Those who want a firsthand sense of how blind the pilots at the QOF are should examine the QOF’s latest list of diseases and conditions that are subject to P4P. You can find them listed in the table of contents of the British Medical Association’s guide here [p. 2]. There you find 18 diseases plus “mental health,” “palliative care,” “obesity,” “smoking,” and “contraception.” Which of these categories would you like to remove? On what basis? Should we pull the “learning disability” measure because the only action required of doctors is to keep a list of patients with learning disabilities? Why was that measure put there in the first place?

Or would you like to add more measures to the existing two dozen?

If doctors were spending much of their time loafing outside their clinics listening to rock ’n’ roll music and cracking jokes, these question about which knobs on the QOF dashboard to twiddle would not be so serious. But research (never mind common sense) tells us that’s not true. Research in the U.S. indicates that doctors would need to work 22 hours a day to “deliver recommended primary care” (preventive, acute and chronic). This means that any P4P scheme imposed on primary care doctors must inevitably induce doctors to focus on “limited parts of clinical practice” and reduce their “focus on the patient’s agenda,” to quote Roland and Campbell.

Those facts – the unalterable fact that doctors simply don’t have enough time to honor all guidelines, and that P4P usurps patient authority to set their own agenda – are determinative for me. Patient autonomy (assuming the patient is of sound mind) should be the paramount value guiding all health policy.

The QOF has had 10 years to demonstrate it creates so much value that the damage it does to patient autonomy can be justified. It has not done that. The Cameron administration should pull the plug on the QOF.

Kip Sullivan, J.D., is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. His writing has appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.

Narrow Provider Networks: Balancing Affordability with Access – a flawed approach

Posted by on Tuesday, Jun 17, 2014

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

Narrow Provider Networks in New Health Plans: Balancing Affordability with Access to Quality Care

By Sabrina Corlette, JoAnn Volk, Robert Berenson and Judy Feder
Urban Institute, Georgetown University Center on Health Insurance Reforms, May 2014

New network configurations offer trade-offs for consumers. Many insurers were able to lower their overall costs by reducing the prices they pay participating providers, which in turn allowed them to lower their premiums to attract price-conscious shoppers. However, in many cases, consumers have been surprised to discover that their new plan offers a more limited choice of providers. Some others willing to pay more to purchase a plan with broader access to providers have found that only limited-network plans are available in their area.

It is not yet clear whether these new, narrower network plans can effectively deliver on the benefits promised under the plan. If policyholders opt to seek medically necessary care out-of-network, it could expose them to significant financial liabilities. If policyholders delay or forgo care because in-network providers can’t meet their needs, it could put their health at risk.

Consequently, state and federal policy-makers are taking another look at the Affordable Care Act (ACA) requirement that plans participating on the new health insurance marketplaces maintain an adequate provider network. In doing so, they must strike a delicate balance. If they overly constrain insurers’ ability to negotiate with providers, consumers could face significant premium increases. On the other hand, consumers must be able to choose among plans with confidence that they have a sufficient network to deliver the benefits promised and that they will not be exposed to unanticipated health and financial risks because of an inadequate network. Insurers also need incentives to take provider quality into account (in addition to prices).


There is no perfect approach to the oversight of health plan networks. In the absence of other government policies to constrain provider prices, insurers’ ability to exclude or threaten to exclude providers from the network is important to their ability to negotiate reimbursement rates and offer more affordable premiums to consumers. On the other hand, if insurers narrow their networks too much, consumers could be harmed if forced to go out-of- network or to a less-preferred provider tier to meet their needs. Policy-makers therefore need to strike a balance between consumer protection and insurer flexibility.

Our proposed approach sets minimum quantitative standards, with waivers for certain providers based on price and quality; improves transparency and consumer information to give consumers better tools to make informed choices; gives insurers the flexibility to develop more value-oriented network designs so long as they maintain a provider network that can meet people’s needs; and — to assure effective consumer protection — calls for continuous monitoring of consumers’ use of out-of-network services, complaints and appeals, and more active oversight of plan behavior.

Full report (10 pages):

This report provides an excellent discussion of the tradeoffs between affordability and access to care when insurers use networks of providers, especially the trendy narrow networks in many of the ACA exchange plans. Unfortunately, the authors’ approach to trying to achieve an optimal balance misses an opportunity both to totally avoid the impaired access characteristic of narrow networks, and to make health care even more affordable.

The flaw is that they assume that private health plans are a given. With that, they then try to achieve a compromise between avoiding excessively reduced access to providers and reducing insurance premiums by restricting patients to providers who agree to lower contracted rates. A single payer system would have full choice of providers and would be more affordable because of the efficiencies of a government administered program, including its power as a monopsony. Compared to single payer, patients enrolled in narrow network plans have less choice of providers and pay more. They lose on both counts.

Even broader networks found in the majority of private plans still compromise between these choices, though not to as great of a degree. But they still do compromise.

The remedial proposals in this report are designed to support the superfluous private insurer intermediaries, while compromising access and cost for patients. Our health care system should be about patients, not insurers.

It is not as if the authors of the report do not understand this. They write, “In the absence of other government policies to constrain provider prices…” If they are going to change policy, why don’t they move to policies that actually benefit patients? Like a single payer national health program – full access to all health care professionals and institutions, in an equitably funded system that all of us can afford.

The U.S. health system ranks last again

Posted by on Monday, Jun 16, 2014

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

Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally

By Karen Davis, Kristof Stremikis, David Squires, and Cathy Schoen
The Commonwealth Fund, June 2014

The United States health care system is the most expensive in the world, but this report and prior editions consistently show the U.S. underperforms relative to other countries on most dimensions of performance. Among the 11 nations studied in this report—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States—the U.S. ranks last, as it did in the 2010, 2007, 2006, and 2004 editions of Mirror, Mirror. Most troubling, the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity. In this edition of Mirror, Mirror, the United Kingdom ranks first, followed closely by Switzerland.

The most notable way the U.S. differs from other industrialized countries is the absence of universal health insurance coverage. Other nations ensure the accessibility of care through universal health systems and through better ties between patients and the physician practices that serve as their medical homes.

Key Findings

Quality: The indicators of quality were grouped into four categories: effective care, safe care, coordinated care, and patient-centered care. Compared with the other 10 countries, the U.S. fares best on provision and receipt of preventive and patient-centered care. While there has been some improvement in recent years, lower scores on safe and coordinated care pull the overall U.S. quality score down.

Access: Not surprisingly—given the absence of universal coverage—people in the U.S. go without needed health care because of cost more often than people do in the other countries. Americans were the most likely to say they had access problems related to cost.

Efficiency: On indicators of efficiency, the U.S. ranks last among the 11 countries, with the U.K. and Sweden ranking first and second, respectively.

Equity: The U.S. ranks a clear last on measures of equity. Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs. On each of these indicators, one-third or more lower-income adults in the U.S. said they went without needed care because of costs in the past year.

From the Discussion

It is difficult to disentangle the effects of health insurance coverage from the quality of care experiences reported by U.S. patients. Comprehensiveness of insurance and stability of coverage are likely to play a role in patients’ access to care and interactions with physicians. We found that insured Americans and higher-income Americans were more likely than their counterparts in other countries to report problems such as not getting recommended tests, treatments, or prescription drugs. This is undoubtedly a reflection of the lack of comprehensive health insurance coverage and the high out-of-pocket costs for care in the U.S., even among the insured and those with above-average incomes. Fragmented coverage and insurance instability undermine efforts in the U.S. to improve care coordination, including the sharing of information among providers. Patients in other countries, in addition, are more likely to have a regular physician and long-time continuity with the same physician.

These results indicate a consistent relationship between how a country performs in terms of equity and how patients rate other dimensions of performance: the lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it also fails to meet needs for the average citizen. Rather than regarding performance on equity as a separate and lesser concern, the U.S. should devote far greater attention to building a health system that works well for all Americans.…

In this 2014 update of The Commonwealth Fund study on the performance of the U.S. health care system compared to other nations, the United States once again comes in last, in spite of having the most expensive system of all nations.

This year the authors express hope that implementation of the Affordable Care Act (ACA) will improve our performance, though so far the changes in the first three years of ACA have not been enough to lift us from the bottom. There is reason to believe that it is too weak of a program to ever have enough impact.

An interesting finding in this report is that the United Kingdom came in first in most categories studied, placing it in solid first place overall. Their National Health Service is government owned and operated – socialized medicine – and is one of the least expensive systems of all, spending only 40 percent per capita of what we spend in the United States. The next time someone claims that we are headed towards socialized medicine, we can respond, “Don’t we wish.”

However we do have to be careful about drawing sweeping conclusions from this study. Canada, which has a single payer system, scored next to the bottom, just above the United States. They scored lower in access, especially in timeliness of care, and in efficiency and safety. Although they have single payer government insurance systems in each province, the health care delivery system remains largely private. Since the deficiencies are primarily those of private delivery systems, it would suggest that the Canadian government should play a much greater role in improving resource allocation.

One of the more important deficiencies of a single payer system is that when conservative governments are in control – as they now are in Canada – the politicians attempt to reduce the role of government. Currently in Great Britain, conservatives are attempting to move more towards privatization, but so far their solidarity has prevented a massive shift in that direction, though they have introduced some worrisome policies.

Nevertheless, politics will always play a role in any system. That makes it even more imperative to put in place a system that is much less vulnerable to political whim – a universal national system in which the people take pride.

Pew Research on the Government’s Role in Health Care

Posted by on Friday, Jun 13, 2014

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

Political Polarization in the American Public

Pew Research Center, June 12, 2014

Section 4: Political Compromise and Divisive Policy Debates

Government’s Role in Health Care

The idea of a single-payer health care system – in which the government pays for all health care costs – has long been a dream of many liberals. But when Congress took up health care reform in 2009, Democrats united behind a market-based proposal – what became the Affordable Care Act – which was seen as more politically feasible.

The current survey finds that government involvement in the health care system continues to draw extensive liberal support: Fully 89% of consistent liberals say it is the responsibility of the federal government to make sure all Americans have health care coverage. And roughly half – 54% – think health insurance “should be provided through a single national health insurance system run by the government.”

Overall, the public is divided over how far the government should go in providing health care. About half (47%) say the government has a responsibility to make sure all Americans have health care coverage, while 50% say that is not the responsibility of the federal government.

Those who believe the government does have a responsibility to ensure health coverage were asked if health insurance should be provided through a mix of private insurance companies and the government, or if the government alone should provide insurance. The single-payer option was supported by 21%, while about as many (23%) favor a mix of public and private insurance.

On the other side of the issue, while half say it isn’t the government’s responsibility to make sure all have health care coverage, relatively few want the government to get out of the health care system entirely. Rather, 43% say it’s not the government’s responsibility to ensure health care coverage for all, but believe the government should “continue programs like Medicare and Medicaid for seniors and the very poor.” Only 6% of Americans go so far as to say the government “should not be involved in providing health insurance at all.”

Even among consistent conservatives, there is minimal support for the government having absolutely no role in providing health care. Three-quarters of consistent conservatives (75%) say the government should continue Medicare and Medicaid while just 20% think the government should not be involved in providing health insurance.…

Bar graph of poll results on government involvement in health care:…

Table 4.7 Government Role in Health Care

Q121/a/b: Do you think it is the responsibility of the federal government to make sure all Americans have health care coverage, or is that not the responsibility of the federal government?

ASK IF GOV’T RESPONSIBILITY: Should health insurance (Be provided through a single national health insurance system run by the government) OR (Continue to be provided through a mix of private insurance companies and government programs) [RANDOMIZE]?

ASK IF NOT GOV’T RESPONSIBILITY: Should the government (Not be involved in providing health insurance at all) OR (Continue programs like Medicare and Medicaid for seniors and the very poor) [RANDOMIZE]?

Table of results at this link:

It is often said, based on many polls, that about 60 percent of Americans support a single payer national health program. How solid is that support? This important poll from Pew Research Center provides some perspective.

Those polled were split into two groups based on whether or not they thought that it is the responsibility of the federal government to make sure all Americans have health care coverage. They were split fairly evenly – 47 percent believing that it is a government responsibility and 50 percent believing that it is not. But then the 50 percent who thought it is not a government responsibility split into 43 percent of the total believing that we should keep Medicare and Medicaid and only 6 percent holding the position that government should not be involved at all.

This demonstrates a problem with polling. We tend to think that answers to seemingly straightforward questions accurately represent the views of the public. But against a background of rhetoric, memes, subliminal persuasion, and the messages of controlled media (think Fox), simple responses are not all that simple. The oft-repeated line, “Keep government out of my Medicare,” facetiously represents the complexity of seemingly simple concepts. Fully half of people seem to believe that they do not want the government to have the responsibility of making sure that all Americans have health care coverage, yet actually only 6 percent do not want the government involved if it means eliminating Medicare and Medicaid. That does not seem to be intuitive. People do want the government involved, even though half said that health care coverage wasn’t the government’s responsibility.

Single payer supporters likely will be troubled by the further responses of the nearly one-half who do believe that the government should be involved. Of those individuals ideologically classified as “Consistently Liberal” 89 percent believe that it is a government responsibility, yet only 54 percent believe that we should have a single national health insurance system run by the government; 31 percent believe that we should have a mix of private insurance and government programs. Of “Consistently Conservative” 98 percent believe that the government should not be involved, and zero percent support single payer (though that 98 percent drops to 20 percent of the “consistently conservative” when asked about Medicare and Medicaid).

Overall, only 21 percent of Americans in this poll seem to believe that we should have a single national health insurance system run by the government.

Most single payer supporters find this difficult to believe. But the view is quite malleable and subject to exposure to memes, rhetoric, political advertising and whatever. As examples, California’s Proposition 186 and Oregon’s Measure 23 – two single payer ballot measures – had support in the polls early in their campaigns, yet three-fourths of voters rejected Prop. 186, and four-fifths rejected Measure 23. Late in each campaign, the insurance industry had very little difficulty in taking advantage of the malleability of the views on single payer.

How could the voters be so deceived? It’s easy. It took only one more question in this Pew poll to change opposition to government involvement from 50 percent to 6 percent!

The lesson is that we cannot rest on believing that the 60 percent of Americans who support single payer will eventually drive the political process and bring us reform. That 60 percent is not an absolute – ask single payer supporters in California and Oregon. People need to have a much better understanding of health policy than they do. We need a solid foundation that cannot be washed away by memes. That is a monumental task, but that is what we are faced with.

We have a lot of educating to do. Get to work.

Addendum:  The full Pew report represents a massive undertaking of defining political polarization in America. It is important to understand better this polarization if we hope to communicate our views on a superior alternative for health care financing – a single payer national health program (or, using malleable political rhetoric, “an improved Medicare for all”).

Political Polarization in the American Public:…

I also want to thank Harvard Professor Robert Blendon for the help he has given me in understanding political polling. Several years ago, responding to my request to get the wording right on single payer in the polls that Harvard and Kaiser Family Foundation were conducting, he sent me a large package of material that amounted to a mini-course on political polling. He convinced me how naive my view was that if we could just phrase the poll questions appropriately, we could get a stronger response supporting single payer and then use that to move the political process. We may have many polls with a 60 percent favorable response, but do we have single payer?

Austin Frakt: ACA fails moral test for affordable care

Posted by on Thursday, Jun 12, 2014

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

The Moral Case for Affordable Coverage and How Obamacare Fails To Live Up to It

By Austin Frakt, PhD
The JAMA Forum, June 11, 2014

Some health policy commentators have claimed that President Obama and Affordable Care Act (ACA) supporters have not made a convincing moral case for coverage expansion. Scholars suggest that support for the law could turn, in part, on the moral argument for it. What is that argument, and is implementation of the law consistent with it?

We can make some headway by turning to Norman Daniels, PhD; Brendan Saloner, PhD; and Adriane Gelpi, who articulate one possible moral case for universal coverage. Their key assumption is that there is a “social obligation to protect opportunity.”

From this, a lot follows. One’s opportunity is threatened by poor health. In sickness, one cannot learn or earn as efficiently, let alone enjoy the same length or quality of life. Therefore, protecting opportunity implies protection of access to health care services that promote and preserve health. And, it’s hard to argue with the notion that such access should be protected equally.

Access to health care is enhanced by health insurance. As Daniels, Saloner, and Gelpi argue, universal health insurance is a means to this end. But it’s not the only way. The key is to recognize that equality of access is not equality of receipt. The authors are not suggesting that we have a moral obligation to ensure that everyone receive the same amount of health care, merely that everyone have the same degree of access to it.

This more modest obligation would be met in a system that does not cover everyone but extends equal opportunity of access to affordable coverage to everyone. That is, equal opportunity to obtain coverage is a necessary condition for equal access to health care, though some may choose not to avail themselves of that care or that coverage. Put another way, if we are morally satisfied with a regime under which people can choose whether to receive care, we ought to be morally satisfied with one under which people can choose whether to obtain coverage for it, so long as there is equal opportunity of access to that coverage and the care it facilitates.

The distinction is crucial because the ACA was not designed for universal coverage, and it will not achieve it. However, it was passed with the more modest ambition to provide universal access to affordable coverage, the very thing we’re morally obligated to provide.

But, when you go beyond the law’s ambition and consider its actual implementation, there are some problems. It has failed to provide universal access to affordable coverage in at least 2 ways. First, the Supreme Court ruled to permit states to opt out of Medicaid expansion without penalty. Though gradually, more states are expanding their programs, many states still have not. In those states, millions of poor residents lack access to affordable coverage. No matter what institution one wishes to blame, this is a moral failing.

Second, for some consumers, the products offered in the new exchanges are unaffordable, even with subsidies. This is a serious ethical concern, as addressed by Saloner and Daniels.

“[T]he exchanges leave families vulnerable to burdensome out-of-pocket spending for treating health conditions that are costly but not necessarily catastrophic. For example, 25 percent of individuals in the United States have a major chronic condition such as a mood disorder, diabetes, heart disease, asthma, or hypertension. The annual cost of treating such conditions, including visits with specialists and payments for medications, can exceed several thousands of dollars, even with health insurance (Soni 2009). Under the ACA, a family of four with an income around 275 percent of the [federal poverty level] ($64 000 in 2010) would be responsible for premium costs of around $5600 and would not experience relief from cost sharing until it had reached half the family cap, around $6000 in 2010 (KFF 2010b).”

Jed Graham of Investor’s Business Daily recently reported that such affordability concerns have become reality. He documents that some families covered by exchange plans could face out-of-pocket costs as high as 40%. By any reasonable definition of affordable, this is not. This is another moral failing.

So, what can be done to bring policy into better alignment with morality? First, all states could expand Medicaid. Second, Saloner and Daniels suggest that subsidies could be increased for families with higher health care burdens, such as chronic conditions. Third, tax credits, (which now kick in when premiums are higher than a specified percentage of income) could take into account other out-of-pocket costs. Saloner and Daniels offer a final suggestion:

“[E]xchanges could be redesigned to protect specific types of investments by providing income disregards for money that low-income families set aside for paying children’s college tuition, opening a small business, or saving for retirement. An added benefit is that such a proposal would encourage families to increase their assets and to build financial stability.”

All of these approaches would make coverage expansion more expensive, unless they could be offset by policies that would make health system delivery or health insurance more efficient.

Perhaps the moral argument for the ACA was not made fully or loudly in years past. That’s a failing we can now easily remedy. I’ve just done my part. But, having done so, it’s now clear that as designed and implemented, the law is not consistent with what that moral reasoning demands. That too can be remedied, but it will require some changes, potentially at some cost. Do we have the moral fiber to make them?…

Austin Frakt is a highly credible health economist with great values, and a person for whom I have profound respect. But sometimes he thinks too much. He is certainly correct when he states that the design and implementation of the Affordable Care Act (ACA) is not consistent with “what moral reasoning demands.” Where he falls short is in his endorsement of flawed recommendations for improvement.

In conceding that ACA was not designed for universal coverage and will not achieve it, he implies that this is acceptable since our only moral obligation is to provide universal access to affordable coverage. The problem is that no matter how much you modify our existing fragmented, multi-payer system, you can never achieve truly universal access to affordable coverage, much less to affordable health care.

Let’s look at his suggestions. He says that all states could expand Medicaid. Sure, but they aren’t, and the Supreme Court ruled that we can’t make them do it. He says that we could increase subsidies for families with greater health care burdens. Sure, but imagine the administrative complexity assigning a health-care-needs status to each individual and then continually adjusting that status as needs change with time. He says that premium tax credits could take into consideration other out-of-pocket costs. Sure, but which would be allowable and how much documentation would be required? He says that exchanges could be redesigned to protect certain investments such as the children’s college education fund, the expenses of starting a small business, or saving for retirement. Sure, but talk about an administrative nightmare, and the error rate would likely be very great.

He says that these approaches would make coverage expansion more expensive. Sure. Much of the increased cost would be in the waste inherent in adding more administrative complexity to a system that is already uniquely heavily burdened with expensive administrative excesses. He says that these extra costs could be offset by increasing efficiency in health system delivery, but that has proven to be an elusive goal with little gain to date. Besides, wouldn’t we want the gains from increased efficiency to be used to improve health care delivery rather than to add to the administrative waste we already have?

The proper moral argument is to make actual health care – not health care coverage – accessible and affordable for absolutely everyone. This is what a single payer system would do. Tweaking our highly flawed financing system so that more people have access to an insurance card falls far short of the moral obligation that we have to each other. Austin Frakt knows this. He should give up on trying to think up ways to skirt single payer.

AHIP supports catastrophic plans as option

Posted by on Wednesday, Jun 11, 2014

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

Continuing Our Commitment to Consumers: Solutions That Will Enhance Affordability, Stability and Accessibility in the New Health Care Marketplace

America’s Health Insurance Plans (AHIP), June 2014

Enhancing affordability by creating a new lower premium Catastrophic Plan option

While millions of Americans have the peace of mind that health insurance provides, more can be done to maximize choice and affordability for individuals and families. As a solution to bring more families into the marketplace:

Health plans support the creation of a new, lower-premium catastrophic plan.

Such a plan would offer consumers the option of coverage that has lower monthly premiums but still provides the comfort of knowing that their costs will be limited in the event of a serious illness or injury.

Under the ACA, plans offered in the marketplaces fall into several metal-level categories, based on their “actuarial value” (AV) standard – essentially, what percentage of health care costs the policy would cover for a standard population. Plans are labeled as platinum (90% AV), gold (80% AV), silver (70% AV), or bronze (60% AV). A limited number of individuals — including individuals under the age of 30 — also have the option to purchase a catastrophic, high-deductible plan, although it has an actuarial value that is comparable to the bronze plan.

The new catastrophic plan would offer an AV just below the current minimum requirement, allowing for lower premiums, but would still include coverage of the law’s mandated essential health benefits, have no annual or lifetime benefit limits, and cover all preventive health services with zero cost-sharing for consumers. This would allow individuals and families eligible for premium subsidies to use that financial assistance to purchase the new plan, an option currently unavailable to consumers purchasing the ACA catastrophic plan.

We believe a new catastrophic plan would further the public policy goal of affordability and call upon policymakers to expand consumer choices by allowing this lower-premium option to be offered.

One of the worst failures of the Affordable Care Act (ACA) is that, even with subsidies, the premiums and out-of-pocket expenses are unaffordable for far too many people. AHIP now proposes to make the premiums slightly more affordable by offering catastrophic plans with very high deductibles that would make accessing health care truly unaffordable for even more people (cost sharing subsidies are available only for silver plans, but coverage of the proposed catastrophic plans would fall even below the lowest-level bronze plans).

Why would they do this? Could it be that they want to capture a portion of the market of the 31 million people who will still remain uninsured after ACA is fully implemented?

Who would actually select these plans with very high deductibles but lower premiums? Those with very low incomes who would struggle even with subsidized premiums might choose these plans if they consider their subsidized premiums to be “all that they can afford.” These are individuals who would be much more likely to forgo essential health care simply because they couldn’t afford their portion of the deductibles.

Very high income individuals might select these plans to insure against catastrophic losses while deciding to self insure against more modest medical costs. The problem with this is that this is a form of regressive financing of the insurance risk pools. Since average health care costs are well beyond the means of middle income families to pay for them, wealthier individuals need to contribute more to the collective insurance pools (as they would in a single payer financing system). The AHIP proposal for low-premium catastrophic plans would allow them to contribute less than average instead.

For healthy middle-income families there is a preference for the tradeoff of lower premiums for higher-deductibles – an observation confirmed by behavior in the individual insurance market before the enactment of ACA. Families that remain healthy will come out ahead, but those families that later face significant health problems often find that they will face severe financial hardship as well – even bankruptcy.

So the insurance industry is taking a position that they can increase their market, that they will not have to pay for routine medical expenses, and that they can lower their medical losses by paying only for the comparatively few individuals with high medical expenses. Little does it matter that they have the health coverage function backwards in that the healthy and wealthy do very well but the sick and poor suffer. Limiting essential protection for the most vulnerable demonstrates again why the private insurance industry should be dismissed.

The insurance industry has been very successful in getting innovations that benefit themselves. This release by AHIP suggests that this is the beginning of another self-serving public campaign – this time to allow individuals to have (in marketing terms) “the choice of purchasing only the insurance they need” – a high-deductible catastrophic health plan.

Social solidarity takes another beating.

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