Update of the data on health care spending

Posted by on Tuesday, May 3, 2011

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.

Health Care Spending in the United States and Selected OECD Countries

Kaiser Family Foundation
April 2011

Compared to other developed nations, the U.S. spends more on health care per capita and devotes a greater share of its GDP to health. Since 1980, the U.S. also has had among the highest average annual growth rates in per capita spending on health care. Despite this relatively high level of spending, the U.S. does not appear to provide substantially greater health resources to its citizens, or achieve substantially better health benchmarks, compared to other developed countries. Faced with expanding public deficits, and growing health care costs, American policy makers may elect to examine the tools employed by other countries to rein in costs. The growing difference between America’s spending and other developed countries may encourage an examination of what people in the U.S. are getting for their healthcare dollar.


This update of health care spending in the United States, as compared with other nations, provides useful graphs that define the magnitude of the problem which is only growing worse. Since the cost containment measures of the Patient Protection and Affordable Care Act will have very little impact on slowing the cost growth, we should consider the advice offered in this report: American policy makers should “examine the tools employed by other countries to rein in costs.” We need to bring single payer to the table – now!

Dr. Abston: “It Could Have Been Me”

Posted by on Monday, May 2, 2011

Pippa Abston, MD, PhD, FAAP, a general pediatrician in Huntsville, Alabama who also teaches medical students, has a blog that everyone should read.

Dr. Abston has written many reflections, including blogging as she reads every word 2,400+ pages of the “Patient Protection and Affordable Care Act.” (33 installments so far!) Dr. Abston has also articulated beautifully the principles that guide her support for single-payer reform, most recently some thoughts on “faith-based health cost sharing.”

If you follow the link to her blog you can subscribe and read Dr. Abston’s latest when she sends it out. I wholeheartedly recommend it!

Here is today’s blogpost by Dr. Abston.

It Could Have Been Me
Pippa Abston MD, PhD, FAAP
May 2, 2011

I’m writing this on a beautiful spring afternoon in Huntsville, just 5 days after a series of horrific tornadoes tore through my state. Tuscaloosa, the town I grew up in, suffered a huge gash. I’m told I wouldn’t recognize the landscape I knew so well. So many people– even children– are suddenly, unexpectedly and heartbreakingly dead. The blog post I drafted last week and meant to post a few days ago seems inadequate to our shared shock and grief.

Last Wednesday, I woke up to sirens and wondered if I would be able to drive down to Destin as planned, to attend our annual Alabama pediatric meeting. During the gap between fronts at 8 am, I decided to make a run for the coast– I succeeded in outrunning the storm by a couple of hours all the way south. Around Montgomery, a radio announcer casually said “there’s a tornado on the ground in downtown Huntsville” and returned to the music– frightened and imagining my husband in his downtown office, I pulled off the road to call him. He was fine, in the basement of the courthouse, and the announcer was wrong. It wasn’t until I got to Florida that I found out about Tuscaloosa.

The pediatric meeting was wonderful, with many excellent speakers. I learned several new things that I hope will help my patients. But the whole time, between every talk and well into the night, I frantically tried to learn what had happened to my loved ones. My father and stepmother were fine. I was able to find many of my Tuscaloosa friends on Facebook, even those who had lost their homes. I clicked repeatedly on the hyperlinks titled “Names of the Dead,” dreading what I might find. I watched the news, and I cried.

The storms passed. Online, between images of the twisters and the damage, I began to see photos of people coming forward to help– rescuing the injured, comforting the newly homeless, bringing food and water. Even in surrounding areas with no damage, strangers seemed kinder. The hotel desk clerk hugged me. Drivers slowed to let me merge, instead of rushing forward at the sight of my turn signal. In the grocery store lines, many let others go ahead of them. We quit watering our lawns and washing our cars to save precious water for the thirsty. I expected this– we always seem to locate our better selves after disaster. After awhile of course, we forget. We get back to “normal.” Still, every time, I am grateful to find our ability to care for one another remains intact, despite being so often underused.

Here’s what I didn’t hear, not even once: I didn’t hear anyone say a victim of the tornado was undeserving of help. I didn’t hear anyone asked if they had heeded the warning sirens, before being pulled from the wreckage. I didn’t see anyone turned away from the food lines because they had chosen to live in a trailer or because they could have stockpiled food and didn’t. I didn’t hear anyone ask why these devastated people had lived in Alabama anyway, knowing tornadoes were possible. And I didn’t notice volunteers checking citizenship papers before offering help.

I heard only “how can I help?” and “it doesn’t matter that I lost my house/stuff/car when others lost their lives.'” I heard “it could have been me.”

Can you imagine what would happen if we treated each other with the same compassion when it comes to healthcare? More than 300 people died this week in the storms– more than 45,000 die every year because they can’t afford to go to the doctor. Sure, some of them could have gotten insurance and didn’t, just the way some of us keep making dinner upstairs when the sirens go off. We could choose to let that go, knowing we are human and thus prone to error.

Forget for a few minutes about the details of how we would do it– single payer, private insurance, whatever. It isn’t an impossible dream. We share our resources to educate our country’s children and to build safe highways for anyone to use. And other developed countries have even applied this principle to their healthcare systems. But first we have to decide we matter to each other– not just after bad weather but all the time.

What if we just quit asking or telling sick people what they had done to cause their own trouble? Let other people into the line ahead of us sometimes? Counted our blessings? Didn’t complain about sharing some of our stuff, to save others’ lives? Conserved our resources out of concern for others? What if we only said “how can I help?” What if we really understood that “it could have been me?”

Further comment by Uwe Reinhardt on queues in Canada

Posted by on Monday, May 2, 2011

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 last Quote of the Day discussed Princeton Economics Professor Uwe Reinhardt’s New York Times blog entry on rationing in Canada and the United States. I (Don McCanne) wrote a response to his article, and he responded to my comments. That response follows.

The New York Times

Uwe E. Reinhardt
Daily Economist
April 29th, 2011

Len Charlap’s Comment No. 27 requests that I respond to Comment No. 9 by Don McCanne, even though Dr. McCanne did not explicitly called for a response.

I agree with Dr. McCanne that the role of queues can easily be misunderstood.

Given a naturally or artificially limited supply of a thing, queues arise when money prices are not allowed to rise to levels that shrink the demand for the thing to match the available supply. Other prices – e.g., the price of time (e.g., waiting in a doctor’s office) or discomfort prices (the disutility of having to put up with a physical impairment while waiting) then do the equilibrating.

In the case of naturally limited supplies – e.g., supplies of transplantable organs – neither of these prices equilibrates demand and supply and some administrative mechanism of rationing occurs. My former Princeton student, later leader of the U.S. Senate and then my co-teacher of a course on health policy at Princeton, told us how that works. It is less than perfect.

In the case of artificially limited supplies, one way to reduce the time-and–discomfort prices is simply to expand the supply of the artificially limited supply.

It is true that in the past I have criticized Canadian policy makers for not doing so. They responded that they are actually quite concerned over the issue and, in fact, have sought to understand the nature of their queues better through one (or perhaps even two) Royal Commissions on queues in health care.

Since that time, they have worked on what they call “evidence-based queuing,” that is, a form of queuing that uses queuing theory and seeks to minimize the physical harm of queuing, giving serious cases faster access than is available to less serious cases.

My Canadian colleagues tell me what Canadians do not want to do is to have their supply side driven by entrepreneurial forces that can easily flood the market with excess capacity and drive up costs. They cite the huge American literature on the excess use of imaging in the US as example.

Similarly, my Canadian colleagues tell me that what Canadians do not want to do is spend 17% (soon going on 20%) of the GDP on health care, especially when there is no evidence that it begets better overall health statistics (and often worse statistics), greater patient satisfaction, and moreover leaves millions of citizens without health insurance and spotty access to care, not even to speak of financial distress.

It is not hard to sympathize with them on that view.


Uwe Reinhardt on rationing in Canada and the U.S.

Posted by on Friday, Apr 29, 2011

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.

Does the Ryan Plan Curb Health Spending?

By Uwe E. Reinhardt
The New York Times
April 29, 2011

My post last week, on the budget plan offered by Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, ended with the observation that the plan did not propose measures to control overall health spending in the United States, “nor does that appear to have been Mr. Ryan’s objective.”

The general idea is that, using whatever financial resources are available to them, patients or their loved ones will, of necessity, engage in a benefit-cost analysis and decide whether the anticipated benefits of end-of-life care exceed its expected cost to the household in terms of what that household has to forgo to buy the extra care. This is how markets work.

Economic theory suggests that, other things being equal, rich and less rich households will come to different conclusions on this question. If less money is available over all to spend on elderly Americans, it is the lower middle class that is likely to do most of the self-rationing.

Note that the Ryan plan proposes a means test to determine the federal contribution to Medicare — the very poor elderly will receive larger federal subsidies, although the size of these subsidies remain unspecified. But the middle and lower-middle class is likely to be on its own.

For reasons that escape me, many Americans do not regard rationing scarce resources through the marketplace, by price and ability to pay, as rationing at all, reserving that term for government withholding of marginally beneficial procedures, based on formal cost-effectiveness analysis.

I do beg to differ.

I have also applied the economist’s reasoning to an analysis of styles of rationing in Canada and in the United States and would be happy to hear what readers make of that. (See link below.)


Uwe Reinhardt: “Keeping Health Care Afloat – The United States Versus Canada”:

9. Don McCanne
San Juan Capistrano, CA
April 29th, 2011

Professor Reinhardt’s discussion of rationing in the United States and Canada, available at the “an analysis” link in his article above (the “Keeping Health Care Afloat” link), is an absolute must read for those who really care about how we finance health care.

In a personal communication, Dr. Reinhardt has suggested that we have not been adequately forthcoming about the problems of rationing in Canada, especially the development of queues for non-urgent services. (“We” refers to the fact that I’m senior health policy fellow for Physicians for a National Health Program, an organization supporting single payer reform not unlike Canada’s.)

It is true that we tend to discuss the virtues of single payer while not emphasizing its deficiencies, but the virtues far outweigh the deficiencies and our message would be corrupted by including a disproportionate emphasis on the problems.

That said, we certainly do concede that rationing is an issue, but also we do, in fact, address it. First, we support separate budgeting of capital improvements with an emphasis on getting capacity right to avoid both under-utilization (queues) and over-utilization (the excesses described by John Wennberg and the Dartmouth group). Admittedly, that is always a work in progress, but merely making the effort does result in improvements in capacity.

We also support the science of queue management (how the long lines at airports were reduced after they became intolerable following 9/11). Monitoring capacity and making relatively minor adjustments as needed, along with queue management, has been very effective in avoiding excess queues in many nations.

Canada has been addressing this problem with some success. In fact, if you actually read the reports from the Fraser Institute that demonstrate excessive queues, you will see that in most instances the time intervals are very close to what the specialists believe are reasonable (joint replacement being an exception).

So what actually is the overriding problem of a system like Canada’s? It lies in the ideology of the public stewards of the health care financing system. When egalitarians who believe in government are in charge, efforts are made to attend to problems such as queues and fix them. When those who oppose government programs and prefer private markets are in charge, problems such as queues are allowed to compound for the purpose of driving support for privatization of the health care system (Alberta’s former premier, Ralph Klein, being a prime example).

So, Dr. Reinhardt, I hereby publicly confess that there are potential problems with rationing in a single payer system, but not nearly as severe as the U.S. style of rationing which causes massive suffering and death simply because we ration based on ability to pay. In fact, since all systems ration, selecting rationing that improves value in our health care purchasing might be better labeled as “beneficial rationing.”

Unfortunately, a new report released by the Commonwealth Fund this week shows that, although health insurance will be more affordable because of subsidies under the Affordable Care Act, about one-fourth of middle-income Americans who actually require significant health care will still not be able to pay for it, in spite of subsidies. Rationing by ability to pay was not eliminated by the Affordable Care Act.

Dr. Reindardt, you have also suggested that single payer works better in Canada than it would in the United States simply because Canadians are more egalitarian than we are. But look at the outrage expressed over Paul Ryan’s proposal to privatize our egalitarian Medicare program. Americans can be quite egalitarian when we have something good that works well for all of us.

Comment originally published on the New York Times website

Further comment: Uwe Reinhardt’s eight page article, “Keeping Health Care Afloat – The United States Versus Canada,” should be downloaded and saved to use as an important resource when responding to expressed concerns about rationing. It is available at the link above.

The most common reason given as to why the United States should reject a Canadian-style single payer system is that it would result in intolerable rationing. Reinhardt’s highly credible article explains in factual terms how rationing works in these two countries. Using Reinhardt’s facts, it is very difficult for me to see how anyone could have an opinion other than it is the United States and not Canada that has intolerable rationing.

It’s going to take a movement to win single payer

Posted by on Thursday, Apr 28, 2011
By Quentin D. Young, M.D.

The following remarks were delivered by Dr. Young at a press conference in the Illinois State Capitol in Springfield, Ill., on April 11, 2011, convened for the purpose of announcing the introduction of state Rep. Mary Flowers’ state single-payer legislation, the “Illinois Universal Health Care Act,” H.B. 311. His remarks and those of several others are available on video. A more complete account of the events in Springfield that day can be found at the Illinois Single Payer Coalition.

I have to believe that all of you enjoyed the presentations that preceded me as much as I did. They were spectacular, because not only are they speaking the truth, but they indicate the coalition that is going to make single-payer health reform happen.

We’re not there yet, but there are very important gains in this country and in this state. In Illinois, no small thanks to state Rep. Mary Flowers for her spectacular leadership in the Legislature, we are making advances, as is evident by those present here today.

In this country we have states like Vermont actually electing governors and representatives and senators who run on a single-payer program. That’s new.

Now, the basic problem is not complex or too difficult for anybody in this room to figure out. The cost of our health care system last year was – brace yourself – twenty-seven hundred billion dollars, or $2.7 trillion. To give you a comparison, at the end of World War II, we had a health system for the nation that cost $22 billion. Now we are spending more than a hundred times that much and, as has already been indicated, not doing very well at all in terms of medical outcomes.

These days, the banter is all about the cost of government and the need to cut down expenses. Much of that I think, is cynical politicking, but if you want to save money, Mr. Politician – Democrat or Republican – enact a single-payer system. You’ll immediately reduce costs and at the same moment give care to all the many tens of millions of people who are either not covered or who are covered inadequately.

I have optimism. I’ve been at this a long time, and I sense we are getting close to victory. On the other hand, I don’t think that it is going to be easy. It’s going to take a movement because the interests of private companies who profit drastically from this system are going to hold tight and they have all kinds of schemes to discredit and confuse the public.

Take for an example the very important health notion that patients should, with their doctor, toward the end of life discuss the kind of treatment they want. Do they want a lot of life-saving methods or do they want to be made comfortable? You know the issue.

This gets translated into “death panels.” The cynicism of that can’t be exaggerated, because you are dealing with people’s lives, with their elementary dignity and needs. And so it goes in the so-called debate over “government-run health insurance” and “socialized medicine” – all these words that they think the American people are automatically going to negatively react to.

I think we’re at the beginning of a new era. I hope I can check this out with all of you in a relatively short period. I think the events in Wisconsin, where the people said, “No more, that’s enough,” and “You can’t take away our elementary rights to bargain collectively or indeed to have government services,” I think that is going to be a turning point in American history. I am counting on it, but your presence here is part of that process.

We’re using our first amendment rights today to petition the Legislature for a redress of grievances. And, the health care system in Illinois is in grievous shape, and we want to change it. We want single-payer, national health insurance.

I’m thrilled to be at this podium with so many colleagues. Let me close on a very up note. I went to Northwestern also. But I’ll tell you a secret: it wasn’t in this century!

I’m proud that my colleagues at Northwestern are in the fray and are so articulate about their desire to serve the people and not be turned into cogs and money-making machines for the insurance companies.

That’s really exciting because one of the arguments used by supporters of the private health insurers in Vermont, where the people did indeed elect a governor and both houses of their Legislature on a single-payer program, was embodied in ads saying, “Doctors will flee this state if you enact this terrible thing.”

Well, I am pleased to tell you all, if you haven’t heard it already, that a week an a half ago on a Saturday, 250 medical students, wearing their white jackets, came to Montpelier, Vermont’s capital, to demonstrate for single payer now and to say they’d be happy to practice in this state if it enacts a single-payer system.

As a doctor for many years – way too many – I can tell you that it’s a conservative profession, but the good news is that the majority of physicians, not to mention medical students, now see national health insurance as the answer.

So I congratulate you all for being here as part of this movement. Somebody it before me, but I’ll reiterate: it’s going to take a movement to move this Legislature and move the Congress, but it’s going to happen. Thank you.

Commonwealth Fund report on affordability is no cause for celebration

Posted by on Wednesday, Apr 27, 2011

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.

Realizing Health Reform’s Potential: Will the Affordable Care Act Make Health Insurance Affordable?

By Jonathan Gruber and Ian Perry
The Commonwealth Fund
April 2011


Using a budget-based approach to measuring affordability, this issue brief explores whether the subsidies available through the Affordable Care Act are enough to make health insurance affordable for low-income families. Drawing from the Consumer Expenditure Survey, the authors assess how much “room” people have in their budget, after paying for other necessities, to pay for health care needs. The results show that an overwhelming majority of households have room in their budgets for the necessities, health insurance premiums, and moderate levels of out-of-pocket costs established by the Affordable Care Act. Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law. Affordability remains a concern for some families with high out-of-pocket spending, suggesting that this is the major risk to insurance affordability.

What are necessities?

The Family Economic Self-Sufficiency Standard (FESS) considers necessary expenditures as:
• child care
• food
• housing
• taxes
• transportation
• miscellaneous (calculated as 10% of other costs).

Exhibit 3. Percent of Households That Do Not Have Room in Budget for Health Care (after paying for necessities + subsidized premium + subsidized out-of-pocket costs at the 90th percentile)

At each reported income as a percent of poverty level:
<Poverty – 17.3%
101-150 – 10.8%
151-200 – 17.5%
201-250 – 26.2%
251-300 – 24.2%
301-350 – 17.5%
351-400 – 12.5%
401-450 – 15.3%
451-500 – 12.0%
>500 – 2.5%

Affordability generally increases as incomes increase, although affordability is particularly challenging for families at 201 percent to 300 percent of poverty with high out-of-pocket expenses (90th percentile). Because the actuarial value of available plans falls from 100 percent for those below the poverty level to between 70 percent and 73 percent for those in this bracket, about one-quarter of families in this income range with very high out-of-pocket costs cannot afford health care–related costs.


News reports on this new Commonwealth Fund study have cheery titles such as, “Health Reform Will Make Insurance Affordable for Nearly All Families.” These titles should be extended to include, “… But Not Health Care.”

Exhibit 3 noted above reveals that up to one-fourth of those with out-of-pocket costs at the 90th percentile level will not have enough money to pay for their necessities plus subsidized premiums plus subsidized out-of-pocket costs for their care. Even 2.5 percent of individuals with high incomes (over 500 percent of the poverty level – $111,750 for a family of four) will face financial hardship should they have greater health care needs.

Also of concern is that the assumption is made that all income beyond the necessities listed would be used for health care if financial hardship were to be avoided. Presumably that would mean no money for savings, for retirement, for higher education expenses, for vacations, for entertainment, nor for thousands of other preferences you might have for your spending. Is that the standard that we want to set? That we pay out what we need merely to exist and then almost everything else goes to pay for health health care if we need it?

Other exhibits in this report show that the outlook is worse for single individuals, for those living in states with a higher cost of living, and in the future it will be worse for everyone since affordability erodes further with the passage of time.

So what accounts for the cheery headlines? It is only subsidized health insurance that is affordable for most, but even there not all. Left out of the headlines is the fact that out-of-pocket expenses are not affordable for far too many.

Because the majority of people are healthy, the report concludes, “Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law.” The celebration is for the 90 percent who may have some funds left after paying for necessities plus health care. But isn’t the purpose of health insurance to take care of that 10 percent who face financial hardship in the face of health care needs? Or even the 2.5 percent who are wealthy and need health care but can’t afford it?

A properly designed single payer system eliminates for everyone financial hardship due to health care costs. Premiums are not a problem because the entire health care system is funded through equitable tax policies. Out-of-pocket spending is not a problem because first dollar coverage applies to all essential health care services and products.

Let’s all work to expose the deceptive rhetoric that the Patient Protection and Affordable Health Care Act has made health care affordable for almost everyone, when in fact, when you need health care, every last dime is squeezed out of you and that still isn’t enough for up to one-fourth of us with significant health care needs. In the same breath, let’s let the public know that there is a way we can do it – a single payer national health program.

How would Marcus Welby, M.D. fare in an ACO?

Posted by on Tuesday, Apr 26, 2011

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.

Family Physician Can’t Give Away Solo Practice

By Gardiner Harris
The New York Times
April 22, 2011

Handsome, silver-haired and likable, Dr. (Ronald) Sroka is indeed a modern-day Marcus Welby, his idol. He holds ailing patients’ hands, pats their thickening bellies, and has a talent for diagnosing and explaining complex health problems.

A former president of the Maryland State Medical Society, Dr. Sroka has practiced family medicine for 32 years in a small, red-brick building just six miles from his childhood home, treating fishing buddies, neighbors and even his elementary school principal much the way doctors have practiced medicine for centuries. He likes to chat, but with costs going up and reimbursements down, that extra time has hurt his income. So Dr. Sroka, 62, thought about retiring.

He tried to sell his once highly profitable practice. No luck. He tried giving it away. No luck.

Dr. Sroka’s fate is emblematic of a transformation in American medicine. He once provided for nearly all of his patients’ medical needs — stitching up the injured, directing care for the hospitalized and keeping vigil for the dying. But doctors like him are increasingly being replaced by teams of rotating doctors and nurses who do not know their patients nearly as well. A centuries-old intimacy between doctor and patient is being lost, and patients who visit the doctor are often kept guessing about who will appear in the white coat.

The share of solo practices among members of the American Academy of Family Physicians fell to 18 percent by 2008 from 44 percent in 1986. And census figures show that in 2007, just 28 percent of doctors described themselves as self-employed, compared with 58 percent in 1970. Many of the provisions of the new health care law are likely to accelerate these trends.

“There’s not going to be any of us left,” Dr. Sroka said.

Indeed, younger doctors — half of whom are now women — are refusing to take over these small practices. They want better lifestyles, shorter work days, and weekends free of the beepers, cellphones and patient emergencies that have long defined doctors’ lives. Weighed down with debt, they want regular paychecks instead of shopkeeper risks.


Having been a general practitioner (as family physicians were called in those days) even before Marcus Welby ventured onto our television screens, I identify closely with the model of the traditional, altruistic physician as exemplified by the fictional Marcus Welby and the real-life Ronald Sroka. In this day of a push toward integrated health care systems, as exemplified by accountable care organizations (ACOs), what role would us relics of Hippocratic medicine rightfully assume?

We don’t have to speculate on this since that question is already being answered. Although we are in a transitional phase, there is widespread recognition that we need to reinforce our primary care infrastructure. Patient-centered medical homes, community health centers, primary care divisions of multi-specialty centers, and non-profit health maintenance organizations organized as fully integrated health systems are some of the models that have established primary care as a central coordinating element in health care delivery.

Even Medicare has recognized this need and has moved funds from over-priced technology to under-priced primary care. We are beginning to see additional funds being directed to pay for care coordination under primary care.

But it isn’t just about money. When I was in practice, I simply accepted the fact that we were so busy that we had to extend office hours into evenings and weekends, and we had to renounce the luxury of sleep because of delivering babies in the middle of the night and assisting in emergency surgeries at all hours of the day and night. My sanity was preserved by rotating call with my brother, so that I had every other night and every other Sunday off call.

More than money, younger physicians are especially concerned about life-style issues. They don’t accept the grindstone that we were on, and I don’t blame them. But they don’t have to. The integrated delivery systems of today and the future offer not only much more freedom for lifestyle choices, they also offer practice environments that allow greater access to specialized and supportive services that improve both the quality of the practice experience and the quality of the care that patients receive.

So where do ACOs fit into all of this? Likely time will show that this was a fairly nebulous concept – a wish that by working together physicians and hospitals could reduce spending while improving quality – but the concept lacks a defining structure. But isn’t that what these integrated systems are already doing, and were doing before the term “accountable care organization” was even coined? So we already have the promise of ACOs without the bureaucratic boondoggle required in the Patient Protection and Affordable Care Act. We should expand these systems whether or not we label them ACOs.

So what would Dr. Welby do today? We can answer that because Dr. Welby is alive and well and replicated throughout today’s medical school graduates, and those graduates are turning once again to primary care. The future of health care is in the good hands of these dedicated women and men who still cherish our Hippocratic values.


In the article, David J. Rothman, president of the Institute on Medicine as a Profession at Columbia College of Physicians and Surgeons, was quoted as follows: “Those of us who think about medical errors and cost have no nostalgia — in fact, we have outright disdain — for the single practitioner like Marcus Welby.” His followup statement released in response to the article is reassuring, defusing somewhat his unfortunate rhetoric:

“The quotation attributed to me in the April 24th New York Times story on primary care does not reflect the opinion, views or policy of the Institute on Medicine as a Profession. Nor does it accurately reflect my views. I have far too much respect for the medical profession, including solo practitioners, to make such offensive and derogatory statements. Rather, what I was trying to convey in a lengthy interview with the reporter (Gardner Harris) was my observations on what was being said and thought among a subset of health policy experts. However controversial or even misguided these views may be, they are seen as an aspect of the movement away from solo practitioners. It was not my intention to support or endorse this position but to call attention to it.

“To understand the principles that IMAP stands for, please read our agenda and mission. They contain descriptions of our programs promoting professionalism, including physician education and advocacy well as managing conflict of interest and strengthening evidence based medical practice.

“All of us concerned with medicine as a profession recognize that the decline of solo practice and the rise of group practice represent a crucial development that must be closely analyzed. We must consider how professionalism can best be maintained and strengthened under new types of delivery systems. Disparaging comments, whether wrongly attributed to me or to others, only serve to undercut constructive thinking and innovative policies.”


Obama, Berwick, Krugman and others on IPAB

Posted by on Monday, Apr 25, 2011

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 Independent Payment Advisory Board: A New Approach to Controlling Medicare Spending

By Jack Ebeler, Tricia Neuman and Juliette Cubanski
Kaiser Family Foundation
April 2011

Targets on Medicare Spending Growth Rate

The statute sets target growth rates for Medicare spending. The target is not a “hard cap” on Medicare spending growth, but if spending exceeds these targets, IPAB is required to submit recommendations to reduce Medicare spending by a specified percentage. For 2015 through 2019, the target for Medicare spending per capita is the average of general and medical inflation: specifically, the average of the projected percentage increase in the consumer price index for all Urban Consumers (CPI-U) and the medical care expenditure category of the CPI-U. For 2020 and later years, the target for Medicare spending per capita is the increase in the gross domestic product (GDP) plus one percentage point, which historically has increased at a higher rate than the CPI-based measures.

If projected growth for the implementation year exceeds the target, and the medical care component of the CPI-U exceeds the CPI-U, then IPAB is required to develop and submit a proposal to bring Medicare per capita growth within the target in the implementation year, subject to the applicable limits (maximum savings).

Provisions Affecting Beneficiaries

More broadly, to the extent changes in payments to providers affect beneficiaries’ access to care, such policies have an impact on beneficiaries. This issue is raised by the current physician payment limits and in evidence in Medicaid, where the state provider payment constraints are often severe, and is a potential consequence of any enforced target for Medicare growth, whether through IPAB or other means. If IPAB recommends policies that squeeze Medicare payment rates without equal pressure being placed on private payment rates, there is some concern that Medicare beneficiaries would be at greater risk of having access problems, as providers become more inclined to serve other patients.



Fact Sheet: The President’s Framework for Shared Prosperity and Shared Fiscal Responsibility

The White House
April 13, 2011

The President’s framework will strengthen IPAB to act as a backstop to the other Medicare reforms by ensuring that Medicare spending growth does not outpace our ability to pay for it over the long run, while improving the program and keeping Medicare beneficiaries’ premium growth under control. Specifically, it would:

Set a new target of Medicare growth per beneficiary growing with GDP per capita plus 0.5 percent. This is consistent both with the reductions in projected Medicare spending since the Affordable Care Act was passed and the additional reforms the President is proposing.



Berwick Says Obama’s Plan To Trigger Medicare Cuts Won’t Be Necessary

By Susan Jaffe
Kaiser Health News
April 15, 2011

A day after President Barack Obama proposed strengthening an independent commission to control Medicare’s costs, the program’s administrator said such oversight won’t be necessary because new efforts to reduce waste should slow down spending and even improve the quality of care.

“We don’t have to get to that point,” Medicare chief Donald Berwick told Kaiser Health News Thursday.



Patients Are Not Consumers

By Paul Krugman
The New York Times
April 21, 2011

About that advisory board (IPAB): We have to do something about health care costs, which means that we have to find a way to start saying no. In particular, given continuing medical innovation, we can’t maintain a system in which Medicare essentially pays for anything a doctor recommends. And that’s especially true when that blank-check approach is combined with a system that gives doctors and hospitals — who aren’t saints — a strong financial incentive to engage in excessive care.

And the point is that choices must be made; one way or another, government spending on health care must be limited.



The Other Medicare Cutters

The Wall Street Journal
April 20, 2011

Starting in 2014, the board (IPAB) is charged with holding Medicare spending to certain limits, which at first is a measure of inflation. After 2018, the threshold is the nominal per capita growth of the economy plus one percentage point. Last week Mr. Obama said he wants to lower that to GDP plus half a percentage point.

Post-ObamaCare, Medicare’s administered fee schedule is set eventually to dip below Medicaid payments in many states, which are themselves already far lower than the rates of private insurers that reflect the true costs of health care.

As a practical matter, the more likely outcome is the political rationing of care for the elderly, as now occurs in Britain, or else the board will drive prices so low that many doctors and hospitals drop out of Medicare. Either alternative would create the kind of two-tier system dividing the poor and affluent that Democrats claim is Mr. Ryan’s mortal sin.



Obama Panel to Curb Medicare Finds Foes in Both Parties

By Robert Pear
The New York Times
April 19, 2011

“But, in its effort to limit the growth of Medicare spending, the board is likely to set inadequate payment rates for health care providers, which could endanger patient care,” (said Representative Pete Stark of California, the senior Democrat on the Ways and Means Subcommittee on Health.)



Health Reform Assumes its Role as a Punching Bag

By Merrill Goozner
The Fiscal Times
April 20, 2011

The IPAB “can’t order the system transformations that we need like care coordination and a focus on chronic conditions,” said Kenneth Thorpe, a professor of public health at Emory University. “So the only thing they can really do is cut payment rates.”

In other words, the problem isn’t that IPAB has too much power. It’s that it doesn’t have enough.


Today’s quotes provide tastes of the broad spectrum of political flavors inspired by the establishment of the Independent Payment Advisory Board (IPAB). The fervor of the debate risks obscuring an important point that we have made before and must make again: Applying a cap on Medicare payments alone at GDP plus one-half or one percent, without placing the same caps on the rest of health care spending, risks devolving Medicare into an underfunded, lower tier welfare program, with impaired access for Medicare beneficiaries because of a lack of willing providers.

As other nations have demonstrated, global budgeting works as long as it is applied to the entire health care delivery system. Instead of merely taking a cleaver to payment rates, as IPAB would, attention in a single payer system is directed to improving productivity, expanding efficiencies, and reducing administrative and clinical waste, all within the constraints of a universal global budget. For those who would dismiss this because it is rationing, keep in mind that this form of rationing actually improves value in our health care purchasing. Maybe “beneficial rationing” should become a byword for reform.

If you wish to learn more about IPAB, the 24 page Kaiser Family Foundation report (first link above) is an excellent resource. The following quote from this report reemphasizes the primary lesson of today’s message: “If IPAB recommends policies that squeeze Medicare payment rates without equal pressure being placed on private payment rates, there is some concern that Medicare beneficiaries would be at greater risk of having access problems, as providers become more inclined to serve other patients.”

S&P’s David Blitzer on single payer

Posted by on Saturday, Apr 23, 2011

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.

Check-Up on U.S. Healthcare

Squawk on the Street, CNBC
April 21, 2011

Mark Haines: S&P’s latest health care costs report from February 2010 through February of this year shows health care costs rose 6.2%. That’s good in a sense that it’s down slightly from 6.3% in the previous 12-month period, but obviously way above the rate of inflation for everything else. Here first on CNBC, David Blitzer, chairman of the S&P 500 index committee. David, good morning. Thanks for being with us.

David Blitzer: Good morning, Mark. How are you?

Haines: Pretty good. What do you have for us?

Blitzer: Health care costs continue to rise, however the rate of increase continues to creep down a little bit. So the news isn’t good, but it’s not getting worse. It’s getting maybe a touch better.

Haines: Why are these costs escalating at – I don’t know – three or four times the rate of overall inflation? What’s going on here?

Blitzer: Health care – despite all the excitement about technology and drugs – health care is a very labor intensive activity, and people – labor – costs a lot of money, which seems to be the key factor driving it up.

Haines: So, if I may, logically then you would find the worst or the most inflation occurring in hospitals.

Blitzer: You would, and, indeed, on the commercial side you do. On the Medicare side, you don’t, and I think that brings up a different aspect. Over the last few years we have heard a lot of arguments about single payer plans versus other kinds of plans. Single payer means Uncle Sam pays for all the health care. We pay him.

Haines: Right.

Blitzer: Medicare for people over 65 is a single payer plan, and, indeed, we consistently see smaller rates of increase in Medicare items than we do in commercial insurance, the kind of insurance that employers provide for their employees.

Haines: Okay. I’m going to leave that lying there because some of our viewers right now are going apoplectic thinking you have just endorsed single payer health care.

Blitzer: I haven’t. I’ve only reported the numbers. I’m not endorsing anything.

Haines: Believe me, I understand. You’re quoting the facts. Some people think facts are partisan. I don’t know how they get there, but they do. David, thank you very much. Appreciate your input.

Blitzer: Thank you. Have a good day.


Facts are not partisan. Standard and Poor’s David Blitzer reports only the facts on single payer – and Wall Street needs to hear them.

CBO: Medicare privatization would increase costs

Posted by on Friday, Apr 8, 2011

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.

Long-Term Analysis of a Budget Proposal by Chairman Ryan

Congressional Budget Office
April 5, 2011

A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization stemming from two sources. First, private health insurers would probably impose greater utilization management than occurs in Medicare. Second, private plans might restrict enrollees’ ability to purchase supplemental insurance plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare, and that increased cost sharing would encourage lower utilization. On net, for a typical 65-year-old in 2011, CBO estimates that average spending in traditional Medicare will be 89 percent of (that is, 11 percent less than) the spending that would occur if that same package of benefits was purchased from a private insurer.


House Budget Chair Paul Ryan’s proposal for Medicare has two primary goals. It would end Medicare as a government program and shift it to private insurers, and it would reduce the government’s payments to the program, shifting more of the costs to the Medicare beneficiaries.

This analysis by the Congressional Budget Office demonstrates that not only would the Medicare beneficiaries receive less care and have to pay more for it, but in the first year alone, the total costs would be significantly higher using private plans than it would be using the traditional Medicare program. Medicare is able to provide health care for 11 percent less than the total costs through private insurers.

In a way we can thank Congressman Ryan for showing us once again why we should abandon the private insurers and adopt an improved Medicare program that covers everyone.

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