WellPoint/employer conspiracy on reference pricing

Posted by on Monday, Jul 29, 2013

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

WellPoint program lets employers name their price for doctors

By Sue Ter Maat
American Medical News, July 29, 2013

Physicians collecting from WellPoint-insured patients who haven’t met their deductible or have a co-pay might have one more reason to send them a bill — to collect the difference between the price the insurer has negotiated with the doctor, and what the employer is willing to pay.

WellPoint plans to launch a program in 2014 in which self-insured companies can determine what they will pay for certain procedures. WellPoint would present a price range to the employer based on what has been negotiated with doctors. Then the company would determine the maximum price it’s willing to pay.

Patients insured through a participating employer would have access to a website that shows, in as much detail as possible, physician price and quality information, including what they would expect to pay out of pocket. Physicians would still be able to charge based on the rate WellPoint negotiated, but any difference between that rate and what a company is willing to pay would have to be collected from the patient, not the insurer.

Companies examine cost distributions for procedure midpoints to determine reference prices, said George Lenko, program director of national networks for WellPoint. So, for instance, hip surgery can range between $20,000 and $100,000. In that case, an employer may set what’s called a reference price at any point in between, Lenko said. If a physician’s contract with WellPoint calls for less than that amount, the doctor would be paid at that previously negotiated rate. But if a doctor’s negotiated charge was higher than the desired price, he or she would have to bill the remainder to the patient.

Reference-based benefits are becoming popular as it becomes easier to compare costs for the same service, Lenko said.

He said when employees know how much services cost, and they are sharing in that cost, they become more engaged with their health care. “The patient becomes a better consumer,” Lenko said. “The more they shop for their own health care, the more efficient they will be.”


WellPoint has been a leader in private insurance innovations. These innovations have worked very well for WellPoint, but for the patients, providers, and purchasers? Well, let’s see how this new innovation in reference pricing for self-insured employers seems to be designed.

For employers who want to insure their own losses in their health benefit programs but who need help in the administration of these programs, private insurers offer health plan administrative services without assuming any of the risks of medical losses (health care bills). As part of their services, they provide employers with lists of network providers – physicians and hospitals who have agreed to contracted rates for their services.

However, those contracted rates may be higher than the employer would be willing to spend, that is, the employer’s reference price. So what happens when the providers bill for their services? If the charges are higher than rates contracted with WellPoint, then WellPoint, using the self-insured employer’s funds after the deductibles are paid by the patient, pays the contracted rate and the rest is adjusted off – just as is done today with in-network services in the typical PPO plan. If the charges are higher than the reference price that the employer is willing to pay, even though at or lower than the WellPoint contracted rate, then WellPoint pays only that reference price on behalf of the employer. Yet the provider’s contract allows the full negotiated fee. So who pays the difference? The patient!

What is going on here? Well, a few things. First, insurers have not been as effective as public programs such as Medicare in obtaining optimal lower pricing for their contracted networks. Also, some economists have suggested that employers should be playing a more active role in slowing the escalation of health care costs. Introducing reference pricing allows them to do just that. They find the lowest prices for which the services can be realistically provided, and then they set their allowed rates at that level. In addition, those who believe that patients should be financially involved in their utilization of health care services (consumer-driven health care) support reference pricing because it requires patients to either shop prices more effectively, or to be personally responsible for prices that are higher than the reference prices.

Who wins? Employers with self-insured plans experience a reduction in their health benefit payments. Insurers who are providing only administrative services are able to market these less expensive models to employers, while selling them yet more administrative services, increasing insurer revenues without any exposure to risk. Providers who reduce their rates to the level of reference pricing will receive fewer revenues per unit of their services, but they will increase their market share if the patients actually do end up choosing providers who will cost them less out-of-pocket. Providers who are unable to match reference prices will lose market share.

Who loses the most? The patients. They cannot always shop prices, and even when they can, they may find that the providers offering reference prices may be their least preferred choices, or they may find that they are simply not accessible due to distances or scheduling difficulties. Not only do patients lose their choices of their preferred providers, they are once more the victims of the current trend in shifting the costs of health care from insurers and employers to the patients themselves. This insurer/employer conspiracy is yet one more manifestation of The Great Risk Shift (Hacker) – moving funds from the workers to the uber-wealthy.

Single payer would jettison this nefarious conspiracy.

Is accountability for patients? Or for policy wonks?

Posted by on Thursday, Jul 25, 2013

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

Accountable Prescribing

Nancy E. Morden, M.D., M.P.H., Lisa M. Schwartz, M.D., Elliott S. Fisher, M.D., M.P.H., and Steven Woloshin, M.D.
The New England Journal of Medicine, July 25, 2013

Physicians spend a lot of time treating numbers — blood pressure, cholesterol levels, glycated hemoglobin levels. Professional guidelines, pharmaceutical marketing, and public health campaigns teach physicians and patients that better numbers mean success.

The first line of defense against poor prescribing should be clinicians’ commitment to responsible, evidence-based practice. Unfortunately, clinicians frequently prescribe medications that improve numbers without necessarily improving health.

To avoid rewarding poor prescribing, we could more closely align quality measures with evidence. The table (available at link below) highlights widely used quality measures that span a spectrum in terms of encouraging accountability; we suggest revisions for those that we believe don’t adequately require prescribers to pursue evidence-based, cost-effective choices. Although some physicians may disagree with specific suggestions, our main interest is in the principle of moving beyond numerically driven quality measures to measures that match treatment goals to the best evidence and encourage use of the safest, most effective, and lowest-cost drugs or nondrug treatments.

Payers could accelerate implementation of accountable prescribing. The table provides a starting point for revising existing measures. In addition, payers could advance and facilitate less onerous measures through claims analysis. Although claims and surveys are the basis of some quality measures, much performance is assessed through Web reporting: payers provide practices with measure-specific lists of eligible patients, and physician groups or institutions review records and report performance for each patient according to definitions of the target care. This is the approach used by the Centers for Medicare and Medicaid Service (CMS) for accountable care organizations (ACOs) and by the PQRS. Because organizations such as ACOs are responsible for defined populations, payers could monitor quality through claims analysis. Prescribing quality may be particularly amenable to this approach. Performance measures based on prescriptions claims could include, for example, the population-level ratio of second-line treatments to first-line options or the ratio of brand-names to generics in drug classes in which ample generics exist. Monitoring could permit efficient determination of clinicians’ response to new drug warnings, and claims analysis could quantify long-term adherence to safe, effective drugs.

Accountable prescribing measures could also incorporate cost. Though some payers may hold providers accountable for prescription spending, CMS programs do not yet do so. CMS shared-savings calculations are currently based on inpatient and outpatient expenditures only, but that doesn’t preclude the inclusion of prescription spending in quality measures. Although prescribing decisions should be driven primarily by safety and effectiveness, cost can be an appropriate tiebreaker among drugs that are equally safe and effective. Considering costs may also discourage use of newly approved brand-name drugs that lack safety or efficacy advantages — drugs with potential shortcomings that have had less time to emerge.

As insurance coverage expands, we must ensure that greater access to prescription drugs confers better health, not harm. The need to advance performance measures as health care reform proceeds is well recognized. Ideally, we should assess outcomes valued by patients, but for reasons of feasibility, many measures focus instead on surrogate end points. To improve health, such end points must be based on strong evidence, and how you get there matters. Refining measures to incorporate best evidence and the notion of accountable prescribing could promote use of the safest and most effective drugs, better align measures with our professional responsibilities, and maximize the chance that meeting goal-driven performance measures will translate into improved population health.


In the mania surrounding the implementation of Obamacare, the hope for controlling spending and improving quality lies in assigning accountability in the delivery of health care, especially through accountable care organizations. Supposedly we should be able shift from payments based on quantity of services to payments based on accountability for quality outcomes (certainly a sketchy premise). How is that playing out?

This article from the Dartmouth Institute gives a hint of how accountability might be measured in practice, in this case through accountable prescribing. Read what they propose and then use your imagination. First you extract the required data from the patient. Then, after you get the patient out of your way, you will need to access the algorithms for prescribing. Next you can go ahead and follow the appropriate algorithm pathway on your computer. After a period of interacting with your keyboard and your mouse you will have arrived at prescription nirvana, having determined the highest quality and lowest cost drug selection for your patient.

Of course, this is only the drugs. But since the goal is to include adequate measurements to determine the full level of accountability, similar algorithms will have to be followed for other aspects of the diagnostic and therapeutic interventions. Of course, there may be some complexity with the more technical aspects of care, such as the complex algorithms of intensive care, or of surgical management, or whatever.

But establishing accountability is the goal and is what must be measured. Today’s policy wonks are leading the way. The payers, to be led by Medicare, are to determine appropriate distribution of funds based on how well the providers follow the wonks’ algorithms. And the patient? Oh yes, if she hasn’t left the room yet, you can let her know that the computer’s algorithm has prescribed metformin as the next step in management of her diabetes. Score 100. One step closer to collecting your reward from the Medicare shared savings program.

And, oh, the patient. She says she wasn’t there for management of her diabetes? She’s there because her husband can’t give up sexting, and she’s profoundly depressed as a result? Gee, is there an algorithm for that? And doesn’t this mess things up by requiring a greater quantity of care? And would there be a way of lowering the cost for that care? In fact, not only does the situational depression need to be managed, but doesn’t something need to be done about the husband’s sexting paraphilia? Never mind. There is no accountability algorithm for that yet anyway. Besides this encounter has already received a perfect score for the shared savings program. Next patient.

Message to accountability policy wonks: The health care system doesn’t exist merely to assign and measure accountability of the health care professionals and institutions, which in itself is a time consuming and administratively burdensome endeavor. It exists to take care of patients. Can’t we get back to that?

By Leonard Rodberg, Ph.D.

We in PNHP often give the impression that the principal problem with America’s health care system is the extraordinary waste associated with its multi-payer private insurance system. We cite the 15 percent administrative waste that we calculate is due to that insurance system, including not only the marketing and utilization-control costs and the profits reaped by the insurance companies, but also the costs imposed on physicians, hospitals, and other providers by the complexity of the insurance system. (S. Woolhandler, et al, “Costs of Health Administration in the U.S. and Canada,” New England Journal of Medicine 349(8) Sept. 21, 2003.)

However, any comparison of our spending with that of other countries reveals that this must be only part of the story. As a share of GDP, U.S. spending is nearly twice the median of the rest of the industrialized world and 60 percent greater than the next most expensive systems.

Why is this? One conventional answer is that the prices charged by U.S. health care providers are much higher. (See Gerard F. Anderson et al, “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries,” Health Affairs May 2003 22:89-105.) But this doesn’t explain anything; it is simply another way of stating the same observation: Health care costs far more in the United States than in any other country.

The explanation is, in fact, clear, but is seldom pointed out, even by critics such as ourselves. It is a consequence of the fact that the United States is not only the only country that finances health care through market-driven private insurance, but we are also the only country that allows prices to be set through the private marketplace.

It is not only that we pay for health care through a third-party reimbursement system – many countries use third-party reimbursement – but that the rest of the system consists, in essence, of a vast number of independent, entrepreneurial providers of health care services and marketers of pharmaceuticals and medical supplies who are free to set their fees and prices as they see fit.

No other country allows such freewheeling price-setting in its health care system. All use a form of administered prices, even when the actual funding is through multi-payer (if essentially nonprofit) insurance funds.

Our own Medicare program uses administered pricing, attempting to tie payments to the actual cost of services, and it has been modestly successful in holding costs down. But its payments cannot get too far out of line from the rest of the entrepreneurial system, or physicians and hospitals would not accept its patients.

It has been known for at least fifty years, ever since publication of Kenneth Arrow’s seminal article in the American Economic Review on medical care and welfare economics – see, for instance, Paul Krugman, “Why markets can’t cure healthcare” – that the provision of health care bears no resemblance to a true market. Consumers (that is, patients) cannot comparison-shop; the methods, consequences, and costs of medical care are uncertain; and even the ethical principles of health care differ from those of a conventional market.

So the price of medical care is seldom discussed before being undertaken, and there is no effective countervailing force to the entrepreneurial drive, by all providers, to raise their incomes as high as they are able.

Nevertheless, the U.S. continues to treat health care as if it were a commodity to be purchased, rather than a service to be provided, and there are persistent efforts by the industry itself and by government officials, aided and abetted by numerous economists, to allow health care to continue to be treated as a market commodity.

The consequences of this can be seen, not only in the fact that health care costs in this country are far above those of any other advanced country, none of which allow their providers and suppliers to set their own prices, but the consequences can be seen as well in the complete irrationality of the prices of individual “items” of medical care amounting, in effect, to price gouging.

These wide and inexplicable variations in price have been chronicled in a lengthy investigative piece in Time magazine by Steven Brill, “Bitter Pill: Why Medical Bills are Killing Us,” and in Elisabeth Rosenthal’s recent reports in The New York Times on the cost of colonoscopies, “The $2.7 Trillion Medical Bill: Colonoscopies Explain Why U.S. Leads the World in Health Expenditures” and of childbirth, “American Way of Birth, Costliest in the World.”

In other words, the problem with the American health care system is not just the waste in the insurance system. It is that we have allowed a Wild West approach to the business of medical care to develop in this country. The “invisible hand” doesn’t exercise any control, and so there is nothing but naked self-interest and, occasionally, ethical considerations, to constrain the cost of medical care.

Today we are witnessing the consolidation of hospital systems and medical supply firms which, as the evidence has shown, can then set their own prices and force insurance companies, who must have them in their networks, to accept whatever charges they impose. Other countries avoid this situation through government mechanisms which lay a strong hand on the system, even when it is not the sole payer. Fees, charges, insurance premiums are all regulated by government to ensure that the system is affordable for the society while still maintaining universal access to health care.

The Affordable Care Act avoids anything remotely resembling price regulation.

The ACA is built on the idea that, through competition among insurance companies, costs can be brought under control. This is a fantasy. Increasingly, the insurance companies are “cost takers,” not “cost makers.” On the one hand, they will face, in the exchanges/marketplaces, increased competition from lower-cost insurers, but they will also face pressure from the hospital “empires” for higher prices and to keep those institutional giants within their networks.

There are attempts to constrain costs by imposing cost-sharing (“skin in the game”) on patients. Some economists claim this will lead patients to act more like smart consumers. However, there is a mountain of evidence that this is a false belief.

Co-pays and deductibles have their greatest effect on the decision to seek primary care, but this is the least-costly portion of health care. Cost-sharing has no serious effect on the most costly parts of medical care, inpatient care and expensive procedures. (See especially reviews by Katherine Swartz, “Cost Sharing: Effects on Spending and Outcomes,” and Dahlia Remler and Jessica Greene, “Cost-sharing: A Blunt Instrument.” Also, Patryk Perkowski and Leonard Rodberg, “Does Cost-Sharing Affect Health Care Spending: An International Comparison,” forthcoming.)

As a consequence, simply replacing insurance companies with a single payer will not, alone, cure the problems of the American health care system. We probably know this, but we don’t articulate it. The agency acting as the single payer must also impose cost discipline on the system, something that we are not accustomed to, and that will perhaps be much more objectionable to the health care industry than the single payer alone.

So, from an advocacy perspective, are we better off not mentioning this, since it will arouse stiff opposition among providers, or should we use it to gain support from those many Americans who are devastated by the costs they face, or expect to face, when they are ill?

Eventually, the providers will understand this without our telling them, but the public will not. Americans take for granted that doctors and hospitals set their own charges. The fact that there is another way to run a health care system is not something that is ever discussed. No one will tell them but those of us who take a critical, systemic view of the health care landscape and can show that there is a real alternative that works, everywhere else in the world but here.

Leonard Rodberg, Ph.D., is professor and chair of the Urban Studies Department at Queens College, City University of New York. He serves as research director of the N.Y. Metro chapter of Physicians for a National Health Program.

Institutional Corruption of Pharmaceuticals

Posted by on Wednesday, Jul 24, 2013

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

Risky Drugs: Why The FDA Cannot Be Trusted

By Donald W. Light
Harvard University, The Lab @ Edmond J. Safra Center for Ethics

A forthcoming article for the special issue of the Journal of Law, Medicine and Ethics (JLME), edited by Marc Rodwin and supported by the Edmond J. Safra Center for Ethics, presents evidence that about 90 percent of all new drugs approved by the FDA over the past 30 years are little or no more effective for patients than existing drugs.

All of them may be better than indirect measures or placebos, but most are no better for patients than previous drugs approved as better against these measures. The few superior drugs make important contributions to the growing medicine chest of effective drugs.

The bar for “safe” is equally low, and over the past 30 years, approved drugs have caused an epidemic of harmful side effects, even when properly prescribed. Every week, about 53,000 excess hospitalizations and about 2400 excess deaths occur in the United States among people taking properly prescribed drugs to be healthier. One in every five drugs approved ends up causing serious harm, while one in ten provide substantial benefit compared to existing, established drugs. This is the opposite of what people want or expect from the FDA.

Prescription drugs are the 4th leading cause of death. Deaths and hospitalizations from over-dosing, errors, or recreational drug use would increase this total. American patients also suffer from about 80 million mild side effects a year, such as aches and pains, digestive discomforts, sleepiness or mild dizziness.

The forthcoming article in JLME also presents systematic, quantitative evidence that since the industry started making large contributions to the FDA for reviewing its drugs, as it makes large contributions to Congressmen who have promoted this substitution for publicly funded regulation, the FDA has sped up the review process with the result that drugs approved are significantly more likely to cause serious harm, hospitalizations, and deaths. New FDA policies are likely to increase the epidemic of harms.



Institutional Corruption of Pharmaceuticals and the Myth of Safe and Effective Drugs

By Donald W. Light, Joel Lexchin and Jonathan J. Darrow
Social Science Research Network (SSRN), Journal of Law, Medicine and Ethics, Vol. 14, No. 3, 2013, June 1, 2013


Over the past 35 years, patients have suffered from a largely hidden epidemic of side effects from drugs that usually have few offsetting benefits. The pharmaceutical industry has corrupted the practice of medicine through its influence over what drugs are developed, how they are tested, and how medical knowledge is created. Since 1906, heavy commercial influence has compromised Congressional legislation to protect the public from unsafe drugs. The authorization of user fees in 1992 has turned drug companies into the FDA’s prime clients, deepening the regulatory and cultural capture of the agency. Industry has demanded shorter average review times and, with less time to thoroughly review evidence, increased hospitalizations and deaths have resulted. Meeting the needs of the drug companies has taken priority over meeting the needs of patients. Unless this corruption of regulatory intent is reversed, the situation will continue to deteriorate. We offer practical suggestions including: separating the funding of clinical trials from their conduct, analysis, and publication: independent FDA leadership; full public funding for all FDA activities; measures to discourage R&D on drugs with few if any new clinical benefits; and the creation of a National Drug Safety Board.

Restoring Institutional Integrity for Safer Drugs

Many concerned experts have suggested ways to reduce conflicts of interest and improve the safety and effectiveness of drugs.

First, while research companies play important roles in discovering and developing superior drugs, they should play no role in testing them. Over the years, expert bodies and prominent scientists have called for an independent institute to test drugs because commercial trials were so poor, biased, and conflicted. Yet this bedrock reform has never been accomplished, as the industry’s lobbying of Congress and its contributions to Congressional campaigns have soared.

Second, the FDA needs new leadership to restore public trust and build a new culture focused on safety through enforcement of its existing rules. Hearings through the 1960s and 1970s documented how frequently the FDA fails to adhere to its own rules and protocols.

Third, user fees must end and the FDA must be entirely funded by taxpayers-as-consumers. The FDA should be entirely clear about whom it serves.

Fourth, while approval criteria should allow for a sufficient number of therapeutically equivalent drugs in a class to give clinicians a range of choices, they should also require patient-relevant evidence of superiority. Non-inferiority trials should be allowed only if one can ethically justify entering patients into a trial in which there can be no benefit for them. All adverse events, including those occurring among subjects who drop out, must be reported with follow-up for two years.

Fifth, Congress needs to restore trust by creating a National Drug Safety Board with adequate powers, funds, and mandates to independently investigate and report on drug safety issues. The creation of this board would support the position that all data related to how drugs and vaccines affect people are a public good and that access to this data is a human right. Both the inadequacy of pre-approval safety testing and the lack of systematic post-approval monitoring need urgent attention.

None of this is likely to happen until third-party payers, politicians, and the people decide they want to stop paying so much for so many drugs of little value and then for treating the millions harmed by those drugs. Nor is it likely until the campaign to restore institutional integrity to Congress through funding elections by the 99 percent, rather than by the one percent, is successful.


Millions of people are being harmed by drugs, many of which have only negligible therapeutic value, and tens of thousands are dying. We need much greater government oversight of pharmaceuticals, certainly more than that which currently is being provided by the FDA.

The Motley Fool on Medicare for All

Posted by on Tuesday, Jul 23, 2013

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

How Much Could Medicare for All Save You?

By Rich Smith
The Motley Fool, July 21, 2013

But could it be that the ACA isn’t really needed at all? Could an alternative idea — “Medicare for all” — actually do a better job of controlling medical costs, and making health care affordable for Americans?

Harvard Medical School visiting professors David Himmelstein and Steffie Woolhandler recently noted on the pages of The New York Times that a Medicare-for-all health care system — known commonly as “single-payer” — is an incredibly efficient operation, in terms of costs.

On average, only 2% of the revenues that flow through Medicare are needed to cover overhead costs. In contrast, patients who subscribe to private health insurance spend 14% of their money — seven times as much — just paying for the overhead costs doctors incur from juggling the multitude of insurance procedures required for different patients subscribing to insurance plans.

In contrast, the U.S. government itself agrees that the ACA — the system we’ve settled upon instead of offering Medicare for all — costs more than a move to a cheaper, more efficient, and better single-payer system. The U.S. Government Accountability Office calculates that a switch to single-payer would shave $400 billion a year off the national health-care bill.

Little wonder, then, that a 2008 survey published in the Annals of Internal Medicine found that 59% of physicians polled support Medicare for all.

If an individual consumers think they’re better off with a private health insurance plan from WellPoint — or from UnitedHealth Group, Aetna, or Cigna — then fine. They could still sign up for one of those, either as a supplement to Medicare-for-all or, if they prefer, as an exclusive plan, and choose not to participate in Medicare at all. For that matter, there should be no need to require anyone to buy any insurance whatsoever.

Excerpts from representative Comments:

“Well, of course! But isn’t the ACA a step in the right direction?”

“Medicare for all would be far superior to any other plan, which was why it was killed before it could get out of committee.”

“ahh, if only the Republicans had not fought the entire idea so hard, that would have been the ideal solution.”

“A big concern, that not a lot of people know about-more and more doctors are refusing to take on new Medicare patients.”

“Medicare is an existing program that could simply be expanded and fixed a bit where necessary. This seem like a much much more common sense approach than a whole new bureaucracy.”

“Authors often site Medicare’s discount rate and admin cost. Both are a mirage. The Medicare discount rate is so low that it does not pay lights on costs.”

“It’s true that Medicare is already set up very well and that a minor legislative action could make it available to all…ObamaCare puts more power into the hands of private insurance companies and BigPharma, and how do you think those will use it?”

“Of course “single payer” would be better, but was not proposed in anticipation of Republican opposition to “socialized medicine” and their insistence on the primacy of a role for the private health insurance companies. As to Medicare for all on a voluntary basis, it still does not answer what to do about the uninsured who get sick. Who pays for them?”

“DUH! How soon could America deal Rich Smith and “Medicare for All” for Ovomit and OvomitCare?”

“Of course Medicare for all makes sense.”

“Regarding hospital charges vs. what insurers pay ($24,000 vs. $4000). . .that is a HUGE problem in healthcare that in a way, single payer WOULD correct.”

“You are dreaming in theory. The Complete Lives System that withholds medical care from infants, special needs children and reduces the amount of medical care available each year by a dollar amount to anyone over 50.”

“the money saving answer is to repeal the ACA and start over with insurance pools and letting those who could afford insurance and don’t have it suffer for their sin”

“PS: don’t forget that Obamacare expands IRS and gives IRS much control over your healthcare”

“Physicians often limit total Medicare patients, and broadening the program will just further stratify medical care from those who have the money to pay and those who do not.”

“Medicare for all would work but only if the discounts were renegotiated.”

“Obamacare will be the destruction of America !! Obama wouldn’t have it any other way !!! Hail to ol RACE BAITER IN CHIEF !!!”

“More and more doctors are refusing new Medicare patients since the pay is too low and it takes too long to get reimbursed. If we moved to a Medicare-based system, what would happen? We would all have insurance, but it would be next to impossible to find a doctor that accepts the insurance. Yeah, that’s smart. Real smart.”

“You don’t have the right to infringe on someone else’s liberties and that is exactly what happens when the government taxes one person to give it to another. Freedom is the answer. God Bless America.”

“This is exactly what Dr. Ben Carson has been proposing the past two years. EACH and every American citizen would have a medicare spending plan and credits to that fund would start immediately upon birth.”

“i think eveyone knows that single-payer is the only efficient answer, but the scum in washington d.c. won’t allow it – they their souls to big pharma”

“Great article. This is so straightforward anyone could understand it. Maybe even congresspeople?”

“Of course this is a step in the right direction, and someday a single payer system will prevail.”


About The Motley Fool

The Motley Fool is a multimedia financial-services company dedicated to building the world’s greatest investment community. Reaching millions of people each month through its website, books, newspaper column, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company’s name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king — without getting their heads lopped off.


This article is truly remarkable because of its source. The Motley Fool “champions shareholder values and advocates tirelessly for the individual investor.” Although they didn’t get everything right (they would include private insurance options and would have no requirement to even be insured), nevertheless this is a particularly strong statement for Medicare for All from a Wall Street source that is just now joining the parade.

Perhaps even more remarkable are the comments posted in response to this article. Considering that these comments are from the investment community, there is strong support for Medicare for All. Inevitably, as with most comment sections, there is a representation of ill-informed, ideologically-driven and sometimes belligerent comments, but those can be ignored.

We should take home from this the lesson that many in the investment community understand that Medicare for All really does make sense from the business perspective. We should tailor our message accordingly.

Forty Hours Is Full Time Act of 2013

Posted by on Friday, Jul 19, 2013

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

S.1188 — Forty Hours Is Full Time Act of 2013

113th Congress, First Session
The Library of Congress

To amend the Internal Revenue Code of 1986 to modify the definition of full-time employee for purposes of the individual mandate in the Patient Protection and Affordable Care Act.

June 19, 2013

Ms. COLLINS (for herself and Mr. DONNELLY) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to modify the definition of full-time employee for purposes of the individual mandate in the Patient Protection and Affordable Care Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

This Act may be cited as the `Forty Hours Is Full Time Act of 2013′.

Section 4980H(c) of the Internal Revenue Code of 1986 is amended–
(1) in paragraph (2)(E), by striking `by 120′ and inserting `by 174′; and
(2) in paragraph (4)(A) by striking `30 hours’ and inserting `40 hours’.



ObamaCare’s Definition of a Full-Time Job Needs Revising

By Sen. Joe Donnelly (D-Indiana) and Sen. Susan Collins (R-Maine)
The Wall Street Journal, July 18, 2013

In Lafayette, Ind., a school district cut the hours of 200 support staff to no more than 29 per week. In Bangor, Maine, the school system is preparing to track and cap the number of hours worked by substitute teachers to ensure that they don’t work more than 29 hours a week. Elsewhere, in Portland, Maine, a small business reduced a part-time employee’s hours from 35 to 29.

We are hearing reports like this from across the country. Why is this happening?

It’s happening because under the Affordable Care Act a “full-time employee” is defined as anyone working an average of 30 hours a week, rather than the traditionally accepted 40-hour work week. Employers with more than 50 full-time employees or full-time equivalents will be required to provide their employees with health insurance or potentially face a financial penalty, essentially a fine.

This rule is causing a growing number of employers to cut the hours of their workers, and according to one study by the UC Berkeley Labor Center, at least 2.3 million workers are at risk. This provision of the health law is not in the best interests of the country, and it needs to change.

As the economy shows modest signs of recovery, we should be working with employers to encourage additional job growth. Yet we are hearing from small businesses, public school systems and nonprofit organizations, that they are cutting employee hours and forgoing additional hiring in an effort to ensure that they are in compliance with the law.

To address this problem, we have introduced the “Forty Hours is Full Time Act of 2013.” It defines a full-time employee for the purposes of complying with the Affordable Care Act as someone who works an average of 40 hours per week, or 174 hours per month for full-time equivalents.


Many employers are in the process of reducing employees’ hours to under 30 per week in order to avoid the requirement to either provide health insurance for their workers or pay a penalty. Not only do these employees end up with no health insurance, they also have their paychecks reduced by about 25 percent. Since most already have modest incomes, this reduction in pay can create severe financial hardship. What can be done?

Senators Collins and Donnelly seem to define the primary problem as the reduction in income that these employees face. By changing the definition of full time work to 40 hours per week for purposes of the Affordable Care Act (ACA), employers will be able to preserve most of their workers’ incomes by employing them for 39 hours, while being relieved of the responsibility of providing health insurance. The employees will still be able to have health insurance since they can then purchase individual plans in the state insurance exchanges. Little does it matter that these are low-actuarial value plans with high-deductibles, and inadequate subsidies to protect family budgets. Oh. Maybe that won’t work so well.

It is not simply the definition of a work week that is wrong. It is the fundamental ACA financing model that is terribly flawed. Trying to fix it with patches such as redefining the work week will never get us where we need to be. We have to change the financing model. (Yes, we need single payer.)

Union leaders: Taft-Hartley plans at risk under ACA

Posted by on Thursday, Jul 18, 2013

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

Union Letter: Obamacare Will ‘Destroy The Very Health and Wellbeing’ of Workers

By Tom Gara
The Wall Street Journal, July 12, 2013

The leaders of three major U.S. unions, including the highly influential Teamsters, have sent a scathing letter to Democratic leaders in Congress, warning that unless changes are made, President Obama’s health care reform plan will “destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”

The full letter, below:


Dear Leader Reid and Leader Pelosi:

When you and the President sought our support for the Affordable Care Act (ACA), you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat. Right now, unless you and the Obama Administration enact an equitable fix, the ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.

Like millions of other Americans, our members are front-line workers in the American economy. We have been strong supporters of the notion that all Americans should have access to quality, affordable health care. We have also been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision.

Now this vision has come back to haunt us.

Since the ACA was enacted, we have been bringing our deep concerns to the Administration, seeking reasonable regulatory interpretations to the statute that would help prevent the destruction of non-profit health plans. As you both know first-hand, our persuasive arguments have been disregarded and met with a stone wall by the White House and the pertinent agencies. This is especially stinging because other stakeholders have repeatedly received successful interpretations for their respective grievances. Most disconcerting of course is last week’s huge accommodation for the employer community—extending the statutorily mandated “December 31, 2013” deadline for the employer mandate and penalties.

Time is running out: Congress wrote this law; we voted for you. We have a problem; you need to fix it. The unintended consequences of the ACA are severe. Perverse incentives are already creating nightmare scenarios:

First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.
Second, millions of Americans are covered by non-profit health insurance plans like the ones in which most of our members participate. These non-profit plans are governed jointly by unions and companies under the Taft-Hartley Act. Our health plans have been built over decades by working men and women. Under the ACA as interpreted by the Administration, our employees will treated differently and not be eligible for subsidies afforded other citizens. As such, many employees will be relegated to second-class status and shut out of the help the law offers to for-profit insurance plans.

And finally, even though non-profit plans like ours won’t receive the same subsidies as for-profit plans, they’ll be taxed to pay for those subsidies. Taken together, these restrictions will make non-profit plans like ours unsustainable, and will undermine the health-care market of viable alternatives to the big health insurance companies.

On behalf of the millions of working men and women we represent and the families they support, we can no longer stand silent in the face of elements of the Affordable Care Act that will destroy the very health and wellbeing of our members along with millions of other hardworking Americans.

We believe that there are common-sense corrections that can be made within the existing statute that will allow our members to continue to keep their current health plans and benefits just as you and the President pledged. Unless changes are made, however, that promise is hollow.

We continue to stand behind real health care reform, but the law as it stands will hurt millions of Americans including the members of our respective unions.

We are looking to you to make sure these changes are made.

James P. Hoffa
General President
International Brotherhood of Teamsters

Joseph Hansen
International President

D. Taylor


The Affordable Care Act (ACA) was intended to keep insurance obtained through employment intact, while adding coverage for the uninsured through new state insurance exchanges and through an expansion of Medicaid. Among the programs to be protected were the multi-employer Taft-Hartley plans that were collectively bargained between unions and employers. Yet an unintended consequence of ACA seems to have put these plans at risk.

Why? The provision of ACA that exempts employers from a requirement of providing coverage for part-time workers – those working less than 30 hours per week – has provided an opportunity for employers to escape the burden of their health benefit programs by merely rearranging the work schedules of their employees. It is already happening even though the employer requirement does not go into effect for another one and a half years.

Employers can assuage their guilt to some extent since they know that the government will subsidize the plans when their newly part-time employees switch to the insurance exchanges. These subsidies are not available for the Taft-Hartley plans (though employers are able to deduct from taxable revenues the cost of these plans – a tax expenditure).

Another motivation for employers to attempt to reduce the Taft-Hartley plans is that ACA includes a tax to be assessed against so-called Cadillac plans. Little does it matter that these are not plans with some kind of gilded benefits. These are merely standard health plans that have not had benefits stripped out nor have they shifted excessive costs to patients through higher deductibles and other forms of cost sharing. Yet health care costs are now so high that the cost of the standard benefits offered exceed the Cadillac threshold.

Union members gave up major wage increases in order to have secure health care coverage. If they lose their Taft-Hartley plans, it is unlikely that employers would grant the wage increases that they would have received had they not had to spend so much on the health plans, even though economists consider these plans to be paid for by forgone wage increases. The reality is that the economic model we have today transfers much of the productivity of the workers to the wealthiest one percent of our society.

Taft-Hartley was designed as anti-union legislation, though allowing collectively-bargained health benefit programs. Now even those programs are at risk. The anti-union one-percenters are winning the war.

We should remove responsibility of providing health benefits from the employers, but not in a way that shafts their employees. We need to replace our current dysfunctional health care financing system with one that works for everyone, while sharing the costs equitably – a single payer national health program. The solution is so obvious. Why isn’t it catching on?

Pioneer Accountable Care Organizations disappoint

Posted by on Wednesday, Jul 17, 2013

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

Pioneer Accountable Care Organizations succeed in improving care, lowering costs

Centers for Medicare and Medicaid Services, July 16, 2013

Today, the Centers for Medicare & Medicaid Services (CMS) announced positive and promising results from the first performance year of the Pioneer Accountable Care Organization (ACO) Model, including both higher quality care and lower Medicare expenditures.  Made possible by the Affordable Care Act, the Pioneer ACO Model encourages providers and caregivers to deliver more coordinated care for Medicare beneficiaries. This model, launched by the CMS Innovation Center, is part of the Affordable Care Act’s efforts to realign payment incentives, promoting high quality, efficient care for Medicare beneficiaries.  ACOs, including the Pioneer ACO Model and the Medicare Shared Savings Program, are one way CMS is providing options to providers looking to better coordinate care for patients and use health care dollars more wisely.

“These results show that successful Pioneer ACOs have reduced costs for Medicare and improved the quality of care for their patients,” said CMS Administrator Marilyn Tavenner.  “The Affordable Care Act has given us a wide range of tools to realign payment incentives in Medicare and Medicaid, and these efforts are already paying off.”



A Pillar of Obamacare’s Cost-Saving Effort Falls Short

By Devin Leonard
Bloomberg Businessweek, July 16, 2013

It’s no secret that the Obama administration’s effort to roll out health-insurance exchanges in every state is turning out to be more challenging than expected. Its campaign to lower health costs isn’t faring any better. On Tuesday, the Centers for Medicare and Medicare Services announced middling first-year results for the administration’s highest profile cost-control effort: the Pioneer Accountable Care Organization Model.

Obamacare supporters have long promised that Accountable Care Organizations — groups of hospitals and doctors that tend to large flocks of Medicare patients, with an eye toward keeping them out of the hospital — would be integral to bringing down the nation’s health-care costs. ACOs are supposed to come up with innovative ways of keeping patients in better shape by focusing on preventive measures while saving money in the process. Under the plan, the ACOs themselves are to be rewarded with the share of the savings they generate.

Thirty-two health care provider groups signed up for the pioneer program intended to promote the new model, but the Centers for Medicare and Medicare Services said Tuesday that only 13 of them generated enough savings to qualify for a cut. Two participants actually lost money instead.

The news wasn’t all bad. The pioneers produced better-than-average results on cholesterol control for diabetes patients. “Overall, we are very excited about the results,” Patrick Conway, chief medical officer for the Centers for Medicare and Medicare Services, told the Wall Street Journal. But a significant percentage of the pioneers weren’t so thrilled, and nine are slated to exit the program.

It’s much too soon to call the pioneer program a failure. It’s also premature to say the ACO model is one that will save vast amounts sums of money. That hasn’t stopped some of the law’s staunchest supporters, who might want to temper their rhetoric after Tuesday’s report.



Pioneer ACOs Year One: On The Path To A Learning Health Care System

By Douglas Hastings
Health Affairs Blog, July 17, 2013

The Pioneer Model should be seen as part of a crucial phase of testing alternative payment and delivery models in an effort to achieve greater value in health care.  One year’s results should not be seen as a definitive outcome or leading to a dispositive conclusion, but rather as a valuable source for learning.

The participating providers are required to be both financially and clinically integrated.  The ACOs must, among other core attributes, have an effective governance and leadership structure, have the ability to apply evidence-based medicine and care coordination processes, meet quality measures, have a savings distribution formula, develop a robust electronic health record infrastructure, and, importantly, be able to effectively engage patients in their care and their health.

ACO skeptics clearly remain.  Among the doubts and cautions that have been raised are that ACOs will drive insufficient change in physician behavior and patient engagement, result in insufficient savings, create a specialist (and thus patient) backlash, suffer from lack of agreement over measures and metrics, and drive up prices due to consolidation.  These are legitimate concerns.  But such concerns should not mean that the testing should slow down.  Rather, in my view, it should accelerate, given some early positive results and the ongoing cost and quality challenges faced by our health care system.


The Pioneer Accountable Care Organizations (ACOs) were already existing health care organizations that were selected as potentially exemplary models that could show the rest of the nation how well ACOs can work to achieve higher quality at lower costs. We now have a report from CMS of the initial “successes” of this model. Although the rhetoric from CMS is quite rosy, most reporters were not impressed, as the Bloomberg Businessweek response demonstrates.

Considering the added administrative hassle, the savings were negligible, with only 13 of the 32 organizations saving enough to receive “shared savings” from CMS, and 2 actually lost money.

Even the supposed quality gains were unimpressive since they represented only 15 measurements which the organizations were told in advance would be used to determine whether or not they met quality standards. These teach-to-the-test gains can hardly represent the overall quality status of each organization.

It is time for our policy makers to stop wishing that the ACO model is the nirvana of health policy and get on with endorsing a proven model of enhancing quality while controlling costs – a single payer national health program – a model that would have the additional benefit of actually covering everyone.

Tempering P4P expectations

Posted by on Tuesday, Jul 16, 2013

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

An Examination of Pay-for-Performance in General Practice in Australia

By Jessica Greene Ph.D.
Health Services Research (HSR), August 2013

This study examines the impact of Australia’s pay-for-performance (P4P) program for general practitioners (GPs).

There was a short-term increase in diabetes testing and cervical cancer screens after program implementation. The increase, however, was for all GPs. Neither signing onto the program nor claiming incentive payments was associated with increased diabetes testing or cervical cancer screening.



The Effect of Pay-for-Performance in Nursing Homes: Evidence from State Medicaid Programs

By Rachel M. Werner M.D., Ph.D., R. Tamara Konetzka Ph.D., Daniel Polsky Ph.D.

Medicaid-based P4P in nursing homes did not result in consistent improvements in nursing home quality. Expectations for improvement in nursing home care under P4P should be tempered.


More evidence that pay-for-performance (P4P) does not improve quality nor reduce costs.

Single payer does.

Insurers will continue to skirt regulations

Posted by on Monday, Jul 15, 2013

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

Insurers Seek Right Balance of Risk, Reward

By Anna Wilde Mathews
The Wall Street Journal, July 14, 2013

In the insurance business, some customers are more desirable than others—and insurers will be seeking to woo them in preparation for the health law’s new marketplaces.

Customers not only bring revenue in the form of the premiums they pay. They also come with costs, since the insurer will be on the hook for medical expenses. Traditionally, that has made healthier people the best insurance risk. Insurers often could decline to sell plans to people with health problems, or charge them more.

Now, the health law is changing the rules of the game. Under its requirements, insurers must sell plans to all comers, and the rates can’t be tied to customers’ health. Less obviously, the law includes mechanisms that are designed to ensure that individual companies aren’t punished if they draw a mix of sicker consumers.

Young and healthy people will still be needed to help balance out the costs of sicker customers. But, in addition, some people who weren’t sought after in the past may become profitable because of the law’s payment structure. Among them: people who have chronic conditions such as diabetes, but who can keep their diseases managed and avoid big costs such as hospital visits, said Shubham Singhal, a director at consulting firm McKinsey & Co. That is because insurers can be paid more to cover consumers based on their diagnoses.

Since insurers can no longer pick and choose their customers, they will employ a range of subtler tools, including marketing campaigns and carefully designed plans aimed at the customers the insurers most want.

“They want to attract the right risk,” said Siva Namasivayam, chief executive of SCIO Health Analytics Inc. His firm helps insurers identify customer types, such as “entry-level singles” and “healthy baby boomers,” each with projections on likely costs. The firm pinpoints, by ZIP Code, where the different types tend to live, so the insurer can target its marketing geographically.

Highmark Inc., a Pittsburgh, insurer, said it has around 100 targeted campaigns aimed at particular types of consumers, including recent college graduates and retirees not yet eligible for Medicare. It sends walk-in tractor-trailers to college campuses and sets up booths at community events such as charity walks. “We have to be more one-to-one than we were historically,” said Steven Nelson, a senior vice president at Highmark.

Blue Cross & Blue Shield of Rhode Island also plans to aim at certain populations, including young men. Last year, the insurer promoted one of its low-cost plans with a campaign that included posters on the walls of men’s bathrooms in bars. “You don’t need beer goggles to fall in love with this health plan,” one slogan said.


One of the great advantages of the Affordable Care Act was that it would finally bring an end to insurance company chicanery in which they were able to selectively insure more profitable healthy individuals while keeping the more costly sick individuals out of their plans.  At least, that’s what the new requirements for guaranteed issue (they must sell the plans to everyone, not only the healthy) and community rating (they cannot charge higher rates for the sick) were supposed to do. But insurers have a much larger bag of tricks.

Although insurers can no longer reject applicants who fail medical underwriting standards, they have learned to selectively market their plans to healthier populations, and they will continue to do so. They intensify their targeting to younger, healthier individuals while avoiding marketing to higher cost individuals. As this article indicates, an industry has arisen to help insurers select their targets for marketing, based on the health of selected groups or on the average health in geographical regions (ZIP Codes). This adds yet more administrative costs to our system already tremendously overburdened with administrative waste.

Not only do insurers market selectively to the healthier, they also are taking advantage of risk adjustment. Since insurers who take on clients with greater medical problems are paid more through these adjustments, it is to their advantage to include individuals with unfavorable diagnoses but whose health care needs are actually quite minimal. An individual might technically be diagnosed as a diabetic but require very little care, and yet the insurer can receive adjustments that are designed for a more severe diabetic with multiple complications. So it is to their advantage to enroll patients with just a touch of bad disease. They are already doing this in the private Medicare Advantage plans.

If an insurer misjudges and ends up with higher cost risk pools, they can no longer dump only those with greater needs, but they can pull their plans from the regions where they are experiencing high spending.

Insurers are masters at innovation. No matter how many laws and regulations they face, they will always find other ways to work the system. That’s just plain old good business. And that is the problem. We don’t want our health care defined by what is good for the industry; we want it defined by what is good for patients. We won’t get that until we establish our own public system dedicated to the primacy of patients.

And about that Blue Cross & Blue Shield of Rhode Island campaign that included posters on the walls of men’s bathrooms in bars with the slogan, “You don’t need beer goggles to fall in love with this health plan.” Although there are ten categories of essential health benefits, insurers are allowed flexibility within each category. Those young men would be well advised to read their plans carefully to see if they exclude sexually transmitted diseases and injuries while intoxicated. Insurers know no boundaries.

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