Justin Bieber’s bodyguard

Posted by on Wednesday, Feb 16, 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.

Justin Bieber Talks Sex, Politics, Music and Puberty In New ‘Rolling Stone’ Cover Story

Rolling Stone
February 16, 2011

The Canadian-born (Justin) Bieber never plans on becoming an American citizen. “You guys are evil,” he jokes. “Canada’s the best country in the world.” He adds, “We go to the doctor and we don’t need to worry about paying him, but here, your whole life, you’re broke because of medical bills. My bodyguard’s baby was premature, and now he has to pay for it. In Canada, if your baby’s premature, he stays in the hospital as long as he needs to, and then you go home.”


They say that you should not use anecdotes to make policy, but when the policy science we know supports the millions of anecdotes Americans have regarding our “evil” ways in health care, it is time to use them to make policy. Just ask Justin Bieber’s bodyguard.

Medicare administrative costs – an update

Posted by on Tuesday, Feb 15, 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.

2011 Primer on Medicare Spending and Financing

Kaiser Family Foundation

Administrative Costs

The costs of administering the Medicare program have remained low over the years – less than 2 percent of program expenditures. As such, program administration is not a contributing factor to Medicare’s expenditure growth. Administrative costs include all expenses by government agencies in administering the program (HHS, Treasury, the Social Security Administration, and the Medicare Payment Advisory Commission). Also included are the cost of claims contractors and other costs incurred in the payment of benefits, collection of Medicare taxes, fraud and abuse control activities, various demonstration projects, and building costs associated with program administration.



Medicare Administrative Costs Are Higher, Not Lower, Than for Private Insurance

By Robert A. Book, Ph.D.
The Heritage Foundation
June 25, 2009

“The fact is that, in recent years, Medicare administrative costs per beneficiary have substantially exceeded those costs for the private sector, this despite the fact that, as critics note, private insurance is subject to many expenses not incurred by Medicare. Contrary to the claims of public plan advocates, moving millions of Americans from private insurance to a Medicare-like program will result in program administrative costs that are higher per person and higher, not lower, for the nation as a whole.”


The costs of administering the Medicare program remain at less than two percent of program expenditures. Several other reports have been circulated claiming that the administrative costs are much higher. Some of these recalculations add in administrative costs that they claim were excluded from the Medicare numbers, such as the administrative costs of claims contractors, costs of collecting Medicare taxes, and the costs of policing fraud and abuse.

Not only are these costs already included in the “less than two percent” calculation, resulting in true double counting by those challenging the numbers, but the costs they estimate are often pie in the sky, resulting in even greater embellishments of the numbers.

They also play with the numbers, using calculations based on per beneficiary services, or excluding those non-administrative services that the private insurers force on us, and using this as a distraction to dismiss as irrelevant the true percentages paid for administrative services.

Not only do they claim that Medicare administrative costs are understated, they also claim that the true administrative costs of insurers are very close to or even less than their “corrected” Medicare numbers. If that is true, then why have the insurers claimed that they will have difficulty keeping their own administrative costs down to fifteen to twenty percent, a requirement of the Affordable Care Act? And that fifteen to twenty percent doesn’t even include the tremendous administrative burden that they place on the health care delivery system.

So Heritage’s Robert Book claims that a Medicare-like program would result in higher administrative costs for the nation as a whole, than would private insurance.

How do we confront this? Do we simply reply that their circus antics are not credible, and walk away? Or do we simplify our rhetoric and call them what they are – liars? That might not sell well to a public that clings to the lies of the right, while rejecting the process of critical thinking.

By Dr. Ida Hellander

This is a two-stage bill which attempts to use the establishment of the required health benefit exchange under PPACA as a bridge to a “public-private single payer health care system” (Green Mountain Care) upon receipt of the required federal waivers. Here are some representative quotes:

“This bill proposes to set forth a strategic plan for creating a single payer and unified health system. It would establish a board …. ; establish a health benefit exchange for Vermont as required under federal health care reform laws; create a public-private single payer health care system to provide coverage for all Vermonters after receipt of federal waivers” (p. 1).

“The intent of the general assembly is to establish the Vermont health benefit exchange in a manner such that it may become the foundation for a single payer system” (p. 5).

“Green Mountain Care shall be implemented upon receipt of a waiver … of the Affordable Care Act. As soon as available under federal law, the secretary of administration shall seek a waiver to allow the state to suspend operation of the Vermont health benefit exchange and to enable Vermont to receive the appropriate federal fund contribution ….” (p. 44).

Comments and concerns

1. The reforms enacted prior to the implementation of single payer are inadequate and delay fundamental reform for 3-6 years. Several states have enacted reforms in the past only to repeal them before full implementation.

2. Provisions necessary for cost-control, such as an annual budget, and separate operating and capital budgets for hospitals, do not appear in the legislation, but do (confusingly) appear in the summary and testimony on the bill by Anya Rader Wallack (summary, p. 3 and testimony, p. 8).

3. The section on pilot projects for payment reform/ACOs appears to allow insurance companies to run ACOs: (p. 15) “the scope of services in any capitated payment should be broad and comprehensive, including prescription drugs, diagnostic services, services received in a hospital, mental health and substance abuse services, and services from a licensed health care practitioner … and may consider “whether to include home health services and long-term care services as part of capitated payments.” Only insurers can bear this much risk, and indeed the three private insurers in Vermont are already involved in developing ACOs.

4. The section on administration allows an insurance company to bid for “administration of certain elements of Green Mountain Care.” This adds unnecessary expense to the program.

5. What will the cost sharing be? (p. 39) “Green Mountain Care shall include cost-sharing and out of pocket limitations as determined by the Vermont health reform board … there shall be a waiver of the cost-sharing requirement for chronic care for individuals participating in chronic care management and for primary and preventive care.” Cost-sharing limits access to care and is ineffective at controlling costs; it should be eliminated.

6. There is no ban on investor-owned health facilities.

7. On the bright side, the single-payer plan includes Medicare and Medicaid (p. 40, 41-42), workers’ compensation and retirees (p.38); covers all “residents” (not just citizens, p. 37); there is at least a nod to the need to have comprehensive benefits including long-term care (if the budget allows); there is language on retraining displaced administrative workers (p. 56); bulk purchasing of drugs and supplies; use of “smart card” technology as in Taiwan (p. 37); and insurance coverage that duplicates the single payer is proscribed (p.41). (This last feature is contradicted, however, by a provision that allows employers to retain their existing coverage.)

8. Some additional features: There is an emphasis on mental health parity and an adequate supply of mental health professionals; emphasis on primary care and use of “medical homes” (this could be good or bad, depending on if they are part of an insurance company-run delivery system).

9. Finally, the bill does not specify financing, except to say that two options will be presented for consideration and all options for raising revenues will be considered (not just a payroll tax, as Dr. William Hsiao had recommended).


Single-payer advocates will have to fight to strengthen the single payer section of this bill, keep single payer in the bill at all (there will likely be attempts to strike it), get the necessary federal waivers and make single payer (aka “Green Mountain Care”) a reality.

Dr. Ida Hellander is executive director of Physicians for a National Health Program.

The Vermont health bill: a brief analysis

Posted by on Tuesday, Feb 15, 2011

By Drs. David Himmelstein and Steffie Woolhandler

The proposed Vermont health reform legislation includes two distinct elements: clear plans to rapidly implement the deeply flawed federal health reform (PPACA) in Vermont; and a vague outline of a single-payer plan that might be implemented six years hence if the feds were to allow it.

In contrast to the bill’s detailed prescription for implementing PPACA, the sections on the single-payer plan leave much to the imagination, punting decisions on critical issues to a board appointed by the governor. It seems that the board is to determine whether critical services like long-term care are included in the benefits package; whether co-payments will be affordable or daunting; how hospitals, home care agencies, nursing homes and doctors will be paid; and whether capital funds are to be allocated separately from operating funds (the sine qua non of effective health planning). And the bill includes no plan for funding the single-payer program.

Happily, the legislation would enroll all Vermont residents (regardless of immigration status) in the single-payer plan. In one critical area the bill seems to come down on both sides of the fence. While it would proscribe the sale of private coverage that duplicates the public plan if the single-payer program is implemented, it would also allow employers to opt out of the plan.

Finally, its uncritical embrace of the latest health policy fad – Accountable Care Organizations (ACOs) – would bolster the role of private insurers, at least in the short run. The bill calls for pilot projects in which an ACO would receive capitation payments which would cover all care for a defined population, including long-term care, prescription drugs, etc. Insurers are the only organizations in Vermont with the financial muscle to take on such “full risk” contracts.

In sum, the Vermont bill evidences good intentions and bold promises, but leaves the make-or-break decisions about restructuring health care financing for a later date. This “kick the can down the road” approach is worrisome in a state where the governor and Legislature change every two years, and where multi-stage health reforms have been enacted in the past, only to see the planned reforms abandoned without being implemented. In this context, ongoing mobilization of a broad-based single-payer movement will be critical. Such a mobilization can bolster the governor’s evident enthusiasm for the single-payer project and maintain the courage of the Legislature as they face the inevitable onslaught of corporate opposition to real health care reform.

Drs. Himmelstein and Woolhandler are co-founders of Physicians for a National Health Program.

By Vermont Health Care for All members Dr. Deb Richter, Ethan Parke, Marilyn Mode, Ellen Oxfeld and Marjorie Power

The following suggestions have been submitted to members of the Vermont Legislature.

1. Order of elements in bill: Put single payer at the front of the bill – this is the goal. Make clear that the goal is for Green Mountain Care to be up and running as soon as waivers are attained and that the exchanges (the next part of the bill) are an intermediary step that will last only as long and until waivers are obtained.

2. Emphasis: Need stronger language in the single-payer section that the goal is to attain waivers at the earliest date possible. This will also make more political sense, and it will be easier to and simpler to sell to the public.

3. Board: More support staff will be needed for this board. Think about the Public Service Board that has been operating for decades and all the support staff that they have. The consumer rep on the board will be especially in need of support staff because he/she does not already have an association (such as the hospital association) at his or her disposal to help when an issue comes up.

4. What if the federal law is repealed, amended, defunded, or struck down by the U.S. Supreme Court? It should be made clear that Green Mountain Care is contingent on the federal law only to the extent that it might be federally preempted. If the federal law is repealed or changed in such a way that states have more latitude to innovate, then the bill should make clear that we will move more quickly to Green Mountain Care (since no exchange stage would be necessary). H. 202 should also be clear that if the federal government does not fund states under the federal health reform bill, then Vermont must take immediate steps to create a single-payer system with whatever resources are at hand.

5. Principles: Section on principles at the beginning should include health care as a public good as well as health care as a human right.

6. Global budgets: Hospitals should receive global revenue budgets for cost containment and administrative savings. These revenue budgets are not for capital expansion. Hospital capital budgets should be allocated separately from their global revenue budgets. For instance, all things that will generate ongoing operating expenses, such as monies for a new parking lot or an additional MRI scanner, are part of capital budgets and should be allocated separately.

7. Role of for-profit entities: Although we recognize that there are already some for-profit entities within the Vermont health care system, the bill should consider a future moratorium on any for-profit health entities.

H.R.676 reintroduced in the 112th Congress

Posted by on Monday, Feb 14, 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.

112th Congress

The Library of Congress


To provide for comprehensive health insurance coverage for all United States residents, improved health care delivery, and for other purposes.

Sponsor: Rep Conyers, John, Jr. [MI-14] (introduced 2/11/2011)

Rep Baldwin, Tammy [WI-2] – 2/11/2011
Rep Capuano, Michael E. [MA-8] – 2/11/2011
Rep Christensen, Donna M. [VI] – 2/11/2011
Rep Chu, Judy [CA-32] – 2/11/2011
Rep Cohen, Steve [TN-9] – 2/11/2011
Rep Dicks, Norman D. [WA-6] – 2/11/2011
Rep Doyle, Michael F. [PA-14] – 2/11/2011
Rep Ellison, Keith [MN-5] – 2/11/2011
Rep Farr, Sam [CA-17] – 2/11/2011
Rep Filner, Bob [CA-51] – 2/11/2011
Rep Frank, Barney [MA-4] – 2/11/2011
Rep Green, Al [TX-9] – 2/11/2011
Rep Grijalva, Raul M. [AZ-7] – 2/11/2011
Rep Hinchey, Maurice D. [NY-22] – 2/11/2011
Rep Jackson, Jesse L., Jr. [IL-2] – 2/11/2011
Rep Lee, Barbara [CA-9] – 2/11/2011
Rep Lofgren, Zoe [CA-16] – 2/11/2011
Rep Maloney, Carolyn B. [NY-14] – 2/11/2011
Rep Meeks, Gregory W. [NY-6] – 2/11/2011
Rep Nadler, Jerrold [NY-8] – 2/11/2011
Rep Pingree, Chellie [ME-1] – 2/11/2011
Rep Roybal-Allard, Lucille [CA-34] – 2/11/2011
Rep Scott, Robert C. “Bobby” [VA-3] – 2/11/2011
Rep Tonko, Paul [NY-21] – 2/11/2011
Rep Weiner, Anthony D. [NY-9] – 2/11/2011

(The text of the bill has not yet been received from the Government Printing Office, but will be posted very soon.)


The “Expanded and Improved Medicare for All Act,” H.R. 676, sponsored by Rep. John Conyers Jr., D-Mich., would replace today’s private health insurers – and the Obama law’s individual mandate, which is being challenged as unconstitutional – with a single, streamlined public agency that would pay all medical claims, much like Medicare works for seniors today. (From a PNHP statement to be released later today at www.pnhp.org)

The immediate task for all of us who support an expanded and improved Medicare for all is to begin to recruit more cosponsors. Remind your Representatives that this does not eliminate the important beneficial measures of the Affordable Care Act. What it does instead is it replaces the highly flawed financing structure of ACA with a proven model that both makes health care affordable and includes everyone – the paramount goals of health care reform that have remained elusive until now.

Is ending job lock a job killer or a creator of employment opportunities?

Posted by on Friday, Feb 11, 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.

CBO: Health law to shrink workforce by 800,000

By J. Lester Feder and Kate Nocera
February 10, 2011

CBO Director Douglas Elmendorf told the House Budget Committee on Thursday that the health care law will reduce employment by 0.5 percent by 2021 because some people will no longer have to work just to afford health insurance.

“That means that if the reduction in the labor used was workers working the average number of hours in the economy and earning the average wage, that there would be a reduction of 800,000 workers,” Elmendorf said in an exchange with Rep. John Campbell (R-CA).

The report, published in August, said, “The Congressional Budget Office estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount — roughly half a percent — primarily by reducing the amount of labor that workers choose to supply … That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other provisions will encourage them to work more.”

Republicans gleefully seized on the admission, eagerly promoting it as evidence of what they call the law’s job-killing effect.

“More bad news for American families,” was how Budget Committee Chairman Paul Ryan’s office described the report in a release.

“Since day one Republicans have opposed Obamacare for a simple reason: it would destroy jobs. Minority Leader Pelosi, Leader Reid and others said we were wrong. Guess not,” said John Murray, deputy chief of staff for Majority Leader Eric Cantor.



The Budget and Economic Outlook: An Update

Congressional Budget Office
August 2010

Effects of Recent Health Care Legislation on Labor Markets

The Patient Protection and Affordable Care Act (Public Law 111-148) and the Health Care Education Reconciliation Act of 2010 (P.L. 111-152) will affect some individuals’ decisions about whether and how much to work and employers’ decisions about hiring workers. The Congressional Budget Office (CBO) estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount — roughly half a percent — primarily by reducing the amount of labor that workers choose to supply. That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other provisions will encourage them to work more. Moreover, many people will be unaffected by those provisions and will face the same incentives regarding work as they do under current law.

The net reduction in the supply of labor is largely attributable to the substantial expansion of Medicaid and the provision of subsidies that will reduce the cost of insurance obtained through the newly created exchanges, beginning in 2014. In particular:

* The legislation extends Medicaid eligibility to most nonelderly residents whose income is below 138 percent of the federal poverty level (FPL) — including childless adults who are currently ineligible for Medicaid in most states. (The FPL in 2010 is $10,830 for a single person and $22,050 for a family of four.)

* People who purchase insurance through the new exchanges will generally be eligible for tax credits to help them pay their health insurance premiums if their income is between 138 percent and 400 percent of the FPL and they are not offered coverage through an employer. (They may also be eligible for reductions in their cost-sharing requirements.) Those subsidies decline in value as income rises and can, under some circumstances, drop sharply to zero when income exceeds 400 percent of the FPL.

The expansion of Medicaid and the availability of subsidies through the exchanges will effectively increase beneficiaries’ financial resources. Those additional resources will encourage some people to work fewer hours or to withdraw from the labor market. In addition, the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work. But because most workers who are offered insurance through their jobs will be ineligible for the exchanges’ subsidies and because most people will have income that is too high to be eligible for Medicaid, those effects on financial resources and marginal tax rates will apply only to a small segment of the population.

Other provisions in the legislation are also likely to diminish people’s incentives to work. Changes to the insurance market, including provisions that prohibit insurers from denying coverage to people because of preexisting conditions and that restrict how much prices can vary with an individual’s age or health status, will increase the appeal of health insurance plans offered outside the workplace for older workers. As a result, some older workers will choose to retire earlier than they otherwise would.

Some other provisions of the legislation may also affect decisions regarding work, but their net effect on the total labor supply will probably be small.


The Republicans in Congress have been using this report from the Congressional Budget Office (CBO) to claim that the Patient Protection and Affordable Care Act (ACA) is a “job killer,” even naming the bill that they passed to repeal health reform the “Repealing the Job-Killing Health Care Law Act.” But on reading the report from the CBO on which this claim is made, it is clear that this is not taking jobs away from the workforce; rather it is removing the shackles of job lock from these workers.

Until ACA many individuals who wanted to and were otherwise able to retire early, or wanted to pursue other less structured jobs or avocations, were unable to because they would lose their employer-sponsored health insurance and would be unable to replace it either because it was too expensive or was not available because of preexisting medical disorders. Thus this job lock was one more major defect that the reform bill was designed to correct, and it partially will once fully implemented.

The CBO explicitly states that “the legislation, on net, will reduce the amount of labor used in the economy by a small amount — roughly half a percent — primarily by reducing the amount of labor that workers choose to supply.” Note that word “choose.” These workers will not be terminated. In contrast, they will celebrate freedom, much as the Egyptians are doing today. These 800,000 jobs are not being killed, they are being abandoned voluntarily.

Which leads to a very important point that was left out of the CBO report, and certainly left out of the Republican rhetoric. These are 800,000 jobs that have been opened up to the labor market. Once these 800,000 individuals have stepped aside because they no longer need their jobs, 800,000 new jobs will have been created, not killed. And aren’t the Republicans, the Democrats and the nation at large claiming that job creation is one of our most urgent priorities?

This does not end the problems inherent in a largely employer-sponsored system. Employers are shifting more of the costs to their employees for purely business considerations, trying to control overhead expenses. Under-insurance is becoming the standard. The private plans that will be available through the exchanges will be overpriced and inadequately subsidized. Waste will be perpetuated because of administrative excesses and the lack of an efficient system of financing health care.

We should relieve employers of their employee health benefits burden, while ending job lock forever. Employees would never again have to worry about health insurance and the costs of it if we had an improved Medicare that covered everyone.

Tiered and limited networks deprive patients of choice

Posted by on Thursday, Feb 10, 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.

Plans steer patients to lower-cost hospitals

By Liz Kowalczyk
The Boston Globe
February 10, 2011

Hundreds of small businesses have signed up in the past month for a new Blue Cross Blue Shield health insurance plan that charges employees hefty fees for seeking care at more expensive hospitals, in an effort to steer them to lower cost care.

The popularity of the plan — Blue Cross Blue Shield of Massachusetts says it is the fastest launch ever of a new product — is the latest sign that the once radical idea has been embraced as a way to control soaring health care costs, even as pricier hospitals warn of a possible backlash and cuts in services.

Other Massachusetts insurers also report brisk business in plans that offer lower premiums in exchange for limits on use of high-cost care. The plans either charge consumers extra for receiving care from popular but expensive hospitals or doctors, or bar them altogether from seeking treatment at those institutions and practices.

The Blue Cross Hospital Choice plan, which went on sale last month, charges members, for example, an extra $1,000 for an inpatient stay or outpatient surgery, and $450 more for an MRI, at 15 higher-cost hospitals, including Massachusetts General and Brigham and Women’s hospitals, Children’s Hospital Boston, and UMass Memorial Medical Center in Worcester.

In Massachusetts, insurers traditionally have offered wide-open networks, meaning members can check into a pricey teaching hospital to deliver a baby rather than go to a less expensive community hospital, and can schedule MRIs in a hospital outpatient department, even when freestanding clinics provide similar service for less money. But amid intense scrutiny into why health care costs in Massachusetts are climbing 7.5 percent a year, “tiered” and “limited” networks have emerged as an immediate way to control costs.

But executives at Partners HealthCare, the parent organization of Massachusetts General and Brigham and Women’s, said that while these new policies are making providers more sensitive to price, they have pitfalls.

Dr. Thomas Lee, head of Partners’ physician group, said some people will become seriously ill and realize they can’t go to, or can’t afford, their first-choice hospital.


Although private insurers in California have led the way in innovative product changes in an attempt to keep insurance premiums competitive (at the great cost of impairing the protection afforded by their products), Massachusetts is now serving as the laboratory for what we might expect under the Affordable Care Act (ACA), since Massachusetts got a jump start on the ACA model.

What determines which insurance policy people will select for themselves or for their families? The premiums or the benefits? If they are relatively healthy, which most people are, they may look at both, but the decision will most likely come down to choosing a plan with a premium that they can barely afford over a plan with a premium that is totally beyond their means. They are less likely to study the fine print on the benefits that states, for instance, the less expensive plan uses “tiered” or “limited” networks.

As this Boston Globe article indicates, the financial penalties for using a higher tiered facility can be very severe. And limited networks? The plan pays nothing outside of the network. Plan-approved provider networks have been used by the insurers as a tool to leverage the negotiations for provider rates. The expansion in the use of tiered or limited networks now uses the patient as a tool – contrary to their own interests – in an attempt to reduce spending so that premiums remain affordable, if only barely so.

Tiered and limited plans are growing rapidly in Massachusetts. Some of the most prestigious academic medical centers in the nation are being targeted and could face serious budget constraints. In using these tools of the marketplace, financial decisions are not being made based on what services should be provided and paid for; instead they are being made on the basis of what will best support the market of private insurance plans. As a result, serious damage could be inflicted on the infrastructure of our health care delivery system.

Imagine Medicare engaging in this behavior. You really can’t. Although always a work in process, Medicare includes the entire health care delivery system as its network, and reimburses at rates that have some semblance of maintaining the financial viability of the delivery system, while reining in waste. It can do better, and would do so if it were purchasing essentially all care provided in the United States, through an improved Medicare for all. The multiple tools of a single payer system would dramatically improve the efficiency of our health care purchasing.

Will Mayo Clinic save money as an ACO?

Posted by on Tuesday, Feb 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.

Some insurance companies pushing plans with Mayo Clinic out of network

By Christopher Snowbeck
February 5, 2011

Bloomington-based HealthPartners last year started marketing health plans that feature a network of hospitals and doctors that doesn’t include the Mayo Clinic. In exchange for not having access with low co-payments to the iconic Rochester, Minn., clinic, subscribers pay lower premiums when they select a HealthPartners plan with Mayo as an out-of-network option.

Last year, Eagan-based Blue Cross and Blue Shield of Minnesota also started emphasizing health insurance products for individuals in which Mayo isn’t in the network of providers.

Mayo has been celebrated nationally for providing high-quality and low-cost health care, but health insurance brokers say the local reputation is different as far as cost goes.

“Mayo is cheap only compared to other national care centers, but in general is a higher-cost center when compared to its Minnesota peers,” said Christopher Schneeman, a health insurance broker with SevenHills Benefit Partners in St. Paul.

“The Mayo Clinic is world-class,” said Greg Sailer of Sailer Benefit Services in Lake Elmo. “But it’s expensive, and you’re going to pay for it.”

Mayo Clinic officials argue that the Rochester center offers greater value by providing comprehensive care that steers patients to the most-effective treatments. That ultimately adds up to lower overall cost, the clinic says.

“When we looked at Mayo’s total cost of care — the combination of price and utilization — they, on average, have a higher total cost of care than other health systems that are seeing comparable groups of patients,” said (Andrea Walsh, chief marketing officer of HealthPartners).


For many years, the most common example given of the variations in the costs of health care demonstrated by the Dartmouth Atlas was the high costs of health care in Boca Raton, Florida when compared to Rochester, Minnesota, home of the Mayo clinic. These observed variations throughout the nation have led to the recommendation – now enacted in the Affordable Care Act (ACA) – to establish accountable care organizations (ACOs).

Although the precise details of what constitutes an ACO have not yet been released by HHS, the law states that the ACO will be “accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it.” Payment will be based on a “Medicare Shared Savings Program,” in which the ACO shares with the government the savings for which it is accountable. It is a program designed to reduce health care spending.

Since Mayo Clinic certainly has the capability of providing overall care of the patient, it would seem to be an ideal institution to serve as an ACO. In fact, the authors of the legislation had in mind institutions such as Mayo as important models that could provide high quality care at a lower cost.

But will Mayo deliver at a lower cost? Not according to the current experience in Minnesota. Mayo argues that they provide greater value because they provide “comprehensive care that steers patients to the most-effective treatments,” even if that care is more expensive than elsewhere in Minnesota. (Time for a little soft shoe?)

The point is that the cost savings in ACA, such as the ACOs, are not much more than a fantasy at this point. And for this we gave up universal coverage and have established under-insurance as the new standard. We can still reach our goals of comprehensive, affordable care for everyone by replacing ACA’s financing system with an improved Medicare for all.

Individual mandate falls short in Massachusetts

Posted by on Monday, Feb 7, 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.

Lack Of Access Due To Costs Remains A Problem For Some In Massachusetts Despite The State’s Health Reforms

By Cheryl R. Clark, Jane Soukup, Usha Govindarajulu, Heather E. Riden, Dora A. Tovar and Paula A. Johnson
Health Affairs
February 2011

Did the Massachusetts health reforms, which provided near-universal insurance coverage, also address problems of unmet need resulting from the cost of care and of inadequate preventive care for diverse patient groups? We found that nearly a quarter of adults who were in fair or poor health reported being unable to see a doctor because of cost during the implementation of the reforms. We also found that state residents earning less than $25,000 per year were much less likely than higher earners to receive screening for cardiovascular disease and cancer.



More get waivers of health insurance

By Kay Lazar
The Boston Globe
February 7, 2011

Massachusetts regulators granted more exemptions last year to residents who said they could not afford the health insurance required by the state, waiving the tax penalty for more than half of those who appealed, according to state data.

That is prompting regulators to take a fresh look at how Massachusetts defines affordable when it comes to mandatory health insurance.

Massachusetts residents with the lowest family incomes, less than $33,075 for a family of four, make up the largest share — 43 percent — of the uninsured, according to state data.

“We may want to let them in [to government subsidized health insurance], but it would cost money, and we would have to decide if the state wants to spend money that way,” said committee member Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology.


Does an individual mandate to purchase private insurance with cost-sharing requirements ensure that citizens will have health care access and be able to afford it? It hasn’t in Massachusetts, and it will not throughout the United States because it is an irreparably flawed mechanism of financing health care.

The literature is replete with policies that would nudge us a little bit closer to the goals of affordability and expanded coverage, but, as Jonathan Gruber, an advocate of the private insurance mandate model, says, “we would have to decide if the state wants to spend money that way.”

But it’s the model, stupid! Dump it and replace it with an improved Medicare for all and then health care will be affordable for everyone. Why does Gruber and the others insist on separating state money from personal money, as if state money is sacred and personal money isn’t? It all belongs to us anyway.

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

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