Health Affairs promotes “regulatory neutrality” for AHIP

Posted by on Wednesday, Aug 7, 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.

Regulatory Neutrality Is Essential To Establishing A Level Playing Field For Accountable Care Organizations

By Gary E. Bacher, Michael E. Chernew, Daniel P. Kessler and Stephen M. Wiener
Health Affairs, August 2013

A recent drive for payment reform in both the public and private sectors is creating powerful incentives for integration in health care finance and delivery. One of the best-publicized models for encouraging a movement away from the fee-for-service payment arrangements that dominate the nation’s current health care delivery system is the accountable care organization (ACO).

Regulating accountable care organizations poses unique challenges. In particular, regulation should strive to create a level playing field both among the various providers and organizations seeking to form an ACO and between ACOs and health plans. This level playing field is known as regulatory neutrality. Regulatory neutrality refers to the concept that similar products or models for financing or delivering care should be regulated in similar ways to try to prevent regulation from favoring any particular approach or product.

Our analysis recognizes that policy interventions that might be viewed as “nonneutral” in the short term may be necessary to promote policy goals, such as maintaining a competitive marketplace, that facilitate regulatory neutrality over the longer term.

Policy Issues

Accountable care organizations are affected by a number of different regulatory regimes—including antitrust, solvency regulation, Medicare’s Shared Savings Program governance regulations, and Medicare payment rules. An uncoordinated approach to policy among these regimes creates a heightened risk that ACOs will be inadvertently favored or disfavored relative to other entities that accept financial responsibility and arrange for the delivery of care, such as Medicare Advantage plans (private managed care plans operated under the auspices of Medicare).

For example, seemingly small, technical differences—such as reserve requirements—for ACOs versus Medicare Advantage plans can place ACOs at an advantage (or disadvantage) relative to organizations participating in the Medicare Advantage program. Even if each regulatory regime were functioning perfectly in terms of its own objectives, the interaction among regimes can have unintended consequences that affect the neutrality of the system as a whole.

Although it has received little attention from health policy researchers, the concept of regulatory neutrality has been studied extensively in other contexts. This literature offers three key lessons also applicable in the health care setting.

First, in general, neutrality favors less over more prescriptive regulation. Simply put, more-prescriptive regimes affect a greater number of decisions, and thus they entail a greater risk of inadvertently favoring one organizational form over another.

Second, neutrality favors “functional” over traditional “institutional” regulation. That is, when different types of institutions are serving the same function, they should be supervised by the same regulator according to the same set of rules, regardless of the labels that may have been applied to them in the past.

Third, the first two rules are not absolute. As we show in our discussion of antitrust policy, the pursuit of neutrality can support a more activist approach and special rules directed at the health care sector, even if that might be viewed as nonneutral in the short term.

Medicare Payment Rules:

Accountable care organizations operating under the Medicare Shared Savings Program compete with Medicare Advantage plans for both beneficiaries and providers. A beneficiary enrolled in Medicare Advantage cannot be enrolled in an accountable care organization, and vice versa. Providers participating in an accountable care organization are also potential members of provider networks for Medicare Advantage plans.

As a result, neutrality between Medicare Advantage and accountable care organizations is important. Although the Medicare Shared Savings Program regulations attempt to address this point, they also show how even small, technical differences can have an effect on the attractiveness of the different models to beneficiaries and providers.

The effect of these differences could be to favor one model over another in different parts of the country and, in so doing, encourage unwanted behavior among providers and Medicare Advantage sponsors that is aimed at handicapping one of the models in comparison to the other.


Regulating accountable care organizations poses unique challenges. Because of their nature, they are affected by at least four different regulatory regimes. The complexity inherent in this situation requires that policy makers pay special attention to coordination to avoid unintended consequences. To address this concern, the government should seek to maintain a level playing field (what we call regulatory neutrality), so that different models of care and those seeking to offer them are permitted to stand or fall on the cost and quality of care each provides. We conclude that neutrality generally favors less, rather than more, prescriptive regulation. Nonetheless there are exceptions to this rule, with antitrust policy as the most prominent example.

More broadly, the pursuit of neutrality may need to be tempered by a recognition of competing goals. Like so many areas in health care policy, accountable care organizations present both potential opportunities and new challenges. Considerations of regulatory neutrality can add depth and clarity to considerations of how to strike the balance in determining how to regulate these new entities.

(Gary E. Bacher is the director of the Institute for Health Systems Solutions at the AHIP Foundation, in Washington, D.C. Michael E. Chernew is a professor of health care policy in the Department of Health Care Policy at Harvard Medical School. Stephen M. Weiner is the national chair of the health care practice at the law firm Mintz Levin Cohn Ferris Glovksy and Popeo. Daniel P. Kessler is a professor in the business and law schools and a senior fellow at the Hoover Institution at Stanford University. Daniel Kessler acknowledges and thanks the Institute for Health Systems Solutions at the AHIP Foundation for support in conjunction with this article.)

AHIP Foundation Launches Health Systems Change

AHIP Foundation
Institute for Health Systems Solutions, June 11, 2013

The AHIP Foundation (“Foundation”), a 501(c)(3) organization,  today announced the launch of the Institute for Health Systems Solutions (IHSS), which has been established to create a hub for new research, new analysis, and a new opportunity for the exchange of views around changes in the organization and structure of the health care system.

IHSS builds on the Foundation’s focus on exploring ways to better contribute to the health care research and policy enterprise and to advance forward-looking ideas for improving the quality and availability of care.

“Collaboration among stakeholders involved in the health care sector is critical to the country’s ability to address the complex challenges in front of us,” said AHIP Foundation President Karen Ignagni. “That’s why IHSS is launching new partnerships, engaging researchers, and hosting forums to bring together individuals with different points of view to expand the dialogue and educate the public.”

“By working together, we will be better able to recognize the connection points between access, innovation, and smart regulation, and begin to find structural solutions to improve quality and access and reduce costs while addressing the substantial challenges facing our health care system,” said IHSS Director Gary Bacher.…

This one is pretty ugly.

The new issue of Health Affairs released this week includes an article on “regulatory neutrality” as a means of “establishing a level playing field for accountable care organizations” (ACOs). What? What level playing field, and what is this about making regulations neutral?

Reading quickly through the article, something didn’t smell right. Studying the article in more detail caused me to come to the conclusion that there was only one reason for the article. It was to introduce the concept of regulatory neutrality as a way of ensuring that private Medicare Advantage plans did not lose footing to the new ACOs established by Obamacare.

The authors conclude that regulatory neutrality “favors less, rather than more, prescriptive regulation,” except “the pursuit of neutrality can support a more activist approach and special rules directed at the health care sector, even if that might be viewed as nonneutral.” That’s it! Medicare Advantage plans should be able to compete with ACOs in relatively unregulated markets, except when they need the government to provide them with “special nonneutral rules.”

Who is behind this? The lead author, Gary Bacher, is director of the Institute for Health Systems Solutions (IHSS) at the AHIP Foundation, and co-author, Stanford Professor Daniel Kessler, “acknowledges and thanks the Institute for Health Systems Solutions at the AHIP Foundation for support in conjunction with this article.”

So what is IHSS? It is a new “research and analysis” entity established by AHIP Foundation, a 501(c)(3) organization, headed by Karen Ignagni… yes, the same Karen Ignagni who heads the insurance lobby organization AHIP – perhaps the most influential lobby organization in the nation. Obamacare was created under the guidance of AHIP.

Health Affairs is one of the most prestigious health policy journals in the world. What is their role in this? It was only June 11 that AHIP Foundation announced the launch of IHSS, and yet less than two months later – much shorter than the usual lead time for a journal article –  Health Affairs has published this article that informs politicians and the policy community that we have a new double standard for regulating private Medicare Advantage plans and their ACO competitors – “regulatory neutrality.”

It is shameful that leaders in our public and private institutions should be conspiring in this blatant abuse of the processes through which legitimate policy science is advanced. I mean, IHSS/AHIP actually purchased Daniel Kessler’s opinion! But Health Affairs? As I said, this one is pretty ugly.

By Katie Robbins, Organizer, New York Metro chapter

On July 30th, the 48th Anniversary of Medicare, PNHP and Healthcare-NOW! NYC members hit the streets in Brooklyn to bring the message to Congress that it’s time to improve and expand our most beloved social insurance program to all.

PNHP-NY Metro Board member, Dr. Sandy Turner, SNaHP (Students for a National Health Program) member Abbey Masonbrink, MD, MPH Candidate, Beth Oram, NP, joined by constituents and activists dropped in on the offices of Members of Congress who had not yet endorsed HR 676 in this Congressional session.

Staffers greeted them with smiles as they arrived unannounced with a cake decorated with the words “Happy Birthday, Medicare!”

In addition to the home-district visits to Representatives Jeffries, Lowey, Maloney, and Velazquez, allies were calling and meeting Members of Congress in their offices in Washington D.C. in preparation for the Congressional Briefing on HR 676. Representatives Rangel and Clarke were thanked for their endorsement of HR 676, and asked to show more leadership to protect and expand Medicare.

As a result of this activity, two new Congressional cosponsors from New York City signed on July 30th, Representatives Maloney and Serrano, bringing the number of Congressional cosponsors of HR 676 to 48.

In conversations with the staff in the Brooklyn offices, a wide range of issues were discussed including the huge number of uninsured people expected even after the ACA is fully implemented, the Brooklyn hospital crisis, and the recovery from Hurricane Sandy, all of which point to the need for improved Medicare for All.

The economic impact study presented on July 31st detailing the significant cost savings of Medicare for All, combined with the urgent health care needs in New York, shows that we cannot wait.

We must build on what works to solve the health and fiscal crisis: Medicare.

Low-socioeconomic patients with high-deductibles receive less high-severity emergency care

Posted by on Tuesday, Aug 6, 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.

Low-Socioeconomic-Status Enrollees In High-Deductible Plans Reduced High-Severity Emergency Care

By J. Frank Wharam, Fang Zhang, Bruce E. Landon, Stephen B. Soumerai and Dennis Ross-Degnan
Health Affairs, August 2013


One-third of US workers now have high-deductible health plans, and those numbers are expected to grow in 2014 as implementation of the Affordable Care Act continues. There is concern that high-deductible health plans might cause enrollees of low socioeconomic status to forgo emergency care as a result of burdensome out-of-pocket costs. We analyzed emergency department (ED) visits and hospitalizations over two years among enrollees insured in high-deductible plans through small employers in Massachusetts. We found that plan members of low socioeconomic status experienced 25–30 percent reductions in high-severity ED visits over both years, while hospitalizations declined by 23 percent in year 1 but rose again in year 2. Similar trends were not found among high-deductible plan members of high socioeconomic status. Our findings suggest that plan members of low socioeconomic status at small firms responded inappropriately to high-deductible plans and that initial reductions in high-severity ED visits might have increased the need for subsequent hospitalizations. Policy makers and employers should consider proactive strategies to educate high-deductible plan members about their benefit structures or identify members at higher risk of avoiding needed care. They should also consider implementing means-based deductibles.

People of low-socioeconomic status who have high-deductible health plans have 25 to 30 percent fewer emergency department visits for high-severity medical conditions – conditions with a high probability of needing ED-level care within twelve hours. That can’t be good.

Since similar trends were not found in people of high-socioeconomic status, the authors suggest that deductibles should be means-based – lower deductibles for those of low-socioeconomic status. But that would add more administrative complexity to our system already overburdened with administrative excesses.

The purpose of the deductibles is to reduce health care spending, but we don’t want to do that by not taking care of individuals with high-severity medical conditions. It would be far more efficient to simply eliminate deductibles for everyone and use better, patient-friendly methods of controlling spending. That’s what single payer is all about – people getting the health care they need while making it affordable for everyone.

‘Cadillac tax’ threatening public union health benefits

Posted by on Monday, Aug 5, 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.

Health Care Law Raises Pressure on Public Unions

By Kate Taylor
The New York Times, August 4, 2013

Cities and towns across the country are pushing municipal unions to accept cheaper health benefits in anticipation of a component of the Affordable Care Act that will tax expensive plans starting in 2018.

The so-called Cadillac tax was inserted into the Affordable Care Act at the advice of economists who argued that expensive health insurance with the employee bearing little cost made people insensitive to the cost of care. In public employment, though, where benefits are arrived at through bargaining with powerful unions, switching to cheaper plans will not be easy.

Steven Kreisberg, the director of collective bargaining and health care policy at the American Federation of State, County, and Municipal Employees, said the term Cadillac tax was misleading, because it “connotes a certain aspect of luxury in these health plans that is just factually incorrect.”

Cities including New York and Boston, and school districts from Westchester County, N.Y., to Orange County, Calif., are warning unions that if they cannot figure out how to rein in health care costs now, the price when the tax goes into effect will be steep, threatening raises and even jobs.

“I think it was misguided all along,” Robert B. Reich, the former labor secretary, said in an e-mail. When the law was being written, he said, he worried that the tax was “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.”

“Apparently, that’s what it’s become,” Mr. Reich, who is a professor of public policy at the University of California, Berkeley, said.

Under the tax, plans that cost above a certain threshold in 2018 — $10,200 annually for individual plans and $27,500 for family plans, with slightly higher cutoffs for retirees and those in high-risk professions like law enforcement — will be taxed at 40 percent of their costs in excess of the limit. (The thresholds will rise with inflation after 2018.)

State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits. Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax.

So the administration of Mayor Michael R. Bloomberg, in its final months in office, is asking municipal unions to agree to seek new bids for the city’s health insurance business, hoping to lower premiums. But lower-cost plans are likely to involve greater out-of-pocket costs and more limited networks of doctors, and so far, the response from labor has been cool.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was a paid consultant to the Obama administration on health care policy, said forcing state and local governments to rein in health care costs was exactly what the tax was intended to do.…

Obama demands tax on Cadillac plans

Comment by Don McCanne
Quote of the Day, January 7, 2010

What is the deal on the excise tax on high-premium “Cadillac” health plans, and why is President Obama pushing this tax so vigorously in the final stages of enacting health care reform?

Well, he is pushing it because his advisers tell him that it would help to achieve his first and foremost goal of slowing the increase in health care spending. The rhetoric being used implies that taxing high-premium plans would reduce the waste of paying for extravagant, non-essential benefits that are of little practical value. We’ll first dismiss this misperception and then follow with an explanation of why this form of cost management results in detrimental health outcomes.

The so-called Cadillac plans are merely plans with high premiums. The Health Affairs article by Jon Gabel and his colleagues (at link below) demonstrates that only 3.7 percent in the variation in premiums can be explained by the actuarial value inherent in the benefit design. In most instances, the higher premiums are not due to “Cadillac” benefits, but they are due to other factors, such as the type of industry providing the employment and the medical costs in the region.

Employers will not want to pay the excise tax, so they will demand from the insurers premiums that are at or below the tax threshold. Insurers will not simply reduce the premiums and continue to offer the same benefit packages. They will lower their benefits, lowering the actuarial value of the plans. There is absolutely no doubt that high and ever-increasing deductibles will be the norm.

The philosophy of controlling health care spending by shifting the financial burden to individuals and families is the most serious defect in the legislation before Congress. The excise tax on high-premium plans is only an example of this shift. The most glaring example is that the national standard proposed for basic plans has an actuarial value set at the unacceptably low level of 70 percent or even less. Making insured individuals pay money they don’t have to access care that is unaffordable is the worst way to control health care spending.

Many of the health policies in Obamacare are not only highly flawed, they were known to be so as the Act was being crafted. The tax on Cadillac plans – standard full benefit plans that are expensive only because health care is expensive – is one of these we-told-you-so, seriously flawed policies.

Unions representing public employees have been more successful in maintaining the actuarial value of their plans, that is, ensuring that the plans will prevent financial hardship for those who need health care. Now Obamacare has provided local governments with a tool – the Cadillac tax – to bring employees’ health plans into compliance with high-deductible, low actuarial value underinsurance plans that have become the norm in the individual insurance market and are becoming more prevalent in the workplace. It is well established that these plans cause worse health outcomes and greater financial hardship.

It is complete nonsense to take good plans and wreck them so that they’ll all be equally bad, when what we need to do is to provide everyone with protection against financial hardship when accessing essential health care services. This is precisely what the health policies of the single payer model are designed to do. Let’s get our policies right.

Steve Auerbach on Stossel

Posted by on Friday, Aug 2, 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.

A Healthy Debate

Fox Business Channel, April 25, 2013

On John Stossel’s show, pediatrician Steve Auerbach debates orthopedist Lie Hieb.

7 minute video:

Steve Auerbach is a member of the executive board of the N.Y. Metro chapter of Physicians for a National Health Program (PNHP) which supports a single payer system – an improved Medicare for all. John Stossel, the moderator, is a libertarian, and, as such, is not supportive of government programs such as single payer. Lee Hieb is a past president of the Association of American Physicians and Surgeons (AAPS) which supports a free market medical system and is opposed to government or corporate intervention.

The debate, such as it is, is no contest. Considering the limited time, Dr. Auerbach presents a convincing case for single payer reform, whereas Stossel gains no ground with his libertarian pitches, and Dr. Hieb is simply not credible as she presents the AAPS distortions and untruths.

In this video, Dr. Auerbach provides us with lessons on taking the higher moral ground.

EHealth moves in for the kill

Posted by on Thursday, Aug 1, 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.

EHealth Wins Approval to Sell Obamacare Health Plans

By Alex Wayne
Bloomberg, July 31, 2013

Online health insurance broker EHealth Inc. (EHTH) won permission from the U.S. government to enroll customers for subsidized plans offered under the federal health-care law.

EHealth will be able to tap into a government computer system allowing the company to determine whether people shopping for plans at its website are eligible for tax subsidies for their health insurance, the Mountain View, California company said today in a statement. The information will enable EHealth to offer customers subsidized plans available in their state.

The company has been lobbying the federal government for the agreement (for 36 states not electing to establish their own exchanges), as well as urging similar permission from 14 states that are building their own marketplaces called exchanges to sell insurance to people who don’t get it at work.

It won’t cost the government or customers anything extra when people enroll through EHealth, (Chief Executive Officer Gary) Lauer said in a May 14 conference call with reporters. The company will instead collect a commission from insurance companies such as UnitedHealth Group Inc. (UNH) when it enrolls people in their plans.

EHealth collects about 7 percent of monthly premiums as commission for the plans it sells now, Lauer said. Carriers will probably negotiate a lower commission for plans sold in government exchanges because “the risk is a little bit more unknown,” he said.

EHealth shares gained 28 percent to $30.74 at the close in New York, the biggest single-day increase since October 2006.…

Today’s comment is a repeat of the Quote of the Day comment from November 9, 2009. It is more evidence that we have been trying to warn the nation about the intolerable flaws in the Affordable Care Act and that there is a far better alternative, but the people who can do something about it are not listening.

eHealth is ready to connect America
Quote of the Day, November 9, 2009

eHealth is ready to become the nation’s broker for private health insurance.

This is yet one more reason why the model of reform selected by Congress and the Obama administration is the most expensive of all. With all of the other wasteful administrative expenses, brokers’ fees are added on top, though often hidden in the premium as a commission rather than a fee.

Compare this to Medicare enrollment. The administrative costs for automatic enrollment in Medicare, at that only once in a lifetime, are negligible for the government and its taxpayers.

Imagine the simplicity and efficiency of automatic, lifetime Medicare enrollment at birth for everyone. But Congress won’t go there… not until the nation demands it.

Friedman analysis of HR 676: Medicare for All would save billions

Posted by on Wednesday, Jul 31, 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.

‘Medicare for All’ would cover everyone, save billions in first year: new study

Physicians for a National Health Program
July 31, 2013

Upgrading the nation’s Medicare program and expanding it to cover people of all ages would yield over a half-trillion dollars in efficiency savings in its first year of operation, enough to pay for high-quality, comprehensive health benefits for all residents of the United States at a lower cost to most individuals, families and businesses.

That’s the chief finding of a new fiscal study by Gerald Friedman, a professor of economics at the University of Massachusetts, Amherst. There would even be money left over to help pay down the national debt, he said.

Friedman says his analysis shows that a nonprofit single-payer system based on the principles of the Expanded and Improved Medicare for All Act, H.R. 676, introduced by Rep. John Conyers Jr., D-Mich., and co-sponsored by 44 other lawmakers, would save an estimated $592 billion in 2014. That would be more than enough to cover all 44 million people the government estimates will be uninsured in that year and to upgrade benefits for everyone else.

“No other plan can achieve this magnitude of savings on health care,” Friedman said.

His findings were released this morning [Wednesday, July 31] at a congressional briefing in the Cannon House Office Building hosted by Public Citizen and Physicians for a National Health Program, followed by a 1 p.m. news conference with Rep. Conyers and others in observance of Medicare’s 48th anniversary at the House Triangle near the Capitol steps.…

Funding HR 676: The Expanded and Improved Medicare for All Act: How we can afford a national single-payer health plan

By Gerald Friedman, Ph.D.
July 31, 2013

Executive Summary

The Expanded and Improved Medicare for All Act, HR 676, introduced into the 113th Congress by Rep. John Conyers Jr. and 37 co-sponsors, would establish a single authority responsible for paying for medically necessary health care for all residents of the United States.

Under the single-payer system created by HR 676, the U.S. could save an estimated $592 billion annually by slashing the administrative waste associated with the private insurance industry ($476 billion) and reducing pharmaceutical prices to European levels ($116 billion). In 2014, the savings would be enough to cover all 44 million uninsured and upgrade benefits for everyone else. No other plan can achieve this magnitude of savings on health care.

Specifically, the savings from a single-payer plan would be more than enough to fund $343 billion in improvements to the health system such as expanded coverage, improved benefits, enhanced reimbursement of providers serving indigent patients, and the elimination of co-payments and deductibles in 2014. The savings would also fund $51 billion in transition costs such as retraining displaced workers and phasing out investor- owned, for-profit delivery systems.

Health care financing in the U.S. is regressive, weighing heaviest on the poor, the working class, and the sick. With the progressive financing plan outlined for HR 676 (below), 95% of all U.S. households would save money.

HR 676 (Section 211, Appendix 2) specifies a financing plan for single-payer that includes
• Maintaining current federal financing for health care
• Increasing personal income taxes on the top 5% of income earners
• Instituting a modest tax on unearned income
• Instituting a modest and progressive tax on payroll, self-employment
• Instituting a small tax on stock and bond transactions

The following progressive financing plan would meet the specifications of HR 676:
• Existing sources of federal revenues for health care
• Tax of 0.5% on stock trades and 0.01% tax per year to maturity on transactions in bonds, swaps, and trades
• 6% high-income surtax (applies to households with incomes > $225,000)
• 6% tax on unearned income from capital gains, dividends, interest, profits, and rents
• 6% payroll tax on top 60% of income earners (applies to incomes over $53,000, tax paid by employers)
• 3% payroll tax on the bottom 40% of income earners (applies to incomes under $53,000, tax paid by employers)

HR 676 would also establish a system for future cost control using proven-effective methods such as negotiated fees, global budgets, and capital planning. Over time, reduced health cost inflation over the next decade (“bending the cost curve”) would save $1.8 trillion, making comprehensive health benefits sustainable for future generations.…

This is the report that single payer advocates have been waiting for. Economics Professor Gerald Friedman of the University of Massachusetts at Amherst has provided us with an analysis of the financing of John Conyers’ HR 676: The Expanded and Improved Medicare for All Act. The results are quite impressive, especially considering the comprehensiveness of the HR 676 reforms. Dr. Friedman’s report will be invaluable in our advocacy for a single pager national health program.

The analysis shows that we really can provide everyone with comprehensive health care without causing a financial hardship for anyone. This is made possible by depending on progressive tax policies. Since it is likely that the opposition will become apoplectic when they see the proposed taxes, we should be prepared to explain why progressive tax policies to fund health care are a good thing rather than a bad thing.

Let’s begin with two fundamental principles: 1) All of us should have the health care that we need, and 2) Obtaining health care should not ever result in financial hardship. Having health problems is enough without adding the financial penalties of paying for health care simply because of having the misfortune of being sick or injured.

Our audience is not those who disagree with these principles. We will never be able to satisfy them. Rather we need to address those who agree but cringe and withdraw when they see a recommendation for TAXES!

We need to keep in mind that we are not working with the spending baseline that we had when we began to advocate for single payer a couple decades ago. (They should have listened to us then!) Health costs are now a much larger percentage of our economy. Health care costs for the average working family of four are now over $22,000, when median household income is about $50,000. It is now impossible to meet the goal of providing affordable health care for everyone without making the wealthy pay more than the rest of us. Financing must be progressive it we are to meet our goals.

The Affordable Care Act (ACA) has included several policies that do increase the progressivity of financing, but it depends on an administratively wasteful, fragmented system that is the source of many of the problems in health care today. Many who cannot afford their allocated share will still pay too much, and many more will not even receive the care that they should have merely because of the dysfunctional financing method perpetuated by ACA. In contrast, the administrative simplicity of progressive taxes ensures an equitable method of financing care, making it affordable for everyone.

For those who say that we can’t afford the taxes, remind them that the taxes displace much of our current spending for health care. Because of the efficiencies of the single payer model of financing, the amount that we would spend in increased taxes for health care is less than the amount we would save in recovering the administrative and clinical waste of our current system. Not only will we be paying less in taxes than the excessive amount that we are currently paying for our dysfunctional system, the payment will become much more transparent so that we finally would know what health care really costs us. Much of the costs are hidden today.

People often think that health care costs are what they or their employers pay in private insurance premiums, plus out-of-pocket expenses. In fact, in 2012 we paid only about $884 billion in private insurance premiums, though our total national health expediters were about $2,831 billion. It is that other $1,947 billion of relatively hidden health care costs that we are already paying that will be more transparent under a public tax system. When you think of these numbers, you can better understand why the proposed taxes seem to be so high.

Rather than fixating on just the taxes proposed in HR 676, it is much more important to look at the change in income that each person faces as a result of these tax policies. Use the link above to access Professor Friedman’s report and go to Figure 2. The bar graph and its explanation in the note below should be studied carefully to understand the changes.

The four bars on the left represent the bottom four quintiles of household income – 80 percent of the population. The four bars on the right represent the top 20 percent. The fifth bar, representing those with incomes from the 80th to the 95th percentile have an average household income of $216,922. Yet they and also those with incomes below them – 95  percent of all households – will see an INCREASE in their net income in spite of what they may perceive to be onerous taxes. It is only the top 5 percent that will be paying more in taxes than they will be receiving in health care benefits.

Okay. That’s fair for most of us, but is it really fair for those with incomes of a half million dollars or more – especially for those with average incomes of $3 million or even $166 million? Remember that wealth has moved upwards with high income individuals benefiting from the increased productivity of the workers, while workers’ incomes have remained flat. This massive, unfair upward shift of income and wealth screams out for justice. Progressive tax policies are precisely what we need to correct this injustice. HR 676 does exactly that – not only ensuring health care for everyone, but finally making it affordable for everyone while establishing public policies to slow the financial drain that the wealthy have placed upon the rest of us.

The Koch brothers and the Walton family may not like this proposal, but it’s not like we’re taking away their mansions or their personal jets. They’ll never miss the money that HR 676 would divert to taxes. Even those with a current $500,000 after tax income will see their net income reduced to about $460,000. They may whine, but if they are honest with themselves, they would have to agree that they really won’t see any significant differences in their lifestyles either. Some of them will even think that it is worth it if it ensures that absolutely everyone finally has the right to affordable health care.

We can have an Expanded and Improved Medicare for All if we simply dispense with our irrational tax phobia.

Montana government clinic: Maybe single payer is aiming too low

Posted by on Tuesday, Jul 30, 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.

Montana’s State-Run Free Clinic Sees Early Success

By Dan Boyce
NPR, July 30,2013

A year ago, Montana opened the nation’s first clinic for free primary healthcare services to its state government employees. The Helena, Mont., clinic was pitched as a way to improve overall employee health.

A year later, the state says the clinic is already saving money.

(Government employees still have their) normal health insurance provided by the state. But at the clinic, (there are) no co-pays, no deductibles. It’s free.

That’s the case for the Helena area’s 11,000 state workers and their dependents. With an appointment, patients wait just a couple minutes to see a doctor.

“For goodness sakes, of course the employees and the retirees like it, it’s free,” says Republican State Sen. Dave Lewis.

He and others faulted then-Gov. Brian Schweitzer for moving ahead with the clinic last year without approval of the state legislature, although it was not needed.

Now, Lewis is a retired state employee himself. He says, personally, he does like going there, too.

The state contracts with a private company to run the facility and pays for everything — wages of the staff, total costs of all the visits. Those are all new expenses, and they all come from the budget for state employee healthcare.

Even so, division manager Russ Hill says it’s actually costing the state $1,500,000 less for healthcare than before the clinic opened.

“Because there’s no markup, our cost per visit is lower than in a private fee-for-service environment,” Hill says.

Physicians are paid by the hour, not by the number of procedures they prescribe like many in the private sector. The state is able to buy supplies at lower prices.

Bottom line: a patient’s visit to the employee health clinic costs the state about half what it would cost if that patient went to a private doctor. And because it’s free to patients, hundreds of people have come in who had not seen a doctor for at least two years.

Montana recently opened a second state employee health clinic in Billings, the state’s largest city. Others are in the works.…

Let’s see. This Montana state-run free clinic is government owned, the physicians are salaried, there are no deductibles or co-pays, employees and retirees including Republicans like it, and it costs the state “about half what it would cost if that patient went to a private doctor.” Wow!

The single payer model of social insurance usually calls for a government-run insurance program that pays for our largely private health care delivery system, with all of its inefficiencies and inequities. But what if it paid for a government owned and financed health care delivery system similar to this Montana clinic, but with government ownership expanded throughout the entire delivery system.

Instead of just aiming for the goal of a single payer social insurance program, we could have a program of socialized medicine – government ownership of the delivery system. Considering that it is a much lower cost system with which everyone is happy, is that such a bad idea?

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?

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