Mark Pauly’s answer to high drug prices: Walk away

Posted by on Monday, May 9, 2016

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.

Maybe we are to blame in part for rising cancer drug prices

By Mark V. Pauly, PhD, May 9, 2016

The prices of oral cancer drugs are rising. This will come as no surprise to anyone who has cancer or who knows someone who has it.

Why did these prices increase at this pace?  My visceral reaction, which I suspect is the same as yours, is to rail against “corporate greed,” something we have seen on display for even old drugs to a spectacular extent lately.

But here is my guess. The combination of rising consumer income (even with the recession) and the spread of drug insurance meant that the maximum amount consumers or their insurers were willing to pay for these effective drugs for desperate situations grew. It was growth in demand or consumer value that persuaded drug firms to develop drugs that would be profitable if introduced at higher prices.

If we consumers want to do something about rising prices for cancer drugs, we need (according to the hard-hearted economist) to do what happens when prices for gas, or steak, or designer ties is rising — we need to walk away from them. A tepid demand response will itself temper prices as well as total spending, and perhaps offer a cautionary lesson for future health care price increases.


S&P Healthcare Claims Index Monthly Report

Key 2015 Takeaways:

The December 2015 S&P Healthcare Claims Indices (the Indices) describe commercial healthcare costs that rose 50% more rapidly in 2015 than in 2014 – 6.50% vs. 4.33%.

Drug costs played a role by significantly increasing for the second straight year – rising 15.83% in 2015 (up from 12.58% in 2014 and 2.73% in 2013).

Drug prices are out of control. Wharton School’s Mark V. Pauly, PhD, of “moral hazard” fame, suggests that we, as consumers, can do something about it. We simply walk away from the high-priced drugs we need and then the markets will take care of the prices.

That might satisfy “the hard-hearted economist,” but there are other economic tools that can be used to achieve our objective: ensuring that everyone receives all essential health care services and products. Predominant amongst the alternative methods of health care financing would be single payer Medicare for all.

A publicly-financed system with government administered pricing and first dollar coverage is much more effective than markets in ensuring both appropriate pricing and access. Using the market tool of walking away eliminates access. That might be fine for designer ties, but it isn’t for health care.

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Kids need healthy mothers

Posted by on Friday, May 6, 2016

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 Are Moms Faring under the Affordable Care Act? Evidence through 2014

By Michael Karpman, Jason Gates, Genevieve M. Kenney, Stacey McMorrow
Urban Institute, May 5, 2016

The number of uninsured mothers fell from 7.5 million in 2013 to 5.9 million in 2014, as the uninsurance rate for mothers reached its lowest point since 1997. The largest declines in uninsurance were found among low- and moderate-income mothers who were targeted by the ACA’s Medicaid expansion and the introduction of subsidized Marketplace coverage, respectively.

Despite these gains in coverage, nearly one in six mothers remained uninsured in 2014, and these mothers were disproportionately young, low-income, Hispanic, noncitizens, less educated, not married, and living in the South. One particularly concerning finding is that about one in five mothers who were likely to have the greatest physical and mental health care needs—those who reported being in less than very good health or having moderate or severe psychological distress—were uninsured.

When asked about the reasons why they do not have health insurance or stopped having coverage, 41.5 percent of uninsured mothers in 2014 said it was because the cost was too high. The next most frequently reported reason was that coverage stopped after pregnancy (18.7 percent). In addition, some mothers identified their inability to get employer-based coverage as a reason for being uninsured, either because they or the person in their family with coverage lost or changed jobs (18.0 percent) or because their current employer does not offer coverage (7.3 percent). Over 5 percent said they had lost Medicaid or other coverage because of a new job or increase in income, and 18.6 percent reported not having coverage for other reasons, such as divorce, separation, or death of a spouse or parent, becoming ineligible because of age or leaving school, denial of coverage from an insurance company, or not needing coverage.

Most would agree that having healthy mothers would be of benefit to their children. Suppose 5.9 million mothers were uninsured, wouldn’t it seem that we should enact health care reform that would address this problem? In fact, we did enact the Affordable Care Act, and between 2013 and 2014 the number dropped from 7.5 million to 5.9 million. Rather than celebrating the “success” of ACA reform, shouldn’t we be advocating for reform that really does work for everyone?

Yesterday, the Physicians’ Proposal for Single-Payer Health Care Reform was released. Under that proposal the number of uninsured mothers would drop to zero. At the following link you can read and download the Proposal and its supporting documents, and provide your personal endorsement:

You don’t want to trouble yourself by providing an endorsement? But Mother’s Day is this weekend. Surely you’ll reconsider, you know, for Mom.

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A Physicians’ Proposal for Single-Payer Health Care Reform

Posted by on Thursday, May 5, 2016

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.

AJPH Editorials: Moving Forward From the Affordable Care Act to a Single-Payer System

By Adam Gaffney, Steffie Woolhandler, David Himmelstein and Marcia Angell
American Journal of Public Health, June 2016
Published in advance online May 5, 2016


Despite the ACA, many serious problems remain in American health care. Uninsurance and underinsurance endure, bureaucracy is growing, costs are likely to rise, and caring relationships take second place to the financial prerogatives of health insurers and providers. A single-payer NHP offers a salutary alternative, one that a would at long last take the right to health care from the realm of political rhetoric to that of reality.


Beyond the Affordable Care Act: A Physicians’ Proposal for Single-Payer Health Care Reform

By The Working Group on Single-Payer Program Design
Co-chairs: Adam Gaffney, M.D., David U. Himmelstein, M.D., Steffie Woolhandler, M.D., M.P.H., and Marcia Angell, M.D.


Even after full implementation of the Affordable Care Act (ACA), tens of millions of Americans will remain uninsured or only partially insured, and costs will continue to rise faster than the background inflation rate. We propose to replace the ACA with a publicly financed National Health Program (NHP) that would fully cover medical care for all Americans, while lowering costs by eliminating the profit-driven private insurance industry with its massive overhead.  Hospitals, nursing homes, and other provider facilities would be nonprofit, and paid global operating budgets rather than fees for each service. Physicians could opt to be paid on a fee-for-service basis, but with fees adjusted to better reward primary care providers, or by salaries in facilities paid by global budgets.  The initial increase in government costs would be offset by savings in premiums and out-of-pocket costs, and the rate of medical inflation would slow, freeing up resources for unmet medical and public health needs.


Download the full proposal

Summary of the Physicians’ Proposal

Background Fact Sheet for the Physicians’ Proposal

PNHP Press Release


From the PNHP website

“Beyond the Affordable Care Act: A Physicians’ Proposal for Single-Payer Health Care Reform” establishes the vision and principles that will empower Americans to replace our expensive, inadequate, and inefficient collection of health care systems with an improved Medicare for All.

The proposal outlines the general structure of a single-payer system for the United States, including coverage and eligibility; physician and outpatient care payment; global budgeting of hospitals; health planning and capital investments; coverage for medications, devices, and supplies; the establishment of a national long-term care program; cost-containment; and single-payer financing. The proposal also demonstrates the shortcomings of alternatives to National Health Insurance, including the Affordable Care Act.

For further links, including downloading and endorsing the proposal:

If you have not done so already, please use the links above to endorse and download the Physicians’ Proposal, including the Summary and the Background Fact Sheet. It is imperative that we fix our dysfunctional health care system.

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We can thank Bernie Sanders’ presidential campaign for putting single-payer national health insurance (NHI) on the front burner of today’s  national political discussion. This is long overdue and especially timely as the two parties debate alternatives for future U. S. health care. It appears that political feasibility for NHI may finally be approaching a time of acceptance, if our democracy can prevail over oligarchy and plutocracy.

The 20,000 physician-strong Physicians for a National Health Program (PNHP) has released today a Physicians’ Proposal for Single-Payer Health Care Reform, updated from its 2003 proposal (1), with an accompanying editorial. (2) It describes how traditional Medicare can be expanded to cover our entire population for necessary health care, provide comprehensive benefits to all Americans, give us free choice of physician and hospital, reduce waste and bureaucracy, and save money at the same time. This proposal by a non-partisan, not-for-profit national organization has been endorsed by more than 2,200 physician colleagues in all specialties. (3) More recently, it has been endorsed by an additional 560 physicians and medical students. (4) In its 2004 report, the Institute of Medicine (now the National Academy of Medicine) called for universal health care by 2010, listing single-payer NHI as one of the alternatives; none of the other alternatives could ever be expected to achieve universal coverage, as they remain part of the problem. (5)

This 2016 election season brings us three very different alternatives concerning future health care in this country: (1) continuation of the Affordable Care Act (ACA) with changes as necessary; (2) a Republican “plan” for health care; and (3) single-payer NHI. Despite some expansions of coverage, especially through Medicaid, the ACA has failed to make health care more affordable, has accelerated waste, bureaucracy and profiteering, and is unsustainable. Yet Hillary Clinton calls for expansion of the ACA to 100 percent coverage with no possible way of doing it by retaining some 1,300 private insurers. She also claims disingenuously that NHI will raise our taxes—without acknowledging that Gerald Friedman’s classic 2013 study found that 95 percent of Americans will pay less for insurance premiums, deductibles, co-payments, actual care and out-of-pocket payments, and that only the wealthiest 5 percent would pay more. (6)

Although no concrete plan has yet been advanced by the GOP, we can expect that it will repeal the ACA, then “replace” it with long discredited reliance on free markets in health care, consumer directed health care, health savings accounts, selling insurance across state lines, and high-risk pools.

Neither the ACA nor GOP options will make health care more affordable or accessible. Single-payer NHI is the only alternative that will achieve universal coverage in an affordable and sustainable way. A strong case for it has been made elsewhere on economic, sociopolitical, and moral grounds. (7) It will meet conservatives’ principles regardless of party affiliation, including efficiency, maximal choice, minimal waste, value, and everyone contributes in proportion to his or her income. (8) Long an iconic guru of free-market economics, Kenneth J Arrow, has recently acknowledged that “a single-payer system is better than any other system”, as long as private practice is preserved (as it would be with NHI). (9)

We know that powerful forces are aligned against passage of NHI,
including private insurers, Big PhRMA, medical device makers, and other members of the medical-industrial complex. They are empowered further by their hundreds of lobbyists and corporate money in our post-Citizens United world. As Bernie Sanders has observed: “the Koch brothers, as the second-wealthiest family in America with $82 billion in wealth, advocate destruction of federal programs that are critical to the financial and personal health of middle-class Americans.” (10)

Sorting through the three major financing alternatives for our health care will test whether or not we have a real democracy. Much of the corporate-owned media under-report the single-payer alternative, misinform the public, and perpetuate myths, such as we can’t afford NHI, net spending would go up because of increased taxes, or the government would ration care. These myths and memes have been discussed in detail elsewhere (11). Solid, reliable updated information on NHI can be found on PNHP’s website (

Democracy can win, but we will need progressive leadership. It is encouraging that Bernie is leading in recent polls in a matchup against Donald Trump or any other Republican presidential nominee. With a large and growing grassroots support from across the country, Bernie should have considerable leverage on the Democratic platform, which hopefully can move Hillary to a progressive position on health care. Recall Hillary’s words in 1994, speaking to a group at Lehman Brothers Health Corporation:

. . . if there is no health care reform this year, and if, for whatever  reason, the Congress doesn’t pass health care reform . . . I believe that by the year 2000 we will have a single-payer system . . . I don’t even think it’s a close call politically. I think that the momentum for a single-payer system will sweep the country . . . it will be such a huge popular issue . . . that even if it’s not successful the first time, it will eventually be. (12)

Health care is too important to be gridlocked in polarized partisan camps. All Americans will win with NHI, including the business community, which will be relieved of its burden of paying growing costs of employer-sponsored health insurance. Time will tell whether or not the oligarchy wins again.



  1. The Working Group on Single-Payer Program Design. Beyond the Affordable Care Act: A Physicians’ Proposal for Single-Payer Health Care Reform. Available a supplement online version of ref. 1 at

    2. Gaffney, A, Woolhandler, S, Angell, M, Himmelstein, DU. Editorial. Moving forward from the Affordable Care Act to a Single-Payer system. Am J Public Health, 106 (6): e1-e2, June 2016.

    3. Carroll, AE, Ackermann, RT. Support for national health insurance among U. S. physicians: five years later. Ann Intern Med 1481: 566-567, 2008.

    4. Woolhandler, S, Himmelstein, DU. Setting the record straight on Medicare for All: An open letter from 560 physicians and medical students. The Huffington Post, February 28, 2016.

    5. Committee on the Consequences of Uninsurance. Institute of Medicine. Insuring America’s Health: Principles and Recommendations. National Academies Press, Washington, D.C., 150-151, 2004.

    6. Friedman, G. Funding H. R. 676: The Expanded and Improved Medicare for All Act. How We Can Afford a National Single-Payer Health Plan. Physicians for a National Health Program. Chicago, Il. July 31, 2013. Available at: htpp://

    7. Geyman, JP. The Human Face of ObamaCare: Promises vs. Reality and What Comes Next. Friday Harbor, WA. Copernicus Healthcare, 199-202, 2016.

    8. Light, DW. A conservative call for universal access to health care. Penn J Bioethics 9 (4): 4-6, 2002.

    9. Arrow, KE. As quoted by Pro-Market. The blog of the Stigler Center at the University of Chicago Booth School of Business, March 15, 2016.

    10. Sanders, B. This is what oligarchy looks like. Bernie 2016, January 4, 2016.

    11. Geyman, JP. Myths and memes as barriers to health care reform. In Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015, pp. 223-241.

    12. Clinton, H. Speaking to a group at Lehman Brothers Health Corporation, June 15, 1994, as reported by Health Care for All-WA Newsletter, Winter 2015, p 9.

James Burdick: “Talking About Single Payer”

Posted by on Wednesday, May 4, 2016

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 Equality for America

By Dr. James F. Burdick
Near Horizons Publishing, May 5, 2016

From the Introduction

Fifteen years ago, when the Clinton health reform plan failed, I began to feel that something was missing, something so fundamental that it seemed hard to understand why almost no one mentioned it: The doctors were missing from the design.

This book corrects that error. It describes a powerful role for doctors in the novel national structure that I propose to allow us to move beyond the incomplete successes of the Patient Protection and Affordable Care Act (ACA). Opinions from a variety of authorities are quoted to provide rich independent sources of understanding about the complex realities and difficult choices we face. Much of this is relevant to any systematic improvement in the U.S. health care system, but out of it emerges in particular a compelling argument in favor of a national single payer system giving access to care for everyone.

These convictions issue in part from my career as an active clinician and health care administrator. I have seen problems from the inside which has given me a clear vision of the power that only doctors can bring to saving our health care system.

One of the most important reasons that single-payer health plans have failed to take hold in American politics is the fear that government-sponsored health care will put decisions in the hands of government bureaucrats, leading to rationing, red-tape, and cost overruns. My plan removes these obstacles by putting decision-making powers in the hands of trusted medical professionals, backed by empirical research and a robust electronic medical records system. Doctors can unite behind my plan to help ensure passage of a single-payer plan that will provide quality, affordable health care to all Americans. Most single payer health plan proposals include some sort of decision-making board. The difference, in the case of the Health Security Board in my proposal, is its private character.

Health care and its delivery involve a complex of issues and all must be considered for such a major restructuring. Costs, issues regarding doctors and hospitals, drugs, devices, diagnostic tests, electronic medical records, professional involvement and the general social challenges in our country are all part of the single payer system talked about in this book. The final structure proposed in the last chapter is my vision for how best to serve patients through a synthesis of all of these topics.

The ideas here are not just my opinions – far from it. I have gathered disparate views from knowledgeable individuals through a series of interviews and researched the literature extensively to underscore a variety of important perspectives.

James F. Burdick is a Professor of Surgery at the Johns Hopkins School of Medicine, Past President of UNOS, the Organ Procurement and Transplant Network contractor, and prior Director of the Division of Transplantation in the Healthcare Systems Bureau of the Health Resources Services Administration.

The Table of Contents and the first 20 pages can be previewed at the following link:

Oh no, not another book on single payer! No, this is not “just another” single payer book. It is complementary to books that have already been published on the topic.

Professor Burdick not only is very well informed on health policy in general and single payer more specifically, he also is dedicated to the cause of health care justice which certainly helps him to sort out good and bad policy. His extensive background as a transplant surgeon and as a health care administrator also provides him with the adroitness to apply effective health policy principles to our health care system. For this book he also interviewed numerous well qualified individuals who provide a broad spectrum of views that are helpful in understanding single payer – even learning the “how not to” from the few expressing negative views.

Burdick does present some new ideas – maybe not entirely new but placing a new emphasis on them. Most significantly, he proposes a Health Security Board composed of qualified professionals rather than government bureaucrats. This board would have a much greater role than the Patient-Centered Outcomes Research Institute (PCORI) established by the Affordable Care Act or the United Kingdom’s National Institute for Health and Care Excellence (NICE). Such concepts along with others should be considered when moving forward in developing the definitive design of a single payer national health program.

Burdick does have some relatively minor differences with some of the opinions expressed on the website of Physicians for a National Health Program, though none of them are compelling enough to motivate fundamental change in the standard single payer model of reform. In fact, tomorrow an updated version of the Physicians’ Proposal will be released, reflecting six years under the Affordable Care Act. It is still the golden standard of single payer.

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Medicare decreases spending without changing volume, compared to private insurers

Posted by on Tuesday, May 3, 2016

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.

Traditional Medicare Versus Private Insurance: How Spending, Volume, And Price Change At Age Sixty-Five

By Jacob Wallace and Zirui Song
Health Affairs, May 2016


To slow the growth of Medicare spending, some policy makers have advocated raising the Medicare eligibility age from the current sixty-five years to sixty-seven years. For the majority of affected adults, this would delay entry into Medicare and increase the time they are covered by private insurance. Despite its policy importance, little is known about how such a change would affect national health care spending, which is the sum of health care spending for all consumers and payers—including governments. We examined how spending differed between Medicare and private insurance using longitudinal data on imaging and procedures for a national cohort of individuals who switched from private insurance to Medicare at age sixty-five. Using a regression discontinuity design, we found that spending fell by $38.56 per beneficiary per quarter — or 32.4 percent — upon entry into Medicare at age sixty-five. In contrast, we found no changes in the volume of services at age sixty-five. For the previously insured, entry into Medicare led to a large drop in spending driven by lower provider prices, which may reflect Medicare’s purchasing power as a large insurer. These findings imply that increasing the Medicare eligibility age may raise national health care spending by replacing Medicare coverage with private insurance, which pays higher provider prices than Medicare does.

This study looked at the changes in spending and volume of services for individuals who, at age 65, transferred from private insurance to the traditional Medicare program. The authors showed that the volume of services remained the same, but spending went down, which reflects the lower provider prices that Medicare pays compared to private insurers.

One suggestion that has been made to “save Medicare” from future federal budget deficits would be to increase the eligibility age from 65 to 67. They showed that this would actually increase our national health expenditures without changing the volume of services, not exactly the health care cost containment that we are seeking.

Conservatives and neoliberals might think that the increase in spending would be worth it just to advance their ideological goal of relying less on government spending and more on the private sector. But a portion of the reduction in federal spending would be offset by increased Medicaid coverage for those eligible, and increased ACA premium tax credits and  cost-sharing subsidies, resulting in tax revenue losses and greater outlays. Not a good deal at all.

Others have suggested that we should expand Medicare enrollment, perhaps by reducing the eligibility age in 5 year increments. Although it would be an extrapolation of this study, it is not unreasonable to assume that we could significantly reduce our expenditures without any change in the volume of services for those who otherwise would have been privately insured.

Or go all the way. Replace the private insurers with a Medicare for all program. Not only is Medicare a more efficient purchaser of health care services, the recovery of much of the profound administrative waste of our fragmented financing system would be enough to fully fund a health care system for all without increasing our national health expenditures from the current level.

Remember who the patient is. It is not the government budget. It is the people who need health care. Establishing a well-designed single payer Medicare-for-all system would take care of the people, and the government budget would perk along just fine.

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Does the neoliberal label apply to our health care system?

Posted by on Monday, May 2, 2016

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.

Obamacare: The Neoliberal Model Comes Home to Roost in the United States — If We Let It

By Howard Waitzkin and Ida Hellander
Monthly Review, May 2016


Abundant data substantiate that the failure of Obamacare has become nearly inevitable. Even after the ACA is fully implemented, more than one-half of the previously uninsured population will remain uninsured — at least 27 million people, according to the non-partisan Congressional Budget Office — and at least twice that number will remain underinsured. Due to high deductibles (about $10,000 for a family bronze plan and $6,000 for silver) and co-payments, coverage under Obamacare has become unusable for many individuals and families, and employer-sponsored coverage is headed in the same direction. Private insurance generally produces administrative expenses about eight times higher than public administration; administrative waste has increased even more under Obamacare, and remains much higher than in other capitalist countries with national health programs. These administrative expenditures pay for activities like marketing, billing, denials of claims, processing copayments and deductibles, exorbitant salaries and deferred income for executives (sometimes more than $30 million per year), profits, and dividends for corporate shareholders. The overall costs of the health system under Obamacare are projected to rise from 17.4 percent of GDP in 2013 to 19.6 percent in 2022.

The overall structure of Obamacare is not new. Similar “reforms” have appeared in other countries over the last two decades.

Such proposals fostered neoliberalism. They promoted multiple competing, for-profit, private insurance corporations. Programs and institutions previously based in the public sector were cut back and, if possible, privatized. Overall government budgets for public-sector health care were reduced. Private corporations gained access to public trust funds. Public hospitals and clinics entered into competition with private institutions, their budgets were determined by demand rather than supply, and prior global budgets for safety net institutions were not guaranteed. Insurance executives made operational decisions about services, and their authority superseded that of physicians and other clinicians.

The Boilerplate Neoliberal Health Reform

Health reform proposals across different countries have resembled one another closely. The specific details of each plan appeared to conform to a word-processed, cookie-cutter template, in which only the names of national institutions and local actors have varied. Six broad features have characterized nearly all neoliberal health initiatives.

1. Organizations of providers. One element of neoliberal proposals involves large privately controlled organizations of health care providers. These organizations operate under the direct control or strong influence of private, for-profit insurance corporations, in collaboration with hospitals and health systems.

2. Organizations of purchasers. A second element of neoliberal proposals involves large organizations purchasing or facilitating the purchase of private health insurance, usually through MCOs.

3. Constriction of public hospitals and safety net providers. Public hospitals at the state, county, or municipal levels compete for patients covered under public programs like Medicaid or Medicare with private hospitals participating as subsidiaries or contractors of insurance corporations or MCOs. With less public-sector funding, public hospitals reduce services and programs, and many eventually close. Although community health centers (CHCs) sometimes enjoy temporary improvements in funding, as in Obamacare, they increasingly serve as the providers of last resort for the remaining uninsured and underinsured. As a result, CHCs remain vulnerable to cutbacks and face an insecure future.

4. Tiered benefits packages. Neoliberal proposals define benefits packages in hierarchical tiers. The national reform provides a minimum package of benefits that experts view as essential, and individuals or their employers can buy additional coverage. Poor and near poor people in the U.S. Medicaid program are eligible for benefits that used to be free of cost-sharing, but since Obamacare passed, states increasingly have imposed premiums and copayments.

5. Complex multi-payer and multi-payment financing. Financial flows under neoliberal health policies are very complex. The costs of administering these flows and other components of neoliberal policies also are quite high (about 25 to 28 percent of total health care expenditures) and keep increasing. Under Obamacare, administrative overhead — also referred to administrative “waste,” since the costs do not contribute to direct patient services — grew 10.6 percent in 2014, faster than any other component of health care except medications.

6. Changes in tax code. Partly because they increase administrative costs and profits, neoliberal reforms usually lead to higher taxes.

Many countries have rejected the neoliberal model, and have instead constructed health systems based on the goal of “health care for all” (HCA). Such countries strive to provide universal access to care without tiers of differing benefit packages for rich and poor. For instance, Canada prohibits private insurance coverage for services provided by its national health program. Because Canada’s wealthy must participate in the publicly financed system, the presence of the entire population in a unitary system assures a high-quality national program. In Latin America, countries trying to advance the HCA model include Bolivia, Brazil, Cuba, Ecuador, Uruguay, and Venezuela. The inevitable failure of Obamacare may open a space, finally, for even the United States to pursue a national health program that does not follow the neoliberal model.

The Single-Payer Proposal

The following features of a single-payer option come from the proposals of Physicians for a National Health Program (PNHP), a group of more than 20,000 medical professionals, spanning all specialties, states, age groups, and practice settings. According to the PNHP proposals, coverage would be universal for all needed services, including medications and long-term care. There would be no out-of-pocket premiums, copayments, or deductibles. Costs would be controlled by “monopsony” financing from a single, public source. The NHP would not permit competing private insurance and would eliminate multiple tiers of care for different income groups. Practitioners and clinics would be paid predetermined fees for services, without any need for costly billing procedures. Hospitals would negotiate an annual global budget for all operating costs. For-profit, investor-owned facilities would be prohibited from participation. Most non-profit hospitals would remain privately owned. To reduce overlapping and redundant facilities, capital purchases and expansion would be budgeted separately, based on regional health planning goals.

Funding sources would include current federal spending for Medicare and Medicaid, a payroll tax on private businesses less than what businesses currently pay for coverage, and an income tax on households, with a surtax on high incomes and capital gains. A small tax on stock transactions would be implemented, while state and local taxes for health care would be eliminated. Under this financing plan, 95 percent of families would pay less for health care than they previously paid in insurance premiums, deductibles, copayments, other out-of-pocket spending, and reduced wages.

Moving Beyond Single Payer

The coming failure of Obamacare will mark a moment of transformation in the United States, where neoliberalism has come home to roost. For that moment, those struggling for a just and accessible health system will need to address some profound changes that have occurred during the era of neoliberalism. These changes pertain to the shifting social class position of health professionals, and to the increasingly oligopolistic and financialized character of the health insurance industry.

Beyond the changing class position of health professionals, the transition as Obamacare collapses will need to address the oligopolistic character of the insurance industry, alongside the consolidation of large health systems. Obamacare has increased the flow of capitated public and private funds into the insurance industry and thus has extended the overall financialization of the global economy.

In this context, it is important to reconsider the distinction between national health insurance (NHI) and a national health service (NHS). NHI involves socialization of payments for health services but usually leaves intact private ownership at the level of infrastructure. Except for a small proportion of institutions like public hospitals and clinics, under NHI the means of production in health care remain privately owned. Canada is the best-known model of NHI. The PNHP proposal and Congressional legislation that embodies the singer-payer approach are based on the Canadian model of NHI.

The PNHP single-payer proposal emerged from a retreat in New Hampshire during 1986, where activists struggled with these distinctions. Although most participants at the retreat had worked hard for the Dellums NHS proposal, they reached a consensus — albeit with some ambivalence — to shift their work to an NHI proposal based on Canada. The rationale for this shift involved two main considerations. First, Canada’s proximity and cultural similarity to the United States would make it more palatable for the U.S. population, and especially its Congressional representatives. Secondly, a Canadian-style NHI proposal could be “doctor-friendly.” Under the PNHP proposal, physicians could continue to work in private practice, clinics, or hospitals. The main difference for physicians was that payments would be socialized, so that the physicians would not have to worry about billing and collecting their fees for services provided.

While PNHP has achieved great success in its research and policy work, these efforts, and those of many other organizations supporting single payer, have not yet generated a broad social movement working toward a Canadian-style NHI. Meanwhile, the neoliberal model, with all its benefits for the ruling class and drawbacks for everyone else, has solidified its hegemony. Partly as a result, physicians and other health professionals are becoming proletarianized employees of an increasingly consolidated, profit-driven, financialized health care system. And under Obamacare, the state has continued to prioritize protection of the capitalist economic system, in this case by overseeing huge subsidies for private insurance and pharmaceutical corporations.


Encyclopedia Britannica

Neoliberalism: ideology and policy model that emphasizes the value of free market competition.

Neoliberal ideology and policies became increasingly influential, as illustrated by the British Labour Party’s official abandonment of its commitment to the “common ownership of the means of production” in 1995 and by the cautiously pragmatic policies of the Labour Party and the U.S. Democratic Party from the 1990s.


A Neoliberal’s Manifesto

By Charles Peters, Founder and Editor
The Washington Monthly, May 1983

If neoconservatives are liberals who took a critical look at liberalism and decided to become conservatives, we are liberals who took the same look and decided to retain our goals but to abandon some of our prejudices. We still believe in liberty and justice and a fair chance for all, in mercy for the afflicted and help for the down and out. But we no longer automatically favor unions and big government or oppose the military and big business. Indeed, in our search for solutions that work, we have come to distrust all automatic responses, liberal or conservative.

The majority of Americans would like to see a high quality health care system that is affordable and accessible for everyone. We do not have that now. Why not?

Progressives/liberals generally recognize that costs and market dysfunctions require a major role of government in financing health care. Conservatives/libertarians believe that free markets can fulfill that role with the exception that those impoverished not by choice need private charity or the helping hand of government. But it is those in the middle – the moderates – who determine policy through the election process. So who are they?

They are both Republicans and Democrats. In health care, they support private financing, primarily through insurance, though they support public tax expenditures to help pay for the most common coverage – employer-sponsored plans. They also support Medicare for seniors and those with disabilities, and most support Medicaid for low-income individuals and families.

In fact, President Obama abandoned single payer in favor of the Heritage Foundation proposal, based on these principles, since it had broad bipartisan support – or so he thought, until the Republicans decided that a political defeat for Obama was more important than improving our health care system.

So what happened to these moderates? The Republicans have retreated toward the right where they would try to tolerate the conservative tea party faction. The moderate Democrats did not move to the left but instead also moved somewhat toward the right into the pro-market neoliberal niche. Following the groundwork laid by President Reagan, President Bill Clinton followed a neoliberal path in which “the era of big government is over” (State of the Union, 1996). The neoliberals then became the establishment force in the Democratic Party. President Obama, whether voluntarily or through political obstructionism, did not change the direction of the party. The likely next president has indicated that she will follow the neoliberal Clintonian path as well and not change direction in health care.

Today’s article describes how neoliberalism and its advocacy of using markets instead of the government to control the financing of health care has resulted in our overpriced and underperforming health care system, as if the neoliberals have failed to see the irony of a health care system that is already 60 percent funded through the tax system and that has failed to conform to free market dynamics.

Whatever labels are used, the majority of Americans support Medicare. If we already had an improved version of Medicare that included everyone, the support would be near unanimous. The neoliberals either need to take a reality check on their ideology, or they need to attend the next local tea party function and listen to the voices extolling the virtues of a society without a functioning government.

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Focus groups confirm that ACA is not affordable for many

Posted by on Friday, Apr 29, 2016

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.

Is ACA Coverage Affordable for Low-Income People? Perspectives from Individuals in Six Cities

By Jennifer Tolbert, Robin Rudowitz, and Melissa Majerol
Kaiser Family Foundation, April 21, 2016

Millions of people have gained access to health insurance coverage under the Affordable Care Act (ACA) through Medicaid and the Marketplaces. While research shows that coverage improves access to care and promotes financial stability, issues around access and affordability remain, and are more acute for the low-income population. To learn more about how low-income individuals have fared with their new coverage, we conducted nine focus groups (three groups with Medicaid enrollees and six groups with low-income Marketplace enrollees) in six states (California, Florida, Maryland, Missouri, Ohio, and Virginia).  Many participants were struggling financially and reported substantial debt (including medical debt). Many had ongoing physical and mental health needs and were accessing health services to treat those conditions. Following are key themes from the groups:

1.  New coverage did not change underlying financial struggles and hardship due to medical debt incurred prior to gaining coverage. Many participants were stretched financially, had limited capacity to absorb unexpected costs, and struggled with finding secure employment in their area.

2.  Medicaid stands up well for the lowest income participants in terms of ease of enrollment, out-of-pocket costs and affordability, and ability to find providers and access care. A small number of participants reported trouble affording care that wasn’t covered (particularly for vision or dental) and difficulty finding some providers, including mental health providers.

3.  Largely due to premium tax credits in the Marketplace, premiums were generally affordable, but out-of-pocket costs weighed heavily on Marketplace participants, especially those with high deductible plans. Many reported being overwhelmed by plan choices. Some were able to make trade-offs to purchase higher cost plans with lower deductibles to meet anticipated care needs, but not everyone was able to afford higher premiums.

4.  The fear of unknown costs was a constant worry for many Marketplace participants. Many got bills for services they thought were covered, such as screenings, colonoscopies and mammograms when issues were discovered and treated. These bills caused many to avoid getting needed care. Marketplace participants also reported trouble affording care that wasn’t covered by their plan, notably vision and some dental services.

5.  Most participants had accessed care and were positive overall about new ACA coverage through Medicaid and the Marketplace. They were grateful that coverage was available to them, particularly those who had been previously ineligible for Medicaid or barred from private coverage due to pre-existing conditions. However, many Marketplace participants wanted coverage to be more affordable.

While people were grateful for coverage, unexpected bills, dealing with insurance companies, and facing known deductibles were sources of stress which made those with Marketplace coverage fearful to use the coverage they had. They were particularly frustrated by the out-of-pocket costs, which were unaffordable to many and wanted insurance that didn’t come with so many hidden costs.

Issue Brief:

This report of nine focus groups confirms that real people have found that the Affordable Care Act (ACA) often fails to provide access to affordable care.

Although the leading candidate for president has said that she wants to build on ACA, reducing premiums and deductibles pours yet more tax money into what is the most expensive and least efficient model of health care financing. The model cannot really be fixed if we want true value in health care. It needs to be replaced with a model that does work – a single payer national health program – Improved Medicare for All.

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Paul Ryan does not seem to understand high-risk pools

Posted by on Friday, Apr 29, 2016

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.

Ryan wants to end Obamacare cost protections for sick consumers

By David Morgan
Reuters, April 27, 2016

U.S. House of Representatives Speaker Paul Ryan called on Wednesday for an end to Obamacare’s financial protections for people with serious medical conditions, saying these consumers should be placed in state high-risk pools.

In election-year remarks that could shed light on an expected Republican healthcare alternative, Ryan said existing federal policy that prevents insurers from charging sick people higher rates for health coverage has raised costs for healthy consumers while undermining choice and competition.

The rule, a cornerstone of President Barack Obama’s Affordable Care Act, has been praised by patient advocates for providing access to medical care for people who previously could not afford private health insurance. The Affordable Care Act also bars insurers from excluding coverage for pre-existing conditions.

“Less than 10 percent of people under 65 are what we call people with pre-existing conditions, who are really kind of uninsurable,” Ryan, a Wisconsin Republican, told a student audience at Georgetown University.

“Let’s fund risk pools at the state level to subsidize their coverage, so that they can get affordable coverage,” he said. “You dramatically lower the price for everybody else. You make health insurance so much more affordable, so much more competitive and open up competition.”

High-risk pools, which existed before the healthcare law, are state-level entities that guarantee coverage for people with health problems. Analysts say they can be prohibitively expensive and offer less than optimal health coverage.

House Speaker Paul Ryan has promised to produce the Republican alternative to the Affordable Care Act, likely before the Republican convention in July. In his comments at Georgetown University yesterday he discussed what would be the most important policy supposedly designed to control health care spending for the vast majority of Americans: Establish state level risk pools for the 10 percent of people with the greatest health care needs. Let’s see what that means.

The top 10 percent of individuals in spending account for 65 percent of health care costs. By removing them from the standard insurance pools that means that the other 90 percent would have to pay insurance premiums that funded only 35 percent of total health care. Ryan says that this would lower insurance premiums through competition, but that is nonsense. Premiums would be much lower because two-thirds of health care costs are pulled out of the insurance plans in the marketplace. Surely most Americans would be happy with private insurance premiums that were one-third of what they would be if everyone were included. It would be a very popular program, and the Republicans would take credit for it.

But what about the 10 percent of people who account for two-thirds of our health care costs. Their premiums would have to be about 7 times what the premium would be if everyone were covered under a common risk pool, or about 20 times what everyone else is paying. As Paul Ryan says, they are “really kind of uninsurable.” So he proposes high-risk pools at the state level, with subsidized premiums. Expecting the states to subsidize two-thirds of our health care costs is a non-starter. Without massive increases in taxes, which are opposed by the Republicans anyway, the states would not be able to fund those pools.

We already have considerable experience with state high-risk pools. In recent decades, thirty-five states established such pools, and overall they were a spectacular failure. Also, the Affordable Care Act authorized temporary Pre-Existing Condition Insurance Plans (PCIP) which were also high-risk pools. These plans proved to be prohibitively expensive to administer, prohibitively expensive for consumers to purchase, and offered much less than optimal coverage, often with annual and lifetime limits, coverage gaps, and very high premiums and deductibles.

It is so obvious on the face of it. Most of us might be happy with our low premiums, but we would be very unhappy with the massive increases in regressive state taxes that would be enacted to pay for this. Vermont’s reform effort failed once the tax consequences were recognized, and that wasn’t even for high-risk pools.

As I wrote in a previous Quote of the Day, “With a single payer system this problem disappears. Funding is based on ability to pay, through the tax system, and not on the basis of anticipated medical expenses. Everyone receives the care they need, regardless of their health status. The fragmented plans supported by the repeal and replace people cannot do that.”

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Who benefits from an “improved” medical loss ratio?

Posted by on Thursday, Apr 28, 2016

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 insurer Centene’s profit beats as medical costs fall

By Amrutha Penumudi
Reuters, April 26, 2016

U.S. health insurer Centene Corp (CNC.N) reported a better-than-expected quarterly profit, helped by lower medical costs in certain patient populations and the acquisition of rival Health Net.

The company’s health benefits ratio, or the amount it spends on medical claims compared with its income from premiums, improved to 88.7 percent in the first quarter from 89.9 percent a year earlier.


Anthem Falls As Medicaid, Obamacare Results Pressure Margins

By Zachary Tracer
Bloomberg, April 27, 2016

Anthem Inc., the No. 2 U.S. health insurer, fell in New York trading as costs tied to its Medicaid and Affordable Care Act businesses pressured margins.

The shares fell 2.8 percent to $142.91 at 11:24 a.m. Wednesday. Anthem spent 81.8 cents of every premium dollar on medical claims in the first quarter, up from a medical-loss ratio of 80.2 percent a year earlier, according to a statement.

Today’s message is just a reminder of one of our problems that the Affordable Care Act (ACA) did not fix. A well-functioning health care financing system should be designed to obtain maximum value by spending our funds on health care and not wasting them on excessive administrative services and on profits that add no value to health care. Yet ACA perpetuates policies that turn these priorities upside down, to the pleasure of Wall Street.

Centene is reporting greater profits attributed to a lower percentage of revenues spent on health care compared to the year before – the medical loss ratio decreased from 89.9 percent to 88.7 percent. A comparable medical loss ratio for Medicare would be about 98 percent – only 2 percent is used for administrative services, and there are no profits. Spending less on patient care and retaining more for Centene’s own administrative services and for profits, Wall Street deems to be an improvement.

In contrast, the percent of revenues that Anthem spent on health care increased – the medical loss ratio increased from 80.2 percent to 81.8 percent. For insurers to spend more on health care is considered to be bad news on Wall Street, and thus they punished Anthem by bidding down the price of their shares.

Since these insurers are giving us the opposite of what we want, why are we leaving them in charge of our health care dollars? Let’s fix Medicare and expand it to cover everyone. Yes, we would have a very high medical loss ratio – with 98 percent of our Medicare tax revenues spent on patient care – but it would be a much better deal for all of us – except for the insurance executives and Wall Street rent-seekers.

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