At its Orlando, Florida meeting two days ago, the DNC platform committee voted down a proposed amendment to include single-payer health care in the Party Platform by a vote of 92 to 62, even though public support for single-payer includes 81 percent of Democrats and 58 percent of U. S. residents. As Michael Lighty of National Nurses United said at the time: “If this is controversial in this room, it is the only room of Democrats in which it is controversial.” Hillary Clinton’s whips in the room were urging on the negative votes. (1)

Hillary has also just come to a compromise with Bernie Sanders’s support of single-payer national health insurance (NHI)—bring back the public option (to supposedly compete with private insurers), expand Medicare to include people 55 years of age and older, and increase funding for community health centers. She contends that NHI would undercut the Affordable Care Act (ACA), meanwhile posturing with this rhetoric:

“We have more work to do to finish our long fight to provide universal, quality, affordable health care to everyone in America.” (2)

By taking this predictable position, the Clinton campaign ignores these inconvenient facts about the ACA:

  • Since the ACA was enacted six years ago, private health insurers have grown stronger through consolidation with most of the market controlled by three giant insurers.
  • Insurers still have wide latitude to raise their premiums and pass along more costs to patients and their families.
  • There are still no effective price controls in health care.
  • There are about 29 million uninsured and tens of millions underinsured.
  • One in three Americans cannot afford health care, with many delaying or forgoing care altogether.
  • Choice of physician and hospital has been severely restricted by insurers’ narrow networks.
  • Discontinuity of care is widespread—as one example, a recent study in California found that 70 percent of people could not gain access to primary care physicians of their choice, both within and outside of the insurance marketplaces. (3)
  • Most of the co-ops established by the ACA have either already failed or are unsustainable, plagued by high costs and adverse selection.
  • The ACA has been a bonanza to corporate stakeholders in health care, with health care stocks the leading sector on the S & P 500.

Hillary’s overly cautious proposals will ignite powerful opposition from Republicans, and perhaps of moderate Democrats. Whatever she does, she cannot avoid another contentious debate. Why fight another big battle with the Republicans over a program that won’t work? A recent blog post showed how the public option, if ever adopted, has no chance of working against the continuing presence of the private insurance industry. (4) So why not go for real reform—universal health care as a human right—which enjoys so much public support, will contain prices and costs, save us $592 billion a year, and reduce what 95 percent of Americans now pay for insurance and health care?

The main answer, of course, is that Hillary is still captive to corporate and Wall Street money. She has never released her transcripts of talks given to Wall Street groups. Even though she said in 1994 that single-payer would be inevitable by 2010 unless health care was reformed by then (5), she is not taking leadership on health care when there is so much public support for NHI, including Millenials and so many millions of Bernie supporters.

We have an oligarchy, not a democracy, as pointed out by John Acheson in his recent Common Dreams blog:

We the people have no say and almost zero influence in our governance. Forget about the land of the free and the home of the brave—we’ve become the land of the duped and the home of the indentured. . . . This is reality. It’s the logical end-point of the pay-to-play PACster politics that reached its peak with the Citizens United Decision. (6)

The “system” under the ACA is collapsing as many insurers exit markets that are not sufficiently profitable, as the costs of insurance and health care continue to escalate, and as the ranks of the underinsured grow. We have to recognize that multi-payer, profit-oriented health care financing is not sustainable for either patients, their families, or taxpayers.

This is an ideal time to include single-payer NHI in the Democratic platform. The GOP is more fractured than it has been for many years. Trump’s “plan”, would be even worse than the ACA. It will increase the numbers of the uninsured by 18 million, eliminate the ACA’s minimal benefit requirements, and lead to higher prices of insurance with skimpier benefits. (7) And the ACA will never get to universal access, despite Hillary’s posturing about Medicare expansion at age 55 and the public option.

Universal access to health care can only be achieved by single-payer NHI. It is time to seize the opportunity, not to be so cautious as to miss it. Though NHI failed at the time, Teddy Roosevelt campaigned for it in 1912, as did Harry Truman in 1948.

2017 could be the moment for real reform if the Democratic platform and Hillary’s campaign listen to the public it is supposed to serve, takes on corporate opposition, wins the White House and hopefully gains enough seats in Congress to govern the country. The words of French historian Henry See apply to this moment of opportunity:

History is like the waves lapping at a cliff. For decades nothing happens and then the cliff collapses.

John Geyman, M.D. is the author of  The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans

References:
1. DNC Platform Committee votes down single payer. Healthcare-NOW, July 10, 2016.

2. Lucey, C, Thomas, K. In nod to Sanders, Clinton offers new health care proposals. Associated Press, July 9, 2016.

3. Haeder, SF, Weimer, DL, Mukamel, DB. Secret shoppers find access to providers and network accuracy lacking for those in marketplace and commercial plans. Health Affairs, July 2016.

4. Geyman, JP. Hillary’s public option proposal: Could it work?, June 3, 2016.

5. 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.

6. Acheson, J. Put away the fireworks . . . you don’t live in a democracy anymore. Common Dreams, July 4, 2016.

7. Alonso-Zaldivar, R. Study: Trump health care plan would make 18 M uninsured. Associated Press, July 7, 2016.

Access to preferred physicians impaired by private health plans

Posted by on Monday, Jul 11, 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.

Secret Shoppers Find Access To Providers And Network Accuracy Lacking For Those In Marketplace And Commercial Plans

By Simon F. Haeder, David L. Weimer and Dana B. Mukamel
Health Affairs, July 2016

Abstract

The adequacy of provider networks for plans sold through insurance Marketplaces established under the Affordable Care Act has received much scrutiny recently. Various studies have established that networks are generally narrow. To learn more about network adequacy and access to care, we investigated two questions. First, no matter the nominal size of a network, can patients gain access to primary care services from providers of their choice in a timely manner? Second, how does access compare to plans sold outside insurance Marketplaces? We conducted a “secret shopper” survey of 743 primary care providers from five of California’s nineteen insurance Marketplace pricing regions in the summer of 2015. Our findings indicate that obtaining access to primary care providers was generally equally challenging both inside and outside insurance Marketplaces. In less than 30 percent of cases were consumers able to schedule an appointment with an initially selected physician provider. Information about provider networks was often inaccurate. Problems accessing services for patients with acute conditions were particularly troubling. Effectively addressing issues of network adequacy requires more accurate provider information.

From the Discussion

Two patterns emerged from our survey. First, and most striking, new patients in either Covered California or the comparable commercial plan had very low prospects—less than 30 percent—of securing an appointment with any randomly chosen provider. The odds got only slightly better in terms of getting an appointment with any provider in the practice. The results were particularly disheartening in the case of patients presenting with acute conditions. Although the average wait time was reduced by about half when compared to physical exams, it nonetheless took eight to twelve days to get an appointment with a physician or physician extender. Moreover, only a handful of providers suggested that patients seek care at an urgent care center. These findings suggest that the third step in health care access, scheduling an appointment with a physician, has much room for improvement. At least accurate lists of providers, including whether the provider is accepting new patients, should be available for patients when they make choices about health plans.

Second, patients in commercial plans tended to fare somewhat better than their counterparts in Covered California plans, in terms of both getting appointments and the time to appointment. However, not only were these differences relatively small and often statistically insignificant, they were dwarfed by the overall difficulty of getting appointments with the desired provider. So, although it was marginally more difficult to get timely care in Covered California plans than their commercial counterparts, substantially increasing access requires more than just equalizing access in the two types of insurance coverage.

Conclusion

Improving access to care by improving access to affordable health insurance is one of the main goals of the Affordable Care Act. However, as our analysis has shown, access to health insurance is not necessarily synonymous with access to health care services. Network accuracy is an important, albeit heretofore largely overlooked, component of access for patients. At the same time, as earlier reforms in Massachusetts have shown, increasing the number of insured people without a commensurate increase in capacity further exacerbates the situation. The more frustrated people become as they are trying to access care, the more likely they are to defer or forgo care, or to choose more expensive options such as emergency departments.

http://content.healthaffairs.org/content/35/7/1160.abstract

Covered California is one of the best functioning health insurance exchanges established under the Affordable Care Act (ACA), yet 70 percent of patients enrolled were not able to schedule an appointment with an initially selected physician from the provider list. This was not a problem unique to the ACA exchanges since the same was essentially true for individual insurance plans offered outside of the exchanges.

The fundamental defect is in having selected a health care financing system dependent on private insurance plans. Private plans use innovations such as narrow provider networks and high deductibles which improve the business outcome for the insurer at a cost of impairing health care access for the patient.

It is obvious that we would all benefit by replacing our current dysfunctional health care financing system with a single payer national health program – an Improved Medicare for All. Yet the political outlook seems quite dim right now. The leading advocate for single payer reform, Bernie Sanders, having failed to gain enough support for the Democratic nomination for president, is currently in negotiations with Hillary Clinton, an avowed opponent of single payer, in which he will withdraw his demand for Medicare for All in exchange for other beneficial health care policies such as the expansion of federally qualified community health centers.

We have a formidable task before us. The majority of the nation does want Medicare to be expanded to cover everyone, yet the two dominant political parties are controlled by conservatives and neoliberals, both supporting the private insurance industry. We must continue with our efforts to inform the public on the superiority of the single payer model, but we also have to step up our efforts in coalition and grassroots organizing. We may have majority support for the concept of Medicare for All, but we do not yet have a critical mass for political action.

We need to keep in mind that our mission is not to assuage our own egos by gaining a political victory, but it is the much more noble goal of improving the health care of the nation. That should make us want to continue to carry the torch in spite of the unfavorable political climate. We have a lot of work to do.

Physicians for a National Health Program is a nonpartisan educational organization. It neither supports nor opposes any candidate for public office.

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Single payer versus free market for health care reform

Posted by on Friday, Jul 8, 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.

POINT: Should Pulmonary/ICU Physicians Support Single-payer Health-care Reform? Yes

By Adam W. Gaffney, MD, Philip A. Verhoef, MD, PhD, Jesse B. Hall, MD, FCCP
Chest, July 2016

As pulmonary and critical care physicians, we aim to utilize the highest quality evidence, in conjunction with our understanding of the pathophysiologic and social determinants of health, to provide the best care for patients. By taking such an evidence-based approach
to the realm of policy, we conclude that only a single-payer system can address the problem of rising health-care costs, while simultaneously ending the grave inequalities that continue to plague our critically ill health-care system.

From the Division of Pulmonary and Critical Care Medicine (Dr Gaffney), Massachusetts General Hospital; and the Section of Pulmonary and Critical Care Medicine (Drs Verhoef and Hall), University of Chicago.

COUNTERPOINT: Should Pulmonary/ICU Physicians Support Single-payer Health-care Reform? No

By Gilbert G. Berdine, MD

Health-care providers compete with each other for the patronage of health-care consumers. Providers can compete by increasing quality or convenience or by decreasing price. Over time, ceteris paribus (all other things being equal), a competitive health-care market will see increases in quality or convenience at lower prices. The term “single-payer” is a euphemism for monopoly. A monopoly requires legal barriers against new competition entering the market. Monopolies have no reason to improve quality or convenience and have no reason to lower price as customers have nowhere else to go for a needed good or service. Over time, ceteris paribus, a monopoly will offer a declining quality of product or service at less convenience to customers at ever-increasing prices. There are no exceptions to these rules.

The best solution to the health care problem is to let people make choices without interference by the government. This approach is known as the free market.

The market always leaves the participants better off, in their own view, than government intervention; there are no exceptions.

From the Departments of Internal Medicine and Medical Education, Texas Tech University Health Sciences Center, and Free Market Institute (Dr. Berdine).

REBUTTAL:

From Drs. Gaffney, Verhoef, and Hall

Dr Berdine argues that in an unhindered competitive health-care marketplace, the market will clear at a price and quantity of goods/services that, as if by definition, leaves all parties maximally satisfied. This argument is little more than a tautology that would, if possible, result in a health-care dystopia that society would not accept.

A free market for health care is not only undesirable: it is, as economists have noted for decades, a fantasy. Fundamentally, the degree of information asymmetry between the buyer (the patient) and the seller (the provider) prevents health care from conforming to the theoretical tenets of free-market economics. Kenneth Arrow famously contended that the uncertainty intrinsic to health care makes it unique from other goods and services. The health economist Bob Evans has argued that not only has there never been a pure free market in health care but that “inherent characteristics of health and health care make it impossible that there ever could be.” On the contrary, he argues, attempts to inject market mechanisms into health care are fundamentally about redistribution. As health-care costs are shifted from public to out-of-pocket sources, those with higher incomes invariably benefit.

As others have noted, the savings made possible through a single-payer system would allow extension of health care as a social right to the entire nation. In contradistinction with a fantastical health-care free market, such a program is both attainable and desirable.

REBUTTAL:

From Dr. Berdine

“Health insurance” is no longer pooled risk in America. The first step to making health care affordable is to separate catastrophic and insurable costs from routine health maintenance. It is impossible to subsidize an entire nation.

http://www.sciencedirect.com/science/article/pii/S0012369216416028

Until August 26, 2016, the POINT article will be available for free at the following link; then it will be behind a paywall, as are the COUNTERPOINT article and the two REBUTTALS:

http://authors.elsevier.com/a/1TKr62p-km2aS

The POINT article by Drs. Gaffney, Verhoef and Hall explains why physicians (and everyone else) should support single payer reform, with special emphasis for pulmonary/ICU physicians. (Chest is a publication of the American College of Chest Physicians.) The article is accessible for free until August 26, 2016.

The rationale for single payer reform presented in this article is based on PNHP’s Physicians’ Proposal for Single-Payer Health Care Reform.

Although a tremendous amount of data has been generated explaining why the advances of the Affordable Care Act are grossly inadequate and why we need a single payer system, this Point/Counterpoint is useful because the counter argument is presented by an advocate of free markets. Dr. Berdine uses standard college economic textbook principles to explain why only a competitive free market will bring us higher quality at lower prices, with “no exceptions.”

In their Rebuttal, Drs. Gaffney, Verhoef and Hall explain how a free market in health care is a fantasy. It is important that we put the free market nonsense to rest and move forward with enacting and implementing a program that really will work – a single payer national health program, aka an Improved Medicare for All.

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Insurance fragmentation promotes adverse and advantageous selection

Posted by on Thursday, Jul 7, 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.

NBER Working Paper No. 22338: Strategic Formulary Design in Medicare Part D Plans

By Kurt Lavetti and Kosali Simon
National Bureau of Economic Research, June 2016

Abstract

The design of Medicare Part D causes most Medicare beneficiaries to receive fragmented health insurance, whereby prescription drugs and other medical care are covered by separate insurance plans. Fragmentation of insurance plans is potentially inefficient since separate insurers maximize profits over only one component of healthcare spending, despite many complementarities and substitutabilities between types of healthcare. Fragmentation of some plans but not others can also lead to market distortions due to differential adverse selection, as integrated plans may use drug formulary designs to induce enrollment by patients who are profitable under Parts A & B, while stand-alone drug plans have no such incentive. We study whether the design of insurance plans in Medicare Part D reflects these two differences in incentives using data on the universe of Part D plan formularies, drug prices, and Medicare claims data. We find evidence consistent with both hypotheses. Relative to fragmented plans, integrated plans systematically design their drug formularies to encourage enrollment by beneficiaries with medical conditions that are profitable under Parts A & B. However, integrated plans also more generously cover drugs that have the potential to causally reduce medical costs. These large differences in incentives and plan design between integrated and fragmented plans are likely the precursors of substantial differential selection of enrollees, and the basic design of Medicare Part D abets this covert selection.

From the Introduction

A growing share of all public expenditures on health insurance in the US is paid to private companies that deliver public health insurance benefits. Medicare Parts C and D, which account for about one-third of all Medicare expenses, are delivered entirely by private companies, and 39 states have contracts with private managed care organizations to deliver Medicaid benefits (KFF, 2014). Although the intention behind privatization is generally to increase efficiency, in the case of Medicare Part D the split between public and private provision of benefits has also introduced several strategic opportunities for insurers that may have reduced efficiency and increased total costs.

We focus in this paper on insurer behavior in responding to these Part D incentives when designing plans, and not on the resulting consumer behavior or net welfare effects. The selection effect that we identity, however, clearly increases the cost to Medicare, and Part D formularies provide a mechanism for MA plans to select patients by medical condition with surgical precision.

From the Summary and Discussion

Finally, the results of this research are useful for understanding the extent to which the fragmentation of health insurance generally affects plan design, which is the primary channel through which adverse or advantageous selection is likely to arise in insurance markets.

http://www.nber.org/papers/w22338

The simple conclusion of this highly technical paper is that fragmentation of health insurance – using the example of Medicare Part D drug benefits – results in differences in plan design and incentives that allow insurers to engage in adverse or advantageous selection. The insurers use this to attract the healthy and avoid the sick. This results in reduced efficiency and in increases in total costs.

Although the example used was Medicare Part D drug benefits, the principle extends throughout our entire fragmented health care financing system, heavily dependent on private insurers that use plan innovations to benefit their own bottom lines.

A single payer system obviously does not use plan design to attract the healthy and repel the sick. Everyone is served equitably.

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Conservatives have long held that U. S. health care should be based on the “free market,” that the role of government should be minimal, and that a deregulated marketplace can resolve issues of access, costs, affordability, and quality of care. (1) We have been told this so often that these unproven claims have become a meme: a self-replicating myth or slogan that by constant repetition becomes part of everyday language, without regard to its merit.

Recent decades have shown this claim to be completely false as the magic of the “free market” continues to create worsening access, higher costs, less affordability, and variable quality of care. But this time-worn meme is still pervasive and distorts this election year’s contentious debate over the future of our health care system.

A Rebuttal to the Free Market Meme
The fact that markets in health care don’t work the same way as those for other products was recognized as early as 1963 by Kenneth Arrow, a leading economist at Columbia University. He saw uncertainty as the root cause of market failure in health care—uncertainty among patients not knowing what they will need, uncertainty among physicians about diagnosis, treatment and prognosis, and uncertainty among insurers about risk of enrollees. (2)

These are some of the ways that under-regulated markets fail patients and the public interest:

  • A nine-year tracking study of 12 major health care markets found four barriers to efficiency of markets: (1) providers’ market power; (2) absence of potentially efficient provider systems; (3) employers’ inability to push the system toward efficiency and quality; and (4) insufficient competition among health plans. (3)
  • Joseph Stiglitz, Nobel Laureate in Economics and former chief economist at the World Bank, reminds us that:

Markets do not lead to efficient outcomes, let alone outcome that comport with social justice. As a result, there is often good reason for government intervention to improve the efficiency of the market. Just as the Great Depression should have made it evident that the market often does not work as well as its advocates claim, our recent Roaring Nineties should have  made it self-evident that the pursuit of self-interest does not necessarily lead to overall economic efficiency. (4)

  • Recent years have seen increasing corporatization and consolidation throughout the medical-industrial complex, including among insurers, the drug industry, hospital systems, nursing homes, and dialysis centers. As their market shares grow, they have more latitude to set prices to what the traffic will bear.
  • Corporate stakeholders pursue the business “ethic” seeking maximal revenue well beyond the service tradition.
  • The private sector is much less efficient than public programs. Compared to traditional Medicare, privatized Medicare is more expensive, less efficient, less reliable, more restrictive in choice of physician and hospital, and has much higher administrative costs (e.g. 15 percent overhead  compared to about 2 percent for Medicare). (5)
  • Privatized Medicaid follows the same pattern, as illustrated by Tennessee Medicaid plans, operated by Blue Cross BlueShield of Tennessee, UnitedHealthcare, and Anthem, with their inadequate physician networks, long waits for care, and denials of many treatments, even as these insurers take away new profits. (6)
  • With our present multi-payer financing system, there is little opportunity to achieve sizable discounts through bulk purchasing. Bulk purchasing of drugs was specifically prohibited by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, while the 2010 Affordable Care Act continued to ban the government from negotiating drug prices.

Implications for Today’s Debate over Health Policy
In their 2014 book, Social Insurance: America’s Neglected Heritage and Contested Future, Theodore Marmor, Jerry Mashaw and John Pakutka drew this important conclusion about the effects of “free market” policies in our health care and the need for more government involvement:

In health care, the “invisible hand” [of the free market] fails to drive down costs, improve quality, or ensure distributional outcomes that are regarded as fair. We can tinker with the rules, regulations and payment schemes that govern medical care, but the forces that increase the demands for and supply of more care are relentless. Only powerful countervailing institutions can keep them under control. Only governments have the necessary authority, assuming they have the political will to use it. (7)

This is not a new concept. The appropriate role of government, as is so needed today to reform our health care system, was recognized more than 200 years ago by John Adams, second president of the United States and one of our founding fathers:

Government is instituted for the common good; for the protection, safety, prosperity and happiness of the people; and not for the profit, honor, or private interest of any one man, family or class of men.(8)

John Geyman, M.D. is the author of  The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans

References:

  1. Goodman, JC, Musgrave, GL. Twenty myths about single-payer health insurance: International evidence on the effects of national health insurance in countries around the world. National Center for Policy Analysis, Dallas, 2002.
  2. Arrow, KJ. Uncertainty and the welfare economics of medical care. American Economic Review 53:941-973, 1963.
  3. Nichols, LM et al. Are market forces strong enough to deliver efficient health care systems? Confidence is waning. Health Aff (Millwood) 23 (2): 8-21, 2004.
  4. Stiglitz, JE. Evaluating economic change. Daedalus 133/3, Summer, 2004.
  5. Healthcare-NOW! Single-Payer Activist Guide to the Affordable Care Act. Philadelphia, PA, 2013, p. 22.
  6. Himmelstein, DU, Woolhandler, S. The post-launch problem: the Affordable Care Act’s persistently high administrative costs. Health Affairs Blog, May 27, 2015.
  7. Marmor, TR, Mashaw, JL, Pakutka, J. Social Insurance: America’s Neglected Heritage and Contested Future. Los Angeles, CA. Sage Copress, 2014, p. 128.
  8. Adams, as quoted by Hartmann, TA. A red privatization story. The Progressive Populist, November 15, 2014, p. 11.

Redistribution of health care from the poor to the wealthy

Posted by on Wednesday, Jul 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.

Health Spending For Low-, Middle-, And High-Income Americans, 1963–2012

By Samuel L. Dickman, Steffie Woolhandler, Jacob Bor, Danny McCormick, David H. Bor, and David U. Himmelstein
Health Affairs, July 2016

Abstract

US medical spending growth slowed between 2004 and 2013. At the same time, many Americans faced rising copayments and deductibles, which may have particularly affected lower-income people. To explore whether the health spending slowdown affected all income groups equally, we divided the population into income quintiles. We then assessed trends in health expenditures by and on behalf of people in each quintile using twenty-two national surveys carried out between 1963 and 2012. Before the 1965 passage of legislation creating Medicare and Medicaid, the lowest income quintile had the lowest expenditures, despite their worse health compared to other income groups. By 1977 the unadjusted expenditures for the lowest quintile exceeded those for all other income groups. This pattern persisted until 2004. Thereafter, expenditures fell for the lowest quintile, while rising more than 10 percent for the middle three quintiles and close to 20 percent for the highest income quintile, which had the highest expenditures in 2012. The post-2004 divergence of expenditure trends for the wealthy, middle class, and poor occurred only among the nonelderly. We conclude that the new pattern of spending post-2004, with the wealthiest quintile having the highest expenditures for health care, suggests that a redistribution of care toward wealthier Americans accompanied the health spending slowdown.

From the Discussion

The slowdown in health spending growth between 2004 and 2013 was widely reported and much celebrated. Our data suggest a sobering interpretation: Slower spending growth (at least through 2012) was concentrated among poor and middle-income Americans, leading to a growing disparity in health expenditures across income groups. It is unclear whether the recent acceleration of spending growth will reverse this trend.

The pattern of sharply rising spending for the wealthy and flat or slow growth for others mirrors the widening gap in the consumption of other goods and could represent a shift from need-based to income-based receipt of medical care. We fear that it might presage deepening disparities in health outcomes.

Prior to the implementation of Medicaid and Medicare in 1966, the poor had the lowest health expenditures despite their greater medical need, while expenditures for the wealthy were nearly twice as high as those for the poor. Subsequent to these public investments, health spending tracked closer to medical need, with the poorest income quintile having the highest expenditures and the top quintile the lowest. (However, after adjustment for age and health status, the health expenditure gap between income groups was never fully reversed.)

The rising income-based disparity in spending suggests a shift from allocation of health care according to need to allocation by willingness (and ability) to pay. It is unclear whether this shift arises from the underuse of needed care among the poor or overuse of unnecessary care by the wealthy. The sharp spending increase among the nonelderly top income group merits further study and could be caused by the widening gap in cost-sharing requirements in private insurance plans for employees of small versus large firms (the latter of which tend to pay higher wages), the rise of concierge medical practices, or supply-induced demand. Irrespective of the cause, the pattern suggests that the efficiency of medical spending is declining, with an increasing share of medical resources devoted to people with the least medical need.

Conclusion

Increasing income inequality has drawn much attention in recent years. Our findings suggest that inequality in health care spending is also on the rise: Expenditures for the poorest (and sickest) segment of the population are actually falling, while those for the wealthy are growing rapidly and now exceed those for other Americans. This pattern, which has not been seen since before Medicare and Medicaid were introduced, could portend a widening of disparities in health outcomes.

http://content.healthaffairs.org/content/35/7/1189.abstract

Today’s important message is well stated in the Conclusion of the article: “Increasing income inequality has drawn much attention in recent years. Our findings suggest that inequality in health care spending is also on the rise: Expenditures for the poorest (and sickest) segment of the population are actually falling, while those for the wealthy are growing rapidly and now exceed those for other Americans. This pattern, which has not been seen since before Medicare and Medicaid were introduced, could portend a widening of disparities in health outcomes.”

Initially Medicare and Medicaid were very effective in increasing the proportion of care provided to the poorest who were the sickest amongst us. What is alarming is that there is now a redistribution of health care to the wealthiest, who as a group also happen to be the healthiest, with a decline in care for the poorest and sickest. This is one of the more cruel examples of the contemporary redistribution of wealth from the masses to the wealthy.

Our current fragmented health care financing system, which has been perpetuated and expanded by the Affordable Care Act, is likely a major contributor to this injustice. As private insurance plans have been expanded, innovations such as high deductibles designed to make premiums more affordable (at the cost of making actual health care less affordable) have increased financial barriers to care for the poor. Concierge practices catering to the wealthy and excluding the poor exemplify the trend of redistribution of health care upward on the economic ladder.

There is a crying need to enact a multitude of public policies that would help to reverse the regressive income and wealth transfer that has been taking place in recent decades. One of the more important measures would address the problem presented in today’s article – redistribution of health care to the wealthy.

A well designed single payer system would remove financial barriers to care while being funded by progressive tax policies. It would ensure that lower-income individuals with greater health care needs would actually receive the care that they need. The limitations of system capacity would help to moderate the superfluous excesses being consumed by the wealthy – excesses currently being paid collectively by all of us through insurance premiums and taxes.

We can have health care justice in America, but only if we demand it though mobilization of our democratic institutions.

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Private Medicare Advantage plans open themselves to fee gouging by dialysis centers

Posted by on Tuesday, Jul 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.

UnitedHealthcare Sues Dialysis Chain Over Billing

By Reed Abelson and Katie Thomas
The New York Times, July 1, 2016

Private health insurers can pay more than $4,000 for each dialysis treatment. Government health plans like Medicaid pay around $200.

That gaping price difference was the motivation for a scheme, orchestrated by a for-profit dialysis chain, that illegally pushed poor people in Florida and Ohio out of inexpensive government programs and into expensive private plans sold by UnitedHealthcare, according to a lawsuit the giant insurer filed in federal court on Friday. UnitedHealthcare says the arrangement needlessly exposed the patients to medical bills.

The suit accuses American Renal Associates, a public company that operates nearly 200 dialysis clinics across the country, of fraudulently billing millions of dollars since the beginning of the year. UnitedHealthcare is trying to recoup that money.

The insurer argues that the effort was aided by the American Kidney Fund, a nonprofit patient advocacy group, which paid the patients’ premiums for private insurance. The insurer said American Renal Associates “earmarked donations” to the kidney fund to pay for the coverage, violating anti-kickback laws in the process.

The kidney fund, which is not listed as a defendant in the lawsuit, is overwhelmingly financed by dialysis companies.

People who need dialysis and have end-stage renal disease are eligible for Medicare coverage, even if they are under 65. If they are poor, they may also qualify for Medicaid.

At the same time, UnitedHealthcare has a keen financial interest in keeping very ill patients, like those who need dialysis, out of its private plans. Under the federal health care law, insurers must cover everyone, no matter how sick they are.

According to the lawsuit, American Renal Associates devised a clever plot aimed at converting patients over to private plans.

The company identified poor patients in rural areas of Florida who did not have a nearby dialysis clinic in UnitedHealthcare’s network, the suit says. The centers then persuaded these patients to switch to UnitedHealthcare plans, using the American Kidney Fund’s program to pay their premiums.

Finally, the centers billed UnitedHealthcare out-of-network prices of about $4,000 per dialysis treatment, compared with just $200 under Florida’s Medicaid program, the suit said.

Because the UnitedHealthcare plans required greater out-of-pocket contributions than Medicaid’s coverage, the centers waived any part of the dialysis bill that was not paid by the insurer.

http://www.nytimes.com/2016/07/02/business/unitedhealthcare-sues-dialysis-chain-over-billing.html

In this scheme a dialysis chain was able to increase Medicare payments twenty fold for dialysis treatments, thus cheating the taxpayers who fund Medicare. The scheme was made possible because Congress continues to push us toward privatization of Medicare by overpaying the private Medicare Advantage plans designed to displace our traditional Medicare program.

Its important to understand how this this scheme works because it epitomizes the irrationality of insisting the we use private insurers in our health care financing instead of a single payer Medicare program. Whereas the traditional Medicare program covers all physicians and hospitals, except the few who opt out of the program, the private insurers, such as those providing Medicare Advantage plans, use limited provider networks in order to contract for more favorable rates.

In this case, UnitedHealthcare was not able to contract with dialysis providers in some regions thus they were forced to pay out-of-network prices instead of what would have been contracted prices. American Renal Associates thus jumped at the opportunity to transfer their traditional Medicare patients, for whom they were receiving $200 a treatment, into the private UnitedHealthcare plan, wherein they could demand an out-of-network payment of $4000.

If instead we had a Medicare for all program, payments might have been slightly more than $200 if the dialysis centers were at risk of closing down due to inadequate revenues, but clearly they would not have approached anywhere near $4000. One of the most important features of a single payer national health program is that payments are fair, both for the providers and for the taxpayers funding the program.

The villains here? The dialysis chain gaming the system, the private insurers using schemes such as limited networks to leverage the system in their favor, and our legislators who are forcing on us their ideology favoring market solutions for health care financing when the government is best suited to ensure an efficient and equitable system of health care financing for all. Perhaps it is us who carry the greatest blame by not insisting that our elected representatives fix this system. Both major political parties have excluded single payer from their platforms, and we do nothing about it, except whine.

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Anthem and Express Scripts legal battle exemplifies our dysfunctional financing system

Posted by on Friday, Jul 1, 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.

Anthem, Express Scripts Face Legal Challenge Over Prescription Drug Prices

By Julie Appleby
Kaiser Health News, July 1, 2016

Anthem and its pharmacy manager Express Scripts overcharged patients with job-based insurance for prescription drugs, alleges a lawsuit that seeks class action status for what could be tens of thousands of Americans.

It’s the latest wrinkle in a battle that has already pitted the major national insurer and its pharmacy benefit manager (PBM) against each other in dueling legal actions — and further illustrates the complicated set of factors that determine what consumers pay for prescription medications.

The case alleges that insured workers paid too much because Express Scripts charged “above competitive pricing levels” and Anthem, in effect, allowed those higher prices as part of a 10-year contract deal with the pharmacy management firm.

Recently, some independent pharmacists have complained that some PBMs are charging insured consumers more than the cash price for some generic drugs.

And for years, questions have been raised about whether the industry fully discloses how much it is actually saving insurer and employer clients — and what portion of those savings are actually passed along to consumers.

“It’s such a complicated web of intermediaries that stand between consumers and the prices they pay,” said Erin Fuse Brown, an assistant professor of law at Georgia State University College of Law. “As a result, no one knows if they’re getting ripped off.”

Anthem’s lawsuit aims to end its contract with the PBM and seeks $15 billion in damages for what it alleges was the PBM’s failure to renegotiate lower prices for prescriptions. Anthem used to run its own PBM, but sold it to Express Scripts in 2009 as part of the contract deal, court documents show.

In its counterclaims, Express Scripts said the insurer rejected several proposals to renegotiate prices. In addition, Express Scripts’ legal document says Anthem was offered a choice of “less money up front but lower pricing” or a bigger upfront payment “with higher pricing for Express Scripts’ services.” It chose the higher prices over the course of the contract in exchange $4.6 billion more in upfront fees, according to the PBM’s counterclaim. That money, Express Scripts’ documents allege, was then used by Anthem to buy back its own stock, rather than passing it along to health plan members. The stock buyback “applied upward pressure to Anthem’s stock price, thereby enriching shareholders and management,” the filing alleges.

http://khn.org/news/anthem-express-scripts-face-legal-challenge-over-prescription-drug-prices/

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Decoding Big Pharma’s Secret Drug Pricing Practices

By Robert Langreth, Michael Keller and Christopher Cannon
Bloomberg, June 29, 2016

The pharmaceutical industry has long said that list prices aren’t a reliable indicator of what Americans pay for prescription drugs because big customers, including health insurers and pharmacy benefit managers, negotiate discounts. But a Bloomberg analysis of 39 medicines with global sales of more than $1 billion a year showed that 30 of them logged price increases of more than double the rate of inflation from 2009 to 2015, even after estimated discounts were factored in. Only six drugs had price increases in line with or below inflation.

(A large number of specific examples are provided in the article.)

http://www.bloomberg.com/graphics/2016-drug-prices/

Pharmaceutical companies, insurers and pharmacy benefit managers each conspire, with each other and independently, to get the maximum financial gain that prescription drug market dynamics will allow. Health care funds pour into these industries, and patients end up the losers.

What would it be like if pharmaceutical firms all converted to non-profit status and then negotiated earnestly with the public stewards of a single payer national health program? Health care funds would no longer be drained off to passive investors and to exorbitant executive salaries and benefits, and patients would end up the winners.

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Our biggest obstacle is lack of personal health care data managers?

Posted by on Thursday, Jun 30, 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.

The Biggest Obstacle to the Health-Care Revolution

By David Blumenthal
The Wall Street Journal, June 28, 2016

The digitization of our health-care system is well under way, but several obstacles frustrate efforts to take full advantage of the health information revolution.  Perhaps the most important is our difficulty moving patients’ data, so that records can follow patients as they go from one site of care to another.

Moving health data goes by the technical term “health information exchange” or HIE. There are some technical barriers to HIE, but they are not the big problems. The big problems are economic and cultural.

The American health system consists of competing economic entities: health systems, hospitals, nursing homes and doctors, to name a few. State and federal authorities zealously enforce antitrust laws to assure that local health-care competition remains strong. But health providers’ data about their patients is a valuable economic asset that some doctors and hospitals are understandably reluctant to share with their competitors down the street. Many patients stick with clinicians and hospitals in part because that’s where their records are. If the records can travel, so may patients, taking their business with them. Also, many providers believe that they – not patients — own that information, and have no obligation to share it.

A recent federal report cites this “information blocking” by providers as an important obstacle to HIE. Legislative and regulatory remedies to information blocking are under review, but there may be another, equally powerful route to HIE: giving patients their records so they can decide who can have them and when.

The idea is simple. Under provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), providers must share patients’ records within 30 days on request. Instead of doctors or hospitals totally controlling their health information, patients could take charge. Managing this information may be challenging for some patients, but they could retain third parties that, for a fee, would steward and distribute health-care data as directed. Patients could designate particular clinicians or institutions, or family members and caretakers, as entitled to access. If so inclined, patients could also share their health information with researchers or public health authorities. Some call this “consumer-mediated health information exchange.” A robust new business sector could provide these data services to interested patients.

To move forward with consumer-mediated HIE, several steps will be required. First, the federal government needs to more aggressively enforce HIPAA’s information-sharing provisions. Second, we need a new cohort of health-data stewards who can help patients manage their own data. Some process of private certification or public regulation will likely be necessary to assure that these new entities can be trusted to discharge this sensitive and complex responsibility. Third, we will need to perfect the technical ability of these new data stewards to access the electronic-data repositories of health-care providers.

Dr. David Blumenthal is the president of the Commonwealth Fund, a national health-care philanthropy based in New York. From 2009 to 2011, he served as the National Coordinator for Health Information Technology, with the charge to build an interoperable, private, and secure nationwide health information system and to support the widespread, meaningful use of health IT.

http://blogs.wsj.com/experts/2016/06/28/how-to-make-health-care-records-as-mobile-as-patients/

We have some serious problems in health care that need our immediate attention such as administrative  excesses, wasteful spending, impaired access, maldistribution of health care resources, and financial barriers to care. But the health policy community is entrenched in efforts to expand the administrative oversight of our system as somehow being the solution to problems they seem not to have defined. They are adding to the problem of administrative excesses while ignoring what really needs to be done.

David Blumenthal, having been our National Coordinator for Health Information Technology, seems to define the problem as a lack of health data management through a health information exchange. He would create a “robust new business sector” – a “consumer-mediated health information exchange” – providing data services to patients. Just what we need – more administrative excesses!

Right now our government and the health care industry are deeply involved in drafting rules for the Merit-based Incentive Performance System (MIPS) and the alternative payment model (APM) option as more studies are showing that such efforts are impairing professional satisfaction and increasing physician burnout –  more administrative excesses with detrimental outcomes!

We need to start thinking about the patients and a health care system that would best serve their needs. A single payer national health program is specifically designed to address the real problems noted in the first paragraph above. Patients are not looking to interact with personal data managers; they want health care, and they want it now.

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Increasing vaccine prices to address shortages?

Posted by on Wednesday, Jun 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.

Low Prices for Vaccines Can Come at a Great Cost

By Austin Frakt
The New York Times, June 27, 2016

A $30,000 price tag for cancer drug therapy that extends life only a few weeks is understandably alarming. But a $2,000 price tag for all childhood vaccines — credited with eradicating smallpox, preventing a million or more cases of other diseases and averting thousands of deaths each year — is a bargain. In fact, the price of childhood vaccines may be too low for our own good because it contributes to shortages.

Vaccine shortages have popped up in the United States many times over the past 50 years. In 2001, eight of 11 recommended childhood vaccines were unavailable or in short supply.

Vaccine prices have gone up over the years, in large part because of newer vaccines that command higher prices. The number of recommended vaccine doses has also increased, which pushes up the overall cost of full vaccination. Still, vaccines are inexpensive relative to their value. A typical dose costs $50 and, apart from an annual flu shot, only a few doses are required over a lifetime. According to the Duke study, vaccines with lower prices were more likely to be in short supply than those with higher prices. There were no shortages of vaccines with a price per dose above $75.

Commercial market vaccine prices are higher than government ones, but not by enough to prevent shortages.

We probably don’t need to raise vaccine prices by a factor of 10 to promote new vaccine investment and stabilize supply. According to one study, a doubling in price would incentivize new vaccine research, development and production.

For drugs as valuable as vaccines, that might be a price worth paying.

http://www.nytimes.com/2016/06/28/upshot/low-prices-for-vaccines-can-come-at-a-great-cost.html

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NYT Reader Comment:

By Don McCanne
San Juan Capistrano, CA

Are vaccines developed primarily to move wealth from the masses to corporate executives and passive investors? Or are they developed to reduce grief and suffering for all of us?

As a child, I remember putting dimes in the March of Dimes cardboard donor cards, because it was the right thing to do. As a medical student, I remember the iron lungs at San Francisco General Hospital. I remember Jonas Salk saying to Edward R. Morrow about polio vaccine, “There is no patent. Could you patent the sun?” It has been decades since I’ve seen an iron lung.

Piketty and Saez have shown us what happened: We have moved from the post-war egalitarian society in which our nation thrived by directing production to the common good, and now onto a society that transfers income and wealth to the richest amongst us, even if that means that many will have to do without vaccines because they are not affordable.

Would Jonas Salk rather have been known as a person who became wealthy from a patent on a vaccine, or as a person who helped virtually eliminate polio from the earth? Altruism is still out there. We need to unlock it from from the shackles of the rent seekers.

http://www.nytimes.com/2016/06/28/upshot/low-prices-for-vaccines-can-come-at-a-great-cost.html

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Dealing with vaccine shortages: current situation and ongoing activities

By Dr. Oleg Benes
World Health Organization, April 12-14, 2016

The way forward…

Paradigm change
* Global solutions to address global challenges
* Strategic supply management vs transactions

Risk management ESSENTIALS
* Identification & assessment & management

Systemic approach
* Articulated policy & strategies
* Monitoring & early-warning systems

Commitment & collaboration
* WHO, Member States, regional institutions, partners & industry

http://www.who.int/immunization/sage/meetings/2016/april/2_Benes_shortages_SAGE_Apr2016.pdf

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CDC Vaccine Price List

http://www.cdc.gov/vaccines/programs/vfc/awardees/vaccine-management/price-list/#modalIdString_CDCTable_0

One of the problems with the U.S. health care system is our heavy reliance on private market dynamics. This has resulted in our exceptionally high prices in health care. The role of our public health system has somewhat moderated price increases for vaccines, but the CDC price list reveals that the costs of vaccine in the private sector are considerably higher than the costs for vaccines provided for our public immunization programs.

Vaccine shortages do occur. Given that we rely on markets, it is understandable why a respected health researcher such as Austin Frakt would reach a conclusion that we need to provide greater financial incentives – higher prices – to motivate vaccine manufacturers to ensure that supplies will not run short.

But how does the rest of the world do it? They cooperate rather than compete. In describing the way forward, the World Health Organization suggests commitment and collaboration. Absent from their list is a suggestion that we should drive prices up until the manufacturers are quite pleased with the cushy margins they would like to have, yet, in the U.S. private sector, we yield to their demands.

My comment in The New York Times is a plea to replace rent seeking in health care with a system based on altruism: We do it because it’s right, and it makes us feel proud (and maybe even begin to  associate greed with shame). Altruism is much more likely to occur when we shift from market driven financing to a government health care financing system (again, compare CDC vaccine prices with market based prices – link above).

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