Trump administration undermining ACA coverage

Posted by on Tuesday, Apr 10, 2018

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.

CMS issues final 2019 Payment Notice Rule to increase access to affordable health plans for Americans suffering from high Obamacare premiums, April 9, 2018

Today, the Centers for Medicare & Medicaid Services (CMS) issued the HHS Notice of Benefit and Payment Parameters for 2019. The final rule will mitigate the harmful impacts of Obamacare and empower states to regulate their insurance market. The rule will do this by advancing the Administration’s goals to increase state flexibility, improve affordability, strengthen program integrity, empower consumers, promote stability, and reduce unnecessary regulatory burdens imposed by the Patient Protection and Affordable Care Act.

“Too many Americans are facing skyrocketing premiums that they can’t afford and every year consumers are faced with the threat of fewer choices. This rule gives states new tools to stabilize their health insurance markets and empower citizens to find coverage that fits their families’ needs and budgets,” said CMS Administrator Seema Verma.

The final rule issued today includes the following key provisions:

Increasing Flexibility

* Essential Health Benefits (EHB)
* States will also now be able to build their own set of benefits
* Qualified Health Plan (QHP) Certification Standards

Improving Affordability

* Exemptions

Strengthening Program Integrity

* Risk Adjustment
* Advanced Premium Tax Credit (APTC) Program Integrity

Empowering Consumers

* Special Enrollment Periods (SEPs)

Promoting Stability

* Medical Loss Ratio (MLR)

Reducing Unnecessary Regulatory Burden

* Small Business Health Options Program (SHOP)
* Rate Review…

Final Rule (523 pages):…

The Trump administration is continuing its efforts to undermine the policies established by the Affordable Care Act. That would not be so bad if they were replacing it with a much better program such as an Improved Medicare for All. But no, just the opposite. They are doing what Congress failed to do and that is inflict as much damage as they can administratively. What is particularly offensive is their glowing rhetoric using terms that dishonestly imply that they are greatly improving the program.

The provisions that are being changed are listed above, and they are briefly described in the press release available at the link. A couple of examples can give you an idea of what they are doing.

ACA requires ten specific essential health benefits in the exchange plans, but the rule released allows much more flexibility in selecting the essential benefits. In a press call, CMS Administrator Seema Verma said that they wanted to allow insurers leeway to “create plans that more directly address the needs of citizens and not a one-size-fits-all D.C. mandate.” Of course, the problem with a menu of benefits is that nobody really knows what their medical needs will be next year. Benefits need to be comprehensive for everyone.

They say they would improve affordability by allowing an exemption when it is determined that coverage is not affordable based on projected income using a higher metal level plan when no bronze plan is available in the service area. Maybe it is sort of true that not buying insurance improves affordability of the exchange plans, but it sure plays havoc with affordability of health care when you are uninsured.

They are changing risk adjustment to reduce the burden on issuers, providing states “with the flexibility to request a reduction to the otherwise applicable risk adjustment transfers in the individual, small group or merged market by up to 50 percent beginning with the 2020 benefit year, which may be helpful in attracting and retaining insurers and more precisely accounting for relative risk differences in the state market.” They continue to take good care of the private insurers, but when insurers benefit financially, patients lose.

The medical loss ratio (MLR) represents the percentage of premium dollars that are paid out for health care. The new rule “allows states to request reasonable adjustments to the MLR standard for the individual market if the state shows a lower MLR standard could help stabilize its individual insurance market.” Again, this takes good care of the insurers by allowing them to spend even less than the current 80 percent requirement on health care, and, again, the patients lose.

Currently insurance premium rate increases over 10 percent must be submitted for review. The new rule changes the threshold to 15 percent. Allowing unchallenged premium increases of 15 percent year after year also takes good care of the insurers, but not so good for those paying the premiums, whether directly or through taxes.

The winners? Insurers and conservatives who want to reduce the role of government in the financing of our health care. The losers? Patients and taxpayers. That’s not good.

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Wherewith public health advocacy?

Posted by on Monday, Apr 9, 2018

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.

Public Health Advocacy in the Tumultuous Times of the Trump Administration

By David N. Sundwall M.D.
AJPH, April 2018 (published online March 7, 2018)


The election of Donald J. Trump as president of the United States was an unexpected and extraordinary event in the history of our nation. His presidency has resulted in dramatic changes in our politics and our policies and unease in much of our population. Those of us committed to public health and ensuring that government programs devoted to the well-being of our citizens be sustained have been perplexed, confused, and frustrated, to say the least. We are not alone—this situation applies to much of the federal government’s agencies, the federal workforce, organizations representing the public’s interests, and our fellow Americans.

Notwithstanding this uncomfortable uncertainty…regardless of who is in the White House, we (in public health) have important and essential work to do, and we must continue to do it with the budget provided and at the direction of our elected officials. We need to do our work as well as we can with the resources provided and within the scope of the laws authorizing our activities. This does not mean, however, that those of us in public health positions, or for that matter any person or group with an interest in public health, should not advocate to sustain and strengthen our nation’s public health enterprise. An important exception is those federal employees constrained by Hatch Act, which prohibits them from engaging in political activities. (This federal law, which was passed in 1939, limits certain political activities of federal employees, as well as some state, District of Columbia, and local government employees who work in connection with federally funded programs. The law’s purposes are to ensure that federal programs are administered in a nonpartisan fashion, to protect federal employees from political coercion in the workplace, and to ensure that federal employees are advanced on the basis of merit and not on the basis of political affiliation.)

So, accepting that these are difficult times when nothing seems to be done as it previously was, how do we go about advocating public health? The following are just a few of the principles I identified that I think are especially relevant to our current circumstance:

* The importance of being honest, informed, and evidence-based—earnest advocacy will not likely get very far without data and information to support a proposal.

* The importance of not judging a book by its cover—the confirmation process for US Surgeon General C. Everett Koop. Yet, once confirmed, he proved to be an effective leader and champion of public health for all, especially those infected with HIV as this epidemic unfolded during his tenure. Could our new Surgeon General, Jerome Adams, also become an outstanding advocate for public health in this position?

* The importance of building bridges—unlikely allies in working together for reauthorization of the Maternal and Child Health Care Block Grant. The Children’s Defense Fund, a liberal Washington, DC–based organization, came together with a group in South Carolina affiliated with the Southern Baptist Coalition, a staunchly conservative organization, to advocate together for the maternal and child health programs.

* The importance of science-driven policy—the National Organ Transplant Act of 1984: Notwithstanding evidence that some of our elected officials seem to be “anti-science” and do not want to be “confused by the facts,” I contend that a significant majority are not. It is essential that we use current scientific knowledge to bolster our case for new and better public health policies.

* The importance of regulations and rules in addressing policy issues—how to achieve administrative simplification, efficiency, and effectiveness by changing the rules, not the law: The opportunity to achieve policy objectives through modifying existing rules and regulations of public health laws is often overlooked. The Trump Administration is committed to such administrative simplification, deregulation, and therefore is likely to support such proposals for constructive changes.

* The importance of understanding and respecting “who’s in charge” and of nonpartisan advocacy, for public health—cultivating relationships with key elected officials: I think it is fair to generalize that, historically, most advocates for public health have favored a strong federal government role in funding public health initiatives, and have favored regulations holding states and grantees accountable to achieve improved health outcomes. The current Administration and the majority in Congress favor a more limited government role, less spending, and less regulation. The most pressing challenge for public health advocates now is to ensure adequate federal funding for public health programs. So, regardless of personal political views, we must invest time and effort to know those currently in charge—our elected officials and their staffs—to seek compromise in funding levels and regulations to sustain our public health enterprise. Our collective efforts to educate and inform key elected officials will be essential to counter harmful proposals in President Trump’s 2018 budget and also to prevent harmful provisions in the Congress’s budget proposal. We will also need to work together to correct potential problems in the recently passed tax reform legislation.

To successfully advocate sustaining and strengthening our nation’s public health enterprise, I recommend we rely on these six time-proven principles.…


Woolhandler and Himmelstein Respond

By Steffie Woolhandler M.D., M.P.H., and David U. Himmelstein M.D.

Who could disagree with Sundwall’s advice to be honest, open-minded, optimistic, and inclusive? But the Trump administration’s authoritarian, antihealth drift demands a stronger response.

Even before Trump, public health was lagging. Funding has been drifting down and death rates creeping up, driven by widening inequality and unrelenting oppression of those at the bottom of the income scale. Although President Obama may be faulted for inadequate responses, his successor has unleashed an all-out assault on the nonrich, non-Christian, nonmale, non-White, non-American—as well as on nature itself. Even George Orwell might flinch at the Centers for Disease Control and Prevention leadership’s ban on words like “science-based,” “evidence-based,” “vulnerable,” “transgender,” and “fetus.”

Yet, the defeat of frontal attacks on the Affordable Care Act (ACA) indicates that health is perilous terrain for Trumpism. The fight against repeal called out legions who packed town hall meetings, disability and other activists who braved arrest, and scholars, journal editors, and journalists who spread the word of mortal and financial consequences from uninsurance. Republicans could only sliver off the Obamacare mandate under cover of a tax bill.

But defensive efforts like those that fended off ACA repeal are not enough. Medicaid—as well as Medicare, SNAP (food stamps [Supplemental Nutrition Assistance Program]), and TANF (welfare [Temporary Assistance for Needy Families])—are also in Congress’s crosshairs. They’ll claim that the ballooning deficits ensured by the new tax law compel cuts.

During the 2016 presidential campaign, Trump’s racist and nativist appeals found fertile ground among beleaguered White working-class voters eager for scapegoats, while the wealthy and powerful needed no dog whistle to understand what Trump could do for them. In response, mainstream Democrats proffered little to ameliorate working-class pain, nor did they threaten to discomfit the wealthy.

The promise—and reality—of sweeping social changes offers the only effective antidote to the president’s reactionary populism. A full turn away from capitalism is not currently on the agenda. Yet experience in other nations—and in ours in the past—shows that redistributing income through taxes and social programs and attending to the environment can do much to improve health, while sustaining, and even spurring, overall prosperity.

Seven decades back, AJPH’s Editor Charles-Edward Winslow called for massive social investments to end the physical and emotional toll exacted “by malnutrition, by slum dwelling, by lack of medical care, by social insecurity” and urged “those who do not agree with me to mend their ways; and those who do agree with me to go forward with hope and courage.”

Such courage is now urgently needed. Public health professionals must put policies to the test of science and raise their voices to decry health-threatening ones. But we must go beyond that, joining others to organize for health-improving reforms and protest harmful initiatives.

As Sundwall notes, for many public employees (including us), politicking for candidates at work and using our employers’ resources, such as computers and e-mail addresses, are verboten. And running for office or soliciting campaign contributions may be off-limits. But while off-duty, we’re free to vote, contribute money, express our views, and protest.

The contrast between our nation’s spectacular wealth and sorry record on health and social indicators gives reason for hope as well as shame. We can readily afford to house, feed, educate, and heal all who are on our soil.

What’s needed is a new New Deal. For medical care, that means single-payer health care, not just defending Obamacare. We can find housing for the 3.5 million homeless in the 18.3 million vacant housing units; food from our abundant harvests can provide for the 41.2 million who suffer food insecurity; and funds can be diverted from the more than $800 billion our governments spend on prisons, policing, and defense to schools, mass transit, and social needs.

Politics, not economics, keeps us from ensuring that our water and air are clean, that carbon is kept from our skies, and that every community enjoys the full measure of prevention in homes, neighborhoods, workplaces, and medical offices. Envisioning what’s possible and fighting for what’s needed are not tangential to public health work. They are our core mission.…

Public health funding in the United States has always been a challenge as have the policy positions of our government leaders. Under the Trump administration the issues are even more difficult because of the anti-spending and anti-regulation ideology which forms a barricade to the public health spending and infrastructure that we need.

The fact that we spend so much on health care yet achieve on average only mediocrity is a sure sign that our government does not have the right policies in place. This applies not only to the health care system directly but to other elements that are essential in maintaining the health of the people. A prime example is that 3.5 million people are homeless when we have 18 million vacant housing units, just as The New York Times this week is reporting on 83 million eviction records. This is not just a failure of our public health system but a failure of our government at large.

The policies that would work are not difficult to understand, but the politics remain a barrier, which is even greater under the current administration. We would already have a single payer, improved Medicare for all if it weren’t for the politics.

David Sundwall I know personally to be a very dedicated, sincere advocate of public health policies. But he represents the all-too-prevalent view that we can do this within the political environment we have, by using his six principles. That approach alone is far too feeble, as our nation’s history demonstrates.

Steffie Woolhandler and David Himmelstein explain why we need much more than that. We need sweeping social change – a new New Deal. We have the resources. It is the politics, not the economics, that keeps us from our goals. We have to fight for what’s needed to make public health work. That must be our core mission.

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Transaction prices under hospital and health insurance market concentration

Posted by on Friday, Apr 6, 2018

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.

Hospital and Health Insurance Markets Concentration and Inpatient Hospital Transaction Prices in the U.S. Health Care Market

By Seidu Dauda, Ph.D.
HSR, April 2018 (first published May 11, 2017)


To examine the effects of hospital and insurer markets concentration on transaction prices for inpatient hospital services.

Data Sources:
Measures of hospital and insurer markets concentration derived from American Hospital Association and HealthLeaders‐InterStudy data are linked to 2005–2008 inpatient administrative data from Truven Health MarketScan Databases.

Study Design:
Uses a reduced‐form price equation, controlling for cost and demand shifters and accounting for possible endogeneity of market concentration using instrumental variables (IV) technique.

Principal Findings:
The findings suggest that greater hospital concentration raises prices, whereas greater insurer concentration depresses prices. A hypothetical merger between two of five equally sized hospitals is estimated to increase hospital prices by about 9 percent (p < .001). A similar merger of insurers would depress prices by about 15.3 percent (p < .001). Over the 2003–2008 periods, the estimates imply that hospital consolidation likely raised prices by about 2.6 percent, while insurer consolidation depressed prices by about 10.8 percent. Additional analysis using longer panel data and applying hospital fixed effects confirms the impact of hospital concentration on prices.

The findings provide support for strong antitrust enforcement to curb rising hospital service prices and health care costs.

From the Conclusion

This study examines the price effects of hospital and insurer concentrations using a large data set with actual transaction prices. I find that hospitals in more concentrated markets are able to use their market power to secure significantly higher prices from insurers and insurers in more concentrated markets are able to exercise a countervailing power and offer significantly lower prices to hospitals.…

Kenneth Arrow; “Uncertainty and the Welfare Economics of Medical Care,” The American Economic Review, December 1963:…

This study shows what other studies have already demonstrated. When hospitals become concentrated, prices go up. When insurers become concentrated, prices go down. These concentrations are often a result of mergers or acquisitions in either the hospital or insurer markets.

It is instructive to note that this was a very large study of the private commercial insurance market, not of government programs such as Medicare. Why should that matter?

The United States is still trying to pretend that we can depend on the marketplace to bring us higher quality health care at a lower cost. Little does it seem to matter than Nobel laureate Kenneth Arrow demonstrated the fallacy of that concept half a century ago.

The government must be involved. The author of this study states that the results “provide support for strong antitrust enforcement to curb rising hospital service prices and health care costs.” But we have had decades of antitrust activity and yet prices have remained far higher than in all other systems. Although supposedly insurer concentration has provided a countervailing downward pressure on prices, obviously it has not been effective since we pay more, per capita, than twice the average of all other wealthy nations.

Private insurers provide the wrong model for health care financing. In sharp contrast is our Medicare program which depends on publicly administered pricing. Now we have a contest between a health care delivery oligopoly and a private insurance industry that tries to capture the market of financing health care, locking horns over what part of the medical-industrial complex reaps the spoils while the patients end up on the short end.

What we need is a benevolent public steward who works with the health care professionals and institutions to optimize quality, access, and value for all patients. Of course, that is what a well designed single payer system – an improved Medicare for all – is precisely designed to do. Let’s quit pretending that the markets will take care of it for us, and that we can keep the government out of it. We can’t.

If you need a reminder why, read Kenneth Arrow’s “Uncertainty and the Welfare Economics of Medical Care” (link above – long, with economist’s jargon).

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CMS is giving unfair competitive advantage to private Medicare Advantage plans

Posted by on Thursday, Apr 5, 2018

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

Medicare Advantage Plans Cleared To Go Beyond Medical Coverage — Even Groceries

By Susan Jaffe
Kaiser Health News, April 3, 2018

Air conditioners for people with asthma, healthy groceries, rides to medical appointments and home-delivered meals may be among the new benefits added to Medicare Advantage coverage when new federal rules take effect next year.

On Monday, the Centers for Medicare & Medicaid Services (CMS) expanded how it defines the “primarily health-related” benefits that insurers are allowed to include in their Medicare Advantage policies. And insurers would include these extras on top of providing the benefits traditional Medicare offers.

“Medicare Advantage beneficiaries will have more supplemental benefits making it easier for them to lead healthier, more independent lives,” said CMS Administrator Seema Verma.

Many Medicare Advantage plans already offer some health benefits not covered by traditional Medicare, such as eyeglasses, hearing aids, dental care and gym memberships. But the new rules, which the industry sought, will expand that significantly to items and services that may not be directly considered medical treatment.

CMS said the insurers will be permitted to provide care and devices that prevent or treat illness or injuries, compensate for physical impairments, address the psychological effects of illness or injuries, or reduce emergency medical care.

Although insurers are still in the early stages of designing their 2019 policies, some companies have ideas about what they might include. In addition to transportation to doctors’ offices or better food options, some health insurance experts said additional benefits could include simple modifications in beneficiaries’ homes, such as installing grab bars in the bathroom, or aides to help with daily activities, including dressing, eating and other personal care needs.

But patient advocates including David Lipschutz. senior policy attorney at the Center for Medicare Advocacy, are concerned about those who may be left behind. “It’s great for the people in Medicare Advantage plans, but what about the majority of the people who are in traditional Medicare?” he asked. “As we tip the scales more in favor of Medicare Advantage, it’s to the detriment of people in traditional Medicare.”…


Fact Sheet: 2019 Medicare Advantage and Part D Rate Announcement and Call Letter, April 2, 2018

CMS is committed to unleashing and strengthening the Medicare Advantage and Part D programs by giving Medicare beneficiaries flexibility so that they can make informed healthcare choices. The policies adopted through the Rate Announcement and Call Letter provide more choices for beneficiaries, a greater number of affordable options, and new benefits to meet their unique health needs.

Expected Average Change in Revenue

* Per February 1, 2018 Advance Notice: 1.84%
* Per April 2, 2018 Rate Announcement: 3.40%

The Expected Average Change in Revenue reported above does not include an adjustment for underlying coding trend. For 2019, CMS expects the underlying coding trend to increase risk scores, on average, by 3.1%.

2019 Part C Risk Adjustment Model

CMS proposed changes to the CMS-HCC Risk Adjustment model that is used to pay for beneficiaries enrolled in Medicare Advantage plans. For 2019, CMS is finalizing an updated model that incorporates most of the proposed changes to the Part C risk adjustment model, such as adding mental health, substance use disorder, and chronic kidney disease conditions to the risk adjustment model, as well as a variety of additional technical updates.

Using Encounter Data

As noted above, the risk adjustment model we are finalizing makes technical updates, including calibrating the model with more recent data, selecting diagnoses with the same method used for encounter data, and supplementing encounter data used in payment with inpatient data submitted to the historical risk adjustment data collection system (the Risk Adjustment Processing System (RAPS)).

Historically, CMS has used Medicare Advantage diagnoses submitted into CMS’s RAPS. In recent years, CMS began collecting encounter data from Medicare Advantage organizations, which also includes diagnostic information. In 2016, CMS used diagnoses from encounter data to calculate risk scores, by blending 10% of the encounter data-based risk scores with 90% of the RAPS-based risk scores. For 2017 and 2018, CMS continued to use a blend to calculate risk scores, by calculating risk scores with 25% encounter data and 75% RAPS in 2017, and 15% encounter data and 85% RAPS in 2018. For 2019, CMS is finalizing the proposal to calculate risk scores by adding 25% of the risk score calculated using diagnoses from encounter data and FFS diagnoses with 75% of the risk score calculated with diagnoses from RAPS and FFS diagnoses. Since the quality of the encounter data has improved, CMS believes it is appropriate to move forward with the proposed increased percentage of encounter data in the blend. CMS will also calculate the encounter data-based risk scores exclusively with the new risk adjustment model, as proposed, while maintaining use of the current risk adjustment model for calculating risk scores with RAPS data.

Coding Pattern Adjustment

Each year, as required by law, CMS makes an adjustment to plan payments to reflect differences in diagnosis coding between Medicare Advantage organizations and FFS providers. In CY 2019, CMS is finalizing the proposal to apply a coding pattern adjustment of 5.90 percent.

Fostering Innovation in Benefit Design: Expanding Health Related Supplemental Benefits
The policy change announced in the Call Letter will help drive patient access to types of services they do not have today. Some Medicare Advantage plans offer supplemental benefits so that enrollees have more healthcare benefits and options than what they would receive under the Medicare FFS Program. Medicare Advantage plans use rebate dollars and plan premiums to fund supplemental benefit offerings. The statute limits supplemental benefits to health care benefits; CMS interprets “supplemental healthcare benefit” as an item or service (1) not covered by Original Medicare, (2) that is primarily health related, and (3) for which the Medicare Advantage plan must incur a direct medical cost.

Previously, CMS has not allowed an item or service to be eligible as a supplemental benefit if the primary purpose includes daily maintenance. However, in the final Call Letter, CMS discusses a reinterpretation of the statute to expand the scope of the primarily health-related supplemental benefit standard. Under this reinterpretation, CMS would allow supplemental benefits if they are used to diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychological impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization. This expansion will effectively increase the number of allowable supplemental benefit options and provide patients with benefits and services that may improve their quality of life and health outcomes.

Uniformity Flexibility

The final Call Letter reminds plans that CMS has determined that plans can provide certain enrollees with access to different benefits and services. Specifically, Medicare Advantage plans can offer targeted cost sharing and supplemental benefits for specific enrollee populations based on health status or disease state in a manner that ensures that similarly situated individuals are treated uniformly. This flexibility helps Medicare Advantage plans better manage health care services.…

CMS Final Call Letter 2019 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies (270pages):…


Fact Sheet: CMS Finalizes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for Contract Year 2019 (CMS-4182-F), April 2, 2018

On April 2, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare Advantage (MA) and the prescription drug benefit program (Part D) by promoting innovation and empowering MA and Part D sponsors with new tools to improve quality of care and provide more plan choices for MA and Part D enrollees.

Unnecessary Limits on Medicare Advantage Plan Variety

Current regulations place unnecessary limits (called “meaningful difference” requirements) on the variety of plans an MA organization can offer in the same county. Beginning in CY 2019, CMS is eliminating the requirement that MA plans offered by the same organization in the same county comply with unnecessary limits requiring differences among the organization’s plans beginning with CY 2019 MA bid submissions. CMS is concerned the current requirement may result in organizations reducing the value of certain benefit offerings in order to make their benefit packages comply with these unnecessary limits. This may include instances where differences in benefit packages exist but are not incorporated in the agency’s evaluation (e.g., unique benefit packages based on enrollee health conditions). CMS expects that eliminating the meaningful difference requirement will improve the plan options available for beneficiaries. New flexibilities in benefit design and more sophisticated approaches to consumer engagement and decision-making should help beneficiaries, caregivers, and family members make more informed plan choices.

Flexibility in the Medicare Advantage Uniformity Requirements

CMS has reinterpreted uniformity requirements for Part C benefits offered to MA enrollees. These changes give MA plans new tools to improve care and outcomes for enrollees by allowing MA plans the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different deductibles for beneficiaries that meet specific medical criteria. This final rule highlights how the new benefit design will be an option for all MA plans.

Updates to the Definition of Marketing

Currently, a variety of materials that are not intended to steer a beneficiary into a particular plan fall under the regulatory definition of marketing and its related requirements, including a statutory requirement that these materials be subject to CMS review. CMS is changing the definition to include only materials that are most likely to lead to a beneficiary to make an enrollment decision. This will allow CMS to focus its oversight efforts on these materials to help ensure that beneficiaries are making the right decisions for their health care needs.

This change lessens the burden of marketing submission on plans and CMS reviewers. To account for those materials that will now fall outside of the new marketing definition, CMS is adopting more appropriate requirements and oversight for a new category of materials and activities called “communications.”

Maximum Out-of-Pocket and Cost Sharing Limits

CMS is revising the regulations controlling maximum out-of-pocket (MOOP) limits, to enable future changes to CMS’s existing methodology of using the 85th and 95th percentiles of projected beneficiary out-of-pocket Medicare Fee-For-Service (FFS) spending beginning no earlier than in CY 2020. CMS will then have authority to change and implement additional levels of MOOP limits, as well as provide flexibility to encourage plan offerings with lower MOOP limits. In addition, CMS will be able to update discriminatory cost sharing standards using a new standard beginning no earlier than in CY 2020.

Default Enrollment

CMS is codifying changes to a current enrollment mechanism that allows MA organizations to provide seamless continuation of coverage for their beneficiaries once they become Medicare eligible.

Restoration of the Medicare Advantage Open Enrollment Period

The 21st Century Cures Act eliminates the existing MA disenrollment period that currently takes place from January 1st through February 14th of every year and, effective for 2019, replaces it with a new Medicare Advantage open enrollment period (OEP) that will take place from January 1st through March 31st annually.

Reducing Unnecessary Paperwork Burden: Medical Loss Ratio

CMS is finalizing the proposal to significantly reduce the amount of MLR data that MA organizations and Part D sponsors submit to CMS on an annual basis. Under these new rules, MA organizations and Part D sponsors will only report the MLR percentage and amount of any remittance owed to CMS for each contract. CMS is also finalizing our proposal to revise the MLR calculation to include in the MLR numerator all expenditures related to fraud reduction activities (including fraud prevention, fraud detection, and fraud recovery) and Medication Therapy Management (MTM) programs.…

CMS Final Rule CMS-4182-F (1156 pages):…

Each year the Centers for Medicare & Medicaid Services (CMS) has used a variety of gimmicks to provide the private Medicare Advantage plans with greater reimbursement rates than their costs and what they are statutorily entitled to. This year the padding of the payments is egregiously obscene. In addition, CMS is providing the private plans with much greater flexibility in benefits and out-of-pocket spending for patients. These changes are designed to make the private Medicare Advantage plans much more attractive than the traditional Medicare program, providing them with an unfair competitive advantage.

By spending more on the private plans, their goal is to move a critical threshold of patients out of traditional Medicare wherein they can begin to sharply reduce federal payments to the traditional program, thus privatizing Medicare through the private Medicare Advantage plans. Once the traditional program is destroyed they will move forward with their premium support model (vouchers) which over time will underfund the private plans, gradually shifting much more of the costs to the beneficiaries, but by then it will be too late to abort their scheme. As Speaker Paul Ryan has explained, budget demands will “require” that these reductions be made (in order to accommodate the tax cuts for the rich).

For details, you can read the combined 1462 pages of the Final Rule and the Final Call Letter (I didn’t this time), though the Fact Sheets at the links above can give you the flavor of these actions. You do have to be careful in following their rhetoric. As examples, “reducing unnecessary paperwork” is code language for allowing the insurers to fudge their medical loss ratios, or wasteful marketing materials are relabeled as “communications.”

What is really offensive is that they are taking our tax dollars and giving them to the private insurers so that they can increase benefits and reduce cost sharing for those enrolled in the private plans while they are denying those same benefits and reduced premiums, deductibles, coinsurance, and stop loss coverage for those of us enrolled in the traditional Medicare program. That is patently unfair. If they were honest about wanting true competition between the private plans and the traditional public program they would fund them at the same risk-adjusted level. Instead they are starving the traditional program – a process that will accelerate – while they are enriching the private insurers, though only temporarily until the traditional program is wiped out (then premium support).

Imagine if we improved the benefits in the traditional Medicare program while eliminating premiums and cost sharing, and instead funding it with equitable taxes; then it would be a great program for all of us. It would also get rid of the limited provider networks that are characteristic of the private Medicare Advantage plans, and it would save the costs of their profoundly wasteful administrative excesses and the administrative burden they placed the delivery system. But we will never see this health care nirvana if we sit back and allow our traditional Medicare program to be put through the grinder while the private plans are nurtured with our taxes, only to eventually be cut loose when we no longer have a viable public program.

Think about this. Most of us in the traditional Medicare program who do not have a retiree health plan or who are not qualified for dual Medi-Medi coverage end up having to buy a Medigap plan, which is not cheap considering the relatively meager benefits. Yet those enrolled in the private Medicare Advantage plans have sufficient enough benefits that they do not need a Medigap plan. The tax burden for all of us is essentially the same whether enrolled in the traditional program or in the private Medicare Advantage plans, yet those enrolled in the traditional program are penalized because they have to pay in addition the Medigap premium plus they receive fewer benefits. If Congress were responsible (an oxymoron?) they would distribute our taxes equitably. That means that preferably they should roll Medigap benefits into the traditional Medicare program, or at least they should stop overpaying the private insurers, giving those enrolled in the private plans an extra free ride at the expense of all of us.

Yes, these technical reports are boring, but we cannot ignore what they really represent – a nefarious attempt to destroy our traditional Medicare program. Remember, we’re entering midterm election season. Let your members of Congress know what you think about this injustice.

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Getting Martin Luther King’s words right

Posted by on Wednesday, Apr 4, 2018

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.

Getting King’s Words Right

By Charlene Galarneau, PhD, MAR, Associate Professor, Wellesley College
Johns Hopkins University Press, Journal of Health Care for the Poor and Underserved, February 2018


“Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

These often-invoked words attributed to Rev. Dr. Martin Luther King Jr. offer moral sustenance to many persons working toward health equity today. Scholars, practitioners, and activists in health care and in public health commonly quote this powerful claim thus aligning the health equity movement with the civil rights movement. Yet, these words are not the precise words that King spoke more than a half century ago.

On March 25, 1966 in Chicago at a press conference before his speech at the second convention of the Medical Committee for Human Rights (MCHR), King said (in part):

“We are concerned about the constant use of federal funds to support this most notorious expression of segregation. Of all the forms of inequality, injustice in health is the most shocking and the most inhuman because it often results in physical death.

“I see no alternative to direct action and creative nonviolence to raise the conscience of the nation.”

This documented quote (second sentence) differs from the more common “quote” in three striking ways. First, King spoke of injustice in “health,” not in health care. While it is impossible to know whether there was a meaningful difference between health and health care for King, his unfailing attention to poverty, racism, education, and housing—what we now often call social determinants of health—makes clear his moral concern beyond health care alone. Second, King said that injustice in health is “inhuman,” not inhumane. The distinction here is likely significant as a matter of degree. Inhumane suggests a lack of compassion for human suffering or pain whereas “inhuman” is more extreme, suggesting a denial of humanity so egregiously cruel that it is, or should be, beyond human action. The final difference in King’s actual words compared with the more popular version is perhaps the most important as it reveals King’s belief about why health injustice is inhuman. Injustice in health is “the most inhuman” form of inequality, says King, “because it often results in physical death.” King could not be plainer: human lives end because of this injustice. Death, as one of the most brutal consequences of radicalized injustice, is erased from King’s words by the exclusion of this phrase.

The ubiquity of King’s words today (in whatever form) reflects not only their rhetorical power, but also King’s abiding moral authority. The 21st century legacy of King’s gift of these words is that we have a social responsibility to “raise the conscience of the nation” so as to end this shocking and inhuman injustice.…

To repeat, “we have a social responsibility to ‘raise the conscience of the nation’ so as to end this shocking and inhuman injustice.”

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Rampant health plan payment abuses

Posted by on Tuesday, Apr 3, 2018

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.

CMA survey finds rampant health plan payment abuses

California Medical Association, April 2, 2018

Despite a California law passed in 2000 to address widespread payment abuses by health care service plans, many payers continue to flout the law. A recent survey by the California Medical Association (CMA) confirms that health plans regularly engage in unfair payment practices, with two-thirds of physician practices reporting routine payment abuses in violation of state law.

The Department of Managed Health Care (DMHC) has been slow to address provider complaints and has taken few enforcement actions against health care service plans that unlawfully underpay providers. When DMHC has acted, the penalty amounts have been small in relation to the economic injury to consumers and providers. DMHC also has refused to issue enforcement actions to cover the entire period of underpayment and has not required health care service plans to pay providers even after it has determined payment should have been made. Accordingly, health care service plans make economic decisions to violate the law, knowing that any penalty amount that may be imposed will be outweighed by the extra revenue the health plans will generate by, for example, underpaying medical care. This results in a loss of resources that should be invested on patient care.

Last month, CMA, along with its county medical societies and several specialty societies, surveyed physicians to obtain feedback on the health plans that are routinely engaging in unfair payment patterns, the types of violations and the results of physician efforts to resolve the issues both through internal plan processes as well as through DMHC. In a period of nine days, 741 physician practices representing thousands of physicians responded to the survey.

Key survey results include:

* Two-thirds of physician practice respondents report routine problems with plans engaging in various unfair payment patterns, defined as a practice, policy or procedure that results in repeated delays in the adjudication and correct reimbursement of provider claims, as outlined in 28 C.C.R. §1300.71.

* More than half of practices report that health plans attempt to rescind or modify authorizations after the physician renders the service in good faith.

* Sixty-two percent report that Anthem Blue Cross is the most problematic when it comes to unfair payment practices; Blue Shield of California was second most problematic (52 percent).

* The health plan provider dispute resolution processes are largely ineffective, with 32 percent of practices indicating disputes are resolved only half of the time, and 29 percent indicating disputes are rarely resolved through the plans’ internal processes.

* Though most practices do utilize the health plans’ internal processes to attempt to resolve issues, 63 percent report that plans routinely fail to respond to their appeals within 45 business days of receipt, as required by California law. Anthem Blue Cross is identified as the most problematic (66 percent), with Blue Shield the second most problematic (61 percent).

* When health plans do respond to physician appeals, 74 percent of practices state the health plan responses do not include a clear explanation for the plans’ determination.

These survey results confirm that health plans overwhelmingly continue to engage in unfair payment practices, despite the legislation that passed 18 years ago attempting to stop these abuses. It further demonstrates that, although plans are required to maintain fast, fair and cost-effective provider dispute processes, their processes are largely ineffective.…

CMA Survey Finds Widespread Unfair Payment Practices by Health Plans:…

One of the primary reasons for enacting the Affordable Care Act instead of a Medicare for All program was to protect and perpetuate the role of the private insurers. Yet observing their rampant abusive payment practices, that did not seem like such a wise decision.

The Blues were the epitome of plans that they wanted to support, yet Anthem Blue Cross (for-profit) and Blue Shield of California (nonprofit) were the worst abusers in this survey. Over half of the physicians surveyed reported abuses by both of the Blues in California.

ACA is not writ in stone. We do not have to continue to support this industry. We really can establish our own public health care financing system that would take care of everyone and do it in a fair way.

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Medicare Shared Savings Program has increased federal spending instead of producing savings

Posted by on Monday, Apr 2, 2018

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

Medicare Accountable Care Organizations Have Increased Federal Spending Contrary to Projections That They Would Produce Net Savings

By Josh Seidman, John Feore, Neil Rosacker
Avalere, March 29, 2018

New analysis from Avalere finds that the Medicare Shared Savings Program (MSSP) has performed considerably below the financial estimates from the Congressional Budget Office (CBO) made in 2010 when the MSSP was enacted as part of the Affordable Care Act. This has raised questions about the long-term financial success of Medicare’s largest alternative payment model (APM). The MSSP has grown from 27 ACO participants in 2012 to 561 in 2018. Most MSSP accountable care organizations (ACOs) continue to select the upside-only Track 1, which does not require participants to repay the Centers for Medicare & Medicaid Services (CMS) for spending above their target.

Avalere’s research shows that the actual ACO net savings have fallen short of initial CBO projections by more than $2 billion. In 2010, the CBO projected that the MSSP would produce $1.7 billion in net savings to the federal government from 2013 to 2016. However, the MSSP increased federal spending by $384 million over that same period, a difference of more than $2 billion.

While the MSSP overall was a net cost to CMS in 2016, there is evidence that individual ACO performance may improve as they gain years of experience with the program.

Avalere’s analysis also shows that the downside-risk models in the MSSP (Tracks 2 and 3) have experienced more positive financial results overall, indicating the potential for greater savings to CMS over time as the number of downside-risk ACOs increase. The upside-only model (MSSP Track 1) increased federal spending by $444 million compared to the downside-risk ACOs (MSSP Tracks 2 and 3) that reduced federal spending by $60 million over 5 years.

“While data do suggest that more experienced ACOs and those accepting two-sided risk may help the program to turn the corner in the future, the long-term sustainability of savings in the MSSP is unclear. ACOs continue to be measured against their past performance, which makes it harder for successful ACOs to continue to achieve savings over time,” said John Feore, director at Avalere Health.…


How does the Affordable Care Act define ACOs?

Quote of the Day, October 28, 2010

Re: Shared Savings Program – New Section 1899 of Title XVIII (from CMS)

From the Comment by Don McCanne, M.D.

So how do ACOs achieve higher quality and lower cost?

The ACOs are not rewarded monetarily for meeting the quality standards. Their motivation to comply is to avoid being suspended from the program.

Costs are reduced by the shared savings program. A benchmark is established for each ACO “using the most recent available 3 years of per-beneficiary expenditures for parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO.” If the ACO can provide care for costs below the benchmark, the ACO then shares those savings with HHS. The benchmark is reset at the beginning of each 3 year agreement.

If the costs are above the benchmark, then the fees are still paid as usual, with no adjustments.

Think about this. The incentives continue to promote greater volume. There is no penalty for running the charges up. Is the reward for reducing the volume and intensity of services enough? Since fixed costs for the ACO are relatively unchanged, the reductions in marginal overhead expenses due to reduced volume must be greater than the amount of savings that HHS shares with the ACO in order to come out ahead. Since this is the opposite of “making it up in volume,” it is more likely that net income will be reduced. Further, since the benchmarks are reset every 3 years based on lower utilization, it is very unlikely that that the ACO could continue to ratchet down services to qualify for shared savings.…

The Medicare Shared Savings Program (MSSP) is Medicare’s largest alternative payment model (APM). This report shows that the program increased federal spending instead of producing net savings. Yet CMS is insisting on moving forward with APMs.

It is not as if this result is a surprise. Even an amateur policy wonk like me saw problems with it as it was being set up in 2010 (see my comment above).

The optimism that this might turn around does not seem to be warranted. In 2010, I wrote, “since the benchmarks are reset every 3 years based on lower utilization, it is very unlikely that that the ACO could continue to ratchet down services to qualify for shared savings.”

Now John Feore, director at Avalere Health, states, “ACOs continue to be measured against their past performance, which makes it harder for successful ACOs to continue to achieve savings over time.”

How could any health care organization continue to increase savings year after year under these terms? Once the low hanging fruit is gone and cherry pickers are used to harvest the rest, they expect that moving to downside risk is going to increase the return for the ACOs while further reducing federal spending? What kind of accounting magic is this?

This does provide yet one more lesson on why it has been a mistake to continue to try to chase screwy business models of financing health care when the obvious solution would be government administered pricing through a single payer national health program – an improved Medicare for all. But the greater lesson here is that we must exercise much more diligence in selecting our government stewards. Both the Democrats and the Republicans have taken us down the wrong path.

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Howard Waitzkin and his colleagues explain capitalism’s barriers to health care reform

Posted by on Friday, Mar 30, 2018

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 Under the Knife: Moving Beyond Capitalism for Our Health

By Howard Waitzkin and the Working Group on Health beyond Capitalism
Monthly Review Press, March 2018


Introduction: What We’re Trying to Do Here and Why by Howard Waitzkin

PART ONE: Social Class and Medical Work

1. Disobedience: Doctor Workers, Unite! by Howard Waitzkin

2. Becoming Employees: The Deprofessionalization and Emerging Social Class Position of Health Professionals by Matthew Anderson

3. The Degradation of Medical Labor and the Meaning of Quality in Health Care by Gordon Schiff and Sarah Winch

4. The Political Economy of Health Reform by David Himmelstein and Steffie Woolhandler

PART TWO: The Medical-Industrial Complex in the Age of Financialization

5. The Transformation of the Medical-Industrial Complex: Financialization, the Corporate Sector, and Monopoly Capital by Robb Burlage and Matthew Anderson

6. The Pharmaceutical Industry in the Context of Contemporary Capitalism by Joel Lexchin

PART THREE: Neoliberalism and Health Reform

7. Obamacare: The Neoliberal Model Comes Home to Roost in the United States – If We Let It by Howard Waitzkin and Ida Hellander

8. Austerity and Healthcare by Adam Gaffney and Carles Muntaner

PART FOUR: The Trajectory of Imperialism’s Health Component

9. Imperialism’s Health Component by Howard Waitzkin and Rebeca Jasso-Aguilar

10. U.S. Philanthrocapitalism and the Global Health Agenda: The Rockefeller and Gates Foundations, Past and Present by Anne-Emanuelle Birn and Judith Richter

PART FIVE: The Road Ahead

11. Resisting the Imperial Order and Building an Alternative Future in Medicine and Public Health by Rebeca Jasso-Aguilar and Howard Waitzkin

12. The Failure of Obamacare and a Revision of the Single-Payer Proposal after a Quarter-Century of Struggle by Adam Gaffney, David Himmelstein, and Steffie Woolhandler

13. Overcoming Pathological Normalcy: Mental Health Challenges in the Coming Transformation by Carl Ratner

14. Confronting the Social and Environmental Determinants of Health by Carles Muntaner and Rob Wallace

15. Conclusion: Moving beyond Capitalism for Our Health by Adam Gaffney and Howard Waitzkin

From the Conclusion

As Obamacare is increasingly recognized as insufficient and inadequate, the demand for such fundamental change in capitalist health care, as well as the economic system that shapes both health care and health itself, will continue to grow. We have highlighted several facets of the struggle ahead: organizing among health workers including physicians; building communal, democratic structures and processes within health care organizations; and transforming political parties and social movements so they become forces that can achieve fundamental change in health care and in capitalist society. Such struggles also must target the social and environmental pathologies that capitalist society constructs as normal and impact health in ways even more important than health care.

The forces that resist these changes command wealth and power that emanate from a tiny part of the U.S. population (less than the 1 percent made famous by the Occupy movement) and an even tinier part of the world’s population. Those in this minority will no doubt continue to fight ferociously to preserve the profound advantages they gain from the status quo, of which capitalist health care figures as only one part. Though the power of this small number should not be underestimated, neither should ours. The road ahead is a steep one, but given the fragility of our harsh capitalist system together with the discontent and suffering it breeds, it is one that we can and must surmount.…

Those of us who have been working for such a long time on trying to bring all of us together into a high quality health care system that is equitable and affordable have certainly been frustrated by the barriers that have locked us out of an obviously superior system. “Health Care Under the Knife” by Howard Waitzkin and his colleagues is invaluable because it enlightens us as to just what those barriers are (hint: it has to do with some of the dysfunctions of our capitalist system). Understanding those barriers is an essential prerequisite to organizing our strategy to move forward in achieving health care justice for all.

Highly recommended.

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Shulkin: Privatizing the V.A. will hurt veterans

Posted by on Thursday, Mar 29, 2018

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.

Embattled Veterans Affairs Secretary David Shulkin fired in latest White House shake-up

By David S. Cloud
Los Angeles Times, March 28, 2018

President Trump on Wednesday fired David Shulkin, the embattled head of the Department of Veterans Affairs, the latest high-profile ouster to roil the White House.

Shulkin ran afoul of some conservatives for his go-slow approach to expanding government-paid private care for military veterans outside the VA system. Shifting more veterans to private care is a top priority for the influential network of conservative groups funded by Charles and David Koch.

An effort to expand the existing Veterans Choice program, under which veterans can get government reimbursement for seeing a private doctor in certain circumstances, failed this month when Congress did not include it in the massive government spending bill that Trump signed into law.

The Koch-backed Concerned Veterans of America has pushed for the legislation, but most other major veterans organizations opposed it.

Sen. Bernie Sanders (I-Vt.) said the Senate should examine (Trump VA Secretary nominee Dr. Ronny) Jackson’s views on privatization of VA care. “Every major veterans organization in this country vigorously opposes the privatization of the VA,” Sanders said. “I stand with them. Our job is to strengthen the VA in order to provide high-quality care to our veterans, not dismember it.”…


David J. Shulkin: Privatizing the V.A. Will Hurt Veterans

By David J. Shulkin
The New York Times, March 28, 2018

During my tenure at (the Department of Veterans Affairs), we have accomplished a tremendous amount. We passed critical legislation that improved the appeals process for veterans seeking disability benefits, enacted a new G.I. Bill and helped ensure that we employ the right people to work at the department. We have expanded access to health care by reducing wait times, increasing productivity and working more closely with the private sector. We have put in place more and better mental health services for those suffering from the invisible wounds of war. We are now processing more disability claims and appeals than ever before and, for the first time, allowing veterans to see the status of their appeals by simply logging on to their accounts. Unemployment among veterans is near its lowest level in years, at 3.5 percent, and the percent of veterans who have regained trust in V.A. services has risen to 70 percent, from 46 percent four years ago.

It seems that these successes within the department have intensified the ambitions of people who want to put V.A. health care in the hands of the private sector. I believe differences in philosophy deserve robust debate, and solutions should be determined based on the merits of the arguments. The advocates within the administration for privatizing V.A. health services, however, reject this approach. They saw me as an obstacle to privatization who had to be removed. That is because I am convinced that privatization is a political issue aimed at rewarding select people and companies with profits, even if it undermines care for veterans.

Until the past few months, veteran issues were dealt with in a largely bipartisan way. (My 100-0 Senate confirmation was perhaps the best evidence that the V.A. has been the exception to Washington’s political polarization). Unfortunately, the department has become entangled in a brutal power struggle, with some political appointees choosing to promote their agendas instead of what’s best for veterans. These individuals, who seek to privatize veteran health care as an alternative to government-run V.A. care, unfortunately fail to engage in realistic plans regarding who will care for the more than 9 million veterans who rely on the department for life-sustaining care.

The private sector, already struggling to provide adequate access to care in many communities, is ill-prepared to handle the number and complexity of patients that would come from closing or downsizing V.A. hospitals and clinics, particularly when it involves the mental health needs of people scarred by the horrors of war. Working with community providers to adequately ensure that veterans’ needs are met is a good practice. But privatization leading to the dismantling of the department’s extensive health care system is a terrible idea. The department’s understanding of service-related health problems, its groundbreaking research and its special ability to work with military veterans cannot be easily replicated in the private sector.

I have fought to stand up for this great department and all that it embodies. In recent months, though, the environment in Washington has turned so toxic, chaotic, disrespectful and subversive that it became impossible for me to accomplish the important work that our veterans need and deserve. I can assure you that I will continue to speak out against those who seek to harm the V.A. by putting their personal agendas in front of the well-being of our veterans.…

The Koch brothers’ goal is to reduce the role of government and the need to pay taxes to support it. In this instance they would move care for our veterans from the highly acclaimed V.A. Health system (acclaimed except for a couple of glitches) to the private health care delivery system. David Shulkin explains in his NYT op-ed why this would be a terrible injustice for our veterans with health care needs.

When we eventually establish a single payer Medicare for all program, it is likely that the VA Health system will continue to be supported as part of our health care delivery system because of its expertise in providing specialized services for the unique needs of our veterans. The last thing we should be doing now is allowing anti-government ideologues to wreak havoc on our health care delivery system.

When the private wealth class is failing us, it’s time for us to elect government stewards who care for and will act on behalf of all of us, including our veterans, and not just on behalf of their wealthy friends.

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California’s lesson on consolidation of health care markets, but can we learn?

Posted by on Wednesday, Mar 28, 2018

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.

Consolidation in California’s Health Care Market 2010-2016: Impact on Prices and ACA Premiums

By Richard Scheffler, Ph.D., Director, Nicholas C. Petris Center on Health Care Markets and Consumer Welfare
University of California, Berkeley, School of Public Health, March 26, 2018

Executive Summary

This report details the rapid consolidation of the hospital, physician, and insurance markets in California from 2010 to 2016. According to the U.S. Department of Justice and Federal Trade Commission’s Horizontal Merger Guidelines, 44 counties had highly concentrated hospital markets. For physician markets, 12 counties had highly concentrated primary care markets, 20 counties had highly concentrated orthopedics markets, 22 counties had highly concentrated cardiology markets, 24 counties had highly concentrated hematology/oncology markets, and 26 counties had highly concentrated radiology markets. The commercial insurance market was also highly concentrated with 42 counties considered highly concentrated according to the Guidelines. There was also an increasing trend of hospitals purchasing physician practices. The percent of physicians working for foundations owned by hospitals increased from 24% to 39% between 2010 and 2016.

We found evidence that highly concentrated markets are associated with higher prices for a number of hospital and physician services and Affordable Care Act (ACA) premiums. In markets with Herfindahl-Hirschman Indices (HHIs) above 1,500, average inpatient procedures prices were 79% higher than the prices in markets with HHIs below 1,500. Likewise, average outpatient physician prices ranged from 35% to 63% higher (depending on the physician specialty) in markets with HHIs above 1,500. In Northern California – which is considerably more concentrated than Southern California across all measures of health care market concentration that we analyzed – inpatient prices were 70% higher, outpatient prices were 17- 55% higher (depending on the specialty of physician performing the procedure), and ACA premiums were 35% higher than they were in Southern California. Even after adjusting for input cost differences (i.e. wages) between Northern California and Southern California, procedure prices are still often 20-30% higher in Northern California than Southern California.

In sum, the pace of market consolidation in California has increased significantly. The vast majority of counties in California warrant concern and scrutiny according to the DOJ/FTC Guidelines. Consumers are paying more for health care as a result of market consolidation. It is now time for regulators and legislators to take action.


It is clear that the market for health care and health insurance is now highly concentrated in California. The vast majority of counties in California warrant concern and scrutiny according to the DOJ/FTC Guidelines. This has likely reduced the level of competition, which has resulted in higher prices and ACA premiums in California. The significant variation in prices and ACA premiums across the state suggests regulatory and legislative solutions need to be implemented. Consumers are paying prices for health care that are considerably above what a more competitive market would produce.…


Single-payer health care is a giant leap. Here are 14 steps California might take to get there

By Michelle Faust and Paul Glickman
KPCC, March 23, 2018

Key state lawmakers are set to introduce a series of bills designed to lower costs and expand access to health insurance on California’s individual market, following through on a strategy they embraced earlier this month that calls for an incremental approach to reform rather than an immediate push for government-backed universal health coverage.

(Use the link to see the various legislative proposals.)…

Numerous recent reports have shown that consolidation of health care markets has resulted in higher health care prices. This study of California is particularly useful for observing the impact of consolidation because of the large size of the population and the successful implementation of the Affordable Care Act. In spite of ACA, reduced competition due to market concentration has resulted in higher prices and higher ACA premiums in most regions of the state.

The report concludes, “Consumers are paying prices for health care that are considerably above what a more competitive market would produce.” The variations in prices and ACA premiums across the state “suggests regulatory and legislative solutions need to be implemented.”

In a way this represents the primary flaw in the U.S. approach to health care financing – misplaced dependence on the dynamics of the private marketplace. The regulatory oversight and administered pricing of a well designed single payer national health program – an improved Medicare for all – is precisely what we need to overcome this. But the reaction of much of the policy community – academically and legislatively – is to look for policy solutions that would enhance private market competition. That has greatly contributed to the mess that we are in, and current incremental approaches such as establishing accountable care organizations (ACOs) and alternate payment models (APMs) will only make it worse.

The single payer bill in California has been killed and replaced with a package of 14 bills (at last count), several of which are designed to enhance the markets. California’s lesson? Don’t go there. Other nations have better performing health care systems at a much lower cost, made possible through egalitarian public (government) policies. California should join with the rest of our nation in leading us also to health care justice for all through a national single payer Medicare for all program.

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