Growing trend for bankruptcy for seniors

Posted by on Monday, Aug 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.

Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society

By Deborah Thorne, Pamela Foohey, Robert M. Lawless & Katherine Porter
SSRN, August 5, 2018

Abstract

The social safety net for older Americans has been shrinking for the past couple decades. The risks associated with aging, reduced income, and increased healthcare costs, have been off-loaded onto older individuals. At the same time, older Americans are increasingly likely to file consumer bankruptcy, and their representation among those in bankruptcy has never been higher. Using data from the Consumer Bankruptcy Project, we find more than a two-fold increase in the rate at which older Americans (age 65 and over) file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system. The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect. In our data, older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of healthcare, as they try to deal with reductions to their social safety net. As a result of these increased financial burdens, the median senior bankruptcy filer enters bankruptcy with negative wealth of $17,390 as compared to more than $250,000 for their non-bankrupt peers. For an increasing number of older Americans, their golden years are fraught with economic risks, the result of which is often bankruptcy.

From the Introduction

The social safety net for older Americans has been shrinking for the past couple decades. The risks associated with aging, reduced income, and increased healthcare costs, have been off-loaded onto older individuals. At the same time, older Americans are increasingly likely to file consumer bankruptcy, and their representation among those in bankruptcy has never been higher. Using data from the Consumer Bankruptcy Project, we find more than a two-fold increase in the rate at which older Americans (age 65 and over) file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system. The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect. In our data, older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of healthcare, as they try to deal with reductions to their social safety net. As a result of these increased financial burdens, the median senior bankruptcy filer enters bankruptcy with negative wealth of $17,390 as compared to more than $250,000 for their non-bankrupt peers. For an increasing number of older Americans, their golden years are fraught with economic risks, the result of which is often bankruptcy.

National concern for the well-being of older Americans soon declined, beginning in the early-1980s, especially as the cost of funding their social safety net strained state and federal budgets. This financial tension and emerging ideological shifts promoted an intergenerational war. Conservatives, free market advocates, and media promoted the image of older Americans as “a threat to economic viability,” as thieves of our children’s futures, and as “responsible for the nation’s economic problems.” In just a few decades, norms of privatized citizenship and individual responsibility upstaged the ideal of America’s social welfare system. Financial risks were shunted off onto individuals, regardless of age. Many older Americans suffered greatly because of this movement toward “private responsibility,” with their Social Security, retirement, and healthcare, among other protections, coming under attack.

Since the early-1990s, scholars on the Consumer Bankruptcy Project (CBP) have collected data on the age of bankruptcy filers. These data are used to determine the percent of older Americans within the U.S. population who file bankruptcy, and the percent of older filers within the bankrupt population. Comparing CBP data between 1991 and now shows significant increases in both categories. The changes are so great that the broader trend of an aging U.S. population can explain only a small proportion of what is happening in the bankruptcy courts. Older Americans’ reported reasons for filing strongly suggest that they are experiencing the fallout from our current individualized risk society and the corresponding shrinkage of their social safety net.

From the Results

Within the Bankrupt Population

One in seven bankruptcy filers is of retirement age, 65 years or over. This is nearly a five-fold increase over just two and a half decades. This is a notable demographic shift.

Within the oldest cohort, those age 75 and over, there has been a near ten-fold increase since 1991. In 1991, this group constituted only 0.3 percent of filers, as compared to 3.3 percent now.

The overall trend is clear. Bankruptcy filers in the youngest cohorts (18-24, 25-34, and 35-44) now comprise a much smaller segment of the bankrupt population than they did twenty-five years ago. During that same period, there has been a marked increase in the percent of filers among the older cohorts (55-64, 65-74, and 75 and above), those people who are approaching or are in their retirement years.

Older Americans’ Reasons for Bankruptcy—Evidence of a Risk Shift

Regardless of age, leading data suggest that income problems and medical costs top the list of events that push households into bankruptcy.

Data from the current CBP suggest that financial struggles, namely a decline in income, was a leading reason for older Americans’ bankruptcies—almost seven out of ten respondents (69.1 percent) reported that they “very much” or “somewhat” agreed that this was the reason for their bankruptcy.

Another respondent’s comment describes an additional financial risk that can be especially consequential for retirees—the popular defined-contribution plans, like 401(k)s, that individuals are left to manage on their own.

Just over seven out of ten respondents (71.6 percent) either “very much” or “somewhat” agreed that they filed because of the stress of dealing with debt collectors.

Medical expenses also were a catalyst for bankruptcy for more than six out of ten (62.2 percent) respondents.

Additionally, 40 percent of respondents reported that they “very much” or “somewhat” agree that missing work for medical reasons was a reason for their bankruptcies.

Finally, respondents were asked to list the single most important thing that they or their family members were unable to afford in the year before their bankruptcies. Over half of older filers (52 percent) who responded indicated that the single most important thing they had to go forego was related to medical care—surgeries, doctor visits, prescriptions, dental care, and health/supplemental insurance. These responses continue to suggest that their health care coverage is inadequate.

From the Discussion

The most effective solution to older Americans’ increasing financial plight is a social safety net that obviates the need to take out debts that result in financial crises. In prior decades, Americans collectively decided that we have a responsibility to our older citizens to absorb the financial risks they face. But it appears that we have since abandoned that commitment. We can do better. Historically, we have.

At the core, the lessons of prior decades show that aid to older citizens must originate with our government. Community and charitable organizations, while having the best of intentions, are inadequate. Comprehensive policies led by our government will ensure financial stability for all elderly citizens. We appear to be in the midst of an old-fashioned game of tug-of-war. On the one hand, many Americans believe that providing a strong social safety net for our older citizens, a net that reduces their individual financial risks, is part of our collective responsibility. On the other hand, there are those who insist on policies that continue to unravel that safety net, leaving older Americans to fend for themselves.

Conclusion

How we manage the time called retirement, the span between when we stop working and when we die, is a social issue affecting the lives of tens of millions. America has come almost full circle in its attitudes toward its older citizens—from sending them to the poorhouse when they became a financial burden, to ameliorating their economic risks with pensions, a responsive social security program, and healthcare, and now to transferring financial risks to them that can drive them to financial collapse.

Absent significant policy changes that reassume the risks of aging and effectively insure the financial stability of older Americans, our data suggest that the trend of an aging bankruptcy population will continue. In 2015, almost 15 percent of the U.S. population was 65 and over. By 2050, almost a quarter of Americans, 88 million, will be over 65 (U.S. Census 2016). If current bankruptcy trends among seniors continue, our bankruptcy courts will be flooded with financially broken retirees. For older Americans, bankruptcy is too little too late. By the time they file, their wealth has vanished, and they simply do not have the enough years to get back on their feet. Our data expose the severity of the continuing financial decline of older Americans. Now that we can see the magnitude of the coming storm of broke elderly, it is time to renew our commitment to supporting our citizens as they age.

https://papers.ssrn.com…

The social safety net for older Americans built up during the last century is now showing alarming trends toward shifting greater financial risk to this population. In the past two and a half decades there has been a five-fold increase in the rate of bankruptcy filings for individuals over 65.

There are multiple factors including the loss of income, the deterioration in retirement plans, and the inability to accumulate wealth before retirement, but the inadequacy of health care coverage also has been a significant factor. The authors state, “respondents were asked to list the single most important thing that they or their family members were unable to afford in the year before their bankruptcies. Over half of older filers (52 percent) who responded indicated that the single most important thing they had to go forego was related to medical care—surgeries, doctor visits, prescriptions, dental care, and health/supplemental insurance.”

The authors conclude, “Absent significant policy changes that reassume the risks of aging and effectively insure the financial stability of older Americans, our data suggest that the trend of an aging bankruptcy population will continue… Now that we can see the magnitude of the coming storm of broke elderly, it is time to renew our commitment to supporting our citizens as they age,” and “At the core, the lessons of prior decades show that aid to older citizens must originate with our government.”

As an aside, one of the co-authors of this report, UC Irvine Professor Katherine Porter, is taking her academic credentials into the political arena by running for Congress in California’s 45th District, hoping to join Senator Elizabeth Warren and others in efforts to counter the attack on our social safety net.

Katherine Porter, Professor of Law, University of California, Irvine School of Law:
https://www.law.uci.edu…

Katie Porter for Congress:

https://katieporter.com

PNHP does not endorse candidates for pubic office. This statement on Katie Porter’s candidacy is appropriately included in the Quote of the Day since it shows her bias on the topic of today’s report (for full disclosure, a bias which Quote of the Day editor Don McCanne happens to share).

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Libertarian rationale for single payer

Posted by on Friday, Aug 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.

Single payer sympathy?

By John Cochrane
The Grumpy Economist, July 29, 2018

A July 30 2018 Op-Ed in the Wall Street Journal, titled “The tax and spend health care solution”:

Why is paying for health care such a mess in America? Why is it so hard to fix? Cross-subsidies are the original sin. The government wants to subsidize health care for poor people, chronically sick people, and people who have money but choose to spend less of it on health care than officials find sufficient. These are worthy goals, easily achieved in a completely free-market system by raising taxes and then subsidizing health care or insurance, at market prices, for people the government wishes to help.

But lawmakers do not want to be seen taxing and spending, so they hide transfers in cross-subsidies. They require emergency rooms to treat everyone who comes along, and then hospitals must overcharge everybody else. Medicare and Medicaid do not pay the full amount their services cost. Hospitals then overcharge private insurance and the few remaining cash customers.

Overcharging paying customers and providing free care in an emergency room is economically equivalent to a tax on emergency-room services that funds subsidies for others. But the effective tax and expenditure of a forced cross-subsidy do not show up on the federal budget.

Over the long term, cross-subsidies are far more inefficient than forthright taxing and spending. If the hospital is going to overcharge private insurance and paying customers to cross-subsidize the poor, the uninsured, Medicare, Medicaid and, increasingly, victims of limited exchange policies, then the hospital must be protected from competition. If competitors can come in and offer services to the paying customers, the scheme unravels.

No competition means no pressure to innovate for better service and lower costs.

As usual, I (John Cochrane) have to wait 30 days to post the whole thing. It synthesizes some of my earlier blog posts on how cross subsidies are worse than straightforward, on budget, taxing and spending.

Let me here admit to one of the implications of this view. Single payer might not be so bad — it might not be as bad as the current Medicare, Medicaid, Obamacare, VA, etc. mess.

But before you quote that, let’s be careful to define what we mean by “single payer,” which has become a mantra and litmus test on the left. There is a huge difference between “there is a single payer that everyone can use,” and “there is a single payer that everyone must use.”

Most on the left promise the former and mean the latter. Not only is there some sort of single easy to access health care and insurance scheme for poor or unfortunate people, but you and I are forbidden to escape it, to have private doctors, private hospitals, or private insurance outside the scheme. Doctors are forbidden to have private cash paying customers. That truly is a nightmare, and it will mean the allocation of good medical care by connections and bribes.

But a single provider or payer that anyone in trouble can use, supported by taxes, not cross-subsidized by restrictions on your and my health care — not underpaying in a private system and forcing that system to overcharge others — while allowing a vibrant completely competitive free market in private health care on top of that, is not such a terrible idea, and follows from my Op-Ed. A single bureaucracy that hands out vouchers, pays full market costs, or pays partially but allows doctors to charge whatever they want on top of that would work. A VA like system of public hospitals and clinics would work too.  Like public schools, or public restrooms, you can use them, but you don’t have to; you’re free to spend your money on better options if you like, and people are free to start businesses to serve you. And no cross-subisides.

Whether we restrict provision with income and other tests, and thus introduce another marginal disincentive to work, or give everyone access and count on most working people to choose a better product, I leave for another day. It would always be an inefficient bureaucratic problem, but it might not be the nightmare of anti-competitive inefficiency of the current system.

The free market describes well how your and my health care and insurance should work. It does not offer nearly so clear advice on how the government should manage the finances and bureaucracy that provide subsidies (if we want to provide them). There are always tradeoffs, generosity vs. moral hazard and disincentives. Economics is crucial to understanding those tradeoffs, of course, but the answer will always be a muddy middle of tradeoffs. I have offered that taxing and spending — on budget and appropriated — to provide those subsidies may be better than the current mandated cross subsidies. We already have a “single payer” — the federal government. The argument that a single point of entry, a single payer, or a single provider, may be more rational and cost effective than the current system for the purpose of providing subsidized care is not as crazy as it sounds — if it allows a free market for the majority of Americans who own cars, houses, TVs and cell phones and can pay for better services in that free market.

“Single payer” also usually means “single price-setter.” It means a gargantuan Federal bureaucracy that will somehow produce health care cost savings by simply decreeing that doctors and hospitals be paid less. Good luck with that.

Both left and right forget that “negotiation” means only you pay less and somebody else pays more. We can’t all pay less by negotiation. Price controls mean rationing. Period. This is the heart of current “single payer” proposals, and they are doomed.

My “single payer” is just that, a “payer,” operating in a completely free market.

Still, when a politician endorses “single payer,” ask “does that mean we all can use a single payer? Or does that mean we all must use a single payer?”

John H. Cochrane is a Senior Fellow of the Hoover Institution at Stanford, an adjunct scholar of the Cato Institute, and formerly a professor at the University of Chicago Booth School of Business.

https://johnhcochrane.blogspot.com…

***

Comment:

By Don McCanne, M.D.

The single payer policy community certainly would dispute that there are two types of single payer – one that allows individuals to opt out and one that mandates participation. In a well designed single payer system there is only one payer for everyone. That does not mean that there are not other systems that allow individuals to opt out of the public program, but those multi-payer systems should not be labeled single payer.

Nevertheless, the comments of conservative economist John Cochrane are interesting. He recognizes that there are enough sound economic policies in a single payer system that it “might not be as bad as the current Medicare, Medicaid, Obamacare, VA, etc. mess.” On that we can agree. However our ideological differences leave us far apart. Cochrane’s insistence that the market must still play a prominent role calls for design features that prevent realization of the single payer goals of true universality, equity, affordability, and universal access.

Many of his comments warrant a response which we won’t bother with now, except one that stands out and that is his statement that a single payer system that does not allow other options is one in which, “you and I are forbidden to escape it, to have private doctors, private hospitals, or private insurance outside the scheme.” Of course, the single payer system supported by Physicians for a National Health Program does allow free choice of private doctors and hospitals. Following is the comment that I submitted in response to his blog:

Under a single payer that everyone must use you are forbidden to have private doctors and private hospitals? But look at the traditional Medicare program. Patients have free choice of their physicians and hospitals. They also can elect to enroll in the private Medicare Advantage (MA) plans, but then they lose their their health care choices by being restricted to provider networks. Not only that, but “MA insurer revenues are 30 percent higher than their healthcare spending,” demonstrating the surplus that the private insurers are receiving from the taxpayers (NBER No. 23090) – a cross subsidy of sorts, but benefiting the insurer rather than the patients.

Of course, single payer advocates also support tax and spend, but we want our tax funds to be used wisely. Providing excess public funding to private insurers while they take away health care choices from patients is not a wise use of our tax dollars. It would be far better to improve the traditional Medicare program and then cover everyone with it, and then let the health care delivery system compete on the basis of service, access, and quality.

***

A Libertarian’s Case Against Free Markets in Health Care

By Roman Zamishka
The Health Care Blog, August 2, 2018

This presumably arbitrary nature of prices should be the first thing about the US healthcare market that catches the attention of any student of economics. Prices for the same procedure vary greatly between hospitals on opposite sides of the street and even then appear to have no basis in reality. Further investigation reveals many other features of the healthcare market that economics teaches us will increase transaction costs and the misallocation of resources. The prices we discussed are generally not paid by the patient, but by a third party insurer. Often the patient isn’t even able to select the insurer but is assigned one by his or her employer. What the patient thinks of the insurer’s ability as a steward of his or her premiums is irrelevant. Further, contracts between providers or pharmacies and the insurer completely hide the true price from the patient’s view. In addition, anti-competitive certificate of need laws limit competition between providers and expensive regulations compel providers to merge to compete in a nuclear arms race with the insurers, although the real victim is the patient’s wallet over which the providers and insurers fight their proxy wars. The best way to explain the US healthcare system is if you took every economic best practice and then did the opposite.

Academics and physicians from places like Boston and San Francisco often argue that this situation is proof that free market healthcare has failed in America and that the only solution is to implement a nationalized single-payer model.

(Zamishka here provides a discussion of Kenneth Arrow’s “Uncertainty and the Welfare Economics of Medical Care,“ and then discusses how markets do not work in the various institutions and disciplines of medicine.)

The broader problem that I see is that much of the health insurance market is already nationalized through Medicaid, Medicare and the VA. The reality is that it is politically impossible to reverse from this position. If we then add to this list emergency medicine, perinatal healthcare, child healthcare, genetic diseases, mental health and chronic disease management, all of which I earnestly believe have a legitimate case to be nationalized, then what are we left with for free market shopping? Surgeries and generic drugs? At that point, you might as well nationalize the rest just to simplify things and remove any regulatory asymmetries. I hate to say it, but it’s not clear to me as a conservative that single payer (or at least universal coverage + optional private supplemental insurance) isn’t the right solution.

Roman Zamishka is a healthcare policy student at NYU focused on comparative analysis of healthcare systems.

http://thehealthcareblog.com…

These articles express the views of two libertarians who recognize the benefits of the single payer model of health care financing, though both would maintain a role for private insurance.

The Cochrane article is reproduced in its entirety. The Zamishka article is quite long and so only brief excerpts are provided. However it might be worth wile to save the link for reading the full article this weekend. He presents a case that we should consider using when discussing single payer with libertarians or conservatives who truly do care and would like to see our health care financing system function better for all of us.

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QOTD Addendum: RAND study of the New York Health Act

Posted by on Thursday, Aug 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.

Distributed as Quote of the Day on August 1, 2018

This morning the RAND study on the single payer New York Health Act was sent out primarily to demonstrate another study showing that the single payer model is effective for ensuring that everyone is covered while containing health care costs. However, a critique of the RAND analysis was not distributed, even though there are some significant deficiencies in the study.

One of the most important policies that characterizes a well designed single payer system is the recovery of a tremendous amount of administrative waste. Many of the studies minimize the amount of waste that exists and that can be recovered, in spite of the abundance of evidence published in the academic policy literature. This is crucial because that concept is often omitted from reports in the lay literature, and so the public is not well informed on this exceedingly important feature of the single payer model. In your single payer advocacy, always be sure that the magnitude of the recoverable administrative waste is not omitted from the discussions.

David Himmelstein and Steffie Woolhandler, distinguished professors of health policy at the City University of New York at Hunter College and co-founders of PNHP, have provided the following brief critique of the RAND study. In it they show that the benefit of single payer is far greater that that reported by the RAND authors, especially regarding the administrative savings.

Comments on the Rand Estimates of the Costs of the New York Health Act

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

1) The projected net changes in utilization given supply constraints are in the ballpark, although the portrayal of the supply constraints as implying waits is unduly negative. Supply constraints limited utilization increases with the implementation of Medicare and the ACA, yet there was no perceptible increase in waits for care. Rather, there was probably a reduction in unnecessary care for the previously well insured.

2) The estimate of reductions in drug prices is too low given the experience in other nations. In particular, the assumption that prices of drugs delivered in physicians’ offices would be reduced by a smaller percentage than other drug prices seems unjustified.

3) The estimates of administrative savings are absurdly low.

a) The assumption that health plan administrative overhead would only be reduced to 6% is completely unjustified. FFS Medicare’s administrative overhead is under 3%, while Canada’s single payer programs averaged overhead of 1.6% in 2017 – a total of $2.7 billion (Canadian). (Canada’s overhead costs are lower, at least in part, because it pays hospitals global budgets rather than FFS, as Medicare does. It seems likely that the NYH act would also globally budget hospitals, and hence achieve savings comparable to those in Canada). As the Rand authors note, the overhead rates for Medicare as a whole (7%), and for Medicaid (7%) are inflated because they include the extremely high overhead of managed care plans in those programs.

Rand claims that health plan administrative costs would be driven up by the need to verify residency, deal with out-of-state services, and track Medicaid and Medicare eligibility in order to draw down federal matching funds. The Canadian provincial programs perform the first two of these functions. Tracking Medicaid eligibility should take trivial resources – essentially just verifying income, which can largely be gleaned from income tax and Social Security records. The Social Security Administration should be able to provide information on Medicare eligibility at virtually no cost to the state.

In sum, there is no justification for the claim that it would cost $16.6 billion to administer coverage for 20 million New Yorkers – $830 per person, more than 8-fold higher than Canada’s cost. A more reasonable estimate would be 2%, or at most 3%.

b) It is hard to decipher exactly how the Rand authors estimated provider administrative savings. In Table 4.1 they indicate that at present, administrative costs account for 13% of physician and clinical service expenditures, 12% of hospital expenditures in New York and 10% of other service expenditures. They then estimate that provider administrative spending could be reduced by 13%, i.e. equivalent to a savings of less than 2% of total revenues.

While they list several references to support this estimate (and provide some further description in footnote 16 on page 33), it is unclear how they arrived at these figures, which are at odds with the actual findings of several of the references they cite. For instance, the Blanchfield paper they cite estimated that “excess” administrative costs in physician practices accounted for 11.9% of total net revenues, or about $50,250 per physician. The Himmelstein, Campbell and Woolhandler paper that they cite, found that administrative costs consumed about 26.9% of physicians’ revenues and  24.3% of hospital revenues, while these costs were 16.1% and 12.9% respectively in Canada. (Himmelstein et al’s more recent analysis of hospital administrative costs in 8 nations, which appeared in Health Affairs in 2014 reached virtually identical conclusions regarding hospital administrative costs and savings.) Both the Jiwani study and the Pozen and Cutler papers reached virtually identical conclusions as the Himmelstein, Campbell, Woolhandler study regarding administrative savings under single payer. The Mora et al study they cite concluded that physicians’ administrative costs totaled about $83,000 per physician in the US vs. about $27,000 per doctor in Canada, far larger savings than Rand assumes.

They reference Rand hospital data, which apparently relies on the same data source as the Himmelstein analyses of hospital administrative costs (which have undergone extensive peer review), but provide no information on how they derived administrative cost estimates from these data, and as far as we can tell their methods have neither been published nor peer reviewed. They cite their analysis of hospital administrative costs in Maryland’s all-payer system, which is irrelevant to an analysis of single payer, then use this paper as a “low estimate” in order to justify excluding a high estimate from a study that is clearly relevant.

In sum, according to the documentation in the report, it appears that the Rand authors  have made an error in interpreting previous studies’ figures for administrative costs and savings for providers under single payer. These studies generally estimate that administrative SAVINGS under single payer would amount to 12%-13% of providers’ TOTAL REVENUES. The Rand authors appear to have mistakenly concluded that these figures are estimates of the total costs of administration (rather than potential savings), and have then assumed that 12% of administrative costs (rather than 12% of total revenues) would be saved. As a result they estimate that providers’ would achieve administrative savings of about 1% of total revenues, rather than about 12% – a very large difference.

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RAND analysis of the New York Health Act – a single payer proposal

Posted by on Wednesday, Aug 1, 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.

RAND Corporation Study Confirms: New York Health Act “Could Expand Coverage While Reducing Total Health Spending”

Richard N. Gottfried, New York Assembly District 75
Chair, Assembly Health Committee

Gustavo Rivera, New York Senate District 33
Ranking Member, Senate Health Committee

August 1, 2018

State Senator Gustavo Rivera and Assembly Health Committee Chair Richard Gottfried, sponsors of the New York Health Act in the New York State Legislature, welcomed the findings of a study of the bill by the highly-regarded, independent, non-profit RAND Corporation. The study confirms that New York Health would reduce total health care costs, while increasing spending on actual care rather than administration and insurance company profit; provide full health coverage to every New Yorker; save substantial money for almost all New Yorkers; and generate a net increase in employment due to increases in disposable income.

In December 2017, the New York State Health Foundation commissioned the RAND Corporation to assess the savings, costs, and feasibility of the New York Health Act. Using conservative estimates, the RAND study establishes that New Yorkers would use more health care services under the new single-payer plan than under the current system, even as total health care spending would be slightly lower in 2022 growing to a savings of $15 billion annually by 2031 due to administrative efficiencies.

The study highlights that the majority of New Yorkers would pay less under the New York Health Plan – New Yorkers in the bottom 90% of household incomes would save an average of $2,800 per person annually – thanks to an equitable distribution of taxation based on the ability to pay. In addition, premiums, deductibles, copays, out-of-pocket payments, and out-of-network charges would be eliminated.

“This is an important validation of the New York Health Act by one of the most prestigious analytical firms in the country,” said Assembly Health Committee Chair Gottfried.  “RAND shows we can make sure every New Yorker gets the care they need and does not suffer financially to get it; save billions of dollars a year by cutting administrative costs, insurance company profit, and outrageous drug prices; and pay for it all more fairly.  Even though RAND thinks the net savings back in the pockets of New Yorkers will be less than I think we’d actually get, this is still a terrific deal for New York.  The study also shows it’s feasible to include long term care – home health care and nursing homes – in the bill.

“The RAND study makes it clear that the New York Health Act is not only feasible, but the most fiscally responsible option for our State”, said State Senator Gustavo Rivera, Ranking Member of State Senate Health Committee. “While we estimate that the benefits to New York State will be greater than those outlined in the study, we all agree that the implementation of the New York Health Act translates into more savings and jobs, while expanding critical health care coverage and access for all New Yorkers regardless of their wealth. I will continue to work with Assembly Member Gottfried and the many advocate organizations that support the bill as we stand up for what is right and work to implement an efficient and universal healthcare system in New York State.”

http://nyassembly.gov…

***

Estimating the Effects of a Single-Payer Proposal in New York State

By Jodi L. Liu, Chapin White, Sarah A. Nowak, Asa Wilks, Jamie Ryan, Christine Eibner
RAND, Research Brief, August 1, 2018

Key Findings

1. The New York Health Act could expand insurance coverage in New York without increasing overall health spending, if administrative costs are reduced and growth in provider payment rates is restrained.

2. Health care would be financed by taxes rather than by premiums and patient out-of-pocket payments. Substantial new taxes would be required.

3. Depending on how progressive new tax rates are, health care payments would decrease among most residents and would increase among the highest-income residents.

RAND Research Brief (6 pages):
https://www.rand.org…

RAND Full Research Report (125 pages):
https://www.rand.org…

RAND News Release:

https://www.rand.org…

This RAND study provides us with yet one more credible analysis that shows that single payer is a valid concept demonstrating that we can expand coverage to include everyone while controlling health care spending. This report should be particularly useful for health care reform advocates since it not only discusses single payer issues in general, but it also discusses the single payer concept as applied to one state, in this case New York.

Temporary political hurdles for New York include a Democrat in the state Senate who has shifted control to the Republicans by caucusing with them, and a CMS administrator in the Trump administration who has indicated that she will not cooperate with the waiver processes that would enable implementation of a single payer system at the state level.

Politics can change. It will be interesting to watch how New York does. But we must not let up on our efforts to enact a national single payer improved Medicare for all since our goal must remain one of achieving health care justice for all. If New York can get there first, then great for them. But let’s try to get the job done nationally as soon as possible so the states won’t have to act individually.

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Another payment model failure: bundling medical conditions

Posted by on Tuesday, Jul 31, 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.

Evaluation of Medicare’s Bundled Payments Initiative for Medical Conditions

By Karen E. Joynt Maddox, M.D., M.P.H., E. John Orav, Ph.D., Jie Zheng, Ph.D., and Arnold M. By Epstein, M.D.
The New England Journal of Medicine, July 19, 2018

Abstract:

Background

The Center for Medicare and Medicaid Innovation (CMMI) launched the Bundled Payments for Care Improvement (BPCI) initiative in 2013. A subsequent study showed that the initiative was associated with reductions in Medicare payments for total joint replacement, but little is known about the effect of BPCI on medical conditions.

Methods

We used Medicare claims from 2013 through 2015 to identify admissions for the five most commonly selected medical conditions in BPCI: congestive heart failure (CHF), pneumonia, chronic obstructive pulmonary disease (COPD), sepsis, and acute myocardial infarction (AMI). We used difference-in-differences analyses to assess changes in standardized Medicare payments per episode of care (defined as the hospitalization plus 90 days after discharge) for these conditions at BPCI hospitals and matched control hospitals.

Results

A total of 125 hospitals participated in BPCI for CHF, 105 hospitals for pneumonia, 101 hospitals for COPD, 88 hospitals for sepsis, and 73 hospitals for AMI. At baseline, the average Medicare payment per episode of care across the five conditions at BPCI hospitals was $24,280, which decreased to $23,993 during the intervention period (difference, −$286; P=0.41). Control hospitals had an average payment for all episodes of $23,901, which decreased to $23,503 during the intervention period (difference, −$398; P=0.08; difference in differences, $112; P=0.79). Changes from baseline to the intervention period in clinical complexity, length of stay, emergency department use or readmission within 30 or 90 days after hospital discharge, or death within 30 or 90 days after admission did not differ significantly between the intervention and control hospitals.

Conclusions

Hospital participation in five common medical bundles under BPCI was not associated with significant changes in Medicare payments, clinical complexity, length of stay, emergency department use, hospital readmission, or mortality. (Funded by the Commonwealth Fund.)

From the Discussion

In summary, hospital participation in five common medical bundles under BPCI, as compared with nonparticipation, was not associated with changes from baseline in total Medicare payments per episode, case complexity, length of stay, emergency department use, hospital readmission, or mortality. Bundling of services to encourage more efficient care has great face validity and enjoys bipartisan support. For such bundling to work for medical conditions, however, more time, new care strategies and partnerships, or additional incentives may be required.

https://www.nejm.org…

In discussions of the disappointing results of experiments with alternative payment models, especially accountable care organizations, frequently advocates of these models recommend continuing to tweak them and study them further, but, at the same time, they also express enthusiasm for bundled payments as a promising cost saving and quality improvement tool.

Some surgical interventions, such as joint replacement, bundle into a neat package, and initial results suggest that these bundles can save money (although it remains unclear as to how much cost shifting takes place in the background of an institution offering a great variety of services of varying complexity – how do you allocate the multitude of other operational costs of the institution?).

For bundling to have a significant impact on costs, it would be important to include common major medical disorders since they account for a considerable portion of hospital admissions. This study of five five such disorders showed that bundling “was not associated with changes from baseline in total Medicare payments per episode, case complexity, length of stay, emergency department use, hospital readmission, or mortality.”

As with other reports of failures in innovative payment models the authors suggest “more time, new care strategies and partnerships, or additional incentives” i.e., more tweaking, and study the responses.

All of this is simply resulting in further delay in implementing a model that would actually accomplish the goals of efficiency and cost containment with the additional benefits of true universality, equity, and accessibility – a well designed, single payer, improved Medicare for all. Just think of the difference it would have made if we did this a quarter of a century ago when we began our advocacy. How much longer do we have to diddle around before we finally make our move?

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The Mercatus analysis of Bernie Sanders’ single payer bill

Posted by on Monday, Jul 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.

The Costs of a National Single-Payer Healthcare System

By Charles Blahous
Mercatus Center, July 30, 2018

Abstract

The leading current bill to establish single-payer health insurance, the Medicare for All Act (M4A – Senator Bernie Sanders), would, under conservative estimates, increase federal budget commitments by approximately $32.6 trillion during its first 10 years of full implementation (2022–2031), assuming enactment in 2018. This projected increase in federal healthcare commitments would equal approximately 10.7 percent of GDP in 2022, rising to nearly 12.7 percent of GDP in 2031 and further thereafter. Doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan. It is likely that the actual cost of M4A would be substantially greater than these estimates, which assume significant administrative and drug cost savings under the plan, and also assume that healthcare providers operating under M4A will be reimbursed at rates more than 40 percent lower than those currently paid by private health insurance.

Increased Demand and Utilization

M4A would increase healthcare demand and utilization in at least three important ways. First, the plan would provide health insurance coverage to all Americans who are currently uninsured, greatly increasing their utilization of healthcare services. Coverage of the currently uninsured is estimated to increase their health service costs by roughly 89 percent.

Second, the plan would expand the range of services covered by existing insurance, explicitly covering dental, vision, and hearing care for all participants. This, too, would increase utilization of such services in addition to shifting their financing from private to public spending, especially for those now reliant on traditional Medicare.

Finally, the plan’s requirement that “no cost-sharing, including deductibles, coinsurance, copayments, or similar charges, be imposed on an individual” would also significantly increase healthcare utilization. Providing this first-dollar coverage is estimated to induce 11 percent additional demand for those currently covered by private insurance and 16 percent for those now in traditional Medicare without supplemental coverage.

Provider Payment Reductions

To offset the substantial cost increases created by stimulating additional consumer demand for and utilization of healthcare, the M4A bill would constrain expenditures by subjecting healthcare providers—including hospitals, physicians, and others—to Medicare payment rates. Under current law, Medicare reimburses healthcare providers at much lower rates than private health insurance does. In 2014, Medicare hospital payment rates were 62 percent of private insurance payment rates and are currently projected to decline to below 60 percent by the time M4A would be implemented, and to decline further afterward. Medicare physician payment rates were 75 percent of private insurance rates in 2016 and, per the terms of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), are projected to decline sharply in relative terms in future years, also falling below 60 percent within the first full decade of M4A.

The adoption of Medicare payment rates would represent a substantial reduction in provider reimbursements for care provided to everyone now covered by private insurance (though it would also be a temporary increase in physician payments for those now covered by Medicaid, which currently pays physicians at lower rates than does Medicare).

Drug Costs

This analysis credits the M4A proposal with approximately $846 billion in additional savings over the 2022–2031 period from negotiating lower prices for prescription drugs.

Administrative Savings

This analysis assumes substantial administrative cost savings generated by replacing private insurance with national single-payer insurance, specifically a reduction of seven percentage points (from an estimated 13 percent to 6 percent) in the administrative cost of covering those now holding private insurance.

Current administrative cost rates for Medicare as a whole are cited as being roughly 4 percent, though closer to 6 percent for Medicare Advantage. It is unlikely that the population now privately insured could be covered by M4A with administrative costs as low as 4 percent.

Long-Term Services and Supports

The M4A bill contains a “maintenance of effort” provision requiring states to continue their LTSS expenditures under Medicaid at current-law levels, automatically indexing the growth of these commitments going forward.

Effects on National Health Expenditures and the Federal Budget

Table 2 summarizes the financial effects of the M4A bill over its first 10 years of full implementation, which would be 2022 through 2031 if enacted in 2018. One striking finding evident in the table is that, even under the assumption that provider payments for treating patients now covered by private insurance are reduced by over 40 percent, aggregate health expenditures remain virtually unchanged: national personal healthcare costs decrease by less than 2 percent, while total health expenditures decrease by only 4 percent, even after assuming substantial administrative cost savings. The additional healthcare demand that arises from eliminating copayments, providing additional categories of benefits, and covering the currently uninsured nearly offsets potential savings associated with cutting provider payments and achieving lower drug costs. Thus, the essential expenditure change wrought by movement to a single-payer system would be to replace private spending on healthcare with government spending financed by taxpayers. At the same time, more generous healthcare insurance would be provided to everyone at the expense of healthcare providers, who would face reimbursements substantially below their service costs.

While these estimates show little net change in NHE, the same cannot be said of the projected effects on the federal budget. Table 2 includes an estimate for the net increase in federal health budget commitments of $32.6 trillion from 2022 through 2031, which, by itself, is more than all federal individual and corporate income taxes projected to be collected during that time period.

It should be noted that M4A’s elimination of employer-sponsored insurance, including the federal tax preferences now accorded to it, should increase worker wages net of employer- provided health benefits. These estimates incorporate the increased federal revenues CBO projects to arise from subjecting these higher expected wages to federal taxation. Thus, at the same time that M4A would dramatically increase federal spending, it would increase taxable worker wages net of employer-provided benefits, while also relieving individuals, families, and employers of the substantial health expenditures they would experience under current law. It would also relieve states of such Medicaid expenditure obligations as are transferred to the federal government. These offsetting effects should be considered when weighing the implications of requiring federal taxpayers to finance the enormous federal expenditure increases under M4A. These estimates should be understood as projecting the added federal cost commitments under M4A, as distinct from its net effect on the federal deficit. To the extent that the cost of M4A is financed by new payroll taxes, premium collections, or other revenue increases, the net effect on the federal budget deficit would be substantially less.

https://www.mercatus.org…

This and other analyses of Senator Bernie Sanders’ Medicare for All Act should not be considered definitive since the bill is not complete and there still is considerable disagreement on the specifics of the bill. The bill will certainly not become law in its present form.

That said, this analysis is not that much different from previous analyses from the Urban Institute and from Emory’s Kenneth Thorpe, both of which contain disputed assumptions, as does this analysis. Considering the similarities, it is interesting that this was done by the Mercatus Center’s Charles Blahous. The mission of Mercatus is “to generate knowledge and understanding of the institutions that affect the freedom to prosper.” Charles Koch is a member of its board.

The media is covering this analysis with headlines that Medicare for All would cost a “stunning $32.6 trillion,” “ridiculously expensive,” “over $32 trillion with a T,” “massive tax increases,” etc. The Mercatus release and the paper’s abstract also emphasize the resulting federal budget commitments. The $32.6 trillion federal spending is for the entire decade of 2022-2031.

Much more important is the total national health expenditures (NHE). Buried in the report, but left out of the media coverage, is this statement: “aggregate health expenditures remain virtually unchanged: national personal healthcare costs decrease by less than 2 percent, while total health expenditures decrease by only 4 percent.” Also, “the essential expenditure change wrought by movement to a single-payer system would be to replace private spending on healthcare with government spending financed by taxpayers. At the same time, more generous healthcare insurance would be provided to everyone.”

Thus they are not claiming that total national health expenditures will increase when compared to current projections, but only that much of our current private spending will shift to the government-administered Medicare for All with the benefit that everyone will be covered with a more generous program. That is a tremendous plus.

There are several problems with this study, but here I’ll mention just a couple.

Blahous predicts an 89 percent increase in costs for the previously uninsured. But he leaves out the fact that other transitions to single payer, such as that in Canada, resulted in a shift of care to those with greater needs. Excess care that was of little value that was provided to the wealthier “worried well” declined, but without any decrease in truly beneficial health care services and thus without adverse outcomes. Attention must still be given to ensuring adequate capacity in the system while avoiding wasteful excess capacity, but we can be assured that there will not be an abrupt increase in excessive queues for essential health care services. Or to Blahous’ point, because of this offset, increased access for the uninsured and underinsured will not result in a dramatic increase in health care spending.

Blahous states that there will be a 40 percent reduction in physician and hospital payment rates compared to private insurance. (He does provide an alternate analysis in which this reduction does not take place.) Although rates will be negotiated and publicly administered (ideally with global budgeting of hospitals), and there should be some increased efficiency in allocation of services (see prior paragraph), we can look to Canada to see what would likely happen. In actuality, there was little net change in income due to the implementation of the provincial single payer systems. We can expect the same here (though eight figure physician incomes will likely not be tolerated).

For an analysis of single payer, Blahous really misses the boat on recovery of administrative waste. He credits a savings of 7 percent of only the administrative cost of covering those now holding private insurance, but ignores all of the other profound administrative excesses that characterize our fragmented, dysfunctional health care financing system. For the first year of full implementation of Medicare for All (2022), he calculates a mere $78 billion in administrative savings, far less than the hundreds of billions that likely would be saved if the ultimate legislation were designed properly.

The link above is to the full Blahous analysis. You may want to save it to be able to show Medicare for All opponents what he actually concluded. Blahous, a conservative/libertarian economist, tells us that Medicare for All will not increase our spending and yet will include everyone and provide them with a much more generous program. Both Republicans and Democrats need to hear this message.

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Reducing personal medical debt

Posted by on Friday, Jul 27, 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.

Unlike Medical Spending, Medical Bills In Collections Decrease With Patients’ Age

By Michael Batty, Christa Gibbs, and Benedic Ippolito
Health Affairs, July 25, 2018 (published ahead of print)

Abstract

Health policy is often designed to help protect patients’ financial security. However, there is limited understanding of the role medical debt plays in household finances. We used credit report data on more than four million Americans to study the age profile of people whose medical bills were sent to a US collections agency in 2016. We found that, unlike health care use and spending, medical collections decreased substantially with age. The average size of medical debt decreased nearly 40 percent from patients age twenty-seven to sixty-four, with increases in health insurance coverage and incomes likely playing important mediating roles. However, the frequency of medical collections—that is, the proportion of people with a collection by age—was less closely tied to insurance coverage rates. A potential explanation is that most medical collections were relatively modest in size, with more than half of them less than $600 annually. As a result, medical collections could still occur under typical insurance plans. We discuss how these results could inform policies targeting medical debt and insurance regulation, such as restrictions on age rating.

From the Introduction

Using deidentified credit report data on more than four million people, we found that the frequency (proportion of people with a medical collection by age) and size of medical collections peak in the late twenties and decline as age increases. This pattern is similar to that of the percentage of people without health insurance by age, but it differs markedly from the sharp rise in medical spending by age.

Furthermore, while the average size of medical collections exhibits a close relationship with uninsurance rates by age, the portion of people who actually incur any medical debt within a given year does not decline as much at older ages as uninsurance rates do. We augment these findings by showing that many annual medical collections are relatively modest in size (more than half under $600). Insurance typically reduces what patients are asked to pay, but if it includes nontrivial cost sharing, patients may still face bills they cannot afford or do not pay. This may both limit consumers’ demand for insurance and temper expectations for how much all but very generous forms of universal coverage would reduce the medical debt we observed.

From the Policy Implications

As prior research has shown, our results suggest that health insurance is associated with medical debt. In addition, we found that younger adults are more likely than their older peers to have medical collections, despite having lower medical spending. Thus, policies that promote insurance coverage for younger adults may have the greatest effect on reducing medical collections. One such policy is the oft-debated limitation on age rating in the ACA Marketplaces for individual insurance coverage. An actuarially fair system would charge the oldest enrollees premiums closer to five times those of the youngest, compared to the current three-to-one age rating cap. Relaxing this limitation could lower premiums for younger consumers and boost coverage in a group that currently incurs the most medical debt, though at a cost of higher premiums and potentially increased medical debt for older people. The extent to which this would alter the total amount of debt or simply redistribute it in part hinges on consumers’ responsiveness to health insurance premiums and wealth differences across age groups.

While our results suggest that insurance is important for reducing the dollar amount of unpaid debts, they also imply that consumers could still incur a substantial amount of debt even under universal coverage, if such coverage required nontrivial cost sharing. This is consistent with data from the 2016 National Health Interview Survey, which show that 72 percent of the patients ages 20–65 who reported not being able to pay medical bills were insured. Thus, one option is for policy makers to further limit allowable levels of cost sharing (for example, restricting the availability of “catastrophic” plans or requiring higher actuarial values more broadly). However, all else equal, this would increase the price of insurance, potentially discouraging the most price-sensitive consumers from purchasing coverage and raising concerns about moral hazard. Policy makers could increase subsidies to offset the price increases, but this may face political opposition, given recent evidence.

If policy makers are committed to the provision of insurance with substantial cost sharing, as has become increasingly common in many employer-sponsored plans and in the ACA individual market, reducing medical collections would require policy efforts to increase funds available to pay bills—either by increasing after-tax incomes or by promoting savings. Although health savings accounts are the most prominent health-specific savings vehicle, their tax-advantaged structure is considerably less valuable to the lower-income people who likely constitute more of the population with medical debt than higher-income people do. As a result, a continued focus on this type of policy would likely have muted effects on the medical debt of lower-income people.

Finally, consideration of the size distribution of medical debt is important for policies aimed at increasing insurance coverage. For example, Amy Finkelstein and coauthors argue that the availability of uncompensated care reduces the cost of being uninsured (though not fully) and may cause people to not purchase insurance even when the subsidized price is far below their own expected medical expenses. Similarly, Neale Mahoney argues that bankruptcy offers some implicit health insurance for those without formal insurance. Our results indicate that most medical debts are relatively modest in size, which means that they could be incurred before the insured person meets their deductible. Thus, the channels that decrease demand for insurance may be in effect for a wider range of medical expenses than previously thought.

***

Health Affairs Comment:

By Don McCanne, M.D.

The discussion of policy implications really needs to be expanded.

The two primary causes of medical debt that results in collections include being uninsured, which calls for policies that would make coverage truly universal, and underinsurance with excessive patient cost sharing resulting in medical debt.

Most policy discussions of the latter seem to accept consumer directed health care as a given – making the patient sensitive to health care spending through higher deductibles and other cost sharing. This results in policy recommendations that do not eliminate the medical debt issue but rather use trade-offs that only shift the problems, often inequitably.

As an example, setting premiums closer to age-related risk would increase medical debt problems for older individuals, not really a desirable policy. Another example is that increased use of medical savings accounts increases tax expenditures that benefit the wealthy – a highly inequitable method of financing health care that is unfair to our taxpayers. Solutions that are directed to moral hazard and consumer price sensitivity do not solve the problems but merely shift them around.

Exhibit 3 provides a very important lesson. At age 65 there is an abrupt decline in the numbers of uninsured, obviously due to increased enrollment in Medicare. But also within a couple of years medical collections become almost negligible, most likely due to the fact that the deficiencies in Medicare coverage are filled in by other coverage including retiree plans, Medigap plans, Medicare Advantage plans, or dual coverage with Medicaid. This suggests that, instead of increasing administrative complexity and costs through the use of these various supplemental plans, Medicare benefits should be expanded to fill in the gaps in coverage if we want to protect patients from medical debt.

Improving Medicare and expanding it to cover everyone would not only address the medical debt issue, it would also make coverage truly universal, and it would be funded equitably through progressive tax policies. Regarding affordability, the policies characteristic of a well-designed single payer system would use other more patient-friendly measures to control spending such as reduction of our profound administrative waste, use of publicly administered pricing such as negotiated rates and bulk purchasing, and planning and separate budgeting of capital improvements to ensure efficient distribution of our health care delivery resources.

These policies would change the cost trajectory to make it sustainable, not only to benefit individuals but society as a whole. That does not remove the major barrier to reform that the authors also allude to – the political opposition to government financing, even though the decrease in private financing, especially employer-sponsored plans and plans in the individual market that disproportionately burden individuals with modest or low incomes, is a major reason that public insurance systems work so well. To enact the beneficial policies that we need for an equitable, affordable health care financing system for all, we need to change the politics.

https://www.healthaffairs.org…

An important theme that runs throughout this article: “consumers could still incur a substantial amount of debt even under universal coverage, if such coverage required nontrivial cost sharing.”

Nontrivial cost sharing is the primary cause of medical debt in insured individuals. Deductibles, coinsurance and often copayments are usually more than trivial in today’s private insurance products.

Several other nations have shown that cost sharing has not been necessary to keep health care spending rates at a level well below that of the United States. Cost sharing in the United States has not kept us from spending the most on health care, and it has created unnecessary exposure to medical debt.

We really can provide health care to everyone for free at the point of service while controlling costs though single payer policies that are much more patient friendly and much more effective than consumer-directed cost sharing, and we can pay for the system painlessly through equitable, progressive public financing.

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CMS Administrator Seema Verma’s opposition to Medicare for All

Posted by on Thursday, Jul 26, 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.

Commonwealth Club, July 25, 2018

Seema Verma: Americans enjoy the benefits of the best health care providers and innovators in the world. Yet while the volume of care consumed by American patients has not increased dramatically compared to similar economies, the cost of care in the United States has accelerated at an alarming pace. Health care costs are growing faster than the United States GDP, making it more difficult with each passing year for CMS to ensure health care for generations to come.

The status quo is simply unsustainable, and there is no easy solution. Anyone who tells you that more government spending alone can fix this problem doesn’t understand the issue, because despite the huge increase in funding we saw from Obamacare, many of our health care challenges not only remain but continue to worsen. As a country, we have not figured out how to slow the rate of growth in health care spending.

***

Before I conclude…I want to address one additional issue.

We have all heard the drumbeat for what advocates of a government-run – socialized – health care system call “Medicare for All.” Let me briefly explain why this notion reveals a fundamental lack of understanding about the uniqueness of Medicare to the very specific population that it serves.

First, Medicare is a program to provide care to our most vulnerable, disabled and aging population that needs it. Second, by proposing to expand services offered by Medicare to every American, you further strain Medicare’s funding streams and run the risk of depriving seniors of the coverage they have worked their entire lives to receive.

We have just discussed the challenges that Medicare faces in serving the nation’s seniors, the misaligned financial systems that are driving up costs, and the bureaucratic hurdles faced by doctors and hospitals. We have a lot of work to do to strengthen the existing Medicare program. Putting millions more Americans on Medicare will undermine the health care for the very demographic the program is designed to assist. Ideas like “Medicare for All” would only serve to hurt and divert focus from seniors, all the while expanding the regulatory burden and the misaligned and perverse incentives of a government-run system.

In essence, Medicare for All would become Medicare for None.

By choosing a socialized system, you’re giving the government complete control over the decisions pertaining to your care or whether you receive care at all. It would be the furthest thing from patient-centric care.

Let’s learn from the mistakes made in Medicaid when the Affordable Care Act pushed millions of able-bodied Americans into a program designed for pregnant women, children, aged, and those with disabilities, only to then incentivize states to serve the able-bodied before protecting Americans most in need. We have seen this movie, and the last thing we need to see is the sequel.

I seriously hope those who advocate it take time to understand the complexity of the program and the adverse consequences of their proposal.

Rather than straining Medicare, we are working to strengthen Medicare. We are activating patients to be consumers of health care, to drive providers to compete for patients by innovating and providing value. We are getting rid of burdensome regulations that are barriers to value-based care while realigning incentives so that providers can focus on delivering care that improves quality and lowers cost.

We are running out of time to solve the challenges of our health care system. Not addressing health care costs not only threatens the future of the Medicare program but our country’s future. This administration will never stop driving our system towards delivering value for the patient. This will take every single part of the health care system working together to ensure that we continue to drive towards value. Everybody will need to do their part to create a value-based system, but we need you to do your part as well. Please engage with us. We need and want your ideas and your unique perspective. At some point, we’re all going to be Medicare beneficiaries, so let’s work together to strengthen the program and leverage that strength for the future of our entire health care delivery system. This is not a luxury, but a necessity. The prosperity and the well-being of future generations is dependent on the decisions that we make today. So join us as we ensure those decisions will benefit all Americans. Thank you.

***

Q&A Session:

Mark Zitter, Moderator: I’d like to turn to the bigger issue that people have brought up and that you raised about single payer health care. I’m not going to ask the question that you already answered. I know the administration is not in favor of it. I do find that many people confuse single payer health care with universal coverage – not the same thing. Many countries have both – not the same thing. So clearly the administration is not in favor of a single payer approach; what’s the Trump administration’s feeling about everybody having health care coverage.

Seema Verma:
I think we’ve always said that we want to make sure that people have access to coverage. That’s always been a goal of the administration. I just don’t think the government is the one to make decisions for each and every American. People need to make decisions about health care on their own. They need to have choices and options and they need to make the decisions that are going to work best for them. We don’t think the the government should be making decisions about individual families and for people about their health care. That should come from the individual.

Mark Zitter:
And when you say “access to coverage,” is that the same as coverage?

(Audience laughter)

Seema Verma: We want people to have access to coverage, and I don’t…I think we’ve been very clear about making sure that, you know, that there’s access in a lot of different ways. What we’ve had through Obamacare is a type of plan – a very expensive plan that lots of people can’t afford. Different people want different types of plans, and I think they should be able to make the choices – decide what’s going to work best for them.

Mark Zitter: So we have through the Affordable Care Act about half the number of uninsured in America. We still have eight or nine percent, whatever that might be, and granted the coverage for everyone is not optimal, so just being covered is not all that we need. However we still have eight or nine percent, more in some states, less in others; what’s the Trump administration’s plans to get that number up pretty close to one hundred.

Seema Verma: So a couple things that we’ve done…What we’re seeing in the exchanges is that the coverage has become very expensive, and for people that are subsidized, they’re not necessarily experiencing issues in terms of getting access to the coverage; they still may having a lot of problems in affording the out-of-pocket expenses and the very high deductibles. But a lot of people cannot afford the coverage; they are not able to get subsidies. And so one of the things that we’re trying to do is to make certain that there is different types of options available, providing more flexibility – short term limited duration plans; we put out a rule for association health plans. The idea is to create more flexibility and more options for consumers to be able to have different choices, because I don’t think that everybody can afford the one-size-fits-all Obamacare approach – a very expensive plan that’s leaving out millions of Americans.

Mark Zitter:
We just heard over the past week in terms of the association health plans – there have been some new rules there. One of the groups that was most in favor of it didn’t feel like the new rules were sufficient for it to pursue. So are there other plans to do something else in that regard?

Seema Verma:
We’re always going to be continuing to drive towards getting Americans options. I think the way Obamacare is structured, it’s a one-size-fits-all approach, and so you’re going to see action by the agency, and I think that’s what the president, in terms of his executive order, wants to make sure there is different types of plans available, that people have choices about their care.

Mark Zitter: One of the statements that the president has made that has gotten a lot of excitement on the right, and increasing interest on the left, is the notion of giving states much more flexibility in how they administer health care to their residents. There’s concern on the left that maybe states won’t do what they want overall, but of course you’ve talked about experimentation… Here in California, as you probably heard, we have a gubernatorial race. Most candidates are running on some kind of platform about single payer health care on a statewide basis. Plenty of challenge to that, but I guess my question to you is that should that platform go forward it would require, I suppose, waivers from the federal government so the money that currently flows through your department would be put into the California single payer pool. Should that happen… should that be requested, what would be your feeling about granting California that flexibility?

Seema Verma:
I don’t think a single payer system is going to work, number one. I think that a lot of the analyses show us that it’s unaffordable, and that it would actually put many people in the situation where the government is making decisions about their health care. We’ve been consistent that we support flexibility, but when we look at proposals, we evaluate them to see are they fiscally sustainable, are they fiscally sustainable for the federal government as well as the states, and when we’re evaluating proposals that’s what we’re looking at, we’re looking to see whether the proposal falls within the confines of the law. But it doesn’t make sense for us to waste time on something that is not going to work.

Mark Zitter: So that’ll be a no.

Seema Verma:
Like I said, our parameters are that it has to be fiscally sustainable for the federal government.

https://www.commonwealthclub.org…

YouTube video (1 hour, 7 minutes):

https://m.youtube.com…

Transcript of prepared speech:
https://www.cms.gov…

This speech was primarily the rhetorical spin that this administration has been spewing out – much conservative and libertarian ideology with a paucity of health policy recommendations that are largely ineffective and often detrimental. Medicare for All advocates should be particularly concerned about what she has to say.

To no surprise, she dismisses Medicare for All with what she believes to be an inflammatory label: “socialized.” She then accuses advocates of not understanding Medicare. She says that that Medicare for all would risk removing resources from current Medicare beneficiaries, which of course is the opposite of the truth since it would expand benefits. She insists that it is unaffordable, ignoring the fact that increased government spending would be offset by the reduction in private health care spending.

Confirming that her speech is rhetorical, lacking in any beneficial policy substance, she concludes by saying, “Medicare for All would become Medicare for None.”

The conservatives have long supported giving the states a much greater role in regulation and financing of health care, contending that the states are in a better position to make decisions about health care for their people. Yet showing that she is much more driven by ideology than by policy, she insists that a single payer system is not going to work regardless, that it would be unaffordable, which all studies show is absolutely untrue when looking at total health care spending. She says that though she supports flexibility, she is not going to “waste time on something that is not going to work.”

As the moderator Mark Zitter says, “So that’ll be a no.”

I found it very painful to listen to this speech. I left out of the transcript that I typed her little joke about world peace, which to me only compounded the pain – joking about peace, of all things. (The audience didn’t laugh either.)

These people will never understand the ethics and morality of an egalitarian health care system that brings health care justice to all. We need to replace them with people who do understand and who care.

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Taking health care reform to the election booth

Posted by on Wednesday, Jul 25, 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.

KFF Health Tracking Poll

Conducted July 17-22, 2018

Thinking about the upcoming election, is a candidate’s position on “passing a national health plan in which all Americans would get their insurance from a single government plan, or Medicare-for-all” the single most important factor in your vote, very important but not the most important factor, one of many factors you’ll consider, or not an important factor in your vote?

12% – Single most important factor
37% – Very important, but not the most important factor
29% – One of the many factors you’ll consider
21% – Not an important factor in your vote
2% – Don’t know/Refused

http://files.kff.org…

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Morning Consult + POLITICO National Tracking Poll

Conducted July 19-23, 2018

How important of a priority should each of the following be for Congress? Passing a healthcare reform bill

55% – A top priority
25% – An important, but lower priority
6% – Not too important a priority
5% – Should not be done
9% – Don’t know/No opinion

https://www.politico.com…

In the Kaiser poll over three-fourths say that a single government plan or Medicare-for-all should be considered or is very important or the single most important factor in the upcoming election. In the Morning Consult/POLITICO poll three-fourths say that passing a health care reform bill is an important or top priority, with over half saying it is a top priority.

As a topmost priority, generic health care reform seems to have greater support than a single government plan or Medicare for all, but both concepts do have three-fourths majority support. That’s enough to make legitimate health care reform a litmus test in the coming election, and what could be more legitimate than an improved Medicare for all? Let’s get the word out.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

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Locking patients out of Medigap plans

Posted by on Tuesday, Jul 24, 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.

In All But Four States, Seniors on Medicare Can Be Denied a Medigap Policy Due to Pre-existing Conditions, Except During Specified Windows of Opportunity

KFF, Newsroom, July 11, 2018

In all but four states, insurance companies can deny private Medigap insurance policies to seniors after their initial enrollment in Medicare because of a pre-existing medical condition, such as diabetes or heart disease, except under limited, qualifying circumstances, a Kaiser Family Foundation analysis finds.

Medigap policies provide supplemental health insurance to help cover the deductibles and coinsurance for Medicare covered services. One in four people in traditional Medicare had a Medigap policy in 2015.

This new analysis of federal law and state regulations shows that only Connecticut, Maine, Massachusetts, and New York require Medigap insurers to sell policies to all Medicare beneficiaries ages 65 and older either continuously during the year or for at least one month per year. In all other states and the District of Columbia, insurers may deny a Medigap policy to seniors, except during their initial open enrollment period when they start on Medicare, or when applicants have other specified qualifying events, such as the loss of retiree health coverage.

Depending on their state, Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life if their needs or priorities change, or if they choose to switch to traditional Medicare after several years of being in a Medicare Advantage plan.

The brief provides new national and state-by-state data on Medigap enrollment, and describes federal and state-level consumer protections that can affect seniors’ access to Medigap.

https://www.kff.org…

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Medigap Enrollment and Consumer Protections Vary Across States

By Cristina Boccuti, Gretchen Jacobson, Kendal Orgera, and Tricia Neuman
KFF, Issue Brief, July 11, 2018

Discussion

Medigap plays a major role in providing supplemental coverage for people in traditional Medicare, particularly among those who do not have an employer-sponsored retiree plan or do not qualify for cost-sharing assistance under Medicaid. Medigap helps beneficiaries budget for out-of-pocket expenses under traditional Medicare. Medigap also limits the financial exposure that beneficiaries would otherwise face due to the absence of an out-of-pocket limit under traditional Medicare.

Nonetheless, Medigap is not subject to the same federal guaranteed issue protections that apply to Medicare Advantage and Part D plans, with an annual open enrollment period. As a result, in most states, medical underwriting is permitted which means that beneficiaries with pre-existing conditions may be denied a Medigap policy due to their health status, except under limited circumstances.

Federal law requires Medigap guaranteed issue protections for people age 65 and older during the first six months of their Medicare Part B enrollment and during a “trial” Medicare Advantage enrollment period. Medicare beneficiaries who miss these windows of opportunity may unwittingly forgo the chance to purchase a Medigap policy later in life if their needs or priorities change. This constraint potentially affects the nearly 9 million beneficiaries in traditional Medicare with no supplemental coverage; it may also affect millions of Medicare Advantage plan enrollees who may incorrectly assume they will be able to purchase supplemental coverage if they choose to switch to traditional Medicare at some point during their many years on Medicare.

Only four states (CT, MA, NY, ME) require Medigap policies to be issued, either continuously or for one month per year for all Medicare beneficiaries age 65 and older. Policymakers could consider a number of other policy options to broaden access to Medigap. One approach could be to require annual Medigap open enrollment periods, as is the case with Medicare Advantage and Part D plans, making Medigap available to all applicants without regard to medical history during this period. Another option would be to make voluntary disenrollment from a Medicare Advantage plan a qualifying event with guaranteed issue rights for Medigap, recognizing the presence of beneficiaries’ previous “creditable” coverage. For Medicare beneficiaries younger than age 65, policymakers could consider adopting federal guaranteed issue protections, building on rules already established by the majority of states.

On the one hand, these expanded guaranteed issue protections would increase beneficiaries’ access to Medigap, especially for people with pre-existing medical conditions. They would also treat Medigap similarly to Medicare Advantage in this regard, and make it easier for older adults to switch between Medicare Advantage and traditional Medicare if their Medicare Advantage plan is not serving their needs in later life. On the other hand, broader guaranteed issue policies could result in some beneficiaries waiting until they have a serious health problem before purchasing Medigap coverage, which would likely increase premiums for all Medigap policyholders. A different approach altogether would be to minimize the need for supplemental coverage in Medicare by adding an out-of-pocket limit to traditional Medicare.

Ongoing policy discussions affecting Medicare and its benefit design could provide an opportunity to consider various ways to enhance federal consumer protections for supplemental coverage or manage beneficiary exposure to high out-of-pocket costs. As older adults age on to Medicare, they would be well-advised to understand the Medigap rules where they live, and the trade-offs involved when making coverage decisions.

https://www.kff.org…

Although most individuals are relieved when they are finally eligible for Medicare, the traditional program leaves them exposed to excessive out-of-pocket costs and so they often seek additional coverage.

If they are fortunate enough to have an employer-sponsored retiree plan, they will usually select that. If they have very low incomes, they may be eligible for dual coverage with Medicaid. Medigap plans are offered to supplement traditional Medicare, but they are quite expensive and many feel that they cannot afford them. Some decide that they will risk going without any other coverage, but others will select private Medicare Advantage plans usually because the benefits are more generous whereas the premiums are generally quite low, and may be zero.

The Medicare Advantage plans have become quite popular because of their marketing appeal, but some individuals find that their use of provider networks limits their access to other physicians and hospitals that they would prefer, plus they sometimes feel that they are being deprived of care that they feel they should have such as an expensive cancer drug that has been excluded from the plan formulary or placed on a financially inaccessible tier.

When their care becomes complex they sometimes decide that they would prefer to shift to the traditional Medicare program that does not limit them to provider networks, and purchase a Medigap plan to protect themselves against catastrophic losses. At this point they are usually out of luck. If they elected not to enroll in a Medigap plan during the initial enrollment period when they first became eligible for Medicare, with rare exceptions they will find that guaranteed issue no longer applies and that they likely will be denied coverage. The initial marketing appeal of the Medicare Advantage plan comes back to bite them since they are then locked out of the Medigap plans.

There is something unjust here. Congress and the administrations of the past couple of decades have been granting the private Medicare Advantage plans all kinds of concessions while paying them more that what comparable patients would cost in the traditional Medicare program. Yet they have failed to enact the improvements that the traditional Medicare program needs to make benefits comparable to the private plans. That is why Medigap plans exist. They are necessary to cover the financial exposure that exists in traditional Medicare, especially the risk of catastrophic loss.

But why should someone in the traditional plan have to buy an expensive supplemental Medigap plan when we, as taxpayers, are also contributing generously to the private Medicare Advantage insurers (30 percent of what they receive goes to administrative costs, profits, and extra benefits such as Silver Sneakers). Shouldn’t taxpayer support for all Medicare beneficiaries be equitable, whether in the private or public plans?

If the traditional Medicare program were funded at the same risk-based level as the private Medicare Advantage plans, we could roll all of the Medigap benefits into traditional Medicare and then there would be no need to purchase a separate Medigap plan. Furthermore, there would be no reason to consider a private Medicare Advantage plan unless you were willing to give up your choice of physicians and hospitals in exchange for a Silver Sneakers membership, or if you preferred to receive your care through an integrated health care delivery system such as Kaiser Permanente.

Better, of course, would be to establish a single payer program – an improved Medicare for all. One of the more important improvements would be to roll Plan F Medigap benefits into Medicare. However, Congress decided that in 2020 Plan F benefits will no longer be offered to new enrollees – just one more measure to chisel away at the traditional Medicare program while furthering the cause of privatization by nurturing the private Medicare Advantage plans. In fact, a new administration proposal this month will further expand benefits in the private Medicare Advantage plans while denying them to patients in the traditional program.

How about health care justice for all? We can have that by enacting and implementing an expanded and improved Medicare for all.

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