Cost sharing in employer plans increasing more rapidly

Posted by on Friday, Apr 15, 2016

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

Payments for cost sharing increasing rapidly over time

By Gary Claxton, Larry Levitt, Michelle Long
Peterson-Kaiser Health System Tracker, April 12, 2016

Rising cost-sharing for people with health insurance has drawn a good deal of public attention in recent years.  For example, the average deductible for people with employer-provided health coverage rose from $303 to $1,077 between 2006 and 2015.

To look at what workers and their families actually spend out-of-pocket for services covered by their employer-sponsored plan, we analyzed a sample of health benefit claims from the Truven MarketScan Commercial Claims and Encounters Database to calculate the average amounts paid toward deductibles, copayments and coinsurance.

From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242, while average payments for copays fell by 26%, from $206 to $152.  Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354. This reflects a modest decline in the average generosity of insurance – large employer plans covered 86.7% of covered medical expenses on average in 2004, decreasing to 85.3% in 2014. Worker’s wages, meanwhile, rose by 32% from 2004 to 2014.

Individuals in the top 15 percent of health spenders (who together account for 74.8% of total health benefit costs for the sample), had substantially higher out-of-pocket costs, averaging $2,679 in 2014, including $1,249 in coinsurance payments, $928 in deductible spending, and $502 in copays.

As of 2014, 5.5% of all enrollees had deductible payments that exceeded $1,500 and 7.8% had overall cost-sharing payments that exceeded $2,500.

A limitation of these data is that they reflect cost sharing incurred under the benefit plan and do not include balance-billing payments that beneficiaries may make to health care providers for out-of-network services or out-of-pocket payments for non-covered services.

While average payments towards deductibles are still relatively low in the context of total household budgets, they have increased quite rapidly. Deductibles are the most visible element of an insurance plan to patients, which may help explain why consumers are showing concern about their out-of-pocket costs for care. Although health insurance coverage continues to pay a large share of the cost of covered benefits, patients in large employer plans are paying a greater share of their medical expenses out-of-pocket. And, while health care spending has been growing at fairly modest rates in recent years, the growth in out-of-pocket costs comes at a time when wages have been largely stagnant.

This is yet one more study that shows that deductibles and coinsurance are increasing quite rapidly in employer-sponsored health plans – plans that have been protected and encouraged by the Affordable Care Act (ACA) as they are the most common source of health care coverage in the United States. This increase in cost sharing is causing financial hardship, especially for those who have greater health care needs.

Avid supporters of ACA say that all we have to do is build on the system we have. Yet instead coverage is deteriorating, and insurers certainly show no inclination towards filling in the gaps at the cost of driving premiums further up into unaffordable ranges.

It will get worse since insurance innovations are designed to slow spending increases by directly or indirectly shifting more costs to the patients.

Under a well designed single payer system costs can be controlled without resorting to financial penalties for using care. How hot does the cauldron we are in have to get before we’re ready to jump out and go to Medicare for All?

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Jonathan Oberlander on the prospect for single payer

Posted by on Thursday, Apr 14, 2016

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

The Virtues and Vices of Single-Payer Health Care

By Jonathan Oberlander, Ph.D.
The New England Journal of Medicine, April 14, 2016

The 2016 U.S. presidential campaign has produced many surprises. One unexpected turn is the reemergence of single-payer health insurance on the public agenda. Senator Bernie Sanders has made Medicare for All a centerpiece of his platform. His opponent for the Democratic party’s presidential nomination, former Secretary of State Hillary Clinton, has criticized Sanders’s plan as unrealistic. An old debate has thus reopened. What are the virtues and vices of single-payer reform? Is it a realistic option for the United States or a political impossibility?

First, a note on language. “Single payer” is often used loosely to refer to everything from Canadian national health insurance to the British National Health Service (NHS) and even Obamacare — though depicting the Affordable Care Act (ACA) as a “slippery slope” to single payer is bizarre, given that it relies on private insurance. U.S. observers often mistakenly lump all foreign health systems together under the single-payer label — a classification that grossly oversimplifies the range of models in place elsewhere. In some rich democracies (Germany, the Netherlands, and Switzerland among them) people enroll in multiple insurance plans, which are typically highly regulated and are operated by private companies or nonprofit associations. Alternatively, in the NHS, the government traditionally owned most hospitals and directly employed many physicians.

Most U.S. single-payer advocates instead have in mind emulating Canada, where all legal residents in each province or territory receive coverage from one government insurance plan for medically necessary hospital and physician services. Canadians can obtain private policies for supplemental services not covered by the government plan. The government does not directly employ most doctors, nor does it own most hospitals, though their payments come from the single provincial insurance program. Canadian national health insurance arrangements — and Taiwan has a similar system — resemble traditional U.S. Medicare, with public financing for privately delivered services. Sanders is not the only presidential candidate to find this model appealing. Donald Trump has praised the Canadian program, though recently he suggested it wouldn’t work here.

Proposals for U.S. single-payer reform have a long history. A 1943 bill subsequently endorsed by President Harry Truman in 1945 envisioned national health insurance funded through payroll taxes. That bill and subsequent efforts by the Truman administration to pass universal insurance went nowhere. However, Medicare, conceived in the 1950s and enacted in 1965, embodied the single-payer model. Medicare’s architects saw it as the cornerstone of a national health insurance system. They believed that Medicare would eventually expand — with children perhaps the next group to join the program — to cover the entire population. That aspiration was never realized. Meanwhile, Congress created Medicaid as a separate program for some categories of low-income Americans, including families with dependent children, further fragmenting the insurance pool.

Single payer enjoyed strong support during the early 1970s among liberal Democrats such as Senator Ted Kennedy (D-MA), yet it never came close to passing. Subsequently, its political fortunes faded. Democratic policymakers increasingly pursued incrementalism (primarily through Medicaid expansion) and more conservative models that relied on private insurance (managed competition) as the only feasible reform routes. Medicare itself underwent a transformation as the role of private insurers in the program grew substantially. The 2010 ACA represented both a landmark achievement in expanding access to insurance and the culmination of a turn away from single payer. In 2009, the House of Representatives did pass legislation creating a Medicare-like government insurance program that would be available to the uninsured in competition with private plans. But this “public option” couldn’t clear the Senate. Even with a Democratic president and large Democratic congressional majorities, a narrow remnant of single payer failed to pass.

Nevertheless, the single-payer approach enjoys a dedicated following among groups such as Physicians for a National Health Program, and Sanders’s embrace has generated renewed attention for the idea. Regardless of the outcome of the 2016 election, the single-payer debate will persist. The enduring appeal of Medicare for All is understandable, given the fragmented, inequitable, costly, profit-driven, and wasteful nonsystem that prevails in the United States. The ACA’s shortcomings are sufficiently serious, single-payer adherents argue, that Obamacare has left unsolved many of U.S. medicine’s major problems. For all the ACA’s considerable achievements, health insurance and medical care are still unaffordable for many people. In a country where nearly 30 million persons remain uninsured, where health insurance is increasingly thinned out by rising deductibles and cost sharing, where even insured patients face staggering bills and the prospect of medical bankruptcy, where myriad insurers and payment systems generate astonishing complexity, and where more money is spent on administration than on heart disease and cancer, it’s no surprise to hear calls for sweeping change.

The lessons of Canadian national health insurance are as straightforward as they are neglected. Having a single government-operated insurance plan greatly reduces administrative costs and complexity. It concentrates purchasing power to reduce prices, enables budgetary control over health spending, and guarantees all legal residents, regardless of age, health status, income, or occupation, coverage for core medical services. Canadian Medicare charges patients no copayments or deductibles for hospital or physician services. Controlling medical spending does not, the Canadian experience demonstrates, require cost sharing that deters utilization. The Canadian system is hardly perfect. All countries struggle with tensions among cost, access, and quality; at times, Canada has grappled with fiscal pressures, wait lists for some services, and public dissatisfaction. Yet its problems pale in comparison to those in the United States.

The substantive virtues of single-payer programs are compelling. But so are their political liabilities. Medicare for All, which aims to constrain health care spending, faces intense opposition from insurers, the medical care industry, and much of organized medicine. It would trigger fierce resistance from conservatives and the business community and anxiety in many insured Americans fearful about changing coverage and the specter of rationing. The ACA’s comparatively conservative reform approach inspired false charges of “socialized medicine,” “pulling the plug on grandma,” and “death panels.” It takes only a little imagination — or a look back at the history books — to predict the reactions that an actual single-payer plan would evoke.

Single payer would also require the adoption of large-scale tax increases. Although Americans would save money by not paying premiums to private insurers, the politics of moving immense levels of health care spending visibly into the federal budget are daunting, given the prevailing antitax sentiment. Furthermore, converting our long-established patchwork of payers into a single program would require a substantial overhaul of the status quo, including the ACA. Then there are the familiar institutional barriers to major reform within U.S. government, including the necessity of securing a supermajority of 60 votes in the Senate to overcome a filibuster.

In short, single payer has no realistic path to enactment in the foreseeable future. It remains an aspiration more than a viable reform program. Single-payer supporters have not articulated a convincing strategy for overcoming the formidable obstacles that stand in its way. Nor have they, despite substantial public support for single payer, succeeded in mobilizing a social movement that could potentially break down those barriers. The pressing question is not about whether Medicare for All can be enacted during the next presidential administration — it can’t — but where health care reform goes from here.

It’s possible that some states could, through waivers that begin in 2017, consider adding a public option to their marketplaces or even adopt single-payer systems. Yet Vermont’s recent struggles to make a modified single-payer plan work underscore the challenges to state action. At the federal level, incremental steps toward Medicare for All, such as expanding program eligibility to younger enrollees, are conceivable — though challenging in this political environment. Moreover, the fight over Obamacare is not over. Preserving and strengthening the ACA, as well as Medicare, and addressing underinsurance and affordability of private coverage is a less utopian cause than single payer. I believe it’s also the best way forward now for U.S. medical care.

NEJM Interview with Dr. Jonathan Oberlander

Closing comments:

When we look at the entire patchwork of the American medical care system and our insurance system there’re still so many holes in it, there’s so much redundancy, and it’s so inefficient. And that’s why the single payer idea is going to resonate far beyond whatever the outcome of the 2016 election is. Because when you have a health insurance that leaves tens of millions uninsured, tens of millions underinsured, that is beset by administrative complexity and is governed too often by profit, there’s going to be an appetite for sweeping change. And whatever its political fortunes are, and I don’t think they’re particularly good, single payer is going to continue to speak to those who are disaffected by what’s going on in American medical care and are looking for something different, something better.

(The full 8 minute audio can be accessed for free at the link above.)

Although single payer advocates may be disappointed with Professor Oberlander’s conclusion that the best way forward now is to strengthen ACA and Medicare and to address underinsurance and the affordability of private coverage, we need to keep in mind that he has described the clear superiority of the single payer model, and that it still has widespread popular support. His pessimism is based on current political realities, which have been confirmed by over half a century of failure to advance comprehensive, universal single payer legislation.

Since single payer seems to be an imperative, why has it not been enacted? Oberlander writes, “Single-payer supporters have not articulated a convincing strategy for overcoming the formidable obstacles that stand in its way. Nor have they, despite substantial public support for single payer, succeeded in mobilizing a social movement that could potentially break down those barriers.”

He’s right, based purely on results to date. We have a lot of work to do.

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NYT journalists discuss status of Obamacare

Posted by on Thursday, Apr 14, 2016

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

News About Obamacare Has Been Bad Lately. How Bad?

By Reed Abelson and Margot Sanger-Katz
The New York Times, April 13, 2016

Ever since passage of the Affordable Care Act, a fierce debate has been waged over whether the law would work as advertised. While advocates promised that the design of new insurance markets would transform the way consumers buy health insurance, critics warned that the new market would never succeed. Reed Abelson and Margot Sanger-Katz have had front-row seats to the debate, and the two reporters took a few minutes to discuss when — and if — the market would stabilize.

Margot Sanger-Katz
: Every time I write a story about the health law, I get comments and emails from people just above the income cutoff for subsidies. These are the people who have been most hurt by the health law. Plans on the exchanges are just really expensive for them, and often come with big deductibles, too. And if premiums keep rising, they’ll keep getting squeezed. Analysts from the Urban Institute have done the math and found that some of them are paying more than 25 percent of their income on health care now. Still, it is awfully hard to imagine Congress approving massive new spending to make Obamacare more generous. Hillary Clinton has some proposals about affordability, but they don’t include expanding subsidies.

Reed Abelson: One of the strengths of the law, and its main weakness, is its emphasis on keeping the status quo. While President Obama may have overpromised when he said you can keep your plan if you like it, the insurance isn’t radically different. The only way companies can seem to bring down prices is by narrowing networks of hospitals and doctors or hiking deductibles. While Bernie Sanders seems to be offering the most dramatic change by proposing that everyone switch to a government plan like Medicare, I’m still looking for a market response — some real change in how care is delivered that is much less expensive or at least more effective.

Margot Sanger-Katz: This is the thing I say whenever anyone asks me what I think about the health law. It basically baked in all of the complexity and dysfunction of the pre-existing American health care system.

Reed Abelson: We’re heading into the season when insurers and state regulators start talking about next year. Any thoughts on what we might expect?

Margot Sanger-Katz: I’m expecting them to ask for rate increases! The insurance companies are doing everything they can to broadcast their intentions to charge more. There are reasons we should expect the plans to do so even if the markets were already stable. Some of the early training-wheel programs set up by the law expire, which means the plans have to pay out more claims for really expensive patients.

Six years after the Affordable Care Act was signed into law we hear opinions ranging from what a phenomenal success it has been to what a miserable disaster it is. This brief excerpt from a discussion between two respected journalists who have followed the process closely, and who are well versed on the policy issues, provides us with a perspective on where we actually are on reform.

It is somewhat sobering. There have been some tradeoffs such as expanding nominally the numbers insured but with insurance products that further limit provider choice and shift more costs to the patients. Margot Sanger-Katz says that the health law “basically baked in all of the complexity and dysfunction of the pre-existing American health care system.”

Most of the system has remained about the same while the deficiencies introduced offset much of the gains. We are still left with tens of millions uninsured, tens of millions more who are underinsured, and costs that continue to increase in spite of the expansion of blunt financial barriers to beneficial health care services. Even employer-sponsored plans are beginning to deteriorate, especially because of higher deductibles and narrower networks.

Reed Abelson says that she is looking for “a market response — some real change in how care is delivered that is much less expensive or at least more effective.” Yet it has been confirmed over the last half century that markets do not work in controlling health care spending. Nothing in the Affordable Care Act will change that in spite of wishes that feeble policy measures such as ACA exchange competition, ACOs, shared shavings, bundling, wellness programs, meaningless rhetoric of quality over quantity, and other ACA concepts would revolutionize health care. The revolution is not happening.

So claims of phenomenal success or miserable disaster can be ignored since we really have not fundamentally changed the infrastructure of our system. But with that background, we actually have failed: We failed to enact an Improved Medicare for All which would have met our goals for reform. We can still do it, you know.

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Costs in individual insurance market skyrocketing

Posted by on Tuesday, Apr 12, 2016

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

S&P Healthcare Claims Index Monthly Report

S&P Dow Jones Indices, April 2016

The “S&P Healthcare Claims Index Monthly Report” provides the latest results for the S&P Healthcare Claims Indices – a comprehensive measure of the change in U.S. healthcare costs based on actual expenses paid by consumers through their commercial health plans – with the goal of providing the public and policymakers with credible, timely and independent data on the cost of healthcare in the U.S.

This Report summarizes data from the October 2015 indices – the latest to be published.

October 2015 In-brief

  • National healthcare costs in the commercial market increased by 6.47% year/year
    • Medical services costs increased by 4.24%
      • Drug costs increased by 16.12%
      • Brand-name drug costs increased by 19.31%
      • Generic drug costs increased by 7.37%
  • Individual market costs increased by 27.41% year/year
  • Monthly costs per covered member (PMPM costs) in the individual market reached an average of $497.55 – about 8.1% more than the employer-provided market (large group and ASO/self-insured)
  • Monthly costs per covered member in the individual market reached an average of $497.55 in October 2015 – $37.28 more on average than the $460.27 monthly cost of a covered member within the employer-provided healthcare market (large group and ASO/self-insured).

The graph below charts the PMPM (per member per month) cost by LOB (Lines of Business – individual; large group; and Administrative Services Only/self-insured). This graph demonstrates that PMPM healthcare costs in the individual market appear to have firmly caught up to per member costs in the employer-based market (large group and ASO/self-insured), a result widely anticipated with enactment of the Affordable Care Act (ACA). Whether individual market costs will begin tracking with the employer-based market, or instead continue their rise and diverge to a more costly plateau, is yet to be definitively seen. The next few months of data should be telling.

QOTD Chart

The costs per enrollee in the individual health insurance plans are skyrocketing as a result of the enactment of the Affordable Care Act (ACA). This was expected since the plans could no longer reject individuals with preexisting conditions, and the required benefits are more comprehensive than they were previously.

ACA was designed to protect employer-sponsored plans – primarily large group insurance plans and self-insured (administrative services only) plans – which had been functioning well prior to reform. In order to keep premiums affordable, plans in the individual market frequently had skimpier benefits (excluding maternity benefits, mental health services, etc.), and excluded individuals with preexisting conditions. ACA, in correcting these deficiencies, brought costs in the risk pools for the individual plans up to the costs of the more comprehensive and inclusive employer-sponsored plans.

But look at what has happened. The cost trajectory for those covered in the individual plans shot upward and has now exceeded the cost for those in employer plans by 8 percent. This higher cost could be due to adverse selection – more people enrolling in the individual plans who already have health care needs, or because those declining to enroll are healthier individuals who would otherwise dilute the costs of the risk pools.

But there is one other possibility that may be an important factor why the costs in the individual market are higher. Enrolling individuals and families in plans selected from a marketplace requires greater administrative services than does wholesale enrollment of employees in a group plan (and much more administrative effort than with automatic, one-time, life-long enrollment in a program like Medicare).

Once the risk pools stabilize, it is likely that the curve for individual plans will parallel that of employer plans, but at a higher trajectory. Thus we will be spending more than that part of the market that was supposedly working well – the employer-sponsored plans. When our health care system is infamous for its profound administrative waste, we are adding even more waste through the provisions of ACA.

We can still fix this – with an improved Medicare for all.

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Luntz’s poll shows CEOs support affordable care for American families

Posted by on Monday, Apr 11, 2016

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

Highlights of Luntz Poll of American CEOs Shows Broad Support for Progressive Policies

By Mary Bottari
The Center for Media and Democracy/PRWatch, April 4, 2016

When considering American CEOs as a category, “empathetic” is not the first word that comes to mind. Yet, the fact that these top executives have empathy for their workers is a major take-away from a closed-door webinar about a new poll taken by LuntzGlobal, the polling firm of prominent GOP pollster Frank Luntz.

The polled executives want to raise the wage, expand paid sick and maternity leave, and support predictive scheduling. Their desire to “keep health care costs low for American families” far outstrips their opposition to the Affordable Care Act.

CMD was provided with a copy of the poll which was shared with business lobbyists, who were instructed on how to manipulate the public debate over those policies rather than implement the views of the business executives who were polled.

The poll was commissioned by Council of State Chambers (COSC) is a little-known association that helps the top lobbyists for state chambers of commerce get on message about the national political agenda of the U.S. Chamber of Commerce, one of the largest and most influential lobbying forces in America.

There is no force in America that has spent more time and effort to keep wages low than the U.S. Chamber of Commerce and the state chambers that aggressively lobby against increasing the minimum wage.

Health Care

“Keeping health care costs low for American families” was a key concern for CEOs. Significantly, it far outstripped “replacing ACA” or “making health care affordable for small businesses” as a priority.


A top take-away for the pollsters? CEOs have empathy for their workers and society as a whole.

Based on the directives to state chamber lobbyists in the webinar, COSC is eager to help chambers of commerce overcome that empathy and continue to oppose legal policies strongly supported by both the American people and the business executives the chambers tell the press and public that they represent.


LuntzGlobal topline

Q19/20. All of these issues may be important, but when it comes to where an elected official stands, which issue is the MOST important to you as a business leader? [Combined]

36%  Economic development and tax incentives
32%  Workforce development and education issues relating to the availability of qualified workers
31%  Employer mandates such wages, paid leave, and predictive scheduling
25%  Finding state solutions to rising healthcare costs
20%  Civil rights issues such as non-discrimination acts and the Religious Freedom and Restoration Acts (RFRA)
19%  Climate issues such as environmental regulations and clean power
16%  The impact the legalization of marijuana has on employers maintaining a safe workplace
11%  Transportation issues including roads, infrastructure, and gas taxes
10%  State preemptions of local mandates

Q31/32. You said healthcare costs are most important. Which of the following issues do you care about the most? [Combined]

38%  Keeping healthcare costs low for American families
30%  Replacing the Affordable Care Act
29%  Giving employees more choices and control over their healthcare options
25%  Making healthcare costs more affordable for small businesses
20%  Finding state-based solutions to healthcare coverage issues
19%  Promoting innovation in the healthcare sector to reduce costs and save lives
18%  Expanding access and coverage to more people
10%  Reducing government regulation and red tape
10%  Freedom to decide whether to provide benefits like birth control


FIX IT: Healthcare at the Tipping Point

A documentary produced by businessman Richard Master

This documentary takes an in-depth look into how our dysfunctional health care system is damaging our economy, suffocating our businesses, discouraging physicians and negatively impacting on the nation’s health, while remaining un-affordable for a third of our citizens.

Free internet access to the full 58 minute documentary is now available at this link:

This poll provides us with the reassuring (and not surprising) finding that CEOs of U.S. businesses “have empathy for their workers and society as a whole.” Regarding health care, they give the highest priority to “keeping health care costs low for American families.”

The poll was conducted by LuntzGlobal – the firm of Republican pollster and wordsmith Frank Luntz. It was commissioned by the Council of State Chambers to help state Chambers of Commerce get on message with the U.S. Chamber of Commerce. This is ominous.

In their new book, “American Amnesia,” Jacob Hacker and Paul Pierson describe how the U.S. Chamber of Commerce has been one of the most powerful organizations in suppressing the appropriate role of government in our mixed economy – an economy that functions best for the private sector when the government is doing what it does best though its services and regulations.

This poll does show that there is significant support for progressive policies amongst these empathetic business executives, including support for health care for American families. But what is really alarming is that the poll is not being used to advocate for the policies supported by these executives, rather it is being used “to help chambers of commerce overcome that empathy and continue to oppose legal policies strongly supported by both the American people and the business executives the chambers tell the press and public that they represent.” How nefarious.

American businesses would fare much better if we had a health care system that would ensure access and affordability for both their employees and their customers. Healthy employees and healthy customers who are not burdened by health care debt are key to business success. Businessman Richard Master has produced “FIX IT” – “a powerful new documentary that reaches across the political and ideological divide to expand support for major healthcare reform.” The documentary can be accessed for free at the link above.

So your homework assignment is to read “American Amnesia” and to view “FIX IT” if you have not yet done so. Doing one will get you a C- and doing both will qualify for a C+. For an A, you need to share these with as many individuals and organizations as possible. Not only will you receive an A, but finally our entire health care system will as well – and what greater reward could you ask?

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Jacob Hacker and Paul Pierson: American Amnesia

Posted by on Friday, Apr 8, 2016

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

American Amnesia

How the War on Government Led Us to Forget What Made America Prosper

By Jacob S. Hacker and Paul Pierson

This book is about an uncomfortable truth: It takes government – a lot of government – for advanced societies to flourish.

But Americans have never been good at acknowledging government’s necessary role in supporting both freedom and prosperity. And we have become much less so over the last generation. We live in an era of profound skepticism about government. Contemporary political discourse portrays liberty and coercion as locked in ceaseless conflict. We are told that government is about “redistribution” and the private sector about “production,” as if government only reshuffles the economic deck rather than holding many of the highest cards. We are told “free enterprise” and “big government” are engaged in a fierce zero-sum battle (one side’s gain is the other’s loss), when, in fact, the modern partnership between markets and government may well be humanity’s most impressive positive-sum bargain (making both sides better off). We are told the United States got rich in spite of government, when the truth is closer to the opposite: The United States got rich because it got government more or less right.

We suffer, in short, from a kind of mass historical forgetting, a distinctively “American Amnesia.”


Like other advanced democratic nations, the United States has what economic analysts call a “mixed economy.” In this public-private arrangement, markets play the dominant role in producing and allocating goods and innovating to meet consumer demand. Apple brings us iPhones, and it earns sizable profits by doing so.

Alongside companies like Apple, however, government plays a dominant or vital role in the many places where markets fall short.


Although the modern robber barons can be found in many parts of our economy, three stand out: health care, finance, and energy. Other sectors have barons, but none rivals these big three in the scale of the tolls they extract or the scope of their political influence.


No doubt the United States is doing something with the extra trillions it has poured into the medical sector over the last few decades. On the available evidence, however, what it is mainly doing is paying higher tolls to the robber barons.


To reverse this spiral, we must reestablish a government with the capacity to foster broad prosperity. We need to ensure that ordinary voters and diffuse interests are capable of triumphing over concentrated interests, And we need to rescue the ideal of the mixed economy from the mists of American Amnesia. Many changes have swept the American economy since the 1970s. Yet our biggest problem is not a lack of attractive policy options. Our biggest problem is our politics. The mixed economy is as necessary as ever – indeed, in a world of increased interdependence and complexity, more than ever. And despite all the changes of recent decades, it is still within our grasp. We need better policies to restore its potential. But above all, we need a better politics.


But we should also recognize just how valuable the mixed economy is, how fundamental the role of government is within it, and how badly we are served by the misleading juxtapositions that dominate public debate: markets versus the state, freedom versus tyranny, free enterprise versus big government. From a more realistic and historically grounded starting point, we can have more vigorous, reasoned, fact-based debates that reflect the diversity of our values and priorities as well as the inevitable uncertainties about the best ways to tackle complex problems. We can seek positive-sum bargains and broad consensus about how to improve the mixed economy and address new challenges, learning over time how to adjust the nimble fingers of the market and the strong thumb of government to best grasp our future.


A government that effectively promotes human flourishing is a government worth fighting for. More than ever, the problems we face demand a sustained and principled defense of a vital proposition: The government that governs best needs to govern quite a bit. Americans must remember what has made America prosper.


Simon and Schuster


When you read this exceptional book by Jacob Hacker and Paul Pierson, it becomes clearer why we have such an expensive health care system that is only mediocre in its performance.

They remind us how half a century ago we had a well-functioning “mixed economy” wherein both the government and the private sector fulfilled their appropriate roles in facilitating a vibrant economy.

In recent decades there has been a shift toward believing that we need to cut back on big government and rely more on the marketplace. But in health care, the market works very well for the modern robber barons (higher costs) but not so well for patients (mediocrity). Conservatives, neoliberals and an accommodating press perpetuate the conviction that private insurers, private Medicare Advantage plans, and private Medicaid managed care plans all ensure better care than the government is capable of providing. Although the government still remains the largest source of health care funds, the “concentrated interests” (plutocracy) and their legislative lemmings place with the private sector much greater control on how those funds are spent.

As long as we have an imbalance in our mixed economy that disproportionately favors the private sector, while suppressing those functions provided well only by the government, we cannot expect to achieve the health care reform goals of true universal coverage, universal access, universal comprehensiveness, efficiency, and, most importantly, equity. Governments do these well, whereas the private sector acting alone does them poorly, if at all.

It is important to understand that the private sector performs better when the government is functioning well under a public-private partnership. To address our American amnesia, everyone should read this book. Liberals, progressives, and moderates will surely understand. Many conservatives in the business community will understand after this refresher course on why we do want the government involved in those activities that only the government does well. Hard Randians (amoral or cold-hearted libertarians) likely will not, but there is nothing we can say that would ever satisfy them since they are lost in their ill-conceived fictional utopia created by Ayn Rand.

Randians aside, we need to remember the words of the authors: “A government that effectively promotes human flourishing is a government worth fighting for.”

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How effective has covering young adults on parents’ insurance been?

Posted by on Thursday, Apr 7, 2016

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

Young Adult Insurance Coverage And Out-Of-Pocket Spending: Long-Term Patterns

By Marc L. Berk and Zhengyi Fang
Health Affairs, April 2016

From the Abstract

The Affordable Care Act appears to have improved health insurance coverage for young adults (ages 18–30). But data from twenty national surveys conducted between 1977 and 2013 paint a more complex picture, showing coverage rates lower in 2013 than they were thirty-six years earlier.

Although the provision in the Affordable Care Act (ACA) that allowed individuals up to age 26 to be covered through their parents’ insurance was partially effective, the rate of coverage for young adults was lower in 2013 than it had been 36 years earlier. Some progress!

The point is the ACA is a series of patches superimposed on our highly fragmented, dysfunctional health care financing system. This patch – extending family coverage into early adult years – fell far short of the one goal of insuring all young adults. In fact, all ACA patches combined are falling far short of our goals of universality, affordability and equity, and we are still left with a highly fragmented, dysfunctional health care financing system.

A improved Medicare that covered everyone would fix this.

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Fixing consumer-directed health care by making physicians financial counselors

Posted by on Wednesday, Apr 6, 2016

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

Study Of Physician And Patient Communication Identifies Missed Opportunities To Help Reduce Patients’ Out-Of-Pocket Spending

By Peter A. Ubel, Cecilia J. Zhang, Ashley Hesson, J. Kelly Davis, Christine Kirby, Jamison Barnett and Wynn G. Hunter
Health Affairs, April 2016


Some experts contend that requiring patients to pay out of pocket for a portion of their care will bring consumer discipline to health care markets. But are physicians prepared to help patients factor out-of-pocket expenses into medical decisions? In this qualitative study of audiorecorded clinical encounters, we identified physician behaviors that stand in the way of helping patients navigate out-of-pocket spending. Some behaviors reflected a failure to fully engage with patients’ financial concerns, from never acknowledging such concerns to dismissing them too quickly. Other behaviors reflected a failure to resolve uncertainty about out-of-pocket expenses or reliance on temporary solutions without making long-term plans to reduce spending. Many of these failures resulted from systemic barriers to health care spending conversations, such as a lack of price transparency. For consumer health care markets to work as intended, physicians need to be prepared to help patients navigate out-of-pocket expenses when financial concerns arise during clinical encounters.

From the Introduction

In recent years an increasing number of Americans have chosen health insurance plans with high out-of-pocket expenses, in the form of deductibles, copayments, or coinsurance rates. According to economic theory, such plans should make consumers more sensitive to the price of health care services. Indeed, copayments have been shown to reduce health care use. However, high out-of-pocket spending can also create financial burdens for patients. In 2014 one in three Americans reported having difficulty paying health care bills. Many patients did not adhere to prescribed health care interventions because of difficulty paying for them. In addition, some patients reported that the financial burden of paying for medical care caused them to miss mortgage payments or led them to personal bankruptcy.

On the one hand, patients with high out-of-pocket spending have an opportunity to behave as informed consumers in the health care Marketplace. On the other hand, their status as consumers exposes them to potential financial burden. Ideally, patients will recognize this trade-off between the medical benefits and the financial costs of receiving health care services, incurring out-of-pocket expenses only when the benefits of receiving the services outweigh the costs.

In this article we present a qualitative content analysis of health care spending discussions from outpatient clinic visits for patients with breast cancer, rheumatoid arthritis, or depression who saw specialists who treat these conditions. We present a series of physician behaviors that interfered with patients’ efforts to either lower their out-of-pocket expenses or understand the pros and cons of less costly health care alternatives.

From the Study Results

Our qualitative content analysis revealed two broad categories of physician behaviors that led to missed opportunities to reduce out-of-pocket expenses. The first set of behaviors involved the physician’s failure to address the patient’s financial concerns, in which the physician did not make an explicit effort to either acknowledge or deal with the seriousness of the patient’s concerns. The second category involved instances where physicians did make explicit efforts to deal with patients’ financial concerns but failed to resolve such concerns satisfactorily.

From the Discussion

Many health care policies are ultimately played out “at the bedside,” by influencing the way doctors and patients make medical decisions. In the case of policies promoting health care consumerism, many patients are faced with important decisions about whether the benefits of health care interventions justify their financial cost. In this qualitative, observational study of outpatient interactions, we identified a range of physician behaviors that stand in the way of helping patients make informed decisions about ways to potentially lower their out-of-pocket spending. Some behaviors reflect physicians’ failures to fully engage with patients’ financial concerns, from never acknowledging such concerns, to dismissing them too quickly, to getting sidetracked discussing frustration with a system that creates such high out-of-pocket spending. Other behaviors reflect physicians’ efforts to engage patients about their financial concerns but efforts that potentially fall short, because physicians fail to resolve uncertainty about out-of-pocket expenses or turn to temporary solutions without making long-term plans to reduce patients’ spending.

We recognize that physician-patient communication is a two-way street and that some of the failures described here resulted in part from patients having difficulty clearly and explicitly expressing their financial concerns. Patients have difficulty partly because health care consumerism is a relatively recent phenomenon in the United States for most people, meaning that patients have not had substantial experience that would help them become savvier about the health care marketplace. Nevertheless, it is still incumbent on physicians to do their best to overcome patients’ difficulties communicating about their expenses.

We acknowledge that many of the potential failures we have identified here, if they truly do reflect physician failure, also reflect more general failure of the US health care system. Physicians in the United States have difficulty factoring financial concerns into health care decisions in part because out-of-pocket spending is often difficult to determine and health care prices are often opaque. Consequently, physicians under time constraints cannot be expected to fully resolve patients’ financial concerns in the space of any single outpatient appointment.

From the Conclusion

Ideally, when people face high out-of-pocket spending for health care services, they will act like savvy consumers, exploring the pros and cons of their alternatives with full knowledge of the financial consequences of those alternatives. This confidence is undermined whenever clinical interactions lead patients to miss opportunities to explore less costly alternatives or to identify means by which they can receive their current interventions at lower prices.

Although the theme of this article seems to be that physicians should improve their skills in communicating with patients about their out-of-pocket spending for health care in order to enable spending reductions that are the goal of the ever-increasingly prevalent consumer-directed health care plans. But there is a much more important message buried in this study. Physicians do not have the time nor the tools and are basically incapable of assisting patients with their burdensome cost sharing.

Patients are mostly on their own to try to negotiate past the financial barriers to care, or, failing to do so, accept the fact that they may have to forgo the recommended health care simply because they cannot afford to pay for it. Training physicians in personal financial management so that they can counsel patients on how they can manage their deductibles and other expenses, and then expecting physicians to dedicate a significant portion of the patient interaction time to that counseling are just not practical uses of the very limited time the physician has with the patient – time that should be fully dedicated to managing the patient’s medical problems.

Also buried in the full article is this comment: “From this sample of 3,000 transcripts, we excluded visits that were conducted by primary care physicians, nurse practitioners, or nurses because these clinicians are often not the ones that prescribed the expensive interventions relevant to the diseases in question.”

Wow! Primary care was excluded because that is not where the expensive interventions occur? So primary care really does provide greater value? Yet most primary care (except sometimes certain preventive services) falls below today’s higher deductibles, and thus the patient is quite sensitive to primary care costs because it usually lacks first dollar coverage.

It is not the lack of training of health care professionals in patient-consumer financial counseling that is the problem. It is the transfer of financial responsibility to the patient that is causing the difficulties. Many other nations that spend much less on health care than we do are able to provide first dollar coverage. We can as well. We can control costs in a much more patient-friendly manner through an improved Medicare that covers everyone.

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The Salt Lake Tribune editors make case for Medicare for all

Posted by on Tuesday, Apr 5, 2016

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

High costs of hepatitis medicine make a good case for universal Medicare

The Salt Lake Tribune, April 4, 2016

Those who continue to argue that there is a “free market solution” to the unconscionable costs and gaps in the American health care system have to explain away the train wreck surrounding new cures for hepatitis C.

The good news is that there is a cure for hepatitis C, a blood disease that can lead to a slow and painful death as it destroys a victim’s liver. In fact, now there are a few. Gilead Sciences markets concoctions called Sovaldi and Harvoni. Janssen Research offers a drug called Olysio.

The bad news is that the cost of the full treatment regimen for a single patient can run from $83,000 to $189,000. That, obviously, is well beyond the reach of nearly every household and understandably enough to scare off both private insurance carriers and government-funded Medicaid.

The worse news is that, because the United States clings to the idea that wellness is a commodity subject to rational market forces, nobody is trying to limit these awful costs.

The drug companies charge so much for these medications for one reason: Because they can.

Functioning free markets do not — and never will — exist in health care because the sellers so often hold all the cards.

Civilized nations — a term that excludes the United States when discussing health care — either regulate the prices of drugs or use their concentrated purchasing power to negotiate a reasonable cost.

Drug makers argue that even the staggering cost of Sovaldi or related drugs is a bargain compared to avoided costs of more treatment, surgeries, disability, early death, etc.

It is notable that single-payer systems, such as in the United Kingdom, have done the math and agreed to pay high — though less than in the U.S. — prices for these drugs. That’s because, in those nations, the single payer does, indeed, come out ahead by paying a lot now but saving many multiples of that later.

In other words, the case made by the drug companies for allowing them to charge such high prices is also an argument for Medicare for all.

If there is any good in the fact that drug companies are gouging patients and payers it is that the citizenry may finally awaken to the fact that we need the government involved to straighten out this crisis, and, by extension, that we can finally get past the anti-government hangup preventing us from enacting a single payer system. We can thank the editors of The Salt Lake Tribune for reminding us that the solution we need is a single payer Medicare for all.

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Anthem and Dignity collude with employers, shafting employees

Posted by on Monday, Apr 4, 2016

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

Anthem Blue Cross, Dignity Health Partner to Improve Health, Lower Employer Costs

Business Wire, March 31, 2016

Anthem Blue Cross and Dignity Health, one of the largest hospital systems in the country, have collaborated to introduce a new tiered EPO/PPO plan designed to improve employee health and lower costs through an integrated care management system.

The Premier Tiered EPO/PPO product is designed for self-insured large groups, or employers with more than 101 employees and will launch on May 1, 2016 in Ventura County.

The plans are designed to offer choice and flexibility for employees who are members. They can select from either the Exclusive Provider Organization (EPO) that provides the best price with a pre-determined network of high value Dignity Health providers, or a Preferred Provider Organization (PPO) which provides access to a wider range of providers to choose from at varying copay and cost share levels. The new product combines the managed care capabilities and expertise of both organizations, with a focus on clinical quality, access and efficiency of health care services.

“As health care providers, we understand the challenges employers face in managing health care access and cost of care,” said Duncan Ross, Dignity Health Vice President, Employer Relations. “This collaboration with Anthem creates a care management model that will help employers reduce costs and provide a better patient experience for their employees, and reflects our mission of service and commitment to our communities.”

In announcing their new program that will “improve health and lower employer costs,” Anthem Blue Cross and Dignity Health show us once again that by relying on the private sector to control health care financing, we will continue to see innovations that serve their industries well, but at a cost to patients.

In this case Anthem and Dignity are providing a competitively priced product that will be cheaper for employers, but it will cause employees to choose between either an exclusive provider organization with severe restrictions in choice of providers or a preferred provider organization with moderate restrictions in provider choice but greater exposure to out-of-pocket spending. Either choice is worse for the employees than under more typical employer-sponsored plans of the past.

Under a well-designed single payer system, patients would have choice of their health care professionals and hospitals, and financial barriers would be removed by providing first dollar coverage. Many other features of a single payer system would control costs in a patient-friendly manner.

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