Bloomberg editors question out-of-pocket costs

Posted by on Tuesday, Feb 17, 2015

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.

Out of Pocket, Out of Control

By The Editors
Bloomberg View, February 16, 2015

Obamacare’s goal to expand access to health care has been only half a success: More Americans have insurance, but a rise in cost sharing means fewer can use it. Copayments — those predetermined charges you pay at the doctor’s office — are a big part of the problem. In recent years, they’ve risen to the point where they no longer work as they’re meant to.

In theory, charging moderate fees to see a doctor or get a procedure gives people an incentive to consider whether they really need it. Done carefully, copays can thus reduce unnecessary spending, benefiting everyone.

That means the charges have to be just large enough to influence people’s decisions, and not so big as to keep people from getting the care they need. Yet copays have been going up significantly. In the past five years, the average price to see a primary care doctor has risen 20 percent. For a specialist it’s gone up 29 percent, and for outpatient surgery it’s up 43 percent. And that’s just for employer-sponsored insurance; on average, those covered through the Affordable Care Act’s exchanges face even higher expenses.

No wonder 22 percent of people now say the cost of getting care has led them to delay treatment for a serious condition. That’s the highest percentage since Gallup started asking in 2001. Another poll found that as many as 16 million adults with chronic conditions have avoided the doctor because of out-of-pocket costs.

The wisdom of copayments also relies on the notion that consumers understand the incentives the payments are supposed to impose. Yet almost two-thirds of Americans don’t know what costs they face for using an emergency room or a walk-in clinic, a recent survey found.

When copayments grow too big and confusing to be effective cost controls, they merely shift an ever-greater share of insurance costs away from premiums. And this undermines the basic purpose of insurance, which is to spread the risk of unforeseen costs across populations and over time — among not just the minority who need care, but also everyone covered by the plan. Unlike premiums, out-of-pocket payments concentrate spending on the few who get sick.

Canada has disposed of almost all out-of-pocket costs for doctor and hospital services since 1984 — and still spends half as much per person on health care as the U.S. does. While Canadians are more likely to see a doctor in any given year, they’re less likely than Americans to wind up in the hospital.

Rather than ban copayments entirely, however, the U.S. could make better use of their ability to steer people away from high-cost, low-value care.

The government should also look at extending copay subsidies to lower-income beneficiaries on employer plans and lowering the cap on out-of-pocket costs.…

It is reassuring when we see representatives of the business community shining light on the deficiencies in our system of health care financing. In this article, the editors of Bloomberg View explain that higher out-of-pocket spending shifts costs away from premiums, which are designed to spread the risk, and instead concentrates spending on those who get sick. As they state, this undermines the basic purpose of insurance.

As they explain. “Canada has disposed of almost all out-of-pocket costs for doctor and hospital services since 1984 — and still spends half as much per person on health care as the U.S. does.”

However, the Bloomberg editors, like most of the policy community, as a principle of faith insist that we must still have modest copayments as an incentive to deter low-value care. As if the administrative waste of managing deductibles, copayments, and coinsurance were not already enough, they would add further to these administrative excesses by applying income-indexed subsidies to the copayments of employer-sponsored plans, just as has been done with the ACA exchange plans.

Canada has shown us that the policies inherent in their single payer system are far more effective in controlling excess spending than are our feeble, market-based policies such as cost sharing. The differences in the health spending trajectories of the two nations are proof enough; Canada has bent the cost curve and we have not. Cost sharing has hardly had even a negligible impact in our total spending.

We do know that cost sharing can impair access to necessary care and create financial hardships for some. Since it hasn’t controlled costs and single payer would, we should make the change to a single payer national health program with first dollar coverage. That would pool risks and improve access without creating burdens for anyone, except maybe a transitional burden for those in the insurance industry who would have to find more gainful employment.

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Steven Brill, author of the well-known 2013 Special Report, Why Medical Bills Are Killing Us, in Time magazine has just released his new book, America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System. (1) Based upon in-depth reporting of interviews with more than 240 people involved in various ways across our health care industry, he gives us an inside look at how the Affordable Care Act was written, passed, implemented and changed over the last five years.

The result is an honest, damning indictment of our market-based system, with all its profiteering and run away costs. He concludes that the ACA, despite the hype of some of its architects and supporters, will fail to contain costs:

There’s nothing in the legislation that brings down the cost of healthcare. . . . The bad news is that the taxpayers are paying for it and they’re paying the same exorbitant prices that make the system so unworkable. . . . The drug companies are making more money, the hospitals are making more money, the medical device makers are making more money, and everybody is happy except the taxpayer. (2)

Brill’s description of the flaws of our profit-driven system are further amplified by his own personal experience with open-heart surgery for an aortic aneurism. After an eight-day hospitalization, his medical bills came to $197,000. Some time later, even Stephen Hemsley, president and CEO of UnitedHealth Group, his health insurance company, could not explain the  medical bills and explanation of benefits.

Brill’s meticulous and well documented reporting of our system problems falls apart when it comes to fixing these problems. There is somehow a striking disconnect between his objectivity in the first part of the book and the proposals he puts forward toward the end. Yes, he is very well informed, is a graduate of Yale Law School, and has had personal experience as a patient, but that does not make him a health policy expert, as many of his readers now expect. He says in his book, as he was recovering from surgery, he began to frame his “unusual idea” of how to go beyond the Affordable Care Act, which he believes is unsustainable because of costs, and to fix U.S. health care:

At first, pieces of it came in the form of seemingly random thoughts that popped up during the extra time I had to read and watch television. But they soon began to come together. (3)

These are the components of his seven-part proposal for regulating our health care system:

  1. Require that any market have at least two big, fully integrated provider-insurance companies (e.g. Kaiser); large markets could have more.
  2. Cap the operating profits of what would be those now-allowed dominant market players, or oligopolies, at perhaps 8 percent, compared to the current average of about 12 percent.
  3. Cap the salaries and bonuses of hospital employees (including the CEOs) who do not practice medicine full-time at 60 times the amount paid to the lowest paid full-time physician, typically a first-year resident.
  4. Establish ombudsman’s offices in each oligopoly to streamline the appeals process for patients who believe they have received inadequate care, and for physicians who feel they have been pressured to limit care.
  5. Any government-sanctioned, oligopoly-designated integrated system should have a physician with practice experience as its top executive.
  6. Require any sanctioned, oligopoly provider to insure a certain percentage of Medicaid patients at a stipulated discount.
  7. Require these regulated oligopolies to charge any uninsured patients no more than they charge any competing insurance companies whose insurance they accept, or a price based on their regulated profit margin if they don’t accept other insurance. (4)

While there may be merit in some of these proposals, Brill’s  brief prediction of how they would reform our system is unpersuasive and comes across as only wishful thinking, uninformed by evidence. His “plan” would just add another layer to our flawed system, based especially on getting some of its providers bigger yet somehow more accountable. There are many problems with his proposals. For example, what would they do for people in many parts of the country, including rural areas, and why is “bigger is better” a solution to our already consolidating system?

For some reason, Brill ignores mountains of experience and evidence that there are more logical and proven ways to rein in our out-of-control system. For example, he recognizes in his first chapter that the U.S. spends more ($3 trillion in 2014) than the next 10 biggest spenders on health care combined: Japan, Germany, France, China, the United Kingdom, Italy, Canada, Brazil, Spain, and Australia. But then he shows no interest in finding out how these countries can spend so much less on health care than we do while also providing better access and usually better outcomes of care. Recent years have seen a growing information base of how they do it, including T. R. Reid’s excellent 2009 book The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care, in which he notes, after study of the experience in France, Germany, Japan, the UK, and Canada, that:

The American system does well when it comes to providing medical care, but has a rotten system for financing that care. . . . All the other rich countries have found financing models that cover everybody and they still spend much less than we do. We’ve ignored those foreign models, partly because of “American exceptionalism”—the notion that the United States has nothing to learn from the rest of the world. (5)

Brill also ignores long-standing efforts in this country to enact universal coverage through a single-payer system, improved Medicare for all, as embodied in John Conyers’ bill in the House, H. R. 676. He cavalierly dismisses this alternative in these words: [My proposed regulations are] certainly more realistic than pining away for a public single-payer system that is never going to happen. (6)

Good as Brill’s book is (and I strongly recommend it) in the diagnosis of our health care problems—the toxicity of our profiteer-dominated system— his proposed treatment is speculative and uninformed by evidence. At best, if implemented, his proposals would just tinker around the edges of our problems.

We still need to ask more fundamental questions before we can see how to go forward with real health care reform, such as: who is the health care system for? (our current answer is the profiteering, mostly corporate stakeholders, not patients and their families); should health care be just another commodity for sale on an open market?; and is health care a personal right (as it is in most advanced countries), or a privilege based on ability to pay?.

Brill and I agree on one reality—the ACA is unsustainable because of its inefficiency, increasing bureaucracy, and unaffordable costs to taxpayers as well as patients and families. As all this becomes more clear, he asks, as we all should, what should follow the ACA? My just released book, How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans, describes and supports the single-payer solution, improved Medicare for all, as a public financing system costing less than the ACA, coupled with a more accountable private delivery system. (7) I hope that readers will read both books and compare their merits based on evidence and experience.


  1. Brill, S. America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System. New York. Random House, 2015.
  2. Brill, S. Health care expert Steven Brill on Obamacare: “Everybody is happy except the taxpayer.” Real Clear Politics Video, January 5, 2015.
  3. Ibid # 1, pp. 418-419.
  4. Ibid # 1, pp. 438-441.
  5. Reid, TR. The Healing of America: A Global Quest for Better , Cheaper, and Fairer Health Care. New York. The Penguin Press, 2009, pp. 225-226.
  6. Brill, S. Ibid # 1, p. 441.
  7. Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans. Friday Harbor, WA. Copernicus Healthcare, 2015.
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Important resource: “A Five-Year Assessment of the Affordable Care Act”

Posted by on Monday, Feb 16, 2015

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.

A Five-Year Assessment of the Affordable Care Act

By John P. Geyman
International Journal of Health Services, February 10, 2015


The Affordable Care Act (ACA) was enacted in 2010 as the signature domestic achievement of the Obama presidency. It was intended to contain costs and achieve near-universal access to affordable health care of improved quality. Now, five years later, it is time to assess its track record. This article compares the goals and claims of the ACA with its actual experience in the areas of access, costs, affordability, and quality of care. Based on the evidence, one has to conclude that containment of health care costs is nowhere in sight, that more than 37 million Americans will still be uninsured when the ACA is fully implemented in 2019, that many more millions will be underinsured, and that profiteering will still dominate the culture of U.S. health care. More fundamental reform will be needed. The country still needs to confront the challenge that our for-profit health insurance industry, together with enormous bureaucratic waste and widespread investor ownership throughout our market-based system, are themselves barriers to health care reform. Here we consider the lessons we can take away from the ACA’s first five years and lay out the economic, social/political, and moral arguments for replacing it with single-payer national health insurance.


Will the ACA be different, and if so, in what ways? And if it won’t work, what next? These are the questions we will deal with in this article, drawing from my just-published book, How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans. The goals of this article are three-fold: (a) to compare the goals and claims for the ACA with its actual experience in the areas of access, costs, affordability, and quality of U.S. health care; (b) to summarize lessons we can already take away from its first five years; and (c) to briefly consider economic, social/political, and moral arguments for replacing the ACA with NHI.

Full Text (PDF – 17 pages):

In this paper, John Geyman summarizes the content of his important new book, “How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for All Americans.” It is already clear that the Affordable Care Act has not and will not provide adequate repairs to our fragmented and dysfunctional health care system. Rather than inflicting more suffering by continuing this flawed experiment in health policy, we should immediately begin the transition to a system that will work – a single payer national health program.

Both this IJHS article and his book serve as important resources in educating the nation on why this transition should be initiated as soon as possible. They should be distributed widely.

The book is available through the PNHP website here.

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Why do Canadians so strongly support their single payer system?

Posted by on Friday, Feb 13, 2015

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.

This week the Forum Club of Sun City Palm Desert (a California retirement community) held a forum on single payer health care. Forum Club Secretary Mike Wedekind, a Canadian, spoke on Canada’s single payer system, and I spoke on the problems with the U.S. system that would be amenable to enactment of a single payer system.

Since it was an after-dinner meeting, I expected the usual laid-back audience with a few partaking of postprandial snoozes. On the contrary, we received great feedback from the attendees. Many attending were snowbirds – relatively affluent and generally politically conservative Canadians who maintain a winter residence in this desert community.

After we each spoke for twenty minutes, the attendees met at round tables to discuss various aspects of U.S. and Canadian health policies. Then a moderator from each table presented their quite astute observations.

I spoke individually with several of the attendees. Even though the Forum Club is explicitly non-partisan, I received no negative comments about a single payer system for the United States. In fact, the reason that I decided to write this commentary was the response of the Canadians. Though most seemed to be politically conservative, there was absolutely no indication that they thought that somehow their single payer system was deficient, especially compared to ours, except for a problem with queues for some elective services such as joint replacement. There was no mention of the need to privatize health care since they already have a private health care delivery system. They certainly see no need for intrusive, wasteful private insurers, other than to provide supplementary benefits outside of their Medicare.

It made me wish that it was as easy to converse on this topic with conservatives here in the United States. A poll last month revealed that 23 percent of Republicans already support “an expanded, universal form of Medicare” (as do 79 percent of Democrats and 45 percent of Independents).

Everyone should give some thought as to what the message might be that resonates with the Independents and Republicans who are supportive, but, above all, what is it that causes Canadians across the political spectrum to be so supportive of their Medicare? We have to deliver that message here in the United States.

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Exchange plans increasingly use abusive drug tier design<

Posted by on Thursday, Feb 12, 2015

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.

Exchange Benefit Designs Increasingly Place All Medications for Some Conditions on Specialty Drug Tier

By Caroline F. Pearson
Avalere, February 11, 2015

New analysis from Avalere Health finds that some exchange plans place all drugs used to treat complex diseases – such as HIV, cancer, and multiple sclerosis – on the highest drug formulary cost-sharing tier.

“Plans continue to innovate on benefit design in the exchange markets,” said Dan Mendelson, CEO of Avalere.  “These designs are calibrated to optimize enrollment by delivering low and stable premiums – the primary metric that consumers use to select a plan.”

Specifically, in five of the 20 classes of drugs analyzed, plans placed all drugs in a class on the specialty tier. Specifically, in the Protease Inhibitor and Multiple Sclerosis Agents classes, 29 and 51 percent of plans respectively place all drugs, including available generics, on the highest tier.

Moreover, a subset of plans in each of 10 drug classes1 placed all single-source branded drugs in a class on a specialty tier. Specifically, in 8 of the 10 classes, 2015 exchange plans were more likely than 2014 plans to assign all single-source branded drugs to the highest cost sharing tier. A single-source branded medication is a brand name drug without a generic equivalent. The practice was most common for some cancer drugs and drugs used to treat multiple sclerosis. Roughly 30 percent of plans also place all single-source drugs for HIV/AIDS on the specialty tier.

“Enrolling in a plan that places all medications for a particular disease on the specialty tier can mean significant out-of-pocket costs for consumers, particularly if they do not qualify for cost sharing reductions,” said Caroline Pearson, Vice President at Avalere.…

Some plans in the insurance exchanges are placing all drugs used to treat complex diseases, such as HIV, cancer, and multiple sclerosis, on the highest drug formulary cost-sharing tier. We have covered this terribly abusive process before, but this update shows that they are “increasingly” placing all medications for expensive conditions into specialty drug tiers. In spite of the pushback, it’s getting worse, not better.

The reasons are obvious. Higher patient cost sharing reduces the insurer’s portion of the payment for the drugs. Higher cost sharing increases the probability that patients will not fill their prescriptions due to the cost, saving the insurer even more money. Most importantly, placing all drugs for an expensive chronic disorder in the highest tier greatly increases the probability that the insurer will not have to cover these high cost patients as they much more likely will obtain their insurance from a competitor.

What then will the competitor do? It’s obvious. They will also move these drugs to the highest tier. That is the nature of business competition. When we rely on private insurance plans to cover health care, we should expect that those plans will always follow an optimal business model.

This devious policy is great for insurers’ businesses, but it is terrible for patients. Health care reform should have been all about the patient. We can still make it so by firing the private insurers and placing our own public insurer in charge through an improved Medicare that covers everyone.

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Evaluation of the Comprehensive Primary Care [CPC] Initiative: First Annual Report

Mathematica Policy Research, January 2015

CMS successfully convened 31 unique other payers (3 to 9 per region) and together with them provides non-visit based monthly care management fees in addition to traditional payments for practices to invest in redesigning and transforming care. (For the median practice, this funding was equivalent to 19 percent of total [non-CPC] practice revenue, or about $70,045 per clinician, in CPC’s first program year.) In addition to this funding, CPC also provides practices with learning activities as well as data feedback on cost, service use, quality of care, and patient, provider, and staff experience, to assist in their transformation. [p. xiii]

Across all seven regions in the first year, early results suggest that CPC has generated enough savings in Medicare health care expenditures to nearly cover the CPC care management fees paid by CMS for attributed Medicare FFS beneficiaries, although not enough to generate net savings. [xiv]

This report by Mathematica analyzes the first year of a four-year experiment being conducted in eight states by the Center for Medicare and Medicaid Innovation, an agency established within the Centers for Medicare and Medicaid Services (CMS) by the Affordable Care Act. The experiment is widely seen as a test of the “patient-centered medical home” (PCMH), although CMS does not call it that. CMS entitled the experiment the Comprehensive Primary Care (CPC) Initiative.  The Mathematica report concludes that the experiment has not saved money for CMS.

This report is unusual in that it contains information on the cost of “medical homes” from both the provider’s and the insurer’s perspective. Although the “medical home” fad is almost a decade old, research on how much it costs providers and insurers to finance the goods and services necessary for clinics to qualify as “homes” is almost nonexistent.

According to Mathematica, the clinics participating in the CPC experiment have received subsidies equal to 19 percent of the clinics’ revenues. These subsidies (“non-visit based monthly care management fees,” as Mathematica calls them) were provided by CMS and 31 private insurers, including United Healthcare, Anthem, Aetna, and Cigna. These subsidies do not include the subsidies many clinics received from the federal government to buy electronic medical records, nor the subsidies previously received by the two-fifths of the clinics that had been certified as PCMHs prior to the start of the CPC experiment. Finally, the 19 percent figure  does not include expenditures by CMS and the 31 insurers on training and “data feedback … to assist with transformation.” The total cost of the experiment – those incurred by both the clinics and the insurers – is, therefore, more than 19 percent of clinic revenues.

Mathematica also reports in a table (ES-2, p. xxi) that Medicare’s subsidies raised Medicare spending on the patients “attributed” to the clinics by 3 percent and that the clinics cut Medicare spending on medical care by 2 percent for a net change in total spending of plus 1 percent. In per-member-per-month (PMPM) terms, Medicare spent an additional $20 PMPM on “attributed” Medicare patients and saved only $14 PMPM. But, to repeat, the 3 percent and $20 PMPM figures do not include the cost to CMS of the training and “data feedback.”

Mathematica does not report analogous data for the private insurers. The report tells us only that Medicare’s payments to the clinics were much larger than those of the private insurers. Medicare accounted for only 26 percent of “attributed” patients but provided 64 percent of the subsidies.

The 19 percent figure for Medicare beneficiaries is consistent with anecdotal data I cited in a comment I posted here a month ago.  That evidence suggested that the costs clinics must incur to qualify as PCMHs is somewhere in the neighborhood of 15 to 20 percent of clinic expenditures.

Although the information in the Mathematica report is unusually helpful, that is not saying much given the near total absence of research on the cost of “homes.” The report still leaves fundamental questions unanswered. Is a 19 percent increase in funding enough to finance the purchase of the extra staff and equipment clinics need to “transform” into providers of “comprehensive care” or  PCMHs? Mathematica offers only vague statements on this important question. Here is one of the few comments on this issue from the 173-page report: “For many practices, CPC’s PMPM care management fees were an important motivation for participation. … Practices that had begun participation in a local or regional PCMH initiative prior to CPC viewed the additional revenues as less important.” (p. 24)

Here is another fundamental question the report leaves unanswered: Would the CPC experiment save more than it costs if CMS were to raise or lower the subsidies? For example, what would happen if CMS were to double the subsidies to 40 percent of clinic revenues and 6 percent of CMS payments? Would the participating clinics improve the health of their patients so dramatically that CMS’s medical costs would drop by 10 percent, for a net savings of 4 percent? The report offers no information to help us answer that question.

I predict that when this four-year experiment is over Mathematica will still be unable to address these questions. These questions will be unanswerable because the hypothesis that CMS is testing is too vague to be tested. I will have more to say about this in another comment about the Mathematica report that I will post soon.

Kip Sullivan, J.D., is a member of the board of Minnesota Physicians for a National Health Program. His articles have appeared in The New York Times, The Nation, The New England Journal of Medicine, Health Affairs, the Journal of Health Politics, Policy and Law, and the Los Angeles Times.

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How far can we go with Sec. 1332 waivers?

Posted by on Tuesday, Feb 10, 2015

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.

Understanding the Affordable Care Act’s State Innovation (“1332”) Waivers

By Jessica Schubel and Sarah Lueck
Center on Budget and Policy Priorities, February 7, 2015

Considerable uncertainty surrounds the potential scope of the “waivers for state innovation” authorized under the Affordable Care Act (ACA), which allow states to modify how they implement key elements of health reform beginning in 2017. Also known as “1332 waivers” for the section of the ACA creating them, the waivers are attracting attention as a way states may pursue their own approaches to expand coverage, including alternatives that would represent a significant departure from the ACA’s standards and requirements.

Many aspects of the ACA, however, cannot be waived. Moreover, the ACA establishes several conditions that states must satisfy if they diverge from ACA standards and requirements. These conditions ensure that states using the ACA’s waiver authority continue to meet the overarching goals of health reform, such as extending access to affordable health coverage that provides a basic level of benefits.

In addition, section 1332 waiver authority doesn’t extend to Medicaid or the Children’s Health Insurance Program (CHIP). If a state wants to change these programs at the same time that it changes how it implements health reform, it can simultaneously request approval of a Medicaid or CHIP demonstration project under section 1115 of the Social Security Act. Section 1332 waivers aren’t themselves “super waivers” that give states sweeping new authority over Medicaid or CHIP (or Medicare), as some have suggested.

This paper describes key elements of 1332 waivers, how states may use them, what conditions states must satisfy to receive federal approval, and how they interact with existing waiver authority related to other federal health programs.

“Forget about our gridlocked Congress. We’ll get an ACA waiver and enact our own state-level single payer system, just like Saskatchewan did in Canada.” Great idea. The problem is that the Sec. 1332 waivers authorized in the Affordable Care Act are extremely limited in their scope. This very helpful article from CBPP explains the uses and limitations of the Sec. 1332 waivers.

Although the limitations are disappointing, single payer activists should vigorously proceed on two fronts. While Congress remains non-receptive to legislation moving us toward single payer, efforts should continue on a state level to enact whatever single payer policies are possible. That not only would make the eventual transition to a single payer system smoother, but it would also improve access and affordability for those who need relief now.

The more important front is to immediately step up advocacy for federal legislation, using John Conyers’ H.R. 676 – the Expanded and Improved Medicare for All Act – in educating the public as to reform that would really work. Although the Republican-controlled 114th Congress is preoccupied with responding to the Affordable Care Act and will not advance a single payer bill, nevertheless it is essential that we use this time to educate, form coalitions, educate, initiate grassroots efforts, and educate. As people discover how severe the deficiencies in our current system are, they will want to hear about a system that does not take away their choices while exposing them to financial hardship.

So understand the limitations of Sec. 1332 waivers as you continue your advocacy for state reform, but, by all means, simultaneously intensify your efforts for federal legislation that will enable not only your state, but all states, to ensure that everyone in the nation will have access to all essential health care services, free of financial barriers.

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Elisabeth Rosenthal’s “Insured, but Not Covered”

Posted by on Monday, Feb 9, 2015

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.

Insured, but Not Covered

By Elisabeth Rosenthal
The New York Times, February 7, 2015

The Affordable Care Act has ushered in an era of complex new health insurance products featuring legions of out-of-pocket coinsurance fees, high deductibles and narrow provider networks. Though commercial insurers had already begun to shift toward such policies, the health care law gave them added legitimacy and has vastly accelerated the trend, experts say.

The theory behind the policies is that patients should bear more financial risk so they will be more conscious and cautious about health care spending. But some experts say the new policies have also left many Americans scrambling to track expenses from a multitude of sources — such as separate deductibles for network and non-network care, or payments for drugs on an insurer’s ever-changing list of drugs that require high co-pays or are not covered at all.

For some… narrow networks can necessitate footing bills privately. For others, the constant changes in policy guidelines — annual shifts in what’s covered and what’s not, monthly shifts in which doctors are in and out of network — can produce surprise bills for services they assumed would be covered. For still others, the new fees are so confusing and unsupportable that they just avoid seeing doctors.

(B)y endorsing and expanding the complex new policies promoted by the health care industry, the law may in some ways be undermining its signature promise: health care that is accessible and affordable for all.

Readers Comments:

Don McCanne
San Juan Capistrano, CA

The private insurance industry will always place a priority on optimizing its business model, which means maximizing revenues (premiums) and minimizing expenses (payments for patient care). Earlier managed care models proved unpopular because of denial of care, but now they have devised innumerable methods of denying payment instead, in full or in part. Many examples are found in this article.

In sharp contrast, an insurer owned by the public, such as Medicare, has a mission of serving patients. That is, our own public stewards are there to help us get the care we need. They are not there to try to produce a profit for the government; after all, its our own tax dollars.

We are close to the threshold wherein the public will no longer tolerate private insurers shifting ever more costs onto patients with health care needs, while taking away our choice of our health care professionals.

What is our way out? Improve Medicare and expand it to include everyone.

Len Charlap
Princeton, NJ

Some conservative commenters have pointed to Switzerland as a country which only uses private insurance companies and appears to have a system that works.

  1. The Swiss government writes a basic policy that all companies are required to offer with no change. Thus all the chicanery reported in the article is avoided. The policy is accepted by all doctors. People know exactly what they are getting. Everyone must have the basic policy.
  2. The private insurance companies may make no profit on the basic policy.
  3. The health care results of Switzerland are about average among the 10 or 12 wealthiest countries which is to say they are considerable better than we get.
  4. If the cost of insurance is more than 8% of a family’s income. they receive a subsidy from the government. About 40% receive such subsidies.
  5. We pay about 50% more for health care than the Swiss, but the Swiss pay almost 50% more than the other wealthy countries most of which use a variation of single payer.
  6. The Swiss government and insurance companies pay careful attention to the practices of its physicians wrt to poor practice, unnecessary tests, and overcharges. A suspected doctor will receive a dreaded “blue letter” from the insurance company requiring him to justify his practice.

If we can’t have an efficient single payer system like the UK or Canada, for example, I would settle for something like the Swiss system. It would do away with most of the scams illustrated in Rosenthal’s great series.

Don McCanne
San Juan Capistrano, CA

In Reply to Len Charlap

The Swiss health care system is certainly superior to what we have in the United States, precisely because of the reasons cited by Dr. Charlap. However, a comprehensive report by OECD and WHO of the Swiss system was released in 2011, and, if you read it carefully, you will also find these features of the Swiss system – features they share with us:

  • Highly inefficient and fragmented
  • Profound administrative waste
  • Inequitably funded
  • Regressive financing
  • Wide variations in premiums
  • Highest out-of-pocket costs
  • Increasing managed care intrusions
  • Insurers game the system

Because of the inadequacies of the Affordable Care Act we need to return to the negotiating table to fix our health care system. But when we do, let’s not start from a position of compromise, thereby allowing private insurers to continue to inflict these abuses on us. Let’s begin with a bona fide single payer system – an improved version of Medicare that covers everyone.….

This may be the most important article in Elisabeth Rosenthal’s outstanding series on health care costs and pricing in the United States. She shows that the Affordable Care Act failed to prevent private insurers from reducing their own risks by shifting much more of the costs onto patients, while reducing patient choice by further limiting their networks of approved providers.

Both access and affordability are worse now than they were with typical plans available a generation ago. The nation expanded the numbers covered by insurance, but at a cost of of leaving too many patients broke and without adequate access to care.

In my first posted response to her article, I repeated our oft-expressed view that it makes a difference on whether we finance health care through private insurers structured to optimize their business success or though public insurance designed specifically to serve patients. Elisabeth Rosenthal shows that what is good for insurers is bad for patients.

Some may wonder why I included two responses on the Swiss health care system when this article is on the poor quality of private health plans in America.

First I want to say that Len Charlap is one of the more astute and ethically-driven commentators in the readers’ response sections of The New York Times. His highly appropriate response to this article explains that our private insurance products could be greatly improved if we adopted the policies that the Swiss have in their country to regulate and control the excesses of the private insurance industry. Such a system theoretically would be more politically feasible in the United States since it is supported by a few prominent conservatives such as Harvard Professor Regina Herzlinger.

We definitely do need to return to the negotiating tables since the ACA reforms are intolerably flawed. Although I certainly agree with Len Charlap that the Swiss system definitely would be superior to what we have, I do have a problem supporting a Swiss-style private insurance model as our opening position on renegotiating reform. Imagine having to compromise with those on the far right who would insist that patients have greater financial exposure to the health care that they receive. They would perpetuate and make even worse the very problems that Elisabeth Rosenthal discusses in her article.

The reason that I am reposting our responses here is that Len Charlap’s comment received very high exposure since it was selected and displayed as a “NYT Picks” and at the top of the list of “Readers’ Picks.” On the other hand, my response to him was held until some time after the comments section was closed, and then, when it was posted, it was buried under 300 plus responses, and thus had virtually no visibility.

My response to him listed findings from a OECD/WHO report that revealed that the Swiss private insurance plans, though certainly better than ours, still had many serious deficiencies that we should reject as we go back to the tables to fix our sick system. Many NYT readers may assume from Len Charlap’s comment that the Swiss system is the answer, or at least a reasonable compromise with broad political support (except that the current Republican proposals move even further away from the highly regulated Swiss system).

So the point of discussing these comments on the Swiss system is found in my concluding remark in my second post above:

“Because of the inadequacies of the Affordable Care Act we need to return to the negotiating table to fix our health care system. But when we do, let’s not start from a position of compromise, thereby allowing private insurers to continue to inflict these abuses on us. Let’s begin with a bona fide single payer system – an improved version of Medicare that covers everyone.”

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Burr, Hatch, and Upton’s Obamacare Replacement Plan

Posted by on Friday, Feb 6, 2015

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.

Burr, Hatch, Upton Unveil Obamacare Replacement Plan

Press Release from Senator Richard Burr (R-N.C.), February 5, 2015

Today, U.S. Senator Richard Burr (R-N.C.), Senate Finance Chairman Orrin Hatch (R-Utah), and House Energy and Commerce Chairman Fred Upton (R-Mich.) unveiled the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act — a legislative plan that repeals Obamacare and replaces it with common-sense, patient-focused reforms that reduce health care costs and increase access to affordable, high-quality care. In contrast with Obamacare and its government-centered mandates and regulations, this bicameral proposal empowers the American people to make the best health care choices for themselves and their families.

The Patient CARE Act provides a legislative roadmap to repeal the President’s health care law known as Obamacare and replace the law with common-sense measures that would:

Establish sustainable, patient-focused reforms:

  • Adopt common-sense consumer protections;
  • Create a new protection to help Americans with pre-existing conditions;
  • Empower small businesses and individuals with purchasing power;
  • Empower states with more tools to help provide coverage while reducing costs; and
  • Strengthen consumer directed health care and allow Americans to buy coverage across state lines.

Modernize Medicaid to provide better coverage and care to patients:

  • Transition to capped allotment to provide states with predictable funding and flexibility.

Reduce defensive medicine and rein in frivolous lawsuits:

  • Medical Malpractice reforms.

Increase health care price transparency to empower consumers and patients:

  • Require basic health care transparency to inform and empower patients.

Reduce distortions in the tax code that drive up health care costs:

  • Cap the exclusion of an employee’s employer-provided health coverage.

Empower Small Businesses and Individuals with Purchasing Power:

  • Targeted tax credit to help buy health care.…

The Patient Choice, Affordability, Responsibility, and Empowerment (Patient CARE) Act:…

The Affordable Care Act has fallen far short of the health care reform that America desperately needs, and the Republicans have repeatedly voted for its repeal. To supposedly show that they are sincere about wanting to fix our health care system, they have introduced The Patient Choice, Affordability, Responsibility, and Empowerment (Patient CARE) Act – not formal legislation but rather a nine page white paper (accessible at the link above).

Although some have labeled this the Republican response to the Affordable Care Act, House speaker John Boehner has assembled another task force to prepare what presumably will be a more formal response, though likely only a more detailed version of this proposal.

When you read past the glowing rhetoric of this white paper, it becomes obvious that this is merely a rehash of several of the policies that Republicans have supported for the past few decades. They would remove mandates for insurance coverage, open the markets to plans with grossly inadequate, stripped-down benefits, sell insurance plans across state borders in a race to the bottom, shift more of the responsibility of paying for care to patients in need, expand the use of high deductible health plans, expand the use of health savings accounts (which do not work when they are empty), shift more of the responsibility of funding care for the poor to the cash-strapped states through Medicaid block grants, make comprehensive plans even less affordable by taxing them, establish under-funded high-risk insurance pools that are too small to meet the need, etc., etc.

These policies will leave more people uninsured, and the majority of those with insurance will end up with lousy plans because they will not be able to afford more comprehensive benefits. These plans will impair access and expose patients to financial hardship and even personal bankruptcy. With fewer funds directed to health care, our health delivery infrastructure could deteriorate, negatively impacting care for even the affluent.

However, the Republicans are doing us a favor. They are publicizing the deficiencies of the flawed reform program brought to us by the Democrats, and they are exposing their own flawed concepts of reform. That provides us with an opportunity to reenter the national dialogue on health care reform. Instead of continuing to rummage through bad policies, we can inject into the debate single payer policies that are truly effective. With the 2016 presidential political season already underway, we need to be sure that voters understand that their health care depends on the policies supported by the politicians they elect.

Yesterday’s message was about John Geyman’s book, “How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans” – a book written specifically for the purpose of ensuring that single payer occupies a prominent position in today’s political arena. For those who missed it yesterday, the message can be accessed here.

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John Geyman’s timely book on ACA and single payer

Posted by on Thursday, Feb 5, 2015

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

How Obamacare Is Unsustainable: Why We Need a Single-Payer Solution for All Americans

By John Geyman, M.D.
Copernicus Healthcare, January, 2015

As we all know, the intense debate over Obamacare, or the Affordable Care Act (ACA), is a polarizing issue that sharply divides political parties and the public. Confusion reigns over its benefits, problems and prospects as claims and counterclaims fill press and media coverage.

This book is an attempt to make sense out of all of this – to cut through the rhetoric, disinformation and myths to assess what is good and bad about the ACA, and to ask whether or not it can remedy our system’s four main problems – uncontrolled costs, unaffordability, barriers to access, and mediocre, often poor quality of care.

In Part One, we will briefly trace historical roots of various reform attempts over the years, and summarize some of the major trends that have changed the delivery system, professional roles and values, the ethics of health care, and the role of government vs. the private sector. In Part Two, we will compare the ACA’s promises with realities of what it has accomplished, examine its initial outcomes on access, cost containment, affordability and quality of care, ask whether its flaws can be fixed with a private insurance industry, and point out the lessons that we can already take away from the first five years of the law. In Part Three, we will discuss the many myths that are perpetuated by opponents of single-payer national health insurance (NHI) and show how that approach stands ready to deal directly with what has become a national disgrace – our increasingly fragmented and cruel health care system that serves corporate interests at the expense of ordinary Americans. We will make the case for NHI in three ways – economic, social/political, and moral. Most other advanced countries around the world came to this conclusion many years ago.

Why this book now? With the 2014 midterm elections behind us, divisions between the parties are even more polarized. The future of health care is even more uncertain. The 2016 election cycle is already underway, and both parties have to confront the failures of yet another incremental attempt to reform our so-called health care system. We have a short year and a half to re-assess where we are and try once again to get health care reform right. As much of the public knows all too well, the stakes get higher every day.

“How Obamacare Is Unsustainable” can be purchased through PNHP for $15.00, here. It is also available through and for $18.95.

John Geyman has been a prolific writer of books describing the major deficiencies in health care in the United States, but “How Obamacare Is Unsustainable” is set apart from the others for a couple of important reasons. He explains what has been wrong with our five year experiment in reform and what we can do about it, and, especially pertinent, it is timed to coincide with a moment in history in which there will be an intense national dialogue recognizing the health care failures of the past and present, with a demand for political solutions as we enter the season of the 2016 presidential election.

Just today, Sen. Burr, Sen. Hatch and Rep. Upton released a nine page report being characterized as the Republican response to Obamacare (though Speaker Boehner has requested another, likely similar proposal from a House team that includes Rep. Upton). Unfortunately, the Burr/Hatch/Upton response is highly partisan and thus gets most of the policy wrong. Although the Affordable Care Act was conceived as a non-partisan solution, it too became partisan as the politics shifted from a largely right-wing concept advanced by Democrats (non-partisan) to an exclusively Democrat-endorsed proposal (highly partisan). In the turmoil, the result ended up being the most expensive model of reform, yet it contained terribly flawed policies that fall intolerably short of universality, affordability, accessibility, efficiency and equity. Both the Democrats and the Republicans are wrong.

As we enter the pending national dialogue on reform we need to move the rhetoric from partisan sniping to informed discussions of policy. We know where Congress lies in the highly-polarized partisan divide, but what about the nation?

According to a January 2015 Gallup poll, 42% of voters are Independents, 29% are Republicans, and 28% are Democrats. Thus a plurality is non-partisan.

According to that same Gallup poll, 45% of Independents support getting their insurance “through an expanded, universal form of Medicare.” To no surprise, 79% of Democrats also support universal Medicare, but, of great importance, 23% of Republicans do as well. When people understand policy, the partisan polarization diminishes.

At this time in history, it is imperative that all solutions be on the table, including those that give up on comprehensive reform (Burr/Hatch/Upton), those that perpetuate unacceptable mediocrity (the Affordable Care Act), and those that would actually achieve the goals that a large majority of Americans support (single payer, improved Medicare for all).

This is why John Geyman’s book is so timely. It is a book on optimal policy. It can be contrasted with today’s partisan release on the Republican answer to Obamacare. Their nine page proposal can be accessed at the following link:…

Partisan politics has not served us well with the Democrats giving us overpriced and mediocre reform and the Republicans proposing to further expose patients to the perverse dysfunctions of the market. Maybe Independents can help us stamp out partisanship and instead become serious about doing what is right for the nation.

Right now we have a chance to change history. We should make widely available John Geyman’s book based on sound, effective policy – just what the nation desperately needs.

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