John McDonough on what follows Vermont

Posted by on Wednesday, Dec 24, 2014

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.

Vermont ends single payer bid: Feds now left to confront the issue

By John E. McDonough
CommonWealth, December 23, 2014

Many American dislike the Affordable Care Act not because it goes too far but because it does not go far enough.  About 24 percent of Americans believe the ACA should be expanded, and by that, many mean a Medicare-for-All single payer financing scheme that takes insurance companies out of the equation.

Since the ACA is nothing like single payer, for four years now, the candle in the window for single payer advocates has stood in the governor’s office in the Vermont State House.  Gov. Peter Shumlin got elected in 2010 promising to bring a single payer health financing scheme to Vermont, and various people in his administration have been hard at work figuring how to make it happen.  Last Wednesday, though, Shumlin snuffed out the candle, admitting that he couldn’t make the numbers work.

So what is single payer’s future?  Like all good Democrats, I harken to the words of my late boss, Sen. Kennedy: “…the work goes on, the cause endures, the hope still lives, and the dream shall never die.”

Today, in the United States, we have three-plus mega-health insurance programs in Medicare, Medicaid, and the new ACA subsidy/exchange structure.  Medicare is actually two programs when you count Medicare Advantage.  Medicaid is nearing 70 million covered lives.  And as employer coverage continues its 25 year plummet, the ACA subsidized exchange world is going to grow in size and importance.

It may take 5, 10, 15 years, or even longer – but at some point, some Republicans and Democrats will propose federal health insurance consolidation.  The illogic and wastefulness of running these enormous, siloed health insurance behemoths will become clear – that will be the backdoor start and momentum will grow.

The Vermont failure, I believe with regret, signals the end of serious efforts to achieve single payer at the state level.  It’s too big a lift, economically and politically.  Shumlin inadvertently blew out the candle.

At the federal level, I do expect it – but through the backdoor, not the front, and no time soon.

John McDonough is a professor at the Harvard School of Public Health and the author of Inside National Health Reform.…

John McDonough is one of the nation’s most astute observers of health care reform. We can take solace in his prediction that the entire nation will eventually achieve single payer reform, while regretting that it will be a slow process.

For those who differ, prove him wrong.

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WSJ on Vermont’s single payer effort

Posted by on Tuesday, Dec 23, 2014

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.

Vermont’s Single Payer Washout

The Wall Street Journal, December 22, 2014

Last week, in a reversal that deserves more attention, Democratic Governor Peter Shumlin announced that Vermont would no longer create America’s first statewide single-payer health system.

Single payer is the polite term for socialized medicine and the ultimate goal of the political left.

At least the Governor deserves credit for admitting failure. His ideological comrades are rarely dissuaded by the prospect of economic damage, as ObamaCare proves. But Mr. Shumlin has succeeded in making Vermont a national model: By admitting that single payer will make health care both more expensive and less efficient, he has shown other states what not to do.


H.202, Bill as Passed by the House and Senate, 2011

“An act relating to a single-payer and unified health system”

changed to

“An act relating to a universal and unified health system”

(H.202 is a 213 page bill. The first 135 pages were deleted and the remaining pages are a rewrite of the entire bill.)


The director, in collaboration with the agency of human services, shall obtain waivers, exemptions, agreements, legislation, or a combination thereof to ensure that, to the extent possible under federal law, all federal payments provided within the state for health services are paid directly to Green Mountain Care. Green Mountain Care shall assume responsibility for the benefits and services previously paid for by the federal programs, including Medicaid, Medicare, and, after implementation, the Vermont health benefit exchange.

As was fully expected, the conservative and libertarian pundits are inundating the Internet and other media vehicles with celebratory commentaries on the theme that Vermont Gov. Peter Shumlin’s withdrawal of his single payer proposal is proof that single payer is more expensive and less efficient than other health care financing systems. The Wall Street Journal editorial excerpt above is selected as a leading example of these right-wing responses. The problem with these comments is that H.202, the Vermont reform legislation, IS NOT A SINGLE PAYER PROPOSAL.

Even many single payer supporters have it wrong. They claim that Gov. Shumlin gave up for political reasons, and, if he had persevered, he would have been successful in establishing the first state-level single payer system in the U.S. Again, the problem is that H.202, the Vermont reform legislation, IS NOT A SINGLE PAYER PROPOSAL.

Posted above is a link to H.202. During the legislative process, the bill was renamed, deleting “single-payer” from its title. If you check the document at the link, you will see that the original bill was red-lined out, and the bill was entirely rewritten. All references to “single-payer” were removed.

The crucial phrase in the except above regarding waivers and agreements is “to the extent possible under federal law.” It was known at the time the revisions were being made that Sec 1332 ACA waivers, Sec 1115 Medicaid waivers, the narrowly defined Medicare demonstration waivers, and the ERISA limitations on employer-sponsored plans were so limited that it would be impossible to establish a bona fide single payer system through unilateral state action alone, nor through a cooperative effort with the Obama administration. Comprehensive federal legislation would have been required, and that clearly was not forthcoming from this or the next Congress. Legislating a wish list does not equate with clearing all of the hurdles that only Congress can effectuate.

The reason that this message is being reemphasized again today is that there has not been a loud enough voice in unison emphatically rejecting the claim that Vermont’s experience is proof that single payer cannot work. Single payer never had a chance, considering the inertia in Congress. This was not a single payer failure. Do not remain silent when that claim is made. Single payer has been proven to work well in many other nations.

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The health-cost slowdown isn’t just about the economy

By David Leonhardt

New York Times, December 5, 2014

It’s one of the most important economic questions today: Is the snail-like growth of health costs over the last several years a real trend, or is it merely a temporary part of the Great Recession’s aftermath?

The data experts who compile the government’s official numbers on health spending lean toward the more pessimistic view. They think the slowdown – to the lowest level of growth on record – stems in large part from Americans skimping on medical care during tough times.

“The pattern observed in recent years is not unique and is consistent with historical patterns,” Anne Martin of the Centers for Medicare & Medicaid Services said after that agency released new numbers this week. The agency’s report put the argument this way: “The key question is whether health spending growth will accelerate once economic conditions improve significantly; historical evidence suggests that it will.”

I do think the government’s analysts are putting an overly pessimistic spin on the numbers.

It’s simply not true that G.D.P. and health costs have historically moved in tandem.

The annual rate of growth in total national spending on health care tumbled in 2009 and continues to be very low. This is happening primarily because our country is struggling to recover from the worst recession since the Great Depression, and secondarily because insurance coverage and income inequality are getting worse.

This is not what managed care advocates like David Leonhardt would have you believe. Leonhardt argues there is simply no correlation between recessions and health care inflation and that managed care fads, particularly those endorsed by the Affordable Care Act, deserve much of the credit for the current slowdown in health care inflation.

Leonhardt cites the pay-for-performance, aka value-based-purchasing, fad. He argues that insurers, including Medicare, have begun to “make payments based less on the quantity of health care provided and more on the quality.” He claims the ACA’s provision requiring Medicare to punish hospitals that have “excess” readmissions is a successful example of the fad at work.

The actuaries at the Centers for Medicare and Medicaid Services (CMS) do not agree. In their last two annual reports on national health spending (for 2012 and 2013) they attribute the unusually slow growth in national health expenditures (NHE) to the recent recession and give no credit at all to managed care nostrums, including “accountable care organizations” and other fads endorsed by the ACA. CMS’s position is correct. Claims by Leonhardt and other ACA proponents, such as White House adviser Jason Furman, that the ACA’s managed care provisions deserve some credit are wrong.

The graph below is taken from CMS’s report on NHE for 2013.

Health Aff   hlthaff.2014.1107, Exhibit 3 (1)


The graph, which covers the last quarter-century, gives you a sense of how strong the correlation between NHE and recessions is.

The graph compares changes in NHE with changes in Gross Domestic Product (GDP). (GDP is the yardstick used to determine when the U.S. has entered into and exited from a recession. When GDP falls for two consecutive quarters, we are said to be in a recession.) The graph breaks the last 25 years into two groups: Years that contained a recession plus the two years that followed those recessions; and all succeeding years up to the start of the next recession.

The graph reveals an obvious pattern: The three recessions that have occurred during the last 25 years have all been followed by sustained declines in health care inflation. Recessions cause NHE inflation to drop, but only after the passage of a few years. And, moreover, the dampening effect that recessions have on NHE persists long after the recession ends. Leonhardt’s statement that “It’s simply not true that GDP and health costs have historically moved in tandem” is wrong. Astonishingly wrong.

Because the Great Recession was the worst recession since the Great Depression, and because NHE and GDP are strongly related, it follows that the decline in health care inflation following the last recession would be unusually deep and unusually prolonged. That is in fact what we are seeing.

Other research on the inflation slowdown supports CMS’s position. The most convincing paper on this subject appeared last August in Health Affairs. Rather than compare national GDP to national health care spending, the authors, David Dranove et al., compared employment rates at the metropolitan level to health care spending at the metropolitan level. Using a very large sample size (47 million non-elderly people insured by Aetna, Humana and United HealthCare), they found a clear correlation between the employment rate and health care inflation for the entire sample across all cities. Where the employment rate fell only slightly, inflation in health spending declined only slightly, and where employment fell precipitously, health care inflation fell precipitously.

Dranove et al. reported a lag time of only one year for the nation as a whole between the initial decline in unemployment and health care inflation: The employment rate dropped precipitously in 2008, and in 2009 the health care inflation rate fell sharply. They also reported that both the employment and health care inflation rates remained depressed two years after the recession officially ended in 2009 (2011 was the last year examined by the study).

Dranove et al.’s findings confirm, and shed more light on, the correlation between recessions and the rate at which health care spending increases. When the unemployment rises, people postpone medical care. And demand for medical care stays depressed even after recessions end because the employment rate takes a while to recover.

This finding is especially relevant today. It may be true that the Great Recession has been officially over since 2009, but it is also true that the recovery from that recession has been unusually slow and has disproportionately benefited the wealthy. The unemployment rate has taken longer than usual to come down, and incomes for average Americans have stagnated.

According to a recent Wall Street Journal analysis of income and spending by the middle class (which the Journal defined as the 60 percent of households earning between $18,000 and $95,000), middle-class income has declined in inflation-adjusted terms since 2007.

Other evidence indicates that the effect of the Great Recession has been aggravated by the rising cost of health insurance coupled with rising copays and deductibles, and that this trend has gotten worse during 2014 despite the drop in the nation’s uninsured rate caused by the ACA. A poll released by Gallup in November reported that the percentage of Americans who have put off medical care because of cost ticked up 3 percentage points between last year and 2014, and that the increase was far worse (9 percentage points) among those with private insurance.


Two New York Times/CBS polls, one conducted in December 2013 and the other this December, confirm Gallup’s finding. The 2013 poll reported that 31 percent of respondents said paying for “basic medical care” is a hardship. That number had risen to 46 percent by the end of 2014. The poll also reported that out-of-pocket costs have soared because coverage is getting worse and health care fees and prices (as opposed to utilization) have gone up.

As the latest CMS report notes, a slowdown in Medicare inflation contributed to the reduction in the rate of growth in NHE during 2013. Medicare expenditure growth dropped slightly in 2012 as well. Some ACA and managed care proponents have asserted that this is evidence that some or all of the managed care fads imposed upon Medicare by the ACA must be working. They argue that Medicare beneficiaries are more insulated from the effects of recessions than the non-elderly and for that reason the recession cannot have contributed to reduced Medicare inflation. This argument no doubt exaggerates the isolation of Medicare from the general economy, but for the sake of discussion let’s accept it at face value.

This “Medicare is insulated from recessions” argument ignores an obvious explanation for the recent reduction in Medicare inflation: Congress has ordered several cuts in Medicare spending in recent years. The cuts authorized by the ACA in 2010 and the Budget Control Act of 2011 (the “sequestration” bill) were large by any standard. In its last two reports, CMS said these cuts explain the bulk of the recent reduction in Medicare inflation. A study just released by the Kaiser Family Foundation confirms CMS’s explanation.

One does not have to have a PhD in economics to grasp the significance of the facts I have just presented. These facts – the longstanding correlation between recessions and NHE inflation, the severity of the last recession, the rising cost of health insurance along with rising out-of-pocket costs, and the devastating and prolonged effects of the last recession on the incomes of average Americans – explains why we are seeing historically low rates of health care inflation. We need not consult the Book of Managed Care Theology to find other reasons.

If income inequality continues to worsen, and if insurance premiums and out-of-pocket costs continue to grow faster than the incomes of the vast majority of Americans, we may see a weakening of the longstanding correlation between GDP and NHE. If that happens, it won’t be evidence that managed care fads are finally working. It’ll be evidence that GDP is no longer a reasonably accurate proxy for the income of the average U.S. household and that economists need to find a better measure of income than GDP.

But rest assured that if annual growth in national health spending continues to stay low despite growth in GDP, managed care and ACA proponents will claim managed care fads are working. They will do this even though research on the individual fads, be it ACOs or “medical homes” or electronic medical records, fails to find these nostrums save more money in reduced medical costs than the nostrums themselves cost to implement.

Kip Sullivan, J.D., is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. His writing has 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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Will the Supreme Court require enforcement of the Medicaid equal-access provision?

Posted by on Monday, Dec 22, 2014

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.

Medicaid Payments and Access to Care

By Sara Rosenbaum, J.D.
The New England Journal of Medicine, December 18, 2014

With more than 66 million beneficiaries, Medicaid is the United States’ largest insurer, and its impact on health insurance coverage, access to care, and the health of the poor has been substantial. But historically, Medicaid has faced a major challenge — a relatively low rate of physician participation. In its March 2011 report to Congress, the Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC, Congress’s Medicaid advisory panel) pointed out that the Medicaid population disproportionately resides in medically underserved communities with serious shortages of primary care providers and that the problem of isolation is confounded by low physician-participation rates.

Extensive research suggests that many factors contribute to low physician participation: complex program requirements, payment delays, and concerns about managing the care of patients with high levels of health and social risk. But research also shows that low fees play a key role and that substantial payment increases may be needed to alter physicians’ behavior. In a study conducted for the Kaiser Family Foundation, the Urban Institute estimated that in 2012, Medicaid physician fees averaged about 66% of Medicare payments and that the Medicaid–Medicare pay disparity was widening.

For good reason, primary care tends to be the first area of focus in any discussion of access in Medicaid. With a pronounced and growing shortage of primary care professionals — a shortage that’s estimated to reach 30,000 by 2015 — depressed Medicaid participation among available physicians is a major cause for concern. In the case of primary care, mitigation strategies exist. Safety-net providers such as community health centers play a vital role in reducing the access gap in the communities they serve.

Specialty care arguably presents the more serious Medicaid access problem, especially since there is no obvious mitigation strategy for it comparable to that offered by community health centers. The Commonwealth Fund reports that low payment rates are the principal cause of reduced specialist participation.

Among the hot-button issues that define the tense federal–state Medicaid relationship, no issue has historically been hotter than access to care, because of fierce state resistance to federal oversight of provider payment. This tension has led Congress to gradually strip most provider-payment provisions out of the Medicaid statute. But one basic legal principle remains: the so-called equal-access provision, which specifies that as a condition of federal funding, states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The Department of Health and Human Services (HHS), however, has never implemented this provision through regulations.

Under the Affordable Care Act, Congress funded a 2-year pay increase for Medicaid primary care services in order to boost primary care payment rates to Medicare levels. In its Kaiser study, the Urban Institute estimated that the pay bump would increase fees by 73%. But the increase, which took effect in 2013, expires at the end of 2014, with no renewal in sight. News reports suggest that nearly all states plan to roll back primary care payments to 2012 levels, despite anecdotal evidence reported by some states of increases in provider participation.

Faced with payment rates that in some cases may be dangerously low, beneficiaries and providers have turned to litigation. A fundamental question, however, is whether providers and beneficiaries can go to court when provider payments may be too low to ensure appropriate access to care. In 2012, in Douglas v. Independent Living Center of Southern California, which involved a challenge to deep rate cuts enacted by California’s legislature, the Supreme Court deflected this question. Now, however, the issue is back; this term, the Court will hear Armstrong v. Exceptional Child Center, Inc., which again raises the question of whether beneficiaries and providers can protest low Medicaid payments in court. Douglas involved a rate cut; Armstrong, in contrast, involves a state’s refusal to pay properly. The situation here is one of a state’s failure to pay a provider an HHS-approved rate, with no HHS effort to enforce its own requirements.

Observers do not expect another deflection; in his Douglas dissent, Chief Justice John Roberts made clear his objection to court involvement in Medicaid-access cases, arguing that HHS — not the courts — should be the sole enforcement authority.

The Armstrong situation may be more serious than that in Douglas. Douglas involved an ongoing and active federal review, however slow it may have been. In Armstrong, the federal government has chosen to play no affirmative role whatsoever.

There is a deeper issue here, of course: getting the federal government to do what it is supposed to do. That means issuing the long-delayed access regulations, providing technical assistance to states, and maintaining active and ongoing oversight of state program management. Medicaid beneficiaries deserve no less.

Medicaid has traditionally underpaid physicians for their health care services. That has resulted in low participation rates, especially by specialists, which, in turn, threatens health care access for Medicaid patients. The Medicaid statute requires that states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” Failure of our government to enforce this equal-access provision will now be heard by the Supreme Court.

The Affordable Care Act (ACA) greatly expanded eligibility for Medicaid, though the increase was not quite as large as anticipated because of the Supreme Court’s previous ruling allowing states to opt out of the expansion. Nevertheless, in an effort to ensure that enough physicians would participate at a level to assure adequate access for the new Medicaid enrollees, Congress included a temporary provision in ACA that would increase primary care payments to Medicare levels. Next week, that increase ends, and most states will revert to pre-ACA payment levels.

Most states are shifting their Medicaid patients into managed care organizations for the purpose of reducing their spending for this program. With the low payment rates, it is difficult to see how these organizations can afford to finance their patients’ care except by significantly reducing the frequency and intensity of services delivered. This is not a population that has been receiving an excess of health care services. Quite the contrary, they were already doing without services that they should have. These further reductions likely will be able to be measured by an increase in suffering and death.

Although Chief Justice Roberts has already indicated that he does not believe this is a matter for the courts, even if there is a ruling that the equal-access provision must be enforced, it is likely that only nominal adjustments will be made and that Medicaid will continue to be critically underfunded.

Instead of tweaking Medicaid, we need to enact an improved Medicare for all that would include implicitly an equal-access provision that applies to everyone.

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Listen to Deb Richter

Posted by on Friday, Dec 19, 2014

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.

Protesters demand action on single payer, condemn Shumlin’s reversal

By Morgan True, December 18, 2014

Protesters from across the state descended on Montpelier Thursday to voice their anger with Gov. Peter Shumlin’s decision to drop his pursuit of single payer health care. More than 60 people stood in front of the Statehouse chanting slogans and singing protest songs.

Deb Richter, a longtime single payer advocate who regularly attends the Green Mountain Care Board’s meetings, tried to convince protesters that Shumlin is not their enemy.

“He’s the only governor in the country who raised this issue and put it in the forefront,” she said.

She urged them to have patience, and said she’s still optimistic Vermont will be the first state to have public universal health care, but that goal may need to achieved in increments, as the governor indicated when he made his announcement Wednesday.

“This is like turning the Titanic,” she said, “Frankly, beating up on the governor I do not believe is really going to be helpful.”

Richter called on the protesters to take their message to the Legislature, which she said is now the most fertile ground for making progress on health reform.

Deb Richter is right. The criticisms of Vermont Gov. Peter Shumlin are not only misdirected, many of them are based on the notion that he had all of the tools at hand to establish a single payer system in Vermont, but that he then decided not to move forward in response to political pressure. We should look carefully at the facts and then decide what approach we should now take to advance the single payer cause.

Many of the protests state or imply that Vermont was on the cusp of implementing a single payer system, but the effort failed because Gov. Shumlin was not innovative enough in his financing proposal for the single payer system, and then elected to abandon it because of the tax burden on individuals and businesses.

What is wrong with this concept?  Well, many things, but the most important is that the model that the governor was trying to implement WAS NOT A SINGLE PAYER MODEL. Excuse the shouting, but everyone must understand that this was not a failure of the single payer model.

Very early it was clear that Vermont could not establish a single payer system without federal support. Even the Obama administration did not have the tools to grant the comprehensive “waivers” that would be required since the process for such waivers must be authorized by Congress. The available Sec 1115 Medicaid waivers, Sec 1332 ACA waivers, and the highly limited Medicare demonstration waivers are not nearly enough to assemble a single payer program. Also ERISA restrictions prevent the state from moving self-funded employer-sponsored health plans into a state system.

It became so obvious that the label, “single payer,” was removed from the legislation, H.202, and the bill was completely rewritten. The bill passed WAS NOT A SINGLE PAYER BILL. After negotiations with the Obama administration, it was clear that there was no way to transfer the control of Medicare to the state government. It was decided that Medicare had to be left out since there was no other option. Another dilemma was that Vermont could not force employers such as IBM into the program, yet the financing system for Green Mountain Care (the surviving entity that was not even close to being a single payer for Vermont) would require payroll taxes and income taxes. How could you require IBM and their employees to pay taxes into a state health care program when they are already paying into IBM’s health benefit program? There are a multitude of other problems that we won’t repeat here, but Vermont was never even close to establishing a single payer system.

When opponents of single payer use the failure in Vermont as proof that single payer cannot work, we must respond that VERMONT NEVER ENACTED A SINGLE PAYER BILL. The bill that was enacted was not much more than a variation on the Affordable Care Act. Although it did have the unique feature of attempting to consolidate private insurers into Green Mountain Care, it failed to provide processes to implement the great multitude of other beneficial features that would be required to make it a single payer system. Vermont’s effort WAS NOT A FAILURE OF THE SINGLE PAYER MODEL.

Gov. Shumlin was not to blame. The federal restrictions were simply overwhelming, making implementation of single payer impossible without major federal legislative action. Nevertheless, Gov. Shumlin continued with his efforts to move forward with implementing as many features of single payer as were possible in this political environment. Any objective analysis reveals that there were too few options at his disposal. Merely expanding our dysfunctional system results in increased health care spending. Innumerable studies have shown that expanding on our system increases spending while falling short of reform goals. Gov. Shumlin just proved that once again. This was not a failure of the single payer model; it was a failure of a model composed of flawed health policies found in our current financing system, as perpetuated by the Affordable Care Act. A true single payer system achieves all goals while slowing spending to sustainable levels.

So what do we do now? Once everyone finishes with their venting, it is imperative that we all pick up our pace in moving forward with single payer. There are many tasks at hand. The three most important you’ve heard repeatedly: education, education, education. The nation needs to have a better understanding of single payer (and I dare say that applies to some in our own camp as well). We need both federal and state legislation. States cannot do it without enabling federal legislation, but then states will need their own legislation to implement the single payer bill enacted by Congress. Until we have the requisite federal legislation, states should begin working on cleaning up our health care financing systems so that the eventual transition to single payer will flow more smoothly.

Many have said that we cannot do anything for the next two years because of the red tide in Congress. On the contrary, two years is almost too short of a time to intensify our education efforts, and begin building the political momentum for reform, ideally before the 2016 elections. We need to get working immediately.

The news from Vermont should not be a reason to walk. On the contrary, it provides us with a reality check on what we need to do.

By the way, did I say that this was not a failure of single payer, since it was never a single payer model in the first place?

(Note: There are many views being expressed now, and some of them are in conflict. The views here are mine and not the official views of PNHP. During this time, all opinions should be expressed, but awfulizing and obstruction of progress should be avoided at all costs. We need to sound off, regroup, and then move forward both individually and in unison in our quest for health care justice for all.)

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Americans prefer public option to single payer

Posted by on Thursday, Dec 18, 2014

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 the High Cost of Medical Care Is Affecting Americans

By Elisabeth Rosenthal
The New York Times, December 18, 2014

The Times designed a questionnaire with CBS News and conducted a national poll this month.

Americans are eager for relief.

There seems to be widespread agreement that medical prices are burdensome for American patients, and new solutions are needed. But will the answer be a market-based approach involving greater price transparency? More regulation, focusing on price? A government-sponsored single-payer health system, like that in Canada? Or allowing younger people to join Medicare, the popular health insurance program for seniors? Many readers surprised me by saying they could not wait to turn 65. As one reader from Texas said: “I bought medicine in Mexico for 23 years before I became eligible for the promised land of Medicare.”

NYTimes/CBS Poll

Would you favor or oppose a government-administered health insurance plan — something like the Medicare coverage that people 65 and older get — that would compete with private health insurance plans?

59%  Favor
34%  Oppose
8%  No opinion

Would you favor or oppose a single-payer health care system, in which all Americans would get their health insurance from one government plan that is financed by taxes?

43%  Favor
50%  Oppose
7%  No opinion…

During the health care reform debate there was considerable support for a “public option” – providing individuals an option of choosing a Medicare-like program, administered by the government, that would compete with the private health plans. During the legislative process it received much publicity, but it was eventually eliminated from consideration under pressure from the insurance industry that did not want any competition from the government. A vote on a single payer proposal also was promised by the Democratic leadership in the House, but eventually the opportunity for that vote was traded away in politics as usual.

We still hear calls for a public option that many contend would address the high costs of health care, though few seem to understand that it would hardly have any impact on costs since it would be only one more player in our dysfunctional multi-payer financing system. But we also hear calls for a single payer system – an improved Medicare for all – that actually would slow spending while meeting other important goals such as universality and equity.

How are these messages resonating with the public? The competitive public option concept is supported  by 59% of those polled, whereas the single payer concept is supported by only 43%, with 50% opposed.

Although some might dispute this polling based on the phrasing of the questions or whatever, to me these results seem to suggest a much more serious problem. Instead of the national debate that we should be having – single payer versus our fragmented multi-payer system – the debate is being shifted to our private insurance-dominated multi-payer system versus a multi-payer system with a public option – a Medicare-like program that you can purchase in place of private insurance.

What does that shift in the debate do? Well, first of all, it ensures that single payer will continue to be left off of the table as we move forward. Second, it allows the insurers to exercise damage control by ensuring, through their ownership of Congress, that the public option would be prohibited from gaining an “unfair” competitive advantage against the private insurers. During the reform debate the insurance lobby was successful in selling the concept that the public option had to be removed from the control of government and have restrictions placed on it that would make it worse than the private plans. Just opening that door was still too much for the insurers, and so the concept was tabled. But when it comes back up again, the insurers want to have that debate rather than the single payer debate, and they are ready for it.

Another concern about the public option debate is that the concept is being deliberately conflated with the premium support concept as a means of ensuring that there is strong public support for improving health care value through competition – competition of private health plans, that is. The government would provide support for the insurance premiums through virtual vouchers that would provide an option to purchase various plans through the public exchanges. Thus the insurance industry gets precisely what it wants with the debate being limited to how much damage can be done to the free-standing public option, public in name only, to be sure that it does not unfairly compete with the private insurers (inadequate funding of reserves, prohibition of “advertising,” increasing adverse selection through the requirement of being the safety-net insurer, requirement to maximize cost sharing, requirement of using ultra-narrow networks, etc.).

Maybe some of this is a stretch, but we really have to be concerned when the perception of the public at large is that we don’t want a single payer system but we do want a government plan that competes with private insurers. The issues are complex. We have a lot of work to do to educate the nation on the true facts behind reform options. As far as messaging is concerned, right now the single payer opponents can dismiss our model with just one word: competition. Now just try to find one word or phrase that explains why single payer is vastly superior to private plans competing in the marketplace.

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Gov. Shumlin regrettably bails

Posted by on Wednesday, Dec 17, 2014

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.

Governor says: ‘Now is not the time for single payer financing plan’

Times Argus, December 17, 2014

Gov. Peter Shumlin is backing away from a commitment to pass a single payer health care financing plan in Vermont in 2015. He just made the announcement at a press conference in Montpelier.

Gov. Shumlin has provided a very valuable lesson for all of us. He did almost everything possible on a state level to try to establish a single payer system within Vermont. He has established the fact that, beyond all doubt, a bona fide single payer system is impossible to enact and implement on a state level without comprehensive enabling federal legislation.

We can be thankful to Gov. Shumlin for his valiant efforts. He has shown us that it is imperative that we continue with our efforts toward a goal of enactment of federal single payer legislation.

Those of us working on the state level still have very important work to do. We need to continue our education efforts on a local, statewide, and national basis. We will not have single payer until the people understand it and elect a Congress that will bring it to us.

There are other important health care measures that can provide some improvements in our dysfunctional health care system, and we should support those. But we cannot be fooled into thinking that these are incremental steps on the path to single payer. Our health financing infrastructure must be replaced with a single payer system. Mere patches, such as we see with the Affordable Care Act, fall far, far short of what we need, and will only perpetuate health care injustices.

We have plenty of dedicated people who will continue with efforts to provide the beneficial patches to our system, and we should support their work. But, above all, we need to regroup and intensify our efforts to educate the nation on the imperative of a federal solution. That must be our first and foremost priority. Nobody should become discouraged and start thinking of leaving our ranks. We need to get busy and recruit more soldiers for our cause, beginning today. We are fighting for the health of the nation.

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Why do insurers set out-of-pocket maximums lower than required?

Posted by on Tuesday, Dec 16, 2014

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.

Many Obamacare Plans Set Out-Of-Pocket Spending Limits Below The Cap

By Michelle Andrews
Kaiser Health News, December 12, 2014

Seventy-four percent of 2015 silver level plans’ out-of-pocket spending caps are below the $6,600 spending limit allowed for individual plans and $13,200 maximum for family plans, according to Avalere, a consulting firm. The average out-of-pocket maximum for 2015 individual silver plans will be $5,853, says Caroline Pearson, a vice president at Avalere. Silver was the most popular plan type this year, selected by about two-thirds of enrollees.

After a policyholder reaches the out-of-pocket spending limit during the year, the insurer pays all the bills, unless, for example, they involve doctors and hospitals not in the health plan’s network.

The vast majority of other plans also feature lower limits on out-of-pocket spending—which includes deductibles, copayments and co-insurance, but not premiums. Seventy-one percent of bronze plan spending limits were below the allowed maximum (with an average spending limit for single coverage of $6,381), as were 94 percent of gold plans (average limit, $4,458) and 98 percent of platinum plans (average limit, $2,145).

The tradeoff for lower out-of-pocket spending maximums may be a higher deductible, says Pearson. The average deductible for silver plans will increase 7 percent in 2015, to $2,658. Other metal-level average plan deductibles are increasing as well.

Higher deductibles are likely helping keep premiums low, and low premiums are what consumers are looking for, Pearson says.

Kaiser Health News:…


This Avalere report reminds us that, at a given actuarial value of a health plan (average percent of the health care costs covered by the plan), there is a reciprocal relationship between the maximum out-of-pocket spending for which the insured is responsible and the deductible that must be met before the plan begins paying for health care.

Ignoring other variables, such as waiving the deductibles for certain preventive services, let’s look at the 2015 average deductibles and average maximum out-of-pocket spending (MOOP) for the four metal tiers representing different levels of actuarial values (AV) in the insurance exchanges. The numbers are for individual plans that must be capped at a MOOP of $6,600 or less.

  • The bronze plans (AV 60%) have an average deductible of $5,249 with an average MOOP of $6,381.
  • The silver plans (AV 70%) have an average deductible of $2,658 with an average MOOP of $5,853.
  • The gold plans (AV 80%) have an average deductible of $1,080 with an average MOOP of $4,458.
  • The platinum plans (AV 90%) have an average deductible of $189 with an average MOOP of $2,145.

It is obvious that, in these examples, as AVs increase, both the deductibles decrease and the MOOPs decrease. The higher the AV value, the more complete is the coverage. But then why are both adjusted? Why didn’t the actuaries set the MOOP for each plan at the statutory maximum ($6,600) and simply adjust the deductibles? That way the higher the premium paid, the lower the deductible would be.

If you look at the platinum plan (90% AV) the average deductible is only $189. With the essential health benefits and the networks remaining the same, in order to push the AV up to 90%, the actuaries had to reduce the maximum out-of-pocket to an average $2,145. For the gold plans, in order to have a product with a standard $1000 deductible ($1,080 with 2015 adjustment), the actuaries also had to lower the MOOP to meet the 80% AV.

The bronze plans, with the lowest AV (60%), had to push their MOOP up to close to the statutory maximum – $6,381, just below $6,600 – but then that required an average deductible of a whopping $5,249 – quite a blow for the low-income individuals and the young invincibles who would be attracted to the low premiums of these plans.

The silver plans, which about two-thirds of exchange purchasers select, have a more balanced deductible and MOOP. So why didn’t they push the MOOP up to the maximum ($6,600) so that they could offer a more reasonable deductible? For one reason, having greater cost sensitivity through higher deductibles advances the consumer-directed approaches of those ideologues who place more importance on the theory of moral hazard than they do on patients getting the care that they need.

Another reason is that, since about 80% of the population uses only about 20% of health care, most insurance plan enrollees would never meet their deductible. With the silver plan deductible of $2,658, insurers would be paying for almost no care for about four-fifths of their enrollees (except preventive services – a very small part of our health care services). The extra that would have to be paid by the insurers for having a modestly lower MOOP would apply to only about one-fifth of their enrollees, most of whom would far exceed their deductibles anyway.

Left out of this are considerations of the consequences of obtaining care out-of-network, even if inadvertent, and of being required to pay retail prices for services that are later determined to not be covered benefits.

Seems like a pretty good deal for the insurers. Isn’t it our turn to get a good deal? We would have to get rid of the insurers first.

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Two Memes that Undercut Medicare-for-All: Managed Care and Competition

Posted by on Monday, Dec 15, 2014

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.

Two Theologies Have Blocked Medicare-For-All

By Theodore Marmor and Kip Sullivan
Health Affairs Blog, December 11, 2014

In the 50 years since Medicare was enacted, Congress has never seriously considered extending Medicare to all Americans, nor even lowering Medicare’s eligibility age below 65. This pattern persisted even during those periods when national health insurance was at the top of the national agenda. This is not what the original advocates of Medicare anticipated when Medicare was enacted in 1965. They saw Medicare as the cornerstone of a national system of health insurance that would eventually cover all Americans.

Two Myths that Undercut Medicare-for-All: Managed Care and Competition

In the paper we presented at the Yale conference (Yale Law School, November 6 & 7) , we reviewed short- and long-term factors affecting the debate about Medicare over its lifetime, and then turned to a discussion of two long-term factors: the rise of what came to be called the managed care movement, and the resurgence of a longstanding campaign promoting the idea that competition can right the wrongs of American medicine.

The managed care movement helped marginalize support for Medicare’s expansion primarily through its influence on the proponents of national health insurance. It did so by persuading many potential proponents of Medicare expansion to pursue a different reform strategy.  Insurance companies practicing managed care, the rhetoric claimed, were more efficient than Medicare.  Managed care kept Medicare-for-all off the congressional agenda primarily by inducing potential proponents of Medicare expansion to support managed care rather the expansion of the traditional Medicare program.

The rise of the pro-competition movement constituted another significant impediment to Medicare expansion. It did so by strengthening the belief that market competition among private health insurance firms could be invigorated, largely by eliminating tax subsidies for insurance and shifting more costs onto patients, and that vigorous competition would make the health care sector much more efficient than Medicare could ever be. But because this movement appealed primarily to conservatives who did not support universal coverage in the first place, its impact on the debate about Medicare’s expansion, although powerful, was less direct.

To sum up, the pro-competition movement contributed to keeping the expansion of Medicare off the national agenda by keeping national health insurance off the national agenda throughout most of Medicare’s 50 years. And the managed care movement contributed by persuading liberals to endorse managed care proposals, not the expansion of Medicare, during those infrequent periods when universal coverage was at the top of the national agenda.

Why have the Managed Care and Competition Movements been Politically Successful?

The answer, in our view, is two-fold. First, both movements acquired immense economic power compared with supporters of Medicare expansion. Second, both movements clothed their diagnoses of and solutions to the health care crisis in rhetoric that induces listeners to overlook unproven assumptions that underlie those diagnoses and solutions. This permitted both movements to present their solutions in idealized, oversimplified forms, and to compare their idealized forms to real-world Medicare. Over the years both movements have developed cultures which resist acknowledging the discrepancy between their assumptions and the evidence.

In the first few months of 1970, Paul Ellwood and representatives of the Nixon administration agreed to promote an unproven diagnosis of the health care crisis and an unproven solution. The unproven diagnosis was overuse of the health care system induced by the fee-for-service method of paying doctors. The unproven solution was a new form of insurance company they called the “health maintenance organization” (HMO).

Ellwood and Nixon administration officials made the deliberate decision to refrain from describing how HMOs were supposed to achieve the powers attributed to them. As assistant HEW secretary Lewis Butler put it, “Let’s specify what we want it to do…. Let’s describe the thing by what we want it to do, not how it’s formed.”

This convention – describing an entity that will supposedly alleviate the health care crisis according to what “we want it to do” – was quickly adopted by Democrats. The convention encouraged, and to some degree forced, HMO advocates to explain their support for the concept in highly abstract terms. It also encouraged the use of opinion and wishful thinking as substitutes for evidence and scientific discourse.

The tendency to adopt abstract concepts defined only by the aspirations of their proponents, to give these abstract concepts labels designed to influence rather than illuminate, and to ignore or downplay evidence contradicting claims made for these concepts has persisted within the managed care movement ever since. These habits of thought can be seen in the movement’s support for other managed care proposals, including “pay-for-performance” and “accountable care organizations.”

The pro-competition movement has exhibited similar traits – a tendency not to examine fundamental assumptions and to gloss over evidence contradicting them. Like the managed care movement, the pro-competition movement rests its diagnosis on the unproven assumption that financial incentives are the single greatest cause of health care inflation. Unlike the managed care movement, which sees physician incentives as paramount, the pro-competition movement claims patient financial incentives are the fundamental cause of high medical costs. Like the managed care movement, the pro-competition movement bases its solution on unproven assumptions, the most important of which is that patients can shop for medical care just as they do for food and other commodities.

The willingness of the two movements to compare real-world Medicare with their idealized proposals has contributed significantly to their ability to keep the expansion of Medicare off the table. It has also contributed significantly to their inability to address the problems that bedevil the American health care system – a chronically unacceptable rate of uninsured, barriers to care even for the insured, and rising costs.…

The dream of expanding Medicare to cover all of us has failed to materialize in a large part because of the nation’s obsession with marketplace concepts of health care financing. On the supply side, health care providers are responding to financial incentives that maximize their revenue. On the demand side, patient-consumers are responding to financial incentives that minimize their out-of-pocket spending. In both instances, health care access is compromised – in managed care by erecting structural barriers to care (“managing” the care), and in competition by erecting financial barriers to care (buying competitively-priced plans with lower premiums that have higher deductibles and other cost sharing).

Where did this obsession come from? Gilens and Page have shown that the very wealthy and large business interests have control over major legislation. These interests benefit from marketplace approaches to health care through investments in for-profit insurance companies and in health care delivery organizations, including for-profit hospitals. In contrast, their tax burden in publicly-financed health programs is greater when taxes are progressive. Also many other important government programs are financed through progressive taxes, so the moneyed interests benefit by privatizing government functions to the maximum extent possible.

These interests, along with ideologues, have made a meme of the concept that private markets are always more efficient than massive government bureaucracies, when the evidence is almost always to the contrary. Unfortunately, much of the media have accepted this meme as a given. Since everyone “knows,” based on a lifetime of exposure to these memes, that the private sector can always do it better, they are quite willing to support private solutions to problems such as the financing of health care.

Whenever proposals such as expanding Medicare come up, the insurance industry pulls the puppet strings in Congress, and the public is reminded how well UnitedHealth and the other for-profit insurers are doing in creating private products that have lower out-of-pocket costs than Medicare (not mentioning that they are doing that with one-third of the overpayments they receive while keeping the other two thirds for profits and to pay for the excessive administrative services that they are selling us – a bad deal for taxpayers).

So those who support the intrusive managed care organizations and who support shifting more costs directly to patients under the false banner of marketplace competition (see Kenneth Arrow) have been effective in suppressing any serious consideration of improving Medicare and expanding it to cover everyone. As long as the public continues to buy their meme, there is little likelihood of change.

We need to continue to inform the public on the legitimate findings of health policy science (national health programs that include everyone while providing higher quality at a lower cost), but that is a daunting task considering how difficult it is to communicate complex policies to a population blunted by unfounded memes.

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Searching for a national child health coverage policy

Posted by on Thursday, Dec 11, 2014

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 Search For A National Child Health Coverage Policy

By Sara Rosenbaum and Genevieve M. Kenney
Health Affairs, December 2014


Thirty-eight percent of US children depend on publicly financed health insurance, reflecting both its expansion and the steady erosion of employment-based coverage. Continued funding for the Children’s Health Insurance Program (CHIP) is an immediate priority. But broader reforms aimed at improving the quality of coverage for all insured children, with a special emphasis on children living in low-income families, are also essential. This means addressing the “family glitch,” which bars premium subsidies for children whose parents have access to affordable self-only employer-sponsored benefits. It also means addressing the quality of health plans sold in the individual and small-group markets—whether or not purchased through the state and federal exchanges—that are governed by the “essential health benefit” standard of the Affordable Care Act (ACA). In this article we examine trends in coverage and the role of Medicaid and CHIP. We also consider how the ACA has shaped child health financing, and we discuss critical issues in the broader insurance market and the need to ensure plan quality, including the scope of coverage, use of a pediatric medical necessity standard that emphasizes growth and development, the structure of pediatric provider networks, and attention to the quality of pediatric health care.


The ACA’s Pediatric Essential Health Benefit Has Resulted In A State-By-State Patchwork Of Coverage With Exclusions

By Aimee M. Grace, Kathleen G. Noonan, Tina L. Cheng, Dorothy Miller, Brittany Verga, David Rubin and Sara Rosenbaum
Health Affairs, December 2014


The Affordable Care Act (ACA) establishes essential health benefits as the coverage standard for health plans sold in the individual and small-group markets for all fifty states and the District of Columbia, including the health insurance Marketplaces. “Pediatric services” is one of the required classes of coverage under the ACA. However, other than oral health and vision care, neither the act nor the regulations for implementing it define what these services should be. We investigated how state benchmark plans—the base plan chosen in each state as the standard or benchmark of coverage in that state under ACA rules—address pediatric coverage in plans governed by the essential health benefits standard. Our review of summaries of all the state benchmark plans found that no state specified a distinct pediatric services benefit class. Furthermore, although benchmark plans explicitly included multiple pediatric conditions, many plans also specifically excluded services for children with special health care needs. The Department of Health and Human Services has made a commitment in the essential health benefits regulations to review its approach for the 2016 plan year. Thus, our findings have implications for future regulations regarding the essential health benefits standard for pediatric services.


The Scheduled Squeeze On Children’s Programs: Tracking The Implications Of Projected Federal Spending Patterns

By C. Eugene Steuerle and Julia B. Isaacs
Health Affairs, December 2014


Federal programs for children are under increasing budgetary pressure. According to current federal law or any budget alternative being offered by the president or congressional leaders, spending on children would decline as a share of the budget and of the national economy. This article summarizes past, current, and projected budgets for children’s programs. It traces significant historical expansions of means-tested programs, such as the Supplemental Nutrition Assistance Program; depicts fairly significant declines in more universal supports, such as the income tax exemption for dependents; and shows the future squeeze on children’s programs brought about by automatic growth in health, retirement, and tax subsidy programs, along with the failure of revenues to keep pace with the overall growth in spending. Federal programs for health care have been a mixed blessing for children: Medicaid has grown to be the largest federal support for children, but overall federal health care costs eat away at the share of the budgetary pie left for anything else.

During the health care reform process there seemed to be an attitude that we were already doing well in ensuring that the health care needs of children were being met. Employer-sponsored family coverage took care of middle- and upper-income children, Medicaid and SCHIP covered lower-income children, and community health centers and other safety-net institutions took care of children who were not covered by the other programs. The Affordable Care Act expanded assurances of coverage by providing income-based subsidies for plans offered through the exchanges. So what is the problem?

Having multiple sources of coverage with different eligibilities that change with continual changes in life circumstances – income levels, employment status of family income source, changes in geographical location, variations in community resources, citizenship status, etc. – results in instability of coverage for everyone, certainly including children. These articles from the current Health Affairs summarize some of these variations in the public and private programs, variations in benefits covered, and variations in financing of the programs. The current situation might be summed up as lacking “a national child health coverage policy” (Rosenbaum and Kenney).

Although many factors contribute to the deficiencies in child health coverage, one of the more important is that we continue to try to build upon a fragmented combination of public and private programs, an approach that only perpetuates many of these deficiencies. An example is the “family glitch” in which children do not have access to exchange subsidies if the employed parent receives solo coverage through their work. Efforts to patch the various flaws only increase the complexity and administrative burden of our dysfunctional system, and yet patches on a fundamentally flawed infrastructure can never provide the stability that we need.

So what can we do? We can build a new health care financing infrastructure that serves well the needs of not only our children, but all of us. That would be a single payer national health program – an improved Medicare for all – but not just a Medicare that serves only the elderly and persons with disabilities, rather, like Canada, a Medicare that serves all of us. Our children deserve it, and so do we.

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