Private Medicare Advantage patients use less care, giving MA plans greater margins

Posted by on Monday, Jan 30, 2017

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.

NBER Working Paper No. 23090: Healthcare Spending and Utilization in Public and Private Medicare

By Vilsa Curto, Liran Einav, Amy Finkelstein, Jonathan D. Levin, and Jay Bhattacharya
National Bureau of Economic Research, January 2017


We compare healthcare spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their healthcare spending. Healthcare spending is 25 percent lower for MA enrollees than for enrollees in traditional Medicare (TM) in the same county with the same risk score. Spending differences between MA and TM are similar across sub-populations of enrollees and sub-categories of care, with similar reductions for “high value” and “low value” care. Spending differences primarily reflect differences in healthcare utilization; spending per encounter and hospital payments per admission are very similar in MA and TM. Geographic variation in MA spending is about 20 percent higher than in TM, but geographic variation in hospital prices is about 20 percent lower. We present evidence consistent with MA plans encouraging substitution to less expensive care, such as primary rather than specialist care, and outpatient rather than inpatient surgery, and with employing various types of utilization management. Some of the overall spending differences between MA and TM may be driven by selection on unobservables, and we report a range of estimates of this selection effect using mortality outcomes to proxy for selection.

From the Conclusion

We have compared healthcare spending and utilization in public and private Medicare. This setting provides a rare opportunity for a “side by side” comparison of public and private health insurance systems operating on a similar scale, for the same population, in the same markets, and with the same providers. Novel data from the Health Care Cost Institute on the healthcare claims of MA enrollees allow us a rare look inside the “black box” of healthcare utilization and spending in MA.

We find that MA insurer revenues are 30 percent higher than their healthcare spending. Healthcare spending for enrollees in MA is 25% lower than for enrollees in TM in the same county and risk score.

The lower spending by MA enrollees is entirely due to lower healthcare utilization. Prices appear similar in MA and TM. Where we can most directly measure this – the price of an admission for a given DRG at a given hospital – we estimate that average prices in MA are 1.1% higher than in TM. Reductions in utilization appear similar both for types of care where there is concern about “over use” (e.g. imaging and diagnostic tests) and where there is concern about “under use” (e.g. preventive care).

We provide suggestive evidence for some of the potential channels by which MA may reduce healthcare utilization for enrollees. We find that utilization is lower in MA but that, conditional on an encounter, spending per encounter is similar or slightly higher in MA. This suggests that MA manages to restrict utilization on the margin to sicker individuals. Relatedly, individuals discharged from the hospital are much more likely to be sent home – and less likely to be sent to post-acute care facility – if they are enrolled in MA rather than in TM. We also find evidence consistent with substitution to less expensive types of care in MA: differences in specialist visits are much larger than differences in primary care visits, and while inpatient surgery rates are lower in MA, outpatient surgery rates are higher.

Finally, in light of the widespread interest in geographic variation in healthcare spending in TM, and recent work on geographic variation in commercial (under 65) private insurance, we explore similar comparisons in MA. Although geographic variation in spending in TM is often viewed as a reflection of the inefficiencies in a public health insurance system, we find similar – in fact slightly larger – geographic variation in spending in MA compared to TM. And while recent work has emphasized the much greater geographic pricing variation in private commercial insurance than in TM, we find similar – in fact slightly smaller – geographic variation in pricing in MA compared to TM.

One natural question these findings raise is their implications for MA insurers and consumers. For insurers, our estimates from MA data indicate that their revenue exceeds their healthcare expenditures by $177 (about 30%) per enrollee-month. An important area for further work is to examine how this may be dissipated through other costs, such as the administrative costs of providing the insurance and the marketing costs of attracting enrollees. A related and important question is whether and how competitive pressures affect the MA market.

Implications for consumers are more elusive, since the elements of their objective function are not as straightforward to define or measure. A simple revealed preference argument would suggest that consumers who choose MA are better off in it. Other inferences are harder to make. Quality of the healthcare experience is difficult to assess; our measures of preventive care point to reductions there that are similar in magnitude to those for other forms of care. We calculated that the mean actuarial benefit to consumers (i.e. rebate to consumers as measured in the bid data) was $51 per enrollee-month, but, of course, the rebate may be valued differently from its actuarial value, and MA plans have other attributes that will affect consumer surplus, such as limited networks. The implications of privately provided Medicare for both consumers and producers is an important area for further work.…

Although services provided by the traditional Medicare (TM) program and the Medicare Advantage (MA) plans are priced about the same, the health care expenditures of MA plans are about 30 percent lower than their revenues. The difference is lower utilization by patients of MA plans.

Although some would like to claim that the lower utilization is due to greater efficiency of the managed care organizations as opposed to the government plan, the data is highly suggestive that MA plans do what we already knew they do – they enroll healthier, less expensive patients who do not require as much care.

What are the private MA plans doing with the 30 percent of revenues that are not spent on health care? The authors suggest that further study might be warranted of their administrative costs and marketing costs of attracting (healthy) enrollees (not to mention high executive compensation and shareholder return), but we already know that is where the excess payments are going. The payments are excessive because they care for healthier patients than those in the traditional program, while gaming risk adjustment to receive higher capitation fees as if their enrollees were sicker than they actually are.

We need an improved Medicare to cover all of us, and one of the first improvements should be to get rid of the private Medicare Advantage plans that are wasting so much of our taxpayer dollars.

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How Seema Verma botched up Iowa’s Medicaid program

Posted by on Friday, Jan 27, 2017

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

In Iowa, financial pain follows Trump-style Medicaid reforms

By David Steen Martin
STAT, January 24, 2017

When President Donald Trump tapped policy consultant Seema Verma to run Medicaid and Medicare in his administration, he called her part of a health care “dream team.”

But the health policy changes she helped design in Iowa have felt more like a nightmare to providers serving poor and disabled residents across the state.

Verma has helped several states revamp Medicaid, including Kentucky and Indiana. Here in Iowa, she worked on an aggressive effort to privatize the program, which provides health care to about 600,000 adults and children.

Complaints poured in when the new program went live on April 1, 2016, shifting all Medicaid recipients at once to managed care.

Nearly a year later, the complaints are still coming: Hospitals, nursing homes, and clinics that provide care to Medicaid patients say they’ve lost hundreds of thousands of dollars in expected reimbursements — and have had to spend untold hours chasing down payments.

The three for-profit managed care organizations running the program aren’t happy either, saying they are hemorrhaging money and accusing the state of vastly underfunding Iowa’s $4.2 billion Medicaid program.

John Bigelow Jr., executive director at the Southwest Iowa Mental Health Center, said the facility was short $313,000 at last count for psychiatric care, outpatient therapy, and other services, in part because the managed care organizations have not reimbursed the center at the same rate the state did.

“We’re doing the same care. We’re just not getting paid for it like we were,” Bigelow said.

When Democrats surveyed 423 Iowa Medicaid providers over the summer, 61 percent said privatization had reduced the quality of services they could provide. Some 90 percent said administrative costs had increased.

“It’s created quite an administrative and financial burden on our hospitals and other providers,” said Scott McIntyre, vice president of communications at the Iowa Hospital Association.

In Washington, meanwhile, Congressman Dave Loebsack, a Democrat, has asked the federal Centers for Medicare and Medicaid to rescind the federal waiver allowing managed care companies to run Iowa’s Medicaid.

But that’s unlikely to happen under the new administration.

If confirmed, Verma is expected to give states even more flexibility to design new Medicaid programs — including more privatization.

Verma, who is awaiting a confirmation hearing for the top job at the Centers for Medicare and Medicaid Services, did not return requests for comment.…

Seema Verma is a conservative ideologue who wishes to convert government health care programs into privatized, consumer-directed models. She has represented some states in negotiating with CMS for waivers to convert their Medicaid programs.

She has been frustrated by the limitations of the waivers, believing that CMS could provide more flexibility with their policies, which would enable her to advance further her ideological preferences. But Iowa serves as an example of what perversions can be accomplished under the current waiver system. Nobody is happy with the changes in Iowa, except Seema Verma.

President Trump has selected her to head CMS and thus be in charge of the waiver process. Her boss will be Tom Price, as head of HHS, who worships the same inhumane ideology. They have a Congress that will be supportive of their efforts to require that these low-income individuals have more “skin in the game” (Verma’s words).

Some are hoping for the Trump surprise of calling for a single payer system. His selections of Verma and Price should set all such expectations aside. Medicaid block grants are on their way, and they will be terribly disruptive of what care Medicaid beneficiaries are receiving!

Some states are trying, but they will be further handicapped by the reductions in the federal transfers made possible by changing to block grants.

We desperately need a well designed single payer system – an improved Medicare for all. We will not get that until we, the people, join together in citizen action to demand health care justice for all.

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Premiums, cost sharing, and provider choice all worse in 2017 ACA exchange plans

Posted by on Thursday, Jan 26, 2017

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.

Consumer Costs Continue to Increase in 2017 Exchanges

By Caroline F. Pearson, Elizabeth Carpenter and Chris Sloan
Avalere, January 18, 2017

Plans sold in exchange markets in 2017 feature higher premiums, growing consumer out-of-pocket costs, and more restricted access to providers and hospitals than in previous years, according to a new analysis from Avalere.

Premiums Increase Dramatically, Especially for Low-Cost Silver Plans

Following several years of single-digit premium growth, premiums increased 12 percent on average for silver plans in 2017 — from $496 per month in 2016 to $554 per month in 2017, this, according to the Avalere analysis.

Furthermore, premiums for popular low-cost silver plans (i.e., those with the lowest or second-lowest cost premiums in each region) increased 25 percent in 2017.

Fewer PPOs Offered on Exchanges

Avalere experts note that in 2017, only 31 percent of all plans sold in exchange markets are preferred provider organizations (PPO) or point of service (POS) plans. By comparison, in 2014, nearly 52 percent of plans sold on exchanges were PPO or POS products. In general, PPOs include a wider network of providers and cover more out-of-network care than health maintenance organizations (HMOs) and exclusive provider organizations (EPOs).

Out-of-Pocket Costs Also Rose in 2017, Particularly Deductibles

In addition to premiums, out-of-pocket costs for exchange products continue to rise, according to Avalere analysis of plans offered in the exchanges. Average deductibles for services and drugs jumped by 20 percent for silver plans in 2017 to $3,703.…

For plans sold in the exchanges in 2017, not only have the premiums gone up 25 percent for the popular low-cost silver plans, but the average deductibles for silver plans have increased 20 percent, and over two-thirds of plans now have more restrictive networks (with only 31 percent allowing out-of-network coverage with the penalty of higher cost sharing).

The instability and uncertainties are innate characteristics of the market for individual health plans. These problems would disappear with a single universal risk pool covering everyone – a single payer national health program, aka an improved Medicare for all.

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National Health Spending: Faster growth in 2015 as coverage expands and utilization increases

By Anne B. Martin et al.
Health Affairs, January 2017

Total US health care spending increased 5.8 percent and reached $3.2 trillion in 2015…. Following five consecutive years of historically low growth, from 2009 through 2013, health spending growth accelerated in 2014…. The faster growth in 2014 and 2015 occurred as the Affordable Care Act (ACA) expanded health insurance coverage for individuals….

Republicans will soon own the health care mess. Whether they do or don’t “repeal and replace,” they’ll own it. It didn’t have to be this way. They could have worked constructively with Democrats to achieve something resembling health care reform. Instead they chose sabotage as their primary goal, both before and after the enactment of the ACA.

Now, after years of practicing sabotage, Republicans must learn to build. Republicans have still not revealed their replacement plan, so it is impossible to say at this date what they will build. However, given Republicans’ longstanding support for managed care ideology, we may predict they will recommend, or passively accept, some or all of today’s managed care fads, including “accountable care organizations,” “medical homes,” pay-for performance, and possibly bundled payments, plus electronic medical records to facilitate all of the above. They will probably continue the overpayments to Medicare Advantage insurers as well, based on the theory that they know how to “coordinate care”/“integrate care”/do “value-based purchasing”/pick your favorite managed care buzzword.

Republicans have never celebrated managed care ideology as loudly as Democrats have, primarily because the GOP has never supported universal health insurance. (Since the modern health care reform debate began a half century ago, proponents of universal coverage have had to at least appear to have a cost-containment strategy.) But over the last quarter-century, conservative think tanks and Republican legislators, presidents and governors have endorsed, implicitly or explicitly, the fundamental tenets of managed care ideology, namely: Overuse (not high prices and administrative waste) is the primary cause of the American health care crisis; fee-for-service is the cause of that alleged overuse; and the solution is to antidote the fee-for-service incentive by shifting insurance risk to doctors and to authorize third parties to micromanage doctors. The most recent endorsement of managed care ideology by Republicans occurred in 2015 when a large majority of them endorsed MACRA (the Medicare Access and CHIP Reauthorization Act). Like the ACA, MACRA relies on every current managed care fad. It represents end-stage managed-care think even more vividly than the ACA.

So now would be a good time for Republicans to learn a lesson Democrats have yet to learn: Managed care doesn’t cut costs. It’s possible some managed care nostrums, such as “medical homes,” can have some modest positive effects on quality, but even that is not clear because all analyses of the impact of managed care experiments on quality rely on measurements of an infinitesimally small fraction of medical services. We must assume until proven otherwise that “teaching to the test” explains all or a substantial portion of the research that attributes modest improvements in quality to “homes,” ACOs, P4P, etc.

Perhaps the best way to attract the attention of Republicans to my message – managed care doesn’t cut costs – is to remind them why Democrats, from Obama on down, predicted the ACA would cut costs. Democrats did so sincerely and with great confidence. For a good example of such sincere but foolish rhetoric, see this 2010 article in the New England Journal of Medicine in which White House advisors Ezekiel Emanuel and Peter Orszag claimed the ACA “will significantly reduce costs.” Emanuel et al. believed their rhetoric; they really believed the main tenets of the managed care faith – overuse is the problem, and ACOs, etc., are the solution.

The prediction by Democrats that the managed care nostrums in the ACA would cut costs was one of the greatest gifts Democrats ever gave to Republicans. Republicans joyously beat Democrats over the head with that promise in every election since the ACA was enacted, and it paid off, most clearly in the 2010 and 2016 elections. I ask all Republicans: Do you really want to return that favor? As you contemplate your “replacement” legislation, do you really want to endorse any legislation that assumes ACOs or any other managed care nostrum will lower costs?

If I were in charge of teaching Republicans how to think clearly about managed care ideology and the role it played in fooling Democrats into making promises about the ACA they couldn’t keep, my first lecture would review the debate about the ACA’s impact on national health spending. My second lecture would review the evidence indicating ACOs and “medical homes,” the most important managed care nostrums of the dozens written into the ACA, have either raised Medicare spending or have had no effect. In the rest of this comment, I’ll focus on the first issue.

The argument Obama, Emanuel, Orszag, et al. made most often in favor of their claim that the ACA is saving money was that the ACA deserved much of the credit for the slowdown in national health care spending that began in 2009 and ended in 2014. Even by 2010 it was apparent that the main cause of the inflation lull was the Great Recession, which ran from December 2007 through June 2009. The evidence was even more compelling by 2014. The evidence today is overwhelming – the Great Recession was the primary cause of the inflation lull, and the net effect of the ACA has been inflationary, not deflationary.

I reviewed the evidence as of 2014 in a comment posted here in December 2014. At that date the latest data we had on national health care spending was the annual National Health Expenditures Accounts report for 2013, posted online by CMS’s Office of the Actuary in early December. That report, authored by Micah Hartman et al. and published in the January 2015 edition of Health Affairs, indicated that the lull in health care inflation that began in 2009 had continued through 2013. It was too early to say the lull had ended. However, because Hartman et al. attributed the slowdown to the Great Recession, they felt comfortable warning their readers that as the economy recovered the lull would end. [1]

That was not the news managed care advocates wanted to hear. They were sure that at least some of the dozens of managed care fads written into the ACA, particularly the provisions authorizing CMS to experiment with ACOs, would cut health care costs so fast the effects would be visible within a year or two of the ACA’s enactment and would more than offset the inflationary effect of the ACA’s expanded coverage and of an expanding economy. By as late as April 2015 Jason Furman, Obama’s economic advisor, was still claiming (a) the inflation lull had continued beyond 2014 and (b) the ACA deserved much of the credit for this non-fact. As late as August 2016, President Obama was still making that claim. [2]

But Hartman et al. and the numerous other observers who said in 2014 that the slowdown would end as the economy recovered turned out to be correct. The two national expenditure reports issued by the CMS actuaries since the 2014 report indicate the inflation lull ended in 2013. The second of these reports, the paper by Martin et al. quoted above, stated that substantial increases in inflation in total U.S. spending occurred in 2014 and 2015 and, moreover, those increases were due largely or primarily (it is not clear which was intended) to the historic drop in the uninsured rate caused by the ACA (2014 was the first year in which the uninsured could buy coverage on the ACA exchanges).

Here are the inflation rates for the years during and since the 2009-2013 inflation lull as reported by the January 2017 Health Affairs paper:

2009: 4.0%
2010: 4.1%
2011: 3.5%
2012: 4.0%
2013: 2.9%
2014: 5.3%
2015: 5.8%

Obviously the CMS actuaries’ prediction in December 2014 that the inflation slowdown would end as the economy recovered was correct. Obviously the managed care proponents who argued inflation would remain low even as the ACA reduced the uninsured rate and as the economy recovered were wrong.

Orszag, Obama and others have also alleged that a slightly less pronounced inflation lull in Medicare spending (a) has continued beyond 2014 (it hasn’t) and (b) was caused by the managed care experiments foisted on the Medicare program by the ACA (it wasn’t). The Medicare lull also ended in 2014 – inflation in total Medicare spending rose from 4 percent in 2013 to 5 percent in 2014.

Apparently recognizing that they can no longer cite a lull in inflation in total Medicare spending, some ACA proponents, including Orzag and Obama, have focused attention on inflation in per-Medicare-enrollee spending. But the lull in that measure also ended in 2014. Moreover, that lull was probably due largely to the aging of Baby Boomers into Medicare. Younger Medicare enrollees cost less than older enrollees, and the Baby Boom generation is large relative to older cohorts. For some time to come the dilution of the pool of Medicare beneficiaries by “boomers” will put downward pressure on per-enrollee inflation.

Finally, let me comment on one of the few kind words the CMS actuaries had in their latest report for a managed care nostrum. The January 2017 Health Affairs article noted that one of the causes of a slightly reduced rate of inflation in Medicare hospital spending in 2015 was “reductions in hospital readmissions.” As anyone following the health policy debate knows, one of the hottest managed care fads is eliminating “unnecessary” hospital readmissions. The ACA endorsed the evidence-free proposition that if hospitals were punished by Medicare for “excessive” readmissions within the first 30 days after discharge, hospitals would find a cheap or totally free method of keeping people out of hospitals, those methods would do more good than harm, and all the savings from reduced readmissions would be pure gravy.

The January Health Affairs paper noted, however, that “spending growth for nursing home and home health care [Medicare services] accelerated” in 2015, offsetting the reductions in hospital spending. A reasonable inference from these data is that the reduction in hospital admissions was achieved in whole or in part by greater utilization of nursing home and home health services. If that’s true, then the savings to Medicare from reduced readmissions was not pure gravy – it was offset, possibly swamped, by new expenditures on non-hospital services.

End of first lecture for Republicans embarking on their quest to own the health care crisis.

For the last half century, Republicans have been under no pressure to comprehend how little evidence there is to support managed care ideology. Those days are over. Republicans will either comprehend that managed-care think is a form of groupthink, or they will repeat the error Democrats made. They will make promises they can’t keep, and they will pay a price.


[1] Here is how Hartman et al. expressed their belief that the economic  recovery would eventually terminate the inflation lull: “The key question is whether health spending growth will accelerate once economic conditions improve significantly; historical evidence suggest that it will.” (p. 159)

[2] Obama and Forman were not alone in peddling the false claim that the inflation lull had continued beyond 2013 and the ACA was a major reason. Peter Orszag made this astonishing claim in an August 2, 2016 paper  in JAMA: “The conventional wisdom at the time the ACA was enacted was that despite its ostensible dual mandate, the act largely addressed the coverage problem while doing almost nothing to address cost trends. That perspective was flawed and frustrating at the time, but even the most optimistic forecasts were conservative relative to what has since occurred.” The accurate statement about “what has since occurred” is that the ACA’s managed care cost-containment provisions (as opposed to the simple cut to Medicare the ACA ordered) have not cut costs and may well have added to costs, while the ACA’s coverage provisions drove costs up substantially.  Note the title of Orszag’s paper includes the phrase “cost containment.”

[3] The real rates of inflation in total U.S. spending (that is, the nominal inflation rates listed above deflated by the underlying, economy-wide inflation rate) reported by Martin et al. show the same abrupt termination of the lull in 2014.

Kip Sullivan, J.D. is a health policy expert and frequent blogger, and is a member of PNHP Minnesota’s legislative committee. 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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Under ACA, too many with chronic disease still left out

Posted by on Tuesday, Jan 24, 2017

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.

Coverage and Access for Americans With Chronic Disease Under the Affordable Care Act: A Quasi-Experimental Study

By Hugo Torres, MD, MPH; Elisabeth Poorman, MD, MPH; Uma Tadepalli, MD; Cynthia Schoettler, MD, MPH; Chin Ho Fung, MD; Nicole Mushero, MD, PhD; Lauren Campbell, MD, MPH; Gaurab Basu, MD, MPH; Danny McCormick, MD MPH
Annals of Internal Medicine, January 24, 2017


Half of Americans have at least 1 chronic disease. Many in this group, particularly racial/ethnic minorities, lacked insurance coverage and access to care before the Patient Protection and Affordable Care Act (ACA) was enacted.


To determine whether the ACA has had an effect on insurance coverage, access to care, and racial/ethnic disparities among adults with chronic disease.

From the Results:

Despite improvements after ACA implementation, large proportions of adults with chronic disease continued to lack coverage or access. Overall, after the ACA took effect, 14.9% of persons with chronic disease nationally continued to lack insurance, 22.8% had to forgo a physician visit, 18.1% did not have a personal physician, and 27.6% did not have a checkup. In addition, we found the persistent lack of coverage and access after ACA implementation was particularly great among racial minorities, despite the greater gains as a result of the ACA. Approximately one fifth of blacks had persistent post-ACA gaps, ranging from 17.5% lacking coverage to 26.8% forgoing a physician visit. Approximately one third of Hispanics had persistence post-ACA gaps, ranging from 29.7% lacking coverage to 32.9% forgoing a physician visit.…

Many people have benefited by gaining access and coverage under the Affordable Care Act, but this study shows that far too many people with chronic disease have been left out, particularly amongst blacks and Hispanics.

We can do far better. An improved Medicare for all, with automatic enrollment of everyone, would close the gaps without spending any more than we do already. That would be vastly superior to any of the proposals that are currently being considered as a replacement for ACA.

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Correcting the WP Fact Checker on the mortality rate of becoming uninsured

Posted by on Monday, Jan 23, 2017

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.

Repealing the Affordable Care Act will kill more than 43,000 people annually

By David Himmelstein and Steffie Woolhandler
The Washington Post, January 23, 2017

Now that President Trump is in the Oval Office, thousands of American lives that were previously protected by provisions of the Affordable Care Act are in danger. For more than 30 years, we have studied how death rates are affected by changes in health-care coverage, and we’re convinced that an ACA repeal could cause tens of thousands of deaths annually.

The story is in the data: The biggest and most definitive study of what happens to death rates when Medicaid coverage is expanded, published in the New England Journal of Medicine, found that for every 455 people who gained coverage across several states, one life was saved per year. Applying that figure to even a conservative estimate of 20 million losing coverage in the event of an ACA repeal yields an estimate of 43,956 deaths annually.

With Republicans’ efforts to destroy the ACA now underway, several commentators have expressed something akin to cautious optimism about the effect of a potential repeal. The Washington Post’s Glenn Kessler awarded Sen. Bernie Sanders (I-Vt.) four Pinocchios for claiming that 36,000 people a year will die if the ACA is repealed; Brookings Institution fellow Henry Aaron, meanwhile, predicted that Republicans probably will salvage much of the ACA’s gains, and conservative writer Grover Norquist argued that the tax cuts associated with repeal would be a massive boon for the middle class.

But such optimism is overblown.

The first problem is that Republicans don’t have a clear replacement plan. Kessler, for instance, chides Sanders for assuming that repeal would leave many millions uninsured, because Kessler presumes that the Republicans would replace the ACA with reforms that preserve coverage. But while repeal seems highly likely (indeed, it’s already underway using a legislative vehicle that requires only 50 Senate votes), replacement (which would require 60 votes) is much less certain.

Moreover, even if a Republican replacement plan comes together, it’s likely to take a big backward step from the gains made by the ACA, covering fewer people with much skimpier plans.

Although Aaron has a rosy view of a likely Republican plan, much of what they — notably House Speaker Paul D. Ryan (R-Wis.) and Rep. Tom Price (R-Ga.), who is Trump’s nominee to head the Department of Heath and Human Services, which will be in charge of dismantling the ACA — have advocated in place of the ACA would hollow out the coverage of many who were unaffected by the law, harming them and probably raising their death rates. Abolishing minimum coverage standards for insurance policies would leave insurers and employers free to cut coverage for preventive and reproduction-related care. Allowing interstate insurance sales probably would cause a race to the bottom, with skimpy plans that emanate from lightly regulated states becoming the norm. Block granting Medicaid would leave poor patients at the mercy of state officials, many of whom have shown little concern for the health of the poor. A Medicare voucher program (with the value of the voucher tied to overall inflation rather than more rapid medical inflation) would worsen the coverage of millions of seniors, a problem that would be exacerbated by the proposed ban on full coverage under Medicare supplement policies. In other words, even if Republicans replace the ACA, the plans they’ve put on the table would have devastating consequences.

The frightening fact is that Sanders’s estimate that about 36,000 people will die if the ACA is repealed is consistent with well-respected studies. The Urban Institute’s estimate, for instance, predicts that 29.8 million (not just 20 million) will lose coverage if Republicans repeal the law using the budget reconciliation process. And that’s exactly what they’ve already begun to do, with no replacement plan in sight.

No one knows with any certainty what the Republicans will do, or how many will die as a result. But Sanders’s suggestion that 36,000 would die is certainly well within the ballpark of scientific consensus on the likely impact of repeal of the ACA, and the notion of certain replacement — and the hope that a GOP replacement would be a serviceable remedy — are each far from certain, and looking worse every day.…

Fact Checkers sometimes traverse minefields, and The Washington Post’s Glenn Kessler really blew it when he gave Bernie Sanders Four Pinocchios for telling the truth about the potential lethal consequences of repealing the Affordable Care Act. Fortunately the Washington Post has now published a response from noted experts on the topic – Professors David Himmelstein and Steffie Woolhandler.

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Important RAND study of single payer and other options for Oregon

Posted by on Friday, Jan 20, 2017

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.

Oregon faces obstacles expanding health insurance to all residents, study finds

By RAND Corporation
Medical Xpress, January 19, 2017

Researchers from the RAND Corporation and Health Management Associates were asked by the Oregon Health Authority to analyze three proposals put forward by policymakers as potential ways to expand health coverage among the uninsured and compared the likely outcomes to the existing health care system.

Researchers used several modeling techniques to analyze how each of the options would affect outcomes on insurance enrollment, payments from households to support health care, total health spending in the state and other impacts. They also assessed the regulatory aspects of each of the proposals.

The single-payer option, introduced as a bill in the Oregon House, would use public financing to provide privately delivered health care to all Oregon residents, including those currently enrolled in Medicare and Medicaid. The proposal would pool state and federal outlays for current public programs, and add additional revenue from new state income and payroll taxes. The plan would cover 100 percent of health care costs for residents with incomes under 250 percent of the federal poverty line and 96 percent of health costs for other residents.

The Health Care Ingenuity Plan would pool revenue from state and federal outlays for Medicaid and ACA marketplaces with addition revenue generated from a new state sales tax. The plan would create a public financing pool to provide basic health insurance for most nonelderly Oregon residents. Medicare would continue to cover seniors and the disabled.

Cost sharing of the private health plans would vary depending on enrollees’ incomes, with the average share of costs covered by the plan ranging from nearly 100 percent for those with incomes below 138 percent of the federal poverty level to 70 percent for those with incomes above 250 percent of poverty. Enrollees could purchase private supplemental insurance to cover cost sharing and additional benefits.

The third proposal, a so-called public option, would create a state-run health plan to cover essential health benefits outlined by the Affordable Care Act and would compete with private plans in the ACA marketplaces. Enrollees in the public option would be eligible for federal advance-premium tax credits and cost-sharing reductions. The public option would set provider reimbursements levels equal to Medicare fee-for-service rates and would require providers who participate in other state health programs to participate in the plan.

Researchers found that both the single-payer option and the Health Care Ingenuity Plan increase coverage relative to the status quo and reduce financial barriers to care.

Under the single-payer plan, researchers assumed the state would have power as the sole purchaser of health care to set payment rates for most providers at 10 percent below the status quo. Overall, there would be little change in health system costs because the increase in patient demand would be offset by lower payments rates and administrative savings.

Under the Health Care Ingenuity Plan, researchers expect there would be higher system costs because Medicaid enrollees and the uninsured would be shifted into private insurance plans, which typically reimburse providers at significantly higher rates than the Medicaid program. These higher payment rates would increase system costs, expand the supply of providers and ease congestion. Researchers also estimate that under the plan, three-fifth of state residents would purchase supplementary insurance to reduce their individual cost sharing.

Researchers estimate that the public option would cover about 9,000 additional Oregon residents, leaving the share of the population who are uninsured at 5 percent. But many people already buying coverage through the ACA marketplaces would likely shift to the public option, saving the average enrollee about $850 per year.…

A Comprehensive Assessment of Four Options for Financing Health Care Delivery in Oregon:…

Download full report (147 pages total; Summary is 12 pages):…

This study can be very helpful to those who are considering comprehensive health care reform on a state level. RAND has shown that a single payer system would cover everyone without increasing total health care spending; private health insurance for the nonelderly plus Medicare for seniors and the disabled would cover everyone but would increase total spending; and providing a state-run health plan (public option) would have only a negligible impact on coverage and spending.

Health policy wonks should read the full study, and reform activists should read at least the 12 page summary. As with any study of this type, certain assumptions are made and differing emphases can be placed on various features of the reform models. For these reasons this study warrants at least the following comments.

For the single payer model, the authors assumed that payment rates for health care providers would be reduced ten percent below the current average Oregon rates. That supposedly would keep total spending at the same level by offsetting the increased volume of care for those who are newly insured and for those who have a significant decrease in their cost sharing.

The authors assume that services would be less available because of the payment reductions, contending that some providers would reduce their supply of care or perhaps even leave the state. They state that this would lead to “congestion” – greater consumer demand with diminished provider availability. This could result in excessive queues or in the need to travel greater distances for care.

This conclusion derives partly from the fact that they assumed that the administrative savings would be much smaller than several other studies have shown. Although a study demonstrating the tremendous administrative burden placed on the providers was included in the appendix, the authors did not factor in the savings that would accrue for the providers by eliminating the private insurers and simplifying the public payment procedures through a single payer. In fact, one of the reasons for reducing payments is that the amount recovered by eliminating the administrative waste is quite significant.

Another factor is that when the volume increases more room is made for the more pressing problems which partially displaces care that is of little or no value. Thus health care value actually increases when there is some pressure on the schedule. Also the use of other health care professionals such as nurse practitioners and physician assistants can help meet the increased demand at a lower marginal cost.

Also their modeling at a ten percent reduction in average payments is still quite a bit above the Medicare rates that are paid in Oregon. Most providers would not find that having absolutely everyone covered with higher than Medicare rates to be particularly onerous. Besides, most dedicated professionals would be satisfied with reasonable payments for their services. Those who are not perhaps should look for income opportunities that would shift them into the one-percenters – a breed not really welcome in health care.

Another point that should be made is that the two comprehensive models are characterized as a public model that would cause “congestion” (queues for non-urgent services) versus a private model that would increase spending. But the two most objectionable features of the private insurance model are given only fleeting acknowledgment in this study. Those are the very high deductibles and other cost sharing and the limited choice in care because of narrow provider networks. In the single payer model, cost sharing is dramatically reduced or eliminated, and there is only one provider network that includes the entire legitimate health care delivery system. Although high cost sharing and narrow networks may reduce spending in the private insurance model, they are not needed in a publicly administered single payer model.

This study also has important lessons for those who insist that we must enact single payer on the state level before we attempt to enact a national program. For those who believe that enacting a state-level public option will eventually lead to single payer, this study shows that it would have only a negligible impact in reducing the uninsured and in controlling costs. Pass it and then nothing else will happen for years to follow.

The other lesson for state reform activists is that there are major barriers to enacting a bona fide single payer system at the state level – barriers that will most likely require federal legislation. As long as we need to carry the battle to the national level, we might as well go for a national single payer program – an improved Medicare for all. Please do continue to work for beneficial changes at the state level, but please do not let it diminish your advocacy for health care justice for the entire nation.

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Harris Poll on profits and ethics in health care

Posted by on Thursday, Jan 19, 2017

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.

Only Nine Percent of U.S. Consumers Believe Pharma and Biotechnology Put Patients over Profits; Only 16 Percent Believe Health Insurers Do

The Harris Poll, January 17, 2017

Only nine percent of U.S. consumers believe pharmaceutical and biotechnology companies put patients over profits, while only 16 percent believe health insurance companies do, according to a Harris Poll study released today. Meanwhile, 36 percent of U.S. adults believe health care providers (such as doctors and nurses) put patients over profits, compared to hospitals (23%).

More consumers rate health insurance (24%) and pharmaceutical and biotechnology companies (20%) with low reputations, compared to hospitals (6%), health care providers (doctors and nurses) (5%) and technology (2%). Fifty-eight percent rate the reputation of the technology industry as high, compared to health care providers (43%), hospitals (37%), pharmaceutical and biotechnology companies (20%), and health insurance companies (15%).

Consumer Skepticism High Across Health Care – But to Varying Degrees

Nearly half of consumers say they think store pharmacists (49%) and health care providers (48%) offer high quality products and services, compared to hospitals (44%), pharmaceutical companies (31%), and health insurance companies (26%). Roughly half of consumers believe providers (51%) and hospitals (49%) make a positive difference in the country, compared to store pharmacists (39%), health insurance companies (26%) and pharmaceuticals (26%).

Consumers See Providers, Patients Solving Health Care Challenges

When asked where solutions to the health care industry’s challenges will come from, more than half of U.S consumers (55%) say health care providers, such as doctors or nurses. Nearly half (47%) see patients and consumers solving health care challenges, while 38 percent cite the government. Other responses include health insurance companies (34%), pharmaceutical and biotechnology companies (32%), hospitals (31%), academics, non-profits or think tanks (29%), technology companies (25%), and retail pharmacies (7%).

Ethics Deemed Important Trait to Solve Health Care Challenges

The Harris Poll study finds that in order to be a part of the solution in addressing U.S. health care needs, consumers believe it is most important for organizations to demonstrate ethics (62% say very important) and quality (57%). Other critical factors include efficiency (51%), a long-term view versus a short-term gain (49%), collaboration (47%), flexibility (47%), and transparency (47%).…

While pharmaceutical firms and insurers stand out for having reputations of placing profits over patients, the rest of the health care industry has not totally escaped the perception of this blemish in its ethics.

It is reassuring that health care professionals – physicians and nurses – still have enough respect that the poll respondents believe that these professionals working with patients are best suited to provide solutions to our health care industry challenges. They believe that it is important to demonstrate ethics above all in addressing these problems.

Since ethics is integral to organizations such as Physicians for a National Health Program and National Nurses United/California Nurses Association, they and other sectors that operate on the same ethical plane are well positioned to work with the people of the nation to bring health care justice to all. We, along with the people, need to lead.

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Pew poll confirms support of government responsibility in health care

Posted by on Wednesday, Jan 18, 2017

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.

More Americans say government should ensure health care coverage

By Kristen Bialik
Pew Research Center, January 13, 2017

As the debate continues over repeal of the Affordable Care Act and what might replace it, a growing share of Americans believe that the federal government has a responsibility to make sure all Americans have health care coverage, according to a new Pew Research Center survey.

Currently, 60% of Americans say the government should be responsible for ensuring health care coverage for all Americans, compared with 38% who say this should not be the government’s responsibility. The share saying it is the government’s responsibility has increased from 51% last year and now stands at its highest point in nearly a decade.

More than eight-in-ten Democrats and Democratic-leaning independents (85%) say the federal government should be responsible for health care coverage, compared with just 32% of Republicans and Republican leaners.

While about three-quarters of those with family incomes of less than $30,000 per year (74%) say the government should ensure coverage, only about half (53%) of those with incomes of $75,000 or higher say the same.

The belief that the government has a responsibility to ensure health coverage has increased across many groups over the past year, but the rise has been particularly striking among lower- and middle-income Republicans.

Currently, 52% of Republicans with family incomes below $30,000 say the federal government has a responsibility to ensure health coverage for all, up from just 31% last year. There also has been a 20-percentage-point increase among Republicans with incomes of $30,000-$74,999 (34% now, 14% last year). But there has been no significant change among those with incomes of $75,000 or more (18% now, 16% then).

Overall, 43% of Democrats and Democratic leaners support a so-called single payer approach, but this approach is more popular among liberal Democrats (51%) than among conservative and moderate Democrats (38%).

Most of those on the other side of the issue – people who say the government does not have a responsibility to ensure health coverage – say on a subsequent question that the government should continue Medicare and Medicaid (32% of the overall public), while just 5% of the public says the government should have no role in health care.









Once again about 60 percent of Americans say that the government should be responsible for ensuring health care coverage for everyone. There are a couple of observations in this particular poll worth considering.

As the health care reform process began, there was a decline in support of a government responsibility in health care coverage. That decline has reversed and is now back to 60 percent (see graph).

Last year, 31 percent of Republicans with family incomes below $30,000 supported a government responsibility for coverage and now that has increased to 52 percent. This suggests that the prospects for bipartisan support are greater, including Trump voters.

The poll also suggests that the term “single payer” has not gained as much traction, though a previous Kaiser Health Tracking Poll has demonstrated much stronger support for the “Medicare for all” framing.

Regardless, the ground is fertile to advance the cause of health care justice for all. Let’s do it.

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The recent first step by the Republicans for repeal of the ACA (by a vote of 51-48 in the Senate and 227-198 in the House) (1) opens up an intense debate among Republicans as to how and when to replace it. President-elect Donald Trump is pressing Congress to replace it concurrently, or nearly so, with its actual repeal, with which House Speaker Paul Ryan now seems to agree. Recent talk of a two to four-year delay is quickly fading away. Having embarked on the budget reconciliation process, the GOP can expect to pass repeal with just a bare majority vote in Congress, thereby avoiding filibuster by Democrats, but knows it will need 60 votes in the Senate to pass any real replacement package, thus requiring some help from the Democrats.

Some say the GOP still has no replacement plan, after almost seven years contesting the ACA, But they actually have published their principles, and have somewhat similar competing plans on the shelf, with some variation as to details. Republicans now realize the political dangers of a two to four-year delay after repeal, and are now trying to gain consensus among these plans as two House committees report out by the end of this month. The question of Tom Price’s role in the outcome lingers as his committee hearings are delayed into February, when we will learn if he is to be confirmed as incoming head of the Department of Health and Human Services (DHHS).

In the meantime, we already know a lot about what to expect in the final Republican post-ACA replacement plan. First, these are the principles upon which it will be based:

  1. States, not the federal government, should have primary responsibility for health policy;
  2. Patients and doctors should be in control;
  3. There should be more competition among health plans to give patients more choices; and
  4. Small business should have more discretion and flexibility to configure health benefits for their employees. (2)

Released last summer, Paul Ryan’s 37-page white paper, A Better Way, includes continuation of consumer-directed health care (CDHC) (with patients having “more skin in the game”), health savings accounts, high-risk pools, selling insurance across state lines, association health plans among businesses, and further privatization of Medicare and Medicaid (3) Tom Price (R-GA), as leader of the House Budget Committee, proposed in 2015 the complete repeal of the ACA, as well as privatization of Medicare, sharp cuts in Medicaid funding, and defunding of Planned Parenthood. (4)

The problem with all of these proposals is—they won’t work. Each of these directions has been used for years, and have all failed to assure Americans with better access to affordable health care. They have been discredited by long experience.

Here are four fatal flaws to these proposals:

  1. Market failure. Like the ACA, any of their replacement plans are still based mainly on the private for-profit market place. Insurers, the drug industry, and other parts of the medical-industrial complex, including their shareholders, have enjoyed bonanza years on Wall Street under the ACA without any significant cost containment. Most people are unaware of how extremely privatized and for-profit the current health care system is, as these examples show: free-standing laboratory and imaging centers (100 %), surgical-centers (95 %), dialysis centers (90 %), home care (76 %), nursing homes (65 %), and hospice (63 %) (1) (2016 Annual Survey by the Commerce Department or most recent available data for share of establishments.) Instead of increased competition, we have seen increasing consolidation and less competition under the ACA.
  2. Failure to learn from past failed health care policies. Republicans conveniently forget that the ACA was modeled on a health plan brought forward by the Heritage Foundation and enacted as the Massachusetts Health Plan by Governor Romney in 2006. Three years later, a study comparing safety net hospitals with non-safety net hospitals found that the former played a disproportionately large role in caring for disadvantaged patients and were hurting financially. (5) Many reasons for the ACA’s failure have been discussed elsewhere, including its reliance on a failing multi-payer financing system with some 1,300 private insurers, mostly dedicated to profits rather than coverage of patients’ health needs. How they continue to discriminate against the sick, profiteer, and inflate their overhead has been described elsewhere, to the point where the industry is not sustainable without taxpayer support. (6)
  3. Further privatization. Contrary to experience, evidence and GOP ideology, privatization is less competitive, less efficient, and more expensive for patients than the public sector, as already demonstrated by private Medicare and Medicaid plans. Privatized plans offer less choice, are more volatile and less accountable than their public counterparts. They game the system and demand ongoing overpayments (e.g. more than $173 billion to Medicare Advantage between 2008 and 2016 (7) All that amounts to corporate welfare at taxpayer expense.
  4. Dependence on larger role of states. There are already wide variations in states’ definitions of eligibility and coverage, which are likely to increase further as more restrictive federal block grants to states become widespread. Safety net resources will be hit hard, seriously impacting the most vulnerable among us.

The GOP is taking us over a cliff, not yet realizing it may well be political suicide for the party. We can expect that any GOP replacement plan will cost patients, families, and taxpayers more, and that we will all get less. This is all so foolish since there is a real solution in plain sight—single-payer national health insurance (NHI) if Republicans were not so blinded by ideology and unaware of the failed policies already proven by the last 25-plus years’ experience, including those of the ACA, much of which are still baked into their supposed “better way.” They also seem to be unaware of the most recent public polls strongly favoring NHI, regardless of political party. As just one example, a Gallup poll in May 2016 found that 41 percent of Republicans and leaners favored replacing the ACA with NHI. (8)

Defying experience and reason, we can anticipate that the GOP’s principles and approaches will make an imploding ACA system even worse. We can then expect a huge backlash from the public and even the private insurance industry when it doesn’t get all that it wants.

John Geyman, M.D. is the author of  The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans


1.    Robert Pear, Obamacare Repeal Moves a Step Closer to Reality, The Atlantic Online, Jan. 13, 2017 –
2.    Senate Republican Leaders Vow to Begin Repeal of Health Law Next Month, New York Times Online, December 6, 2017 –
3.    Rovner, J. House Republicans unveil long-awaited plan to replace health law. Kaiser Health News, June 22, 2016 –
4.    Petito, J, Hyatt, A, Zingman, M. We condemn the AMA and AAMC endorsements of Tom Price for HHS secretary. Common Dreams, December 12, 2016 –
5.    Mohan, A, Grant, J, Batalden, M et al. The health of safety net hospitals following Massachusetts health care reform: Changes in volume, revenue, costs, and operating margins from 2006 to 2009. Intl J Health Services 43 (2): 321-335, 2013 –
6.    Geyman, JP. How Obamacare Is Unsustainable: Why We Need a Single Payer Solution for all Americans. Friday Harbor, WA. Copernicus Health Care, 2015 –
7.    Geruso, M, Layton, T. Upcoding inflates Medicare costs in excess of $2 billion annually. UT News. University of Texas at Austin, June 18, 2015 –
8.    Republican support for single-payer. Gallup poll, May 16, 1016. Keith Ensminger. Kramer Translation, Merced, CA. Personal communication, September 8, 2016 –

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