Medicare decreases spending without changing volume, compared to private insurers

Posted by on Tuesday, May 3, 2016

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

Traditional Medicare Versus Private Insurance: How Spending, Volume, And Price Change At Age Sixty-Five

By Jacob Wallace and Zirui Song
Health Affairs, May 2016


To slow the growth of Medicare spending, some policy makers have advocated raising the Medicare eligibility age from the current sixty-five years to sixty-seven years. For the majority of affected adults, this would delay entry into Medicare and increase the time they are covered by private insurance. Despite its policy importance, little is known about how such a change would affect national health care spending, which is the sum of health care spending for all consumers and payers—including governments. We examined how spending differed between Medicare and private insurance using longitudinal data on imaging and procedures for a national cohort of individuals who switched from private insurance to Medicare at age sixty-five. Using a regression discontinuity design, we found that spending fell by $38.56 per beneficiary per quarter — or 32.4 percent — upon entry into Medicare at age sixty-five. In contrast, we found no changes in the volume of services at age sixty-five. For the previously insured, entry into Medicare led to a large drop in spending driven by lower provider prices, which may reflect Medicare’s purchasing power as a large insurer. These findings imply that increasing the Medicare eligibility age may raise national health care spending by replacing Medicare coverage with private insurance, which pays higher provider prices than Medicare does.

This study looked at the changes in spending and volume of services for individuals who, at age 65, transferred from private insurance to the traditional Medicare program. The authors showed that the volume of services remained the same, but spending went down, which reflects the lower provider prices that Medicare pays compared to private insurers.

One suggestion that has been made to “save Medicare” from future federal budget deficits would be to increase the eligibility age from 65 to 67. They showed that this would actually increase our national health expenditures without changing the volume of services, not exactly the health care cost containment that we are seeking.

Conservatives and neoliberals might think that the increase in spending would be worth it just to advance their ideological goal of relying less on government spending and more on the private sector. But a portion of the reduction in federal spending would be offset by increased Medicaid coverage for those eligible, and increased ACA premium tax credits and  cost-sharing subsidies, resulting in tax revenue losses and greater outlays. Not a good deal at all.

Others have suggested that we should expand Medicare enrollment, perhaps by reducing the eligibility age in 5 year increments. Although it would be an extrapolation of this study, it is not unreasonable to assume that we could significantly reduce our expenditures without any change in the volume of services for those who otherwise would have been privately insured.

Or go all the way. Replace the private insurers with a Medicare for all program. Not only is Medicare a more efficient purchaser of health care services, the recovery of much of the profound administrative waste of our fragmented financing system would be enough to fully fund a health care system for all without increasing our national health expenditures from the current level.

Remember who the patient is. It is not the government budget. It is the people who need health care. Establishing a well-designed single payer Medicare-for-all system would take care of the people, and the government budget would perk along just fine.

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Does the neoliberal label apply to our health care system?

Posted by on Monday, May 2, 2016

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

Obamacare: The Neoliberal Model Comes Home to Roost in the United States — If We Let It

By Howard Waitzkin and Ida Hellander
Monthly Review, May 2016


Abundant data substantiate that the failure of Obamacare has become nearly inevitable. Even after the ACA is fully implemented, more than one-half of the previously uninsured population will remain uninsured — at least 27 million people, according to the non-partisan Congressional Budget Office — and at least twice that number will remain underinsured. Due to high deductibles (about $10,000 for a family bronze plan and $6,000 for silver) and co-payments, coverage under Obamacare has become unusable for many individuals and families, and employer-sponsored coverage is headed in the same direction. Private insurance generally produces administrative expenses about eight times higher than public administration; administrative waste has increased even more under Obamacare, and remains much higher than in other capitalist countries with national health programs. These administrative expenditures pay for activities like marketing, billing, denials of claims, processing copayments and deductibles, exorbitant salaries and deferred income for executives (sometimes more than $30 million per year), profits, and dividends for corporate shareholders. The overall costs of the health system under Obamacare are projected to rise from 17.4 percent of GDP in 2013 to 19.6 percent in 2022.

The overall structure of Obamacare is not new. Similar “reforms” have appeared in other countries over the last two decades.

Such proposals fostered neoliberalism. They promoted multiple competing, for-profit, private insurance corporations. Programs and institutions previously based in the public sector were cut back and, if possible, privatized. Overall government budgets for public-sector health care were reduced. Private corporations gained access to public trust funds. Public hospitals and clinics entered into competition with private institutions, their budgets were determined by demand rather than supply, and prior global budgets for safety net institutions were not guaranteed. Insurance executives made operational decisions about services, and their authority superseded that of physicians and other clinicians.

The Boilerplate Neoliberal Health Reform

Health reform proposals across different countries have resembled one another closely. The specific details of each plan appeared to conform to a word-processed, cookie-cutter template, in which only the names of national institutions and local actors have varied. Six broad features have characterized nearly all neoliberal health initiatives.

1. Organizations of providers. One element of neoliberal proposals involves large privately controlled organizations of health care providers. These organizations operate under the direct control or strong influence of private, for-profit insurance corporations, in collaboration with hospitals and health systems.

2. Organizations of purchasers. A second element of neoliberal proposals involves large organizations purchasing or facilitating the purchase of private health insurance, usually through MCOs.

3. Constriction of public hospitals and safety net providers. Public hospitals at the state, county, or municipal levels compete for patients covered under public programs like Medicaid or Medicare with private hospitals participating as subsidiaries or contractors of insurance corporations or MCOs. With less public-sector funding, public hospitals reduce services and programs, and many eventually close. Although community health centers (CHCs) sometimes enjoy temporary improvements in funding, as in Obamacare, they increasingly serve as the providers of last resort for the remaining uninsured and underinsured. As a result, CHCs remain vulnerable to cutbacks and face an insecure future.

4. Tiered benefits packages. Neoliberal proposals define benefits packages in hierarchical tiers. The national reform provides a minimum package of benefits that experts view as essential, and individuals or their employers can buy additional coverage. Poor and near poor people in the U.S. Medicaid program are eligible for benefits that used to be free of cost-sharing, but since Obamacare passed, states increasingly have imposed premiums and copayments.

5. Complex multi-payer and multi-payment financing. Financial flows under neoliberal health policies are very complex. The costs of administering these flows and other components of neoliberal policies also are quite high (about 25 to 28 percent of total health care expenditures) and keep increasing. Under Obamacare, administrative overhead — also referred to administrative “waste,” since the costs do not contribute to direct patient services — grew 10.6 percent in 2014, faster than any other component of health care except medications.

6. Changes in tax code. Partly because they increase administrative costs and profits, neoliberal reforms usually lead to higher taxes.

Many countries have rejected the neoliberal model, and have instead constructed health systems based on the goal of “health care for all” (HCA). Such countries strive to provide universal access to care without tiers of differing benefit packages for rich and poor. For instance, Canada prohibits private insurance coverage for services provided by its national health program. Because Canada’s wealthy must participate in the publicly financed system, the presence of the entire population in a unitary system assures a high-quality national program. In Latin America, countries trying to advance the HCA model include Bolivia, Brazil, Cuba, Ecuador, Uruguay, and Venezuela. The inevitable failure of Obamacare may open a space, finally, for even the United States to pursue a national health program that does not follow the neoliberal model.

The Single-Payer Proposal

The following features of a single-payer option come from the proposals of Physicians for a National Health Program (PNHP), a group of more than 20,000 medical professionals, spanning all specialties, states, age groups, and practice settings. According to the PNHP proposals, coverage would be universal for all needed services, including medications and long-term care. There would be no out-of-pocket premiums, copayments, or deductibles. Costs would be controlled by “monopsony” financing from a single, public source. The NHP would not permit competing private insurance and would eliminate multiple tiers of care for different income groups. Practitioners and clinics would be paid predetermined fees for services, without any need for costly billing procedures. Hospitals would negotiate an annual global budget for all operating costs. For-profit, investor-owned facilities would be prohibited from participation. Most non-profit hospitals would remain privately owned. To reduce overlapping and redundant facilities, capital purchases and expansion would be budgeted separately, based on regional health planning goals.

Funding sources would include current federal spending for Medicare and Medicaid, a payroll tax on private businesses less than what businesses currently pay for coverage, and an income tax on households, with a surtax on high incomes and capital gains. A small tax on stock transactions would be implemented, while state and local taxes for health care would be eliminated. Under this financing plan, 95 percent of families would pay less for health care than they previously paid in insurance premiums, deductibles, copayments, other out-of-pocket spending, and reduced wages.

Moving Beyond Single Payer

The coming failure of Obamacare will mark a moment of transformation in the United States, where neoliberalism has come home to roost. For that moment, those struggling for a just and accessible health system will need to address some profound changes that have occurred during the era of neoliberalism. These changes pertain to the shifting social class position of health professionals, and to the increasingly oligopolistic and financialized character of the health insurance industry.

Beyond the changing class position of health professionals, the transition as Obamacare collapses will need to address the oligopolistic character of the insurance industry, alongside the consolidation of large health systems. Obamacare has increased the flow of capitated public and private funds into the insurance industry and thus has extended the overall financialization of the global economy.

In this context, it is important to reconsider the distinction between national health insurance (NHI) and a national health service (NHS). NHI involves socialization of payments for health services but usually leaves intact private ownership at the level of infrastructure. Except for a small proportion of institutions like public hospitals and clinics, under NHI the means of production in health care remain privately owned. Canada is the best-known model of NHI. The PNHP proposal and Congressional legislation that embodies the singer-payer approach are based on the Canadian model of NHI.

The PNHP single-payer proposal emerged from a retreat in New Hampshire during 1986, where activists struggled with these distinctions. Although most participants at the retreat had worked hard for the Dellums NHS proposal, they reached a consensus — albeit with some ambivalence — to shift their work to an NHI proposal based on Canada. The rationale for this shift involved two main considerations. First, Canada’s proximity and cultural similarity to the United States would make it more palatable for the U.S. population, and especially its Congressional representatives. Secondly, a Canadian-style NHI proposal could be “doctor-friendly.” Under the PNHP proposal, physicians could continue to work in private practice, clinics, or hospitals. The main difference for physicians was that payments would be socialized, so that the physicians would not have to worry about billing and collecting their fees for services provided.

While PNHP has achieved great success in its research and policy work, these efforts, and those of many other organizations supporting single payer, have not yet generated a broad social movement working toward a Canadian-style NHI. Meanwhile, the neoliberal model, with all its benefits for the ruling class and drawbacks for everyone else, has solidified its hegemony. Partly as a result, physicians and other health professionals are becoming proletarianized employees of an increasingly consolidated, profit-driven, financialized health care system. And under Obamacare, the state has continued to prioritize protection of the capitalist economic system, in this case by overseeing huge subsidies for private insurance and pharmaceutical corporations.


Encyclopedia Britannica

Neoliberalism: ideology and policy model that emphasizes the value of free market competition.

Neoliberal ideology and policies became increasingly influential, as illustrated by the British Labour Party’s official abandonment of its commitment to the “common ownership of the means of production” in 1995 and by the cautiously pragmatic policies of the Labour Party and the U.S. Democratic Party from the 1990s.


A Neoliberal’s Manifesto

By Charles Peters, Founder and Editor
The Washington Monthly, May 1983

If neoconservatives are liberals who took a critical look at liberalism and decided to become conservatives, we are liberals who took the same look and decided to retain our goals but to abandon some of our prejudices. We still believe in liberty and justice and a fair chance for all, in mercy for the afflicted and help for the down and out. But we no longer automatically favor unions and big government or oppose the military and big business. Indeed, in our search for solutions that work, we have come to distrust all automatic responses, liberal or conservative.

The majority of Americans would like to see a high quality health care system that is affordable and accessible for everyone. We do not have that now. Why not?

Progressives/liberals generally recognize that costs and market dysfunctions require a major role of government in financing health care. Conservatives/libertarians believe that free markets can fulfill that role with the exception that those impoverished not by choice need private charity or the helping hand of government. But it is those in the middle – the moderates – who determine policy through the election process. So who are they?

They are both Republicans and Democrats. In health care, they support private financing, primarily through insurance, though they support public tax expenditures to help pay for the most common coverage – employer-sponsored plans. They also support Medicare for seniors and those with disabilities, and most support Medicaid for low-income individuals and families.

In fact, President Obama abandoned single payer in favor of the Heritage Foundation proposal, based on these principles, since it had broad bipartisan support – or so he thought, until the Republicans decided that a political defeat for Obama was more important than improving our health care system.

So what happened to these moderates? The Republicans have retreated toward the right where they would try to tolerate the conservative tea party faction. The moderate Democrats did not move to the left but instead also moved somewhat toward the right into the pro-market neoliberal niche. Following the groundwork laid by President Reagan, President Bill Clinton followed a neoliberal path in which “the era of big government is over” (State of the Union, 1996). The neoliberals then became the establishment force in the Democratic Party. President Obama, whether voluntarily or through political obstructionism, did not change the direction of the party. The likely next president has indicated that she will follow the neoliberal Clintonian path as well and not change direction in health care.

Today’s article describes how neoliberalism and its advocacy of using markets instead of the government to control the financing of health care has resulted in our overpriced and underperforming health care system, as if the neoliberals have failed to see the irony of a health care system that is already 60 percent funded through the tax system and that has failed to conform to free market dynamics.

Whatever labels are used, the majority of Americans support Medicare. If we already had an improved version of Medicare that included everyone, the support would be near unanimous. The neoliberals either need to take a reality check on their ideology, or they need to attend the next local tea party function and listen to the voices extolling the virtues of a society without a functioning government.

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Focus groups confirm that ACA is not affordable for many

Posted by on Friday, Apr 29, 2016

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

Is ACA Coverage Affordable for Low-Income People? Perspectives from Individuals in Six Cities

By Jennifer Tolbert, Robin Rudowitz, and Melissa Majerol
Kaiser Family Foundation, April 21, 2016

Millions of people have gained access to health insurance coverage under the Affordable Care Act (ACA) through Medicaid and the Marketplaces. While research shows that coverage improves access to care and promotes financial stability, issues around access and affordability remain, and are more acute for the low-income population. To learn more about how low-income individuals have fared with their new coverage, we conducted nine focus groups (three groups with Medicaid enrollees and six groups with low-income Marketplace enrollees) in six states (California, Florida, Maryland, Missouri, Ohio, and Virginia).  Many participants were struggling financially and reported substantial debt (including medical debt). Many had ongoing physical and mental health needs and were accessing health services to treat those conditions. Following are key themes from the groups:

1.  New coverage did not change underlying financial struggles and hardship due to medical debt incurred prior to gaining coverage. Many participants were stretched financially, had limited capacity to absorb unexpected costs, and struggled with finding secure employment in their area.

2.  Medicaid stands up well for the lowest income participants in terms of ease of enrollment, out-of-pocket costs and affordability, and ability to find providers and access care. A small number of participants reported trouble affording care that wasn’t covered (particularly for vision or dental) and difficulty finding some providers, including mental health providers.

3.  Largely due to premium tax credits in the Marketplace, premiums were generally affordable, but out-of-pocket costs weighed heavily on Marketplace participants, especially those with high deductible plans. Many reported being overwhelmed by plan choices. Some were able to make trade-offs to purchase higher cost plans with lower deductibles to meet anticipated care needs, but not everyone was able to afford higher premiums.

4.  The fear of unknown costs was a constant worry for many Marketplace participants. Many got bills for services they thought were covered, such as screenings, colonoscopies and mammograms when issues were discovered and treated. These bills caused many to avoid getting needed care. Marketplace participants also reported trouble affording care that wasn’t covered by their plan, notably vision and some dental services.

5.  Most participants had accessed care and were positive overall about new ACA coverage through Medicaid and the Marketplace. They were grateful that coverage was available to them, particularly those who had been previously ineligible for Medicaid or barred from private coverage due to pre-existing conditions. However, many Marketplace participants wanted coverage to be more affordable.

While people were grateful for coverage, unexpected bills, dealing with insurance companies, and facing known deductibles were sources of stress which made those with Marketplace coverage fearful to use the coverage they had. They were particularly frustrated by the out-of-pocket costs, which were unaffordable to many and wanted insurance that didn’t come with so many hidden costs.

Issue Brief:

This report of nine focus groups confirms that real people have found that the Affordable Care Act (ACA) often fails to provide access to affordable care.

Although the leading candidate for president has said that she wants to build on ACA, reducing premiums and deductibles pours yet more tax money into what is the most expensive and least efficient model of health care financing. The model cannot really be fixed if we want true value in health care. It needs to be replaced with a model that does work – a single payer national health program – Improved Medicare for All.

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Paul Ryan does not seem to understand high-risk pools

Posted by on Friday, Apr 29, 2016

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

Ryan wants to end Obamacare cost protections for sick consumers

By David Morgan
Reuters, April 27, 2016

U.S. House of Representatives Speaker Paul Ryan called on Wednesday for an end to Obamacare’s financial protections for people with serious medical conditions, saying these consumers should be placed in state high-risk pools.

In election-year remarks that could shed light on an expected Republican healthcare alternative, Ryan said existing federal policy that prevents insurers from charging sick people higher rates for health coverage has raised costs for healthy consumers while undermining choice and competition.

The rule, a cornerstone of President Barack Obama’s Affordable Care Act, has been praised by patient advocates for providing access to medical care for people who previously could not afford private health insurance. The Affordable Care Act also bars insurers from excluding coverage for pre-existing conditions.

“Less than 10 percent of people under 65 are what we call people with pre-existing conditions, who are really kind of uninsurable,” Ryan, a Wisconsin Republican, told a student audience at Georgetown University.

“Let’s fund risk pools at the state level to subsidize their coverage, so that they can get affordable coverage,” he said. “You dramatically lower the price for everybody else. You make health insurance so much more affordable, so much more competitive and open up competition.”

High-risk pools, which existed before the healthcare law, are state-level entities that guarantee coverage for people with health problems. Analysts say they can be prohibitively expensive and offer less than optimal health coverage.

House Speaker Paul Ryan has promised to produce the Republican alternative to the Affordable Care Act, likely before the Republican convention in July. In his comments at Georgetown University yesterday he discussed what would be the most important policy supposedly designed to control health care spending for the vast majority of Americans: Establish state level risk pools for the 10 percent of people with the greatest health care needs. Let’s see what that means.

The top 10 percent of individuals in spending account for 65 percent of health care costs. By removing them from the standard insurance pools that means that the other 90 percent would have to pay insurance premiums that funded only 35 percent of total health care. Ryan says that this would lower insurance premiums through competition, but that is nonsense. Premiums would be much lower because two-thirds of health care costs are pulled out of the insurance plans in the marketplace. Surely most Americans would be happy with private insurance premiums that were one-third of what they would be if everyone were included. It would be a very popular program, and the Republicans would take credit for it.

But what about the 10 percent of people who account for two-thirds of our health care costs. Their premiums would have to be about 7 times what the premium would be if everyone were covered under a common risk pool, or about 20 times what everyone else is paying. As Paul Ryan says, they are “really kind of uninsurable.” So he proposes high-risk pools at the state level, with subsidized premiums. Expecting the states to subsidize two-thirds of our health care costs is a non-starter. Without massive increases in taxes, which are opposed by the Republicans anyway, the states would not be able to fund those pools.

We already have considerable experience with state high-risk pools. In recent decades, thirty-five states established such pools, and overall they were a spectacular failure. Also, the Affordable Care Act authorized temporary Pre-Existing Condition Insurance Plans (PCIP) which were also high-risk pools. These plans proved to be prohibitively expensive to administer, prohibitively expensive for consumers to purchase, and offered much less than optimal coverage, often with annual and lifetime limits, coverage gaps, and very high premiums and deductibles.

It is so obvious on the face of it. Most of us might be happy with our low premiums, but we would be very unhappy with the massive increases in regressive state taxes that would be enacted to pay for this. Vermont’s reform effort failed once the tax consequences were recognized, and that wasn’t even for high-risk pools.

As I wrote in a previous Quote of the Day, “With a single payer system this problem disappears. Funding is based on ability to pay, through the tax system, and not on the basis of anticipated medical expenses. Everyone receives the care they need, regardless of their health status. The fragmented plans supported by the repeal and replace people cannot do that.”

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Who benefits from an “improved” medical loss ratio?

Posted by on Thursday, Apr 28, 2016

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

Health insurer Centene’s profit beats as medical costs fall

By Amrutha Penumudi
Reuters, April 26, 2016

U.S. health insurer Centene Corp (CNC.N) reported a better-than-expected quarterly profit, helped by lower medical costs in certain patient populations and the acquisition of rival Health Net.

The company’s health benefits ratio, or the amount it spends on medical claims compared with its income from premiums, improved to 88.7 percent in the first quarter from 89.9 percent a year earlier.


Anthem Falls As Medicaid, Obamacare Results Pressure Margins

By Zachary Tracer
Bloomberg, April 27, 2016

Anthem Inc., the No. 2 U.S. health insurer, fell in New York trading as costs tied to its Medicaid and Affordable Care Act businesses pressured margins.

The shares fell 2.8 percent to $142.91 at 11:24 a.m. Wednesday. Anthem spent 81.8 cents of every premium dollar on medical claims in the first quarter, up from a medical-loss ratio of 80.2 percent a year earlier, according to a statement.

Today’s message is just a reminder of one of our problems that the Affordable Care Act (ACA) did not fix. A well-functioning health care financing system should be designed to obtain maximum value by spending our funds on health care and not wasting them on excessive administrative services and on profits that add no value to health care. Yet ACA perpetuates policies that turn these priorities upside down, to the pleasure of Wall Street.

Centene is reporting greater profits attributed to a lower percentage of revenues spent on health care compared to the year before – the medical loss ratio decreased from 89.9 percent to 88.7 percent. A comparable medical loss ratio for Medicare would be about 98 percent – only 2 percent is used for administrative services, and there are no profits. Spending less on patient care and retaining more for Centene’s own administrative services and for profits, Wall Street deems to be an improvement.

In contrast, the percent of revenues that Anthem spent on health care increased – the medical loss ratio increased from 80.2 percent to 81.8 percent. For insurers to spend more on health care is considered to be bad news on Wall Street, and thus they punished Anthem by bidding down the price of their shares.

Since these insurers are giving us the opposite of what we want, why are we leaving them in charge of our health care dollars? Let’s fix Medicare and expand it to cover everyone. Yes, we would have a very high medical loss ratio – with 98 percent of our Medicare tax revenues spent on patient care – but it would be a much better deal for all of us – except for the insurance executives and Wall Street rent-seekers.

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External validity through structured speculation

Posted by on Wednesday, Apr 27, 2016

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

Decision Theoretic Approaches to Experiment Design and External Validity (Working Paper 22167)

By Abhijit Banerjee, Sylvain Chassang, and Erik Snowberg
National Bureau of Economic Research, April 2016


A modern, decision-theoretic framework can help clarify important practical questions of experimental design. Building on our recent work, this chapter begins by summarizing our framework for understanding the goals of experimenters, and applying this to re-randomization. We then use this framework to shed light on questions related to experimental registries, pre-analysis plans, and most importantly, external validity. Our framework implies that even when large samples can be collected, external decision-making remains inherently subjective. We embrace this conclusion, and argue that in order to improve external validity, experimental research needs to create a space for structured speculation.

Formats for structured speculation

In all external decision making problems, inference is unavoidably subjective. In structural modeling, the source of subjectivity is the model itself.

This highly technical paper is a difficult read, but it provides important lessons for design and application of health policy research. The subjective design of the research model and subjectivity of the resulting decision making impacts the external validity of the experiment. That is, can the results of the experiment be applied generally outside of the experimental model?

Perhaps the most famous example is the RAND Health Insurance Experiment. It demonstrated that employees and their families who had to pay part of the costs of their health care used less health care than did those who had no out-of-pocket spending, yet both groups had equally good health care outcomes (except for hypertensives). This conclusion was internally valid for this group, and it has been applied to the population at large. But is it really externally valid?

Employees and their families are a comparatively healthy sector of society, and in the RAND HIE they were studied during a healthy period of their lives. These results would not apply to the population at large that includes less healthy individuals who help run up our three trillion dollar national health care bill. Yet we have accepted the results of the RAND HIE as gospel even though other studies have confirmed that cost sharing does cause individuals to forgo beneficial health care services.

In the Oregon Experiment individuals with no insurance were compared with individuals who received Medicaid benefits by lottery. The conclusions published in the NEJM were that “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years,” and this has been interpreted widely to mean that Medicaid does not improve health. The internal validity was regarding three measurements – BP, cholesterol and HbA1c during only two years. How could that possibly have external validity for the low-income population at large with innumerable infirmities that we know respond to beneficial health care services?

The subjectivity of sectors of the policy community is at question here. Model design is subjective and inference is subjective. Studies can be designed and interpreted to obtain the results desired. Cost sharing can be shown to reduce spending without having any adverse effect on health. Medicaid can be shown to have no benefit on health outcomes.

And what do we have now? Apparently policy science is so advanced that we are putting in place measures that do not require research to confirm their effectiveness. Narrow provider networks can reduce spending by deterring patients who, after all, really do not need care, they say. High deductibles can reduce spending without adversely affecting health, except for those who deferred the health care that they should have had. They say accountable care organizations will improve quality and significantly reduce spending, even though experience to date has largely failed to confirm that. The Merit-Based Incentive Payment System (MIPS) will convert the volume of health care delivery to the elusive concept of value, they hope, though the limited evidence indicates otherwise.

What is the purpose of health policy research? To improve quality? Isn’t quality determined by studying the diagnostic, therapeutic and preventive interventions in heath care – i.e, medical research? Is the purpose of policy research to control spending? Except by creating detrimental financial and logistical (network) barriers to beneficial care, policy studies have been remarkably ineffective. Public policies such as establishing a single payer system have been far more effective in controlling spending.

The authors of this NBER paper state, “in order to improve external validity, experimental research needs to create a space for structured speculation.” Haven’t we had enough of this structured speculation of the health policy community? Isn’t it time to adopt public policies that have been proven to be effective?

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ColoradoCare to face industry onslaught

Posted by on Monday, Apr 25, 2016

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

Health Care Industry Moves Swiftly to Stop Colorado’s “Single Payer” Ballot Measure

By Lee Fang
The Intercept, April 22, 2016

The campaign in Colorado to create the nation’s first state-based “single payer” health insurance system, providing universal coverage and replacing insurance premiums with higher taxes, has barely begun.

But business interests in Colorado are not taking anything for granted, and many of the largest lobbying groups around the country and in the state are raising funds to defeat Amendment 69, the single-payer ballot question going before voters this November.

The Council of Insurance Agents & Brokers, a national trade group, is mobilizing its member companies to defeat single payer in Colorado. “The council urges Coloradans to protect employer-provided insurance and oppose Proposition 69,” the CIAB warns. The group dispatched Steptoe & Johnson, a lobbying firm it retains, to analyze the bill.

Lobby groups that represent major for-profit health care interests in Colorado, including hospitals and insurance brokers, are similarly mobilizing against Amendment 69. The Colorado Association of Commerce & Industry — a trade group led in part by HCA HealthOne, a subsidiary of HCA, one of the largest private hospital chains in the country — is soliciting funds to defeat single payer. The business coalition to defeat the measure also includes the state’s largest association of health insurance brokers.

I asked Sean Duffy, a spokesperson for “Coloradans for Coloradans,” an ad hoc coalition against the single-payer ballot measure, how the state should address high health care costs and those struggling to afford health insurance premiums.

“We are focused on sharing with Coloradans the numerous questions, ambiguities, and concerns with Amendment 69,” said Duffy. He noted that “motivations for universal coverage are shared by many in Colorado” but that making Colorado a “one-state experiment, and the cost of doubling our state budget, potentially diminishing the accessibility and quality of care and creating an unaccountable, massive bureaucracy is just not a good idea for Colorado.”

As other states consider proposals to lower costs and expand coverage, health care interests keen to protect some of the largest profit margins in the economy will be sure to mobilize quickly to snuff them out.


MSNBC’s Chris Hayes interviews reporter Lee Fang (4 minutes)


Email message

From T. R. Reid, author of The Healing of America
April 21, 2016


As you know, there’s a citizens’ initiative on the ballot in Colorado this November to create a state-specific plan that will cover everybody, eliminate deductibles, and let the patient, not the insurance company, choose the doctor, chiropractor, hospital, etc. If “ColoradoCare” passes, it can be a model and an incentive for other states where people like you are working to get health care for all.

I’m happy to report that our early polls show us ahead statewide.  I’m unhappy to tell you that our lead is not big enough to withstand the expected onslaught from our opponents. The insurance companies have funded a huge “No” campaign. The Koch Brothers are already running TV ads that say for-profit insurance is the ideal way to pay for health care.

So we need help. We need money…

Without additional enabling federal legislation, Colorado is not able to enact a bona fide single payer system. However, their ballot measure – Amendment 69, ColoradoCare – would improve efficiency, equity and coverage through the health care financing system in their state. Strong opposition is expected since ColoradoCare could be disruptive to some of the well-financed stakeholders, especially the private insurance industry.

The advocates of ColoradoCare are now seeking support for their effort (link above). It will be difficult to educate the public on the facts behind their reform proposal. Even when saturated with facts, the public often remains dubious because of the prevailing anti-government and anti-tax rhetoric. It is a massive project to convert the majority of the voters into passionate supporters of such a cause.

In the meantime, the opponents know that their task does not involve educating the public on the facts. They do not have to engage the other side in a information battle over the truth. They merely have to appeal to the passion of the voters. Simple rhetorical soundbites are usually enough to convince the voters that they do not have to waste their time studying some complicated government scheme in order to know how to vote on it. Just look at some of the rhetoric of the opposition group, Coloradans for Coloradans: “doubling the state budget,” “diminishing accessibility and quality,” and “creating an unaccountable, massive bureaucracy.” Who would support that? No need to try to find out the truth.

This is not just theoretical, as single payer activists supporting ballot measures in California and Oregon can attest to. In both cases, early polling was favorable, as it is now in Colorado. But closer to election time, intensive campaigns were launched by the opponents using simplistic sound bites and slogans, and the results were a disaster. California’s Proposition 186 lost by a 3 to 1 margin and Oregon’s Measure 23 lost by 4 to 1.

So what should we do? I have three suggestions.

1.  Contribute to their effort in any way you can. (Today I made a donation through their website.)

2.  If the effort should fail (and I hate to say that), then be sure that everyone understands that this was not a failure of single payer, especially since it is not even a bona fide single payer proposal. Rather it will have been a failure in mobilizing a social movement.

3.  Above all, do not let up in the least in your advocacy for a single payer national health program – an improved Medicare for all. That is the ultimate goal, and it could be accomplished in a single step without having to first enact compromised systems in several states. Difficult? Of course. But, in spite of many attempts, how many states have enacted single payer? In this age of advanced communications, mobilizing a social movement on a national basis makes more sense than trying to do it in selected individual states.

(ColoradoCare is not a project of PNHP since we are a single issue organization supporting a single payer national health program. But most members are individually very supportive of the Colorado effort as a beneficial interim measure to fill in until we can enact a national Medicare for all program.)

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MACRA and the ethics of physician burnout

Posted by on Friday, Apr 22, 2016

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

Medicare’s New Physician Payment System

Health Affairs, Health Policy Briefs, April 21, 2016

An overwhelming body of research in recent years found that medical care in the United States was neither efficient nor as effective as it could be. Inappropriate and excessive care is common even as rising health care costs burden government, business, and families.

Against this backdrop, government and private-sector leaders have resolved to transform how physicians are paid in a way that holds them more accountable for the care they deliver. The latest salvo in this effort was the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, signed into law April 16, 2015.

What’s in the law?

Initially, physicians can choose a program called the Merit-Based Incentive Payment System (MIPS) or join an alternative payment model such as an accountable care organization or patient-centered medical home. If they make no choice or are deemed to be ineligible for an alternative payment model incentive payment, they will be assigned to MIPS.

At the same time, three existing payment incentive and quality improvement initiatives will be dissolved as separate programs and melded into MIPS. They are the Physician Quality Reporting System, Meaningful Use, and the Physician Value-Based Payment Modifier.

Physicians in MIPS must report performance measures to CMS. They’ll then be graded on four factors: quality of care (30 percent); resource use (30 percent); meaningful use of EHRs (25 percent); and clinical practice improvement activities (15 percent).

High-scoring physicians will get a bonus, and low-scoring physicians will see their fees reduced.

Physicians choosing the alternative payment model path will have to join an accountable care organization or an approved patient-centered medical home, or otherwise be in an alternative payment model entity where payment is at least partly based on quality performance and on total spending. Payment tied to performance must be 25 percent of a doctor’s or group practice’s Medicare revenue in 2019, increasing to 75 percent in 2022.

‘Volume to value’–slogan or sound policy?

Some critics argue that the volume-to-value movement is, for now, based more on faith than on strong evidence. For example, they cite the experience of countries in Europe that control spending primarily through regulating prices and fees in fee-for-service systems, instead of through performance measurement and payment incentives.

Critics also argue that “value” in medicine is an elusive concept and not one likely to be pinned down through a single composite score. As yet, these critics further allege, value has not been clearly pegged or produced by accountable care organizations, patient-centered medical homes, or integrated health care systems.


The Mess That is MACRA

By Kip Sullivan
The Health Care Blog, April 21, 2016

MACRA (the Medicare Access and CHIP Reauthorization Act) is a mess. It is extremely difficult to comprehend, it is based on assumptions that defy commonsense and research, and it may raise costs.

The Medicare Payment Advisory Commission (MedPAC) would never say what I have just said, but MedPAC definitely understands MACRA’s defects. The transcripts of MedPAC’s October 8, 2015 and January 15, 2016 meetings indicate that members and staff perceive daunting impediments to the implementation of MACRA. But those transcripts also suggest that MedPAC won’t tell Congress to rewrite or repeal MACRA. Rather, the evidence suggests MedPAC will mince words. It appears MedPAC will send CMS and Congress a few wishes dressed up as “principles” and wait for MACRA’s inevitable failure before offering more useful advice.

MIPS: Measuring the unmeasurable

The MIPS program was designed for doctors who can’t or won’t join the ACO-medical-home bandwagon. MIPS inflicts huge rewards and penalties (up to 9 percent of the average annual Part B payout per physician) based on a single “value” score (a score derived by the capricious jamming of crude quality and cost measures into one number) for each doctor. As commissioner Gradison put it, MIPS was designed for “the laggards, the people who stand for the status quo,” the knuckle-draggers who just won’t get with the Managed Care 2.0 program.

Sand castles on top of sand castles: The APM program

I suspect the reason Congress did not populate the APM compartment with clearly defined entities is that Boehner et al. knew full well that the first iteration of “value-based” entities – the ACOs and “medical homes” authorized by the Affordable Care Act – have not panned out. We know that MedPAC understands that. In its reports to Congress, and in statements by staff and members, MedPAC has clearly indicated they understand that ACOs and “homes” are saving little or no money and are having at best minor and mixed effects on quality.

It is fair to say, then, that MedPAC understands that Congress has essentially instructed CMS to build a new layer of undefined, unproven APMs on top of the existing layer of poorly defined and unproven ACOs and “homes,” in other words, a second layer of sand castles over an existing layer of sand castles.

Congress and CMS don’t need to hear any more abstract and wishful remarks about MACRA. They need to hear useful feedback. MedPAC should tell Congress MACRA is an unworkable mess and must be repealed or amended.


Physician Burnout Is a Public Health Crisis, Ethicist Says

By Arthur L. Caplan, PhD
Medscape, March 4, 2016

We’ve got a problem in this country with doctors. It’s kind of an epidemic, but no one is talking about it. It is burnout. A recent study from the Mayo Clinic showed that in 2011, 45.5% of doctors reported that they felt burned out, and that number has now risen to 54.4% in 2014.

This is really trouble. It’s trouble because a doctor who feels this way can commit more errors. They suffer from compassion fatigue, or just not being able to empathize with others because they have their own emotional issues. They may retire early, thereby reducing the workforce. They may have problems managing their own lives; 400 doctors committed suicide last year, which is double the rate of the population average. There’s trouble for patients in having a workforce that’s burned out. There’s trouble for doctors in terms of their own health and well-being.

When we institute new software or when we have new bureaucratic regulations, I think somebody ought to ask what this does to the workforce. If one more doctor complains to me about Epic and other types of electronic record keeping and billing forms, it’ll be one doctor too many. It takes a lot of energy. It makes people unhappy. A lot of the software and computer assistance that’s out there doesn’t seem to help the doctor; it makes more work or makes them frustrated. It also seems to me that if you look at what’s going on with respect to regulations and administrative or bureaucratic requirements, nobody is saying, “Hey, is this user-friendly? What’s the burden that it’s putting on the doctor?” It’s just done to save money or allow people to collect bills more reliably, but it’s not asking what it’s taking out of our workforce.

Arthur L. Caplan, PhD is from the Division of Medical Ethics at the New York University Langone Medical Center.

We now have an epidemic of physician burnout. It has become a crisis not only because of what it does to physicians’ well-being but also because of a deterioration in the all-important physician-patient relationship and in the medical practice environment.

A major contributor to burnout is the subversion of physician independence to the massive misdirected oversight interposed by public and private insurance bureaucracies. Little need be said about the private insurance bureaucracies that waste tremendous resources while creating havoc in our health care delivery system. We merely need to eliminate the private insurers and replace them with a single payer national health program.

Our government has established policies that result in Medicare gradually being shifted to the private Medicare Advantage insurers and Medicaid being shifted to private managed care organizations. In the past we’ve covered the reasons why privatization is a terrible idea, and we won’t go into that now. We’ll merely say that moving on to single payer should eliminate the privatization schemes.

Today’s message is more narrowly targeted to the problem that the public bureaucracies are creating, especially Medicare. MACRA with its MIPS (merit-based incentive payment system) and its APMs (alternative payment models) epitomize the bureaucratic interference of the federal government in our public programs. For more details, you should read the full articles cited today. These are concepts thought up by the policy community working with our government bureaucrats. They are relying on intuition since there is little in policy science to support MIPS and APMs. Initial results have been quite disappointing yet they are moving full steam ahead with these programs.

The burden on physicians and other health professionals will be great and can only exacerbate current trends leading to burnout. Public policies that make health care worse are unethical policies – the gist of today’s message.

We need to expand policies that serve the public in their need to have affordable access to health care. On May 5 we will be releasing an update of the Physicians’ Proposal which describes the policies we need to ensure comprehensive health care for everyone, in a pleasant environment that optimizes the health care experience. Watch for it.

Once we have that system in place it will be imperative for us to exercise continuing due diligence in ensuring that our political and policy stewards support the ideology of health care justice for all through public policies, while dismissing would-be stewards who support Randian you’re-on-your-own ideology that dominates the private arena.

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Giving health care consumers what they don’t want

Posted by on Thursday, Apr 21, 2016

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

Robin Wright King on Consumer Reactions to HDHPs, April 17, 2016

Robin Wright King, MBA, of Blue Cross Blue Shield of Massachusetts, discusses consumer reactions to high-deductible health plans, which ask them to shoulder more of the burden of the cost of their healthcare.

How do consumers react to the new health plans that ask them to shoulder more costs?

“I don’t believe members are excited, generally, about the concept of having to shoulder more of the cost, but these high-deductible health plans are here to stay. And employers are trending towards engaging in these higher deductible health plans more and more. As a matter of fact, many employers are moving to these plans as full replacement plans. Again, we really have the responsibility – and many employers want us as a health plan to be more involved – to help their members understand their plans.”

Blue Cross Blue Shield members are not excited about having to shoulder more of the cost through high-deductible health plans, but these plans are here to stay. So much for consumer choice.


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Lessons from the Swiss rejection of single payer

Posted by on Wednesday, Apr 20, 2016

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

What Can US Single-Payer Supporters Learn From the Swiss Rejection of Single Payer?

By Claudia Chaufan
International Journal of Health Services, 2016, Vol. 46(2) 331–345


On September 27, 2014, Swiss voters rejected a proposal to replace their system of about 60 health insurance companies offering mandatory basic health coverage with a single public insurer, the state, which would offer taxpayer-funded coverage of all medically necessary care. The Swiss and the U.S. media, academia, and business sectors, from conservative and liberal camps, interpreted the results to mean a rejection of single payer and a preference for a privately run system, with important implications for health reform in the United States. While on the surface mainstream interpretations appear reasonable, I argue that they have little basis on fact because they rely on assumptions that, while untrue, are repeated as mantras that conveniently justify the continuation of a model of health insurance that is unraveling, less conspicuously in Switzerland, dramatically in the United States. To make my case, I describe the dominant narrative about Swiss health care and mainstream interpretations of the latest referendum on health reform, unpack the problem within these interpretations, and conclude by identifying what lessons the Swiss referendum contains for single payer advocates in the United States in particular and for those who struggle for social and economic rights more generally.

Lessons to be Learned

Why, then, was single payer defeated? What, if anything, can single payer supporters learn from this defeat? First, we must grant that the state of Swiss health care may be of concern for the Swiss (who seem to have lower tolerance for being deprived of health care than Americans), but is still not bad enough. People who experience the greatest barriers to care, in Switzerland as elsewhere, are the most politically disenfranchised—young, poor, women, and immigrants, much like they are in the United States—so the problem has yet to strike the so- called middle classes badly enough.

Yet the Swiss case can help single payer supporters, and other social justice advocates, experience and gauge the extraordinary power of propaganda of the corporate class, in health care matters as in others. The scare tactics against single payer displayed by corporate interests in Switzerland have been extraordinary, in both 2007 and this latest referendum. As the BBC timidly suggested, one reason for the failure “may be the power of the insurance sector and of the big pharmaceutical companies in Switzerland […] Both have strong lobby groups.” And yet, none of the single payer or other relevant referenda indicate that love of private health insurance is increasing. If anything, they lay bare the reality that even in the land of direct democracy, as in Switzerland, the attempt to achieve health care justice through a system of “competing private insurers” is a delusion. They also indicate that more political education is necessary to achieve single payer. This, I believe, is as true for the Swiss as it is for the American people.

The Swiss referendum also teaches activists that corporate propaganda is vicious not only when it comes to portraying the presumed evils of single payer or beauty of private health insurance. It is also vicious when it comes to interpreting, and communicating to the public, voting patterns and preferences in health care matters.

The power of corporate propaganda matters because its self-serving interpretation can operate like a self-fulfilling prophecy. The narrative that “the people” prefer the status quo, and the dubious assumption that the people’s will is the key driver of policy, especially in America, can lead public health care advocates to conclude that those who struggle for greater social justice are more alone than they really are, rather than interpreting the resilience of current power structures as indicating that the corporate class owns, and controls, the means of communication as much or more than it owns and controls the means of production, and is thus able to shape the public debate to suit their interests. As a result of this, advocates may give up the fight too soon, or worse, retreat and accommodate to the boundaries of change as set by this corporate class.

In concluding, I propose that the Swiss referendum teaches us that: 1) We need to sharpen our analytic tools, i.e., to improve our understanding of what the ACA is really about, what the real challenges (and enemies!) are, and what our alternatives could and should be; 2) We must increase our outreach to those sectors of society who do not have a voice, or whose voices are suppressed, or who do not think that their voices make a difference; and finally 3) We must work on improving the political education of those we wish to reach, rather than investing in “improving the message” (as many political “experts” recommend). This is usually a message of sound bites without substance which more often than not leads to attempts to fit social change within the boundaries of the “politically feasible” as defined by that same corporate class.

As Americans celebrate this year the 50th anniversary of Medicare, and many, even insured, continue to forgo needed care, they are being told that “Medicare was enacted in a very different environment than we live today” and that some privatization is inevitable and even desirable. However, the results of the Swiss referendum teach us that we need more, not less — nor more accommodating — struggle for single payer and health care justice, in the words, albeit not in the spirit, of Milton Friedman, until the “politically impossible becomes politically inevitable.”*

* “Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”
— Milton Friedman

Claudia Chaufan, MD, PhD, is an associate professor at the University of California San Francisco and a member of Physicians for a National Health Program.

OECD/WHO report on the Swiss health system

Comment by Don McCanne, M.D.
Quote of the Day, October 24, 2011

“It is not clear why so many in the U.S. are enamored of the Swiss health insurance system when this OECD/WHO report confirms that it is highly inefficient and fragmented, with profound administrative waste, inequitably funded, with regressive financing and with wide variations in premiums, has the highest out-of-pocket costs, has an increasing prevalence of managed care intrusions, and is controlled by a private insurance industry that has learned how to game risk selection at significant cost to those on the losing end.”

At a time of renewed interest in single payer reform in the United States, it might be helpful to look again at why the voters of Switzerland rejected single payer reform in September, 2014. Although their financing system is superior to ours, it does have several serious deficiencies that would be addressed by converting to a single payer system. In this article, Claudia Chaufan discusses lessons that we can learn from the Swiss that may help us in our advocacy for reform.

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