PNHP

Public Provisioning of Services: Adjunct to Single Payer

Public Provisioning of Services: Adjunct to Single Payer

Public financing of health care (single payer) is a long-standing progressive goal. Public provisioning of services is a well-established practice in the US, largely fallen out of favor – and a perfect complement to public financing.

Reviving public provisioning in US health care, Health Affairs Scholar, March 17, 2025, by Hayden Rooke-Ley, Dana Brown, & Colleen Grogan

Abstract:

As new approaches of political economy gain ground in some sectors, American health care still reflects many aspects of neoliberalism. In this piece, we build on proposals to reorient health care policy around a new industrial policy for health. A core component of this strategy – and our focus here – is a revival of public provisioning of medical services and pharmaceuticals. Although less prevalent today, forms of public provisioning still exist in vital ways. These models demonstrate how public provisioning can not only address urgent capacity needs – it can promote local ownership, operate as a competitive public option that bolsters worker power, and assure societal return on public investments.

Introduction:

Despite experimentation in certain sectors with new paradigms of political economy, American health care still exhibits many hallmarks of neoliberalism. The privatization of Medicare typifies an overreliance on market making and consumerism, even as it drives up costs and builds private power with public dollars. Widespread corporate consolidation, pursued in the name of efficiency, increases costs and often reduces access for low-income patients. The financialization of care delivery – instantiated by private equity, insurance conglomerates, and profit-oriented “nonprofit” hospital systems – prioritizes returns for investors and corporate management over the production of health. The broader picture is one of neoliberal “re-regulation”: it is not that the health care state has receded – indeed quite the opposite – but that it has been repurposed to empower large corporations and financial investors over popular democratic demands.

In response, calls are emerging for a new health care paradigm to join the existing ferment of industrial policy.

Core to this agenda should be a revival of public provisioning, which we define as medical care and pharmaceutical production that is owned and governed by public institutions. The decline of public provisioning accelerated with the neoliberal turn, as an ideological attraction to privatization and markets took hold. Nonetheless, as we explain here, public provisioning still exists in vital if less visible ways today. These models demonstrate how public provisioning can promote local ownership, serve as a competitive check on private industry, and assure that society benefits from public health care investments.

Public provisioning today:

Public hospitals are defined as government-owned acute care hospitals and are owned by a state, county, city, or hospital district. They made up nearly a third of all US hospitals but have since declined by 39%; meanwhile, for-profit hospitals have increased by 32% since 2009. A key driver here is public-to-private conversions. The evidence suggests privatization does not increase efficiency but instead undermines access to care. Moreover, public hospitals that privatized had higher average mortality rates compared with public hospitals not experiencing privatization. Policymakers ought to consider maintaining and upgrading existing public hospitals and a more robust role for new public hospitals through which to direct public capital financing.

Health districts represent another element of locally governed and publicly accountable care that can adapt to a community’s needs. These services are often offered in under-resourced rural areas. Investing in these models will likely require cross-subsidization at the state or federal level.

Public health centers provide an avenue for local public investment to support health centers. Yet the expansion of public health centers is constrained by the 5% cap set by Congress. To build out this “public-public” delivery model, policymakers could lift the 5% cap and enhance grant funding of public institutions at the local level.

Pharmaceuticals … there are dire shortages in the generic drug market, and policymakers are beginning to look to the public sector in response. Federally, there are proposals both for large-scale generics production and public R&D coupled with public-interest provisions on all resulting intellectual property. These public-option proposals deserve serious consideration.

Future policy directions:

Current policy limits the growth of public provisioning. Policymakers could begin to address this by lifting the cap on public entity Federally Qualified Health Centers. A “new Hill-Burton” could emphasize investment through public hospitals and health districts. Similarly, state and federal investment dollars could be channeled to build pharmaceutical capacities. Ultimately, a new health care industrial policy must prioritize a rational production and allocation of capacity – and public provisioning can ensure that these public investments deliver a return for patients, the health care workforce, and their local communities.

Comment:

By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.

The United States has the most expensive health care delivery system in the world, yet its performance falls far below that of other industrialized nations, leaving far too many individuals with poor access to health care, low quality care, high mortality, and crippling financial burdens.

Decades ago we realized that we could address these problems by implementing single payer financing: improving the Medicare program and expanding it to cover everyone. It would be funded through progressive taxes, affordable for everyone. But we failed to achieve that goal. Instead, costs have increased faster than in other nations, with coverage and quality lagging.

What happened? We shifted most health care payments into the private insurance system. Under public financing, the mission is to fund the health care needs of patients. In contrast, the primary mission of private insurance is to enrich investors and executives. Many of their business techniques – such as cherry-picking healthy individuals and lemon-dropping sick ones, burdensome prior authorization, upcoding of diagnoses, and excessive deductibles and copayments – are used to divert our health care dollars to their profits. Sadly, corporate insurers have been effective at privatizing public insurance, allowing massive diversion of health care funds to their purposes. Both Medicare and Medicaid operate mainly via private insurance.

Another critical factor is the transformation of care delivery by widespread corporate purchase of providers: hospitals, physician groups, and nursing homes. With private equity in particular, the goal often is to buy the health care entity, drain it of assets and funds, and then dispose of it, often via bankruptcy. With a shift in emphasis from patients to profits, costs are up while quality and access are down.

What can we do about it? Single payer is essential – to shift spending away from profit-making insurance intermediaries and toward providers. But we also need to shift to not-for-profit providers. To us – the community. That is, we need significant public provisioning of health care, building on an impressive history, as nicely reviewed Rooke-Ley and colleagues.

Public provisioning is feasible, with historical and current examples and the potential to represent best practices within a diverse delivery system. In contrast, a national health service (government owning the entire system) faces far greater resistance — it would be a monumental challenge to transfer private sector to public ownership in one step. Many voters are ideologically opposed to a system that would be entirely owned and administered by the government, dismissing it as “socialized medicine”. Instead, by establishing and expanding public provisioning options, we can imagine gradual transformation to substantial public ownership. Public providers, well-funded by single payer and without the need to extract profits, would be highly desirable to patients.

Do we have the necessary public support? Of course, politics is a challenge. One major political party has fostered “neoliberalism,” which supports a major private sector role (with profits) for public goals. A significant element within that party prefers “progressive” policies, in which the mission is public (eg patient care) while profit-oriented business interests are minimized. The other major party cuts health care spending as a source of funds to reduce taxes for the wealthy. Notably, voters of both parties want to retain Medicaid, Medicare, and other public insurance. So the path, although tricky, can build on a broad base of support.

Obviously, there is a pressing need to educate the public. But: affordable. comprehensive, high-quality care for absolutely everyone creates a much better image than billionaires using government tax policies to increase their personal wealth at the cost of reducing essential social services required by so many. The public is primed, more than ever, for a public approach.

Let’s finally end decades of delay and move forward with reform based on sound policy proposals. Public financing together with public provisioning is the potent combination!

https://healthjusticemonitor.org…

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Projected Effects of Proposed Cuts in Federal Medicaid Expenditures on Medicaid Enrollment, Uninsurance, Health Care, and Health

By Adam Gaffney, M.D., M.P.H.; David U. Himmelstein, M.D.; and Steffie Woolhandler, M.D., M.P.H.
Annals of Internal Medicine, June 17, 2025

Abstract

In January 2025, the Republican majority in the House of Representatives’ Budget Committee offered a list of possible spending reductions to offset revenue losses from proposed tax cuts. In May, the Committee advanced a bill incorporating several reductions on the list. The Committee estimated that the 6 largest potential Medicaid cuts (for example, work requirements for some Medicaid enrollees) would each reduce the federal government’s Medicaid outlays by at least $100 billion over 10 years. On the basis of the Committee’s estimates of savings; Congressional Budget Office analyses; and peer-reviewed studies of the coverage, financial, and health impacts of past Medicaid expansions and contractions, the authors project the likely effects of each option and of the House bill advanced by the Budget Committee in May.

Each option individually would reduce federal Medicaid outlays by between $100 billion and $900 billion over a decade, increase the ranks of the uninsured by between 600 000 and 3 900 000 and the annual number of persons forgoing needed medical care by 129 060 to 838 890, and result in 651 to 12 626 medically preventable deaths annually. Enactment of the House bill advanced in May would increase the number of uninsured persons by 7.6 million and the number of deaths by 16 642 annually, according to a mid-range estimate. These figures exclude harms from lowering provider payments and shrinking benefits, as well as possible repercussions from states increasing taxes or shifting expenditures from other needs to make up for shortfalls in federal Medicaid funding.

Policy makers should weigh the likely health and financial harms to patients and providers of reducing Medicaid expenditures against the desirability of tax reductions, which would accrue mostly to wealthy Americans.

Congressional Republicans and President Trump seek to extend and expand tax cuts implemented during Trump’s first term, which expire this year. In January 2025, the Republican majority in the House of Representatives’ Budget Committee circulated a menu of possible spending reductions (1) that could offset the estimated $5 trillion to $11 trillion in revenue losses over 10 years from such tax cuts (2, 3). Cuts to Medicaid (4–8)—which today covers 71 million Americans (9)—figured prominently in the Committee’s menu (1). In April 2025, the House passed a budget resolution calling for $2 trillion in funding cuts, $880 billion of which would come from Medicaid and a few other programs under the House Energy and Commerce Committee’s jurisdiction (10). On 18 May 2025, the Budget Committee advanced a reconciliation bill, which the House passed on 25 May 2025, that included several Medicaid cuts on the menu (11).

Using House Budget Committee figures (1), Congressional Budget Office (CBO) analyses (12–17), and studies of previous Medicaid expansions and contractions, we project the effects of the 6 largest proposed cuts—and of the bill advanced by the Budget Committee—on Medicaid enrollment and the number of persons likely to become uninsured, as well as the impacts of those coverage contractions on health care access, financial strain, and health outcomes (including mortality).

full analysis: https://www.acpjournals.org…

Proposed Medicaid cuts could lead to thousands of deaths, study finds

Several provisions in the bill passed by House Republicans last month, including Medicaid work requirements, would lead to the loss of coverage for millions of people.

By Kaitlin Sullivan
NBC News, June 16, 2025

The proposed Medicaid cuts in the House Republicans’ sprawling domestic policy bill could cause an estimated 7.6 million Americans to lose health insurance, leading to thousands of preventable deaths, according to an analysis published Monday in the Annals of Internal Medicine.

The study estimated the cuts could cause nearly 2 million people to lose their primary doctor, 1.3 million people to not fill medications they need and 380,270 women to skip a mammogram. More than 16,600 people could die as a result of losing access to or forgoing care, the researchers estimated.

“Patients who go without care because they cannot afford it often get sicker and sicker, until they end up with chronic illness,” said lead study author Dr. Adam Gaffney, a critical care physician and assistant professor at Harvard Medical School.

The reconciliation bill, which passed the House in late May and is working its way through the Senate, proposes deep cuts to federal Medicaid spending — at least $625 billion over 10 years, according to the study.

“Parts of the bill that seem innocuous, that seem like they may be aimed at cutting fraud and abuse, will disenroll people who should be on Medicaid under the stated criteria,” said Dr. Rachel Werner, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, who was not involved in the analysis. “It’s not just about saving dollars and cents, it’s costing lives.”

Of the Medicaid cuts included in the bill, the analysis highlighted the three that would have the largest impact on people losing health insurance: establishing work requirements, limiting states’ ability to collect taxes from Medicaid providers and ending a Biden-era rule that streamlined Medicaid enrollment.

Several smaller cuts in the bill, including penalizing states that used Medicaid funds to cover undocumented immigrants, brought the total to an estimated 7.6 million people becoming uninsured. (The estimate assumes that while closer to 10.3 million people would lose their Medicaid coverage, some would find other health insurance — though the authors noted this assumption “may be overly optimistic.”)

The report was based on figures from the House Budget Committee, analyses from the Congressional Budget Office and past studies on Medicaid.

Gaffney noted that the work requirements in the bill passed in May were wider than what the analysis originally estimated, and could lead to the greatest number of deaths.

Michael Shepherd, an assistant professor of health management and policy at the University of Michigan School of Public Health, agreed that the work requirements are a particularly worrying part of the bill.

“They sound reasonable for folks, if you’re able to work, you should be working,” said Shepherd, who was not involved in the new analysis. “The majority of people on Medicaid are already working and most of those who are not are either in a caregiving role or are disabled and cannot work.”

If federal lawmakers do pass work requirements, people would need to routinely submit proof that they are employed for a specific number of hours. It’s unclear how often this would be, but the process would create more obstacles for people to get care, particularly for people who work seasonally or who are between jobs when the work requirement documentation is due, Shepherd said.

“It’s a good example of kicking people while they’re down or putting roadblocks in the way of people who are already doing what they are supposed to,” he said. “The last thing you want to do for someone who is in a financially precarious position is to take away their health care.”

Georgia and Arkansas have already experimented with implementing work requirements for Medicaid recipients in their states. Georgia’s is still in effect, but a judge reversed Arkansas’ requirement in 2019, about a year after it went into effect.

Shepherd said what happened in these states can act as a warning for what could come of federal work requirements for Medicaid recipients: “What we observed was a large number of people not being able to enroll in Medicaid, even though they qualify and they are working, and an increase in administrative costs.”

A ripple effect

Dr. Steven Woolf, a professor of family medicine and population health at Virginia Commonwealth University, said potential preventable deaths aren’t his only concern.

“There will be many Americans who develop chronic diseases that they will have to live with for the rest of their lives,” said Woolf, who was not involved with the analysis. “Someone who has signs of a stroke and doesn’t seek immediate care because they don’t have access to Medicaid will live with neurological effects for the rest of their lives.”

Woolf said Medicaid cuts would be compounded by cuts to SNAP benefits — which are also in the bill — as well as cuts to programs, funding and staff at the Centers for Disease Control and Prevention.

“The health consequences of this are huge,” he said.

Werner said she worries that the cuts would cause confusion for people who are still eligible and enrolled in Medicaid, potentially causing them to believe they or their child has lost coverage.

The disenrollment of kids is unlikely, she said: “What is more likely is that when parents become disenrolled they mistakenly think their kids will be disenrolled.”

Another provision in the bill would delay a mandate requiring staffing minimums at nursing homes, which Werner said could lead to additional deaths among residents.

The ripple effects would also affect the health system at large, especially in rural areas, and could lead to loss of care and deaths even among people with private insurance, Shepherd said.

Medicaid cuts would strain rural hospitals, which would be left to increasingly absorb the cost of care for uninsured people who cannot pay their medical bills. (Even without the cuts, one-third of all rural hospitals are at risk of closing due to financial strains, according to the Center for Healthcare Quality and Payment Reform.)

“We are looking at substantial numbers of rural health clinics and hospitals closing,” Shepherd said. “If you are living in a rural community, there is a pretty decent chance these cuts will cost you your local access to a hospital regardless of what insurance you have.”

Shepard said that while the authors did a good job in their estimations, the numbers do not take into account these spillover effects.

Woolf agreed.

“We know a lot of these cuts will claim lives,” he said. “Trying to quantify exactly how many lives is challenging.”

https://www.nbcnews.com…

Health Reform Review: What’s Breaking, & Breaking Through

Health insurance issues permeate the news, overwhelmingly. Mostly, we’re deluged with what’s breaking, like threats to Medicaid and other public programs. But there are also positive signs of breaking through to real health reform. Today HJM summarizes the threats, the upbeat signals, and actions to take.

Note to HJM readers: These are politically trying times. I’m distracted by that turmoil, and I bet you are too. Hence the brief hiatus in recent HJM posts. However, I think health insurance is a critical and integral part of democratic evolution. That’s why I undertook this status report despite, indeed partially in response to, the political struggles. – Jim

A) Proposed funding cuts

Congress’ budget reconciliation bill has morphed, far more than ever before, into an omnibus policy bill – possible because policies need funding. A budget bill is not subject to the Senate’s filibuster rule, which would empower Democratic opposition. There’s another tactical reason: the more sweeping the provisions, the less likely that opposition to specific elements will coalesce. Several health insurance provisions are important:

Medicaid cuts are the highest profile issue. Proposed changes include enrollee cost-sharing, lower federal payments for states covering or helping immigrants, work requirements, limited retroactivity of eligibility, blocking minimum nursing staffing levels, and eliminating participation by Planned Parenthood. Total federal cuts are ~$800 billion over 10 years.

Affordable Care Act (ACA) – failure to extend COVID-era premium subsidies would cut federal contributions to health care for the near-poor by $300 billion over ten years.

Veterans’ Affairs (VA) – the new VA director is eager to cut budgets, with no surgical precision in the process, threatening clinical capacity. Community medical resources are often not up to the task of picking up the slack.

Medicare is not directly affected by the budget bill. However, under the 2010 PAYGO law, rising federal budget deficits (expected with the new bill) would trigger up to 4% cuts to Medicare, totaling $500 billion. This is likely to be taken from payment levels, and thus potentially decrease provider participation.

Federally Qualified Health Centers (FQHC) are a major source of health care for lower income populations. Funding derives 40-45% from Medicaid (which will be heavily cut) and 15-25% from grants (which are currently not targeted, though the funding agency HRSA may be substantially cut).

Estimated changes in coverage & deaths – All of these funding cuts translate to large dips in insurance coverage and increases in mortality. Although many potential program effects can’t be quantified, e.g., for the VA, the Medicaid and ACA changes are likely to lead to 16 million more uninsured (10.9 from Medicaid, 5.1 from the ACA). The Medicaid contraction alone may increase deaths by 2,500 – 5,000 per year.

B) Flaws in the armor

The “armor” is, of course, the broad array of political and rhetorical defenses deployed by defenders of our profit-driven health insurance to retain the status quo – and their immense financial gains. The “flaws” are vulnerabilities: developments that can, in ways both focused and far-reaching, undermine private health insurance defenses. Several of these flaws are now appearing in a potentially synergistic fashion.

Widespread displeasure with Medicaid cuts. Polling indicates that opposition far exceeds support. Only 1 in 6 adults want reduced Medicaid spending; 42% want increases. Most (55-75%) are worried about the impacts on patients and providers. Even among Trump 2024 voters, 2/3 want Medicaid spending protected or increased.

Anger with private insurers. The 2024 murder of the United Healthcare CEO clarified – and galvanized – broad dislike of private insurers. Polling in December found that 7 in 10 adults blame the death at least partly on private insurance care denials and profits.

Stricter regulation of Medicare Advantage insurers. The Center for Medicare & Medicaid Services (CMS) is substantially bolstering oversight of MA plans. Audits of diagnostic upcoding (which bumps MA premiums by $40 billion / year) are being enhanced 50-fold. UnitedHealth (UH) is being investigated. And care denials are being restricted and scrutinized. This clamp-down is surprising with a pro-business White House, perhaps reflecting the industry’s distinct Harris tilt in 2024 election donations.

Slipping profits for MA insurers. The increase in premium rates for 2025 was 3.7%, the same as previewed by the Biden administration, despite expectations of an increase. UH 2025 profit projections dropped by 12–15% from forecasts, due to higher care use in MA and the payment level; stock prices dropped 22% in April. Other insurers also lost value. Alas, still quite profitable … but vulnerable.

Pharmacy Benefit Manager regulation. PBM pricing practices are under new scrutiny from federal agencies. And states are regulating too.

Drug pricing reform. The Trump administration, confounding expectations, is pushing to slash drug costs. But true to form, blaming other countries – for paying unfairly low prices. And demanding a “most favored nation” approach: other nations pay more and we pay less. Pharma doesn’t seem too upset, perhaps anticipating preserved profits There’s no telling where this will go.

Physicians unionizing. In the last several years, unionization level and intentions have jumped up, with a focus on physician welfare such as reducing moral injury. Many unions are pro-single payer.

Ongoing Support for Government Insurance Role. Gallup polling from Dec 2024 found that 65% of US adults say it is the “responsibility of the federal government to make sure all Americans have healthcare coverage” — the highest level since 2007. Support for a “government-run healthcare system” is 46% vs 49% for ”a system based mostly on private health insurance”. Properly described single payer (“government health insurance with mostly private providers”) would poll higher.

C) Advocacy strategy

Breaking the entrenched opposition to single payer will require large doses of determination, creativity, and persistence. With no guarantee of success, but every reason to keep trying, because so much health and peace of mind are at stake. I list a few themes, opportunities, and resources. This is far from a comprehensive strategy – which we will return to in future posts.

Highlight budget bill cuts & their effects: Tell everyone you know what’s at stake if programs are unraveled – millions more uninsured, thousands more lives lost.

Contact your senator, especially if Republican: The budget bill faces an uphill battle in the Senate – the vote margin is narrow, and public sentiment is against it. But Senators need to be reminded constantly of this displeasure, and understand the consequences of going against the will of voters.

Persuade friends and family members. Show them the stark statistics summarized above about what happens with insurance cuts. Remind them of the fundamental humanity of providing health insurance, and the cruelty of taking it away.

Eyes on the prize for Single Payer. Go beyond the critique of program cuts. Single payer is the solution that both saves money and provides universal broad coverage with generous benefits. Dozens of countries use it, with lower mortality, lower spending, and no significant medical debt. Use the cuts to Medicaid and other programs – which people heartily dislike – to offer the vision of permanent, universal public insurance.

Expand your vision to community empowerment. Single payer is essential, but a truly transformative approach should also build public health capacity and not-for-profit community providers (more on this soon).

Participate in Coalition-building. There are many opportunities. The May 31 National Day of Action for Single Payer had events in dozens of cities (full report soon). There’s a one-payer state strategy meeting in Denver (and on Zoom) on August 1-2.

Health Justice Monitor: Check out our new website, HJM 2.0, to be launched in June. Blog posts (of course), data visuals for use in talks, a list of 5-minute daily actions, a glossary, organizational descriptions and links, and to navigate all this – super-charged search capabilities including via an AI bot – ask any question, get a coherent & authoritative answer.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

“Well, we’re all going to die!”

By Jay Brock, M.D.
FXBG Advance, June 6, 2025

With that memorable, almost throwaway line in response to complaints that the just-passed Republican House Budget would separate millions of Americans from their Medicaid health insurance, U.S. Senator Joni Ernst, an Iowa Republican, said the quiet part out loud: your healthcare—your life—might not be that important to her. Or, apparently, to every Republican in the House of Representatives who also supported this bill.

What IS important to them is throwing millions of what they consider to be undeserving people off their government-paid-for health insurance simply because by receiving health insurance benefits from the government, they might be committing “waste, fraud and abuse”.

Of course, people in every other advanced nation receive such benefits as a human right.

(Like it or not, the United States is the only advanced nation where affordable healthcare is not considered a human right.)

And if, as a result of losing their Medicaid, these poor people cannot obtain lifesaving medical care and die as a result, “Well, we’re all going to die!”

The Republican Party goal here? By separating millions of Americans from their healthcare, the Federal government can save hundreds of billions of taxpayer dollars over the next decade…in order to provide huge tax cuts to the gazillionaires already at the very apex of our financial food chain, who, you know, are deserving of even more American wealth, power, and prestige than they already think they are entitled to.

And if poor people have to pay for tax cuts for gazillionaires with their their lives,”Well, we’re all going to die!”

The optics of such a callous political attitude are appalling: the American people are already enraged at a health insurance system where 3/4 of them worry about being able to afford to pay their medical bills if they get sick. And when people put off unaffordable healthcare, they die prematurely: each year, that happens to some 70,000 Americans.

“Well, we’re all going to die!”

What is wrong with our health insurance system? It simply has failed to do the two things any good system should do: cover everyone, and do it affordably. Instead we have a dysfunctional mishmash of government (public) entities and a largely for-profit (private) health insurance industry that is about as popular as the American telemarketing industry. The for-profit health insurance company business model is to rake in as many of our healthcare dollars as possible, then spend as few of those dollars on our healthcare as it can get away with. This is in keeping with the fiduciary duty of a for-profit investor-owned business: increase profits for shareholders. Patient healthcare suffers. When it comes to your healthcare, that’s an irreconcilable conflict of interest, and it’s deeply embedded in our current health insurance system.

That’s why we need a new system: one where your healthcare comes first. It’s why so many healthcare experts, physicians, and everyday Americans support switching to Single Payer Medicare for All, a government-funded health insurance system that would pay 100% of the cost of all medically necessary care for everyone, and where an individual’s contributions are based mostly on their income, so it’s truly affordable.

But here’s where things get murky: when it comes to fixing what’s wrong with our health insurance system, there’s widespread agreement among BOTH political parties that the best course here….is to do nothing. Or at least nothing major.

You read that right.

Where not a single Washington Republican wants to eliminate our current failed system and replace it with one that actually works, neither do the majority of Democrats in our nation’s capital. Yes, you’ve got the “progressives” on the Left, like Bernie Sanders, and some moderate Democrats such as Senator Adam Schiff, from California, who support switching to Single Payer healthcare, but the majority, representing the Democratic Party Establishment, are right up there with every Washington Republican who resist any meaningful change.

Two examples: One well known Democratic US Senator opposes changing our health insurance system because so many of his constituents really like their health insurance—a claim hard to believe, given that most Americans worry about being able to afford to pay their medical bills if they got sick. Another Democratic US Senator says he supports only minor, incremental change because people are afraid of change, and they don’t like the government telling them what to do. More likely, these people are even more frightened of unaffordable healthcare costs, or are part of the more than 6/10 Americans who, in a recent poll, say that it was the responsibility of the Federal government to ensure all Americans have healthcare coverage.

So we can criticize appalling remarks from Republicans like “Well, we’re all going to die,” but what really counts is what our politicians actually do— and when it comes to affordable healthcare, the results are dismal: while Republicans might be much worse than Democrats, the failure here, sadly, is bipartisan.

https://fxbgadvance.com…

Proposed changes to Medicaid, other health programs could lead to over 51,000 preventable deaths

Yale School of Public Health, June 3, 2025

In a letter to ranking Senate leaders, public health and policy researchers at Yale University and the University of Pennsylvania warn that provisions in the House-passed federal budget reconciliation bill could lead to more than 51,000 deaths annually if enacted.

Addressed to the Senate Finance Committee Ranking Member Sen. Ron Wyden and Senate Health, Education, Labor, and Pensions Committee Ranking Member Sen. Bernie Sanders, the letter presents science-based projections of the human toll of eliminating key health protections. The findings point to catastrophic public health consequences from mass insurance losses and cuts to nursing home standards—provisions supported by the House bill.

The researchers estimate that 42,500 lives could be lost each year from disenrollments in Medicaid and Marketplace coverage and the rollback of nursing home staffing rules. An additional 8,811 deaths are projected from the expiration of the enhanced Affordable Care Act (ACA) Premium Tax Credits, bringing the total to more than 51,000.

Background

The science information presented in the letter was produced in response to a request for technical assistance from the Senate Finance Committee and the Senate Committee on Health, Education, Labor & and Pensions (HELP) regarding the potential mortality effects of several provisions in the House-passed reconciliation bill.

Key Findings

The authors of the letter modeled the mortality impacts of three major provisions in the House bill:

  • Loss of coverage for 7.7 million people: This would result in an estimated 11,300 additional deaths annually due to lost access to Medicaid or ACA Marketplace coverage.
  • Disenrollment of 1.38 million low-income Medicare beneficiaries: Ending Medicare Savings Program support would increase mortality by 18,200 per year due to reduced access to subsidized prescriptions.
  • Elimination of Centers for Medicare & Medicaid Services (CMS) nursing home staffing rules: Repealing the 2024 minimum staffing standard would lead to 13,000 deaths annually among nursing home residents.

In addition, the bill’s failure to extend the ACA’s enhanced premium tax credits is expected to push another 5 million Americans into uninsurance, resulting in 8,811 more deaths each year.

What the Researchers Say

“These are not abstract numbers,” said Dr. Alison Galvani, PhD, Director of the Yale Center for Infectious Disease Modeling and Analysis at the Yale School of Public Health. “Every data point represents a human life. These cuts would disproportionately harm the most vulnerable communities in America, including older adults, low-income families, and people already at the margins of our health care system.”

Methodology

To generate their mortality estimates, the research team relied on peer-reviewed studies quantifying the relationship between insurance coverage, access to prescription drug subsidies, and nursing home staffing levels with all-cause mortality. These estimates were applied to population loss projections from the Congressional Budget Office, which were released in May 2025. The researchers emphasized that the effects are additive across distinct groups—uninsured adults, low-income seniors, and nursing home residents—resulting in a total projection of more than 51,000 deaths annually if the proposed policies take effect.

The research was conducted by experts from Yale School of Public Health and University of Pennsylvania Leonard Davis Institute of Health Economics.

The letter is signed by Drs. Rachel M. Werner, Norma B. Coe, and Eric T. Roberts from the University of Pennsylvania and Drs. Galvani, Abhishek Pandey, and Yang Ye from Yale University.

https://ysph.yale.edu…

Medicaid is a lifeline for our patients with disabilities. We must protect it.

By Therese Derovanessian, M.D.
Physiatry Forward, Association of Academic Physiatrists, Summer 2025

Mr. Johnson arrived on the inpatient rehabilitation floor unable to move the left side of his body, barely able to speak after a massive stroke. Day by day, with intensive therapy, he began to regain his speech and mobility.

Ms. Tammy, who lives with cerebral palsy, came in with her caregiver to replace her broken wheelchair after years of use. Her replacement allowed her to maintain her independence.

What both patients had in common, and the only reason they could access this essential care, was that they, like 43% of all non-elderly disabled adults, were covered by Medicaid.

Physiatrists have seen what happens when patients are denied medically necessary rehabilitation—not because it is not indicated, but because of insurance coverage. The proposed “One Big, Beautiful Bill” Act threatens to restrict essential access to rehabilitation services further. The bill would slash $700 billion from Medicaid over the next decade through eligibility restrictions, benefit reductions, and privatization. (1) According to the Congressional Budget Office, nearly 11 million Americans could lose coverage entirely. (2) This is particularly alarming for the disability community, who account for 72% of all Medicaid expenditures (3) and account for 15 million people. (4)

For our patients, Medicaid isn’t a safety net—it’s the foundation for survival. (5) The consequences of gutting Medicaid go far beyond numbers on a spreadsheet—they are felt most acutely by people with disabilities. The House’s 2025 budget proposal would slash over $2 trillion in programs serving low- and moderate income Americans, with Medicaid bearing a major brunt. For people with disabilities, this could mean losing access to home care, personal attendants, assistive equipment, or even institutional care— services that are often life-sustaining. According to the Center on Budget and Policy Priorities, (6) many of the proposed changes are not designed with the unique realities of disability in mind: they ignore that many disabled individuals cannot meet work-reporting requirements and already face extensive administrative hurdles.

Disability rights activist Julie Farrar recently said in an interview, (7) “I was born missing 12 vertebrae, and every six months, I have to prove I’m still disabled enough to qualify.”

The disability community is already subject to exhausting eligibility reviews and coverage instability. Further cuts will only deepen this issue, isolating people from the care that supports their survival, independence, and dignity.

We must reject this direction.

Physiatrists are at the frontlines. We understand the value of function, the cost of losing it, and our patients’ long, nonlinear journeys. We cannot stay silent as access to that care is eroded.

While we defend Medicaid, we must also look forward. A well-designed single-payer system—such as that proposed by Physicians for a National Health Program (PNHP)— would ensure continuity, equity, and dignity. Critically, it would include:

  • Home and Community-Based Services (HCBS)
  • Inpatient rehabilitation and long-term post-acute care
  • Durable Medical Equipment (wheelchairs, ventilators, communication devices)
  • Personal care attendants and in-home nursing
  • The urgency is real. In May 2025, ADAPT activists were arrested at the Capitol, demanding the protection of Medicaid and the civil rights of disabled Americans. This is not a theoretical debate—it is unfolding now at the intersection of medicine, policy, and survival.

As physicians and physiatrists, we must:

  • Refuse to normalize exclusion from rehabilitation and lifesaving services
  • Advocate for payment models that center human dignity—not just cost-efficiency
  • Bring disabled voices into PNHP, medical education, and every space where care systems are designed

Physiatry was built to restore function and preserve independence. We must use that expertise to build a system that includes everyone—not just those who can afford to fight for it.

https://www.physiatry.org…

Dr. Therese Derovanessian is an Armenian-American from Seattle, Washington who recently graduated from medical school in New York and is now an incoming preliminary medicine resident at NYU Langone Long Island. She will continue her advanced PM&R training at Johns Hopkins.

Therese is passionate about disability justice, health policy, and advancing global rehabilitation care. She actively advocates for legislation impacting her patients’ lives and believes physician voices are essential at the policy table. Clinically, Therese gravitates toward interventional pain management, especially for oncological and medically complex patients. However, she remains open-minded and curious, finding nearly every subspecialty within physiatry engaging and full of possibility.

References:

  1. Freking K, Mascaro L. Trump’s big tax bill has passed the House. Here’s what’s inside it. AP News. https://apnews.com/article/trump-tax-breaks-billmedicaid-80b5781377bcd0870a1dccb3c7b8dc05. Published May 22, 2025. Accessed June 19, 2025.
  2. Burns A, Ortaliza J, Lo J, Rae M, Cox C. How will the 2025 reconciliation bill affect the uninsured rate in each state? Allocating CBO’s estimates of coverage loss. Kaiser Family Foundation. https://www.kff.org/affordable-care-act/issue-brief/how-will-the-2025-reconciliation-bill-affect-the-uninsured-rate-in-each-state-allocating-cbos-estimates-of-coverage-loss/. Published June 6, 2025. Accessed June 23, 2025.
  3. Okoroa CA, Hollis ND, Cyrus AC, Griffin-Blake S. Prevalence of Disabilities and Health Care Access by Disability Status and Type Among Adults — United Statues, 2016. MMWR Morb Mortal Wkly Report. https://www.cdc.gov/mmwr/volumes/67/wr/mm6732a3.htm#suggestedcitation. Published April 17, 2018. Accessed June 19, 2025.
  4. Burns A, Cervantes S. 5 Key Facts About Medicaid Coverage for People With Disabilities. Kaiser Family Foundation. https://www.kff.org/medicaid/issue-brief/5-key-facts-about-medicaid-coverage-for-people-with-disabilities/. Published February 7, 2025. Accessed June 23, 2025.
  5. Khavjou OA, Anderson WL, Honeycutt AA, et al. National Health Care Expenditures Associated With Disability. Med Care. 2020;58(9):826-832. doi:10.1097/ MLR.0000000000001371
  6. Center on Budget and Policy Priorities. 2025 Budget Impacts: House Bill Would Cut Assistance and Raise Costs for People With Disabilities. https://www.cbpp.org/research/federal-budget/2025-budget-impacts-house-bill-would-cut-assistance-and-raise-costs-for-1. Published June 9, 2025. Accessed June 23, 2025.
  7. Interview with Julie Farrar [Interview Transcript]. “It Is Going to Kill People”: Disability Rights Activist Speaks Out on Trump’s “Big, Beautiful Bill.” Democracy Now!. https://www.democracynow.org/2025/5/21/disability_rights_activists_budget_bill. Accessed May 21, 2025. Accessed June 23, 2025.

Saturday! National Day of Action for Single Payer

This Saturday is the day to hit the streets to demand health care justice – single payer / Medicare for All.

Heal This Sick Country: ‘Hands Up’ for the National Day of Action for Single Payer, Common Dreams, April 27, 2025, by Judy Albert, Ed Grystar, Ana Malinow, Kay Tillow, and Claire M. Cohen

Event details provided HERE. Scroll down a little to “Find an Action” or click HERE.

Today, we call on people across the country to gather on May 31, 2025, to put their “Hands Up” for:

  • The recognition by our government that healthcare is a human right;
  • The elimination of private health insurance and the banning of for-profit delivery of care;
  • The enactment of a publicly financed, national single-payer program that would provide comprehensive coverage to everyone; and
  • The transformation of care delivery from profit-seeking ventures into services organized to serve the people of our country, a system in which all caregivers are freed from corporate control.

President Donald Trump’s inauguration has introduced the prospect of severe hardships to working class and low-income people, people with disabilities, the elderly, and children with proposed cuts to Medicaid, Medicare, and Social Security necessary to fund tax cuts for the wealthy. This moment demands more than the protection of our public programs; it demands a national, single-payer healthcare program, free from profit, for everyone. One people, one plan.

The complicity of our government in the profit-making enterprise of health insurance has been exposed once again when, on Monday April 7, the Trump administration raised payment rates for Medicare Advantage insurers by 5.1%, significantly more than the Biden administration’s proposed increase of 2.2%, which was bad enough. This rate increase has the potential to increase payments to MA by $25 billion next year.

[ see article for more examples of how our insurance approach increasingly places profits over health care ]

Comment:

By Jim Kahn, M.D., M.P.H.

This imminent national event is exciting!

Popular demand is an essential element of achieving single payer – the desperately needed transformation of how we pay for health care. Single payer / Medicare for All places people over profits, annually saving hundreds of thousands of lives and tens of billions of dollars (as HJM has often reported). What decreases is hassle, administrative waste, and profits for payer intermediaries.

The path to single pay is, we have found over decades, very difficult. We must redouble our efforts.

Express your demands for health care justice on Saturday! Spread the word!

See links above to find out more.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Veterans Care Under Attack

Veterans’ medical care is being slashed by the White House administration that veterans helped elect. It’s unconscionable. Raise your voice for health justice – join the national single payer day of action on Saturday, May 31st.

VA Secretary Collins: Indifferent to Public’s and Congressional Opposition to His Gutting Veterans’ Care, The American Prospect, May 23, 2025, by Suzanne Gordon & Russell Lemle

When Doug Collins first appeared before the Senate Committee on Veterans’ Affairs (SVAC) for his confirmation hearing, his comforting bromides about his commitment to the VA and veterans lulled Democratic members, who, with only a few exceptions, voted to confirm Collins as President Trump’s new secretary of the Department of Veterans Affairs. As one Capitol Hill insider told the Prospect, many believed that, unlike Pete Hegseth or RFK Jr., Collins was “a man they could work with.” …

Fast-forward four and a half months to May 6th, when Collins appeared for the second time in front of the Senate Committee, and May 15th, when he made his first appearance before the HVAC. Assessing his first months on the job, Democrats now clearly viewed Collins as someone working not with, but against, them—and against the nation’s veterans. They expressed anger at his firing of 1,000 probationary employees, his cancelation of hundreds of contracts with vendors that supply VA with critical resources, and his termination of VA researchers, thus interrupting clinical trials that could benefit veterans. And, of course, there was Collins’s vow to lay off 83,000 VA employees. …

As one VA observer who chose to remain anonymous observed, “Some VISN staff reductions could occur without loss of functional capability if such were done in a systematic and thoughtful manner. In doing so, however, it would be important to work with the Congress on what programmatic, reporting, and other requirements they are going to insist upon going forward.”

As for all those supposed underperforming doctors and nurses Collins wants to reassign or fire, some are chiefs of medicine, chiefs of staff, chiefs of nursing, or nurse managers who provide the kind of clinical leadership without which no hospital or health system can function. These administrative positions also require the very clinical background that Collins seems to dismiss. …

At the end of the House hearing, ranking member Takano displayed a spreadsheet in which Collins’s team had calculated the cost savings that would result from a 15 percent reduction in every VA classification. The spreadsheet, Takano said, estimated that cutting 4,000 nurses would save $1 billion, while cutting 400 psychologists would save $110 million. Why, Takano asked the secretary, had Collins requested that his team conduct this kind of analysis given that he’d promised not to cut direct-care staff?

Instead of responding to the question, Collins began yelling at the ranking member …

On the afternoon after the Senate hearing, a group of 60 members of Common Defense, a progressive veterans’ organization that has launched a nationwide campaign called “VA: Not For Sale,” joined nurses and congressmembers on the steps of the U.S. Capitol to protest Collins’s plans. Common Defense’s executive director, Army veteran Jose Vasquez … told the Prospect that Common Defense is adamantly opposed to arbitrary mass layoffs at the VA. “VA shouldn’t be firing 8, or 80, or 8,000, much less 83,000 employees. The VA needs to hire, not fire.” More importantly, Vasquez added, “instead of attacking VA doctors and nurses who contribute to our care in all kinds of ways, VA leaders should be supporting the dedicated caregivers who themselves sacrifice to support veterans like me.”

Call To Action May 31, 2025: Demand Health Not Profit!, search “Action Sites” on the webpage for a US map – will update all week as new sites are added!

We call on communities across the country to join in a National Day of Action on Saturday, May 31, 2025, to put National Single Payer Healthcare on the nation’s agenda.

Our health care system is broken beyond repair. Insurance companies and for-profit middlemen create barriers to care and massive administrative waste. These result in unnecessary suffering and deaths. For over 60 years, piecemeal reforms have resulted in higher costs and the worst health outcomes among comparable nations.

We demand the recognition by our government that health care is a human right.

We demand the elimination of private health insurance and the banning of for-profit delivery of care.

We demand the enactment of a publicly financed, national single payer program that would provide comprehensive coverage to everyone.

We demand that health care delivery be transformed from profit-seeking ventures into services organized to serve the people of our country, a system in which all caregivers are freed from corporate control.

The National Day of Action will bring people together locally and nationally from neighborhoods, unions, faith groups, businesses, and all types of civic organizations to join the demand to remove profit from health care. We must focus our collective anger towards corporate health insurers to bring real reform: put National Single Payer on the nation’s agenda!

Comment:

By Jim Kahn, M.D., M.P.H.

On Memorial Day, of course our attention turns to the health care of military veterans. Only to find, sadly, that this group – which voted 65% for Trump – is being mistreated by his administration. Unlike other nominees requiring Senate confirmation, Doug Collins seemed competent and committed to the VA role, to the welfare of veterans. But, as it turns out, he’s committed most of all to cutting budgets, regardless of consequences. And when questioned on this anti-veteran approach, he bristles. Thus we find that even this highly valued group of Americans suffers from being a lower priority than the billionaires whose tax cuts are the payment due for supporting the current president’s campaign.

Single payer – with everyone served by the same public system – is the way to assure adequate funding. Indeed, it is the path to combining efficiency with generosity, by eliminating administrative complexity and intermediary (insurer) profit-taking.

An exciting national day of action for single payer is just 5 days away! Join the event nearest you. Raise our voices — demand health care justice. Louder and louder every day!

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

The Case for Single-Payer

Reduce Healthcare Cost with Administrative Simplification and Restore Professional Autonomy

By Stephen Kemble, M.D.
Counter Punch, May 22, 2025

Privatization of publicly funded Medicare and Medicaid, managed care, and “value-based payment” (1) have failed to reduce cost or improve population health despite over 30 years of trying, and a new paradigm for health policy is needed. This article summarizes key health policy concepts and the implications of different payment systems and offers recommendations for design of an optimally cost-effective system enabling universal high-quality care at lowest cost.

Key Concepts

1. Should Health Care be Financed as a Public Good or with Market Competition?

Public funding is appropriate for essential public services necessary for everyone—funded by taxes and paid for with budgets based on cost of operations, with no opportunity for profit or loss. Examples include police and fire departments, public schools, the military, roads and bridges, and government services. Health care should be added to this list. Other industrialized countries with far more cost-effective universal systems treat health care as a public good, not a commodity.

Marketplace financing uses competition, market forces, private enterprise, and opportunity for profit and risk of loss. This works well for consumer goods, industry and manufacturing, hotels and restaurants, fuel and food production, and housing (except for those in poverty). These are appropriately subject to market forces, but health care is not.

2. Ethics: Professional vs Commercial Ethics

Professional ethics, traditional in medicine and other professions, put patient or client interests and welfare first, ahead of personal financial interests.

Commercial ethics prioritize financial interests of owner(s) or shareholders. Patients or clients (and taxpayers) are viewed as consumers from whom money can be extracted.

Reliance on professional ethics in health care is not perfect, but it works much better than commercial ethics and there are effective ways to deal with outliers who engage in unethical practices. It would be far less costly to manage outlier practitioners than to try to control mega-corporations that have amassed deep pockets at taxpayer expense.

Profiteering and the corporatization of health care, with substitution of commercial for professional ethics, is the main root cause of excessive cost and dysfunction in U.S. health care.

3. Insurance Risk:

The entity that covers the unpredictable variability in healthcare cost bears insurance risk. Direct payment of providers with fee-for-service means claims received will be variable and somewhat unpredictable, and risk is retained by the payer.

Government programs may contract payment to private fiscal intermediaries with capitation (payment per-member, per-month), as in Medicare Advantage, Medicaid Managed Care, and Medicare Accountable Care Organizations, shifting insurance risk onto the intermediary. A fiscal intermediary contracting to assume risk will always try to over-charge—usually to assure around 90% chance of profit, 10% risk of loss.

4. Excessive Cost of U.S. Health Care:

The managed care paradigm blames excessive cost on fee-for-service with its presumed incentive to provide unnecessary care and over-utilization. The solution offered is “value-based payment” (see below) or up-front funding for care of a defined population with capitation (2). But the U.S. has never had higher utilization compared to other countries that use fee-for-service and whose universal health care costs half as much per person, so fee-for-service cannot be the cause of excessive U.S. healthcare cost (3). The difference between the U.S. and other countries is in administrative cost and pharmaceutical prices, not over-utilization (4). And market financing of U.S. health care means about a third of total cost goes to administration (5,6).

Health Care Payment Systems

1. Fee-for-service (FFS)

Simple FFS is inexpensive to administer, although FFS as implemented in the U.S. is often unnecessarily complex and costly. For doctors, FFS rewards productivity—working harder means more pay. FFS is compatible with “patient first” professional ethics and it is compatible with independent private practice. FFS does not shift insurance risk onto providers of care, so it does not need risk adjustment or linking payment to diagnostic coding, and up-coding is not an issue.

However, FFS can reward unnecessary treatment. FFS is more likely to be abused when billing is separated from direct contact with the patient, allowing substitution of commercial ethics for professional ethics. Abuse of FFS is lowest with doctors in independent practice who bill out of their office, more problematic with doctors employed by a large group practice or hospital, and worst with for-profit ownership of doctors’ practices by an insurance company or private equity (7). Current trends are in the wrong direction.

For government programs, paying doctors and hospitals directly with FFS means government retains insurance risk and must cover the variability in claims received. However, the larger the risk pool the more manageable this unpredictability becomes, and reserve funds and re-insurance can manage budgetary uncertainty without shifting risk to third-party intermediaries.

2. Salaries for doctors

Salaries are inexpensive to administer, do not create incentives to over- or under-treat, and are compatible with “patient first” professional ethics. However, payment with salaries requires an employer, which can be a problem if the employer is profit-seeking and paid with either fee-for-service divorced from contact with the patient or capitation with its incentive for profiteering. Salaried doctors who can control their schedule/workload may be tempted to become less productive, but this can be mitigated with salary plus a small productivity incentive.

3. “Value-based payment” and capitation

“Value-based payment” systems hold doctors and hospitals accountable for quality and cost of care, even when cost and quality outcomes depend largely on patient characteristics that are beyond the control of care providers. “Capitation” is an advanced form of “value-based payment,” defined as up-front payment per-capita, based on the average per-person cost for a defined population of “members.” Value-based payment and capitation shift insurance risk onto care providers.

Capitation is a simple concept, that seemingly should be inexpensive to administer and provide cost control because care delivery must live within a capitated budget. But capitation is not the same as a simple budget, and in a competitive setting introduces inherent perverse incentives, requires added administrative burdens and costs, and does not assure budgetary control.

  • Up-front payment per member requires members, and performance on quality metrics and cost depends heavily on which members are captured.
  • Gaming the risk pool: Competition for members rewards capturing the healthy and avoiding the sick.
  • Capitation requires risk adjustment, which is administratively expensive, can’t be done anywhere near accurately enough to deter risk pool gaming (8), AND…
  • Risk adjustment incentivizes up-coding diagnoses to game the risk-adjustment formula. Up-coding is heavily abused by capitated, risk-adjusted Medicare Advantage (8) and Medicaid Managed Care plans, exploiting government funding.
  • Capitation rewards skimping on care since less care means more of payment can be kept, but capitation deters necessary as well as unnecessary care (9).

These incentives align to raise administrative cost and worsen disparities in care, and they conflict with professional ethics, contributing to physician moral injury.

Government programs (Medicare and Medicaid) may think capitation of fiscal intermediaries is a convenience because per-member payment is fixed for a contract year. However, payer risk due to changes in enrollment remains, and predictable funding is not assured over subsequent contract periods. Capitated fiscal intermediaries can keep unspent funds, inviting profiteering by plans guided by commercial instead of professional ethics. And government contracts with capitated plans means loss of control of the budget year-to-year, because in practice plans can extract whatever raises they want by gaming financial data reported to government (10).

For doctors, payment with capitation is independent of office visits, how often a patient is seen, or even whether a “member” is seen at all. Capitated doctors were protected from loss of income when patients stopped coming to the office during the COVID-19 pandemic. In theory, capitation does not require linking every service to a procedure code, but in practice payers using capitation often require fee-for-service claims for budgeting and benchmarking purposes, precluding administrative savings. And the perverse incentives and administrative costs of capitation listed above all apply.

4. Paying hospitals and other institutional providers

Fee-for-service

Hospital fee-for-service billing is extremely complex and heavily gamed, with chargemaster fee-setting, cost-shifting across different insurance lines of business, unreimbursed care, different in-network and out-of-network fees, and data reporting for value-based payment schemes. Large savings could be realized by paying hospitals with global budgets (see below) instead of fee-for-service.

Capitation

Attributing “members” to a hospital is problematic unless the hospital is part of a closed system with members who signed up for that system (e.g. Kaiser). The perverse incentives inherent to capitation listed above apply to hospitals in capitated systems.

Global budgeting

Simple global budgeting of hospitals (as in Canada) pays hospitals with global operating budgets based on cost of operations, including salaries for employed doctors and other professionals, plus separate budgets for capital improvements based on community need. Simple global budgeting of hospitals does not involve capitation (no “members”) or risk shifting and can’t be easily gamed like fee-for-service or “value-based payment.” Hospital administrative costs per capita in Canada (in US dollars) are less than a quarter of those in U.S. hospitals (11).

Centers for Medicare and Medicaid Services has been promoting the AHEAD model (“Advancing All-Payer Health Equity Approaches and Development”) (12), which includes a version of global hospital budgets applied on top of fee-for-service with rates standardized across all payers, with claims revenue reconciled to the budget at the end of the year, plus partial capitation with attributed “members” and “value-based” add-ons. These include pay-for-performance and incentives to address inequities and social determinants that are largely not under the control of the hospital. This version of hospital budgeting has none of the administrative savings of simple global budgeting, and in fact piles on more administrative burdens and cost.

Recommendations for universal care at lowest cost

1. Health care should be publicly financed by government, and the government payer should retain insurance risk, with no sub-contracting to risk-bearing fiscal intermediaries. Risk is most cost-effectively managed with broadest possible risk pooling plus financial reserves and/or re-insurance.

2. The major focus of reform should be on reducing administrative cost and therefore prices, not “managing” utilization of care.

3. Physicians could be either in independent practice or employed, and hospitals could be either privately or publicly owned, but ownership of doctors’ practices and hospitals by for-profit corporations or private equity and the corporate practice of medicine should be banned by law.

4. “Value-based payment” introduces perverse incentives and high administrative costs that preclude real value and should have no place in health care.

5. Large administrative savings could be achieved with simplified, standardized payment of care providers. Simplified fee-for-service would be appropriate for doctors in independent practice, with all procedures reduced to professional time required and hourly rates based on required training. Fee-for-service based on time and training would be much fairer and less costly to administer than attempting to assign a relative value to each of thousands of procedure codes (13). Payment should be based on the value of the time and expertise of the professional performing a procedure instead of attributing value to the procedure itself.

6. Hospitals, other institutional providers, and community-based health services should be paid with global budgets, with employed doctors paid with salaries.

7. Pharmaceutical prices should be regulated and negotiated by government.

8. Necessary administrative functions and quality assurance may be publicly administered or contracted out to an Administrative Services Only contractor on a non-risk basis.

Healthcare Cost Implications

Savings would come from markedly reducing billing and collections costs for doctors and hospitals, reduced administrative cost for the government single-payer, negotiated pricing for pharmaceuticals and durable medical equipment, and eliminating the high administrative cost of competing private plans. Further savings would result from a much-improved practice environment for primary care that eliminated disincentives for practice in under-served rural and urban areas, expanding access to primary care in the most cost-effective settings and reducing preventable ER visits and hospitalizations.

If all these recommendations were implemented, U.S. per-capita healthcare costs would likely fall into the range of Canada and other countries with universal systems that cost at least 30-40% less than what the U.S. now spends on health care.

Dr. Stephen Kemble is a psychiatrist in Hawaii who has followed health policy for decades and is a proponent of cost-effective universal healthcare.

https://counterpunch.org…

References

  1. Rooke-Ley H, Ryan AM. A New Medicare Agenda—Moving Beyond Value-Based Payment and the Managed Care Paradigm. JAMA 2025; 333(14):1203–1204.
  2. Schroeder SA, Frist W. Phasing Out Fee-for-Service Payment. N Engl J Med 2013; 369:2029-2032.
  3. Himmelstein D, Woolhandler S. Global Amnesia: Embracing Fee-For-Non-Service—Again. J Gen Intern Med 29, 693–695 (2014).
  4. Papanicolas I, Woskie LR, Jha AK. Health Care Spending in the United States and Other High-Income Countries. JAMA 2018; 319(10):1024–1039.
  5. Himmelstein DU, Campbell T, Woolhandler S. Health Care Administrative Costs in the United States and Canada, 2017. Ann Intern Med 2020; 172:134–142.
  6. Downing NL, Bates DW, Longhurst CA, Physician Burnout in the Electronic Health Record Era: Are We Ignoring the Real Cause? Ann Intern Med 2018; 169:50-51.
  7. Harris E. Private Equity Ownership in Health Care Linked to Higher Costs, Worse Quality. JAMA 2023; 330(8):685-686.
  8. Medicare Payment Advisory Commission. Report to the Congress: Medicare payment policy. Washington DC: MedPAC; March 2024.
  9. U.S. Department of Health and Human Services Office of Inspector General, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” April 2022, https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf.
  10. Goldsmith J, Mosley D, Jacobs A. Medicaid Managed Care: Lots of Unanswered Questions (Part 2). Health Affairs Blog, May 5, 2018.
  11. Himmelstein DU, Jun M, et al. A Comparison of Hospital Administrative Costs in Eight Nations: US Costs Exceed All Others By Far. Health Affairs 33, No. 9 (2014):1586–1594
  12. States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model. CMS.gov. 2024.
  13. Kemble SB, Kahn J. Optimizing Physician Payment for a Single-Payer Healthcare System. Int’l J Social Determinants of Health and Health Svcs, May, 2023.